The Laguna de Bay Community Carbon Finance Project (Carbonshed Project) was a pioneering initiative of the Laguna Lake Development Authority on Clean development Mechanism (CDM) activities under the Kyoto Protocol, to reduce the greenhouse gas (GHG) emissions and to improve environmental quality in the Laguna de Bay Watershed. This was implemented from 2004-2008 through a grant of USD 358,450.00 from the Japan Climate Change Initiatives that the World Bank administers. The project’s main activity was the development of a set of small-scale environmental interventions in Laguna de Bay watershed using the LISCOP Projects as a focus.

The Carbonshed Project’s aims to:

• Build the capacity of the LLDA as an intermediary to enable small-scale environmental projects to result in verified emissions reductions.

• Pilot the implementation of interventions that reduce carbon emissions and address priority environmental issues such as waste management and erosion reduction

• Prepare a set of environmental projects from which emission reduction credits could be purchased by the World Bank’s Community Development Carbon Fund (CDCF) and Bio-carbon Fund (BioCF).

Potential types of CDM-eligible sub-projects include:

• Solid waste management particularly composting

• Wastewater treatment including the use of biogas, and

• Reforestation and afforestation to reduce soil erosion

A. Key Accomplishments of the Carbonshed Project

Training and Capacity Building

A Carbon Finance Team (CFT) was organized in LLDA to lead in the implementation of the Carbonshed Project and to carry out the different tasks geared towards the attainment of the project objectives. Through the technical supervision and guidance of Dr. John Morton, Task Team Leader of the World Bank for the Carbonshed project and the Carbon Finance Unit of the World Bank based in Washington D.C. , the CFT training and capacity building started off with a “learning by doing” approach.

This project was implemented in parallel with LISCOP, thus the marketing of this project was done through the LEAP process. Information about Carbonshed were presented consisting of the following:

• Global warming

• Climate change

• The Kyoto Protocol and the Clean Development Mechanism

• The Carbonshed Project and its benefits

• Implementing Mechanisms

CFT members were mentored on the CDM process and procedures and the required documents for registration for CDM-Eligible sub-projects to UNFCCCC-CDM-EB.

The Daruma Technologies, Inc., consulting firm, was hired in March 2007which is to provide trainings to the CFT and the project proponents on the preparation of the Project Design Document (PDD) for each of the categories of CDM projects (Methane Avoidance, Methane Recovery and Carbon Sequestration). Similarly, training on the monitoring of CDM projects for the purpose of carbon credits in accordance with the strict compliance to the methodologies approved by the UNFCCC was also provided to the team and the Project Monitoring Team of the project proponents.

The CFT team was also provided with training on the inventory of greenhouse gas emission in the Laguna de Bay watershed. Exposure trips outside the watershed were done to observe on-going projects that reduce the amount of GHG in the atmosphere.

BioCF Training on Reforestation and Afforestation in the World Bank Headquarters in Washington DC in 2005 and 2008 was attended by the Head of the Carbon Finance Team and the Group Leader through the funding support from the World Bank.

B. Reduction of GHG emissions through environmental interventions

Development of CDM-eligible subprojects

Sub-projects under LISCOP were considered as CDM-eligible however underwent the process in accordance with CDM requirements.  Most of the sub-projects are Material Recovery Facility (MRF) with Composting while two are Methane Recovery projects. Thus, initial estimates of the emission reductions formed part of the financial viability assessment and the equipments that needed to be purchased to ensure that the emission reductions are attained and monitored.

With the project closing in July 2008, two bundles of sub-projects under Methane Avoidance  category were processed for implementation.

Under the Methane Recovery category, Sta. Cruz and Nagcarlan from the province of Laguna came out with wastewater treatment facilities.

With the private sector participation, proposals from this sector were evaluated. These were:

1. Communal digester for a cluster of small piggery farms by the RiverCouncil of Pagsanjan-Lumban but did not mature due to limited funding sources.

2. Wastewater treatment facility by two commercial piggery farm owners

3. Reforestation of the Caliraya watershed by the National Power Corporation (NPC) and Caliraya-Botocan-Kalayaan (CBK) Power Co. Ltd.

4. San Pablo Water District wherein series of meetings and site inspections were done by LLDA

Only the third proposal matured into a Memorandum of Agreement (MOA) among NPC, CBK and LLDA that was signed on July 10, 2006 encompassing the reforestation of 140 hectares of denuded areas in the Caliraya watershed. The technical evaluation of the project site, reforestation planning and implementation and preparation of the plantation management plan were done jointly by these three institutions.

On reforestation and afforestation, Tanay, Rizal, Siniloan, Laguna at Mt. Makiling (Laguna side and Batangas side) were inspected and evaluated by the CFT.

Legal Agreements

1. Memorandum of Agreement (cMOA) – This is signed by the proponent and LLDA prior to proceeding with the technical assessment and inclusion of the proponent’s sub-project to the CDM-eligible bundle.

2. Emission Reduction Purchase Agreement (ERPA) – This was entered into by the LLDA, in behalf of the project proponents and the World Bank, in behalf of the buyers of Carbon credits, namely the Community Development Carbon Fund and the BioCarbon Fund. This ERPA was signed on June 30, 2006. The price of one unit of CER expressed in tons CO₂-e, wherein the LLDA will sell to the buyers as specified and spelled out certain penalties in case of default.

3. Sub-Emission Reduction Purchase Agreement (sub-ERPA) – This binds the project proponent to the LLDA to deliver a specified amount of emission reduction. In case of failure to deliver the required ERs, corresponding sanctions were stipulated in this sub-ERPA.