LAGUNA DE BAY COMMUNITY CARBON FINANCE (CARBONSHED) PROJECT

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The Laguna de Bay Community Carbon Finance Project (LDBCCFP) is an initiative parallel to and complementary with the LISCOP project. Funded under the Japan Trust Fund for Climate Change Initiatives, it aims to reduce carbon emissions.

Although the Carbonshed Grant ended on July 28, 2008, LLDA continued its commitment to implement projects that will eventually contribute to the local and global efforts to mitigate Global warming.

Such projects include engaging communities to implement solid waste management mechanisms, composting, reforestation projects and construction of infrastructure to support these projects including wastewater treatment facilities. These projects are envisioned to address the priority environmental issues in water pollution caused by mismanaged solid and liquid wastes and lake sedimentation caused by solid erosion due to natural and manmade loss of forest cover.

A review of ERPA ER yearly deliveries was done and it indicated that levels of composting for many of the LGUs are still well below that which was agreed on in their Subproject ERPAs. The total ERs calculated for the three monitoring periods (2009-2011) of Bundle 1 were only about 6% of the estimates in the Project Design Document (PDD). Thus, because of the low amount of actual ERs produced and the high transaction costs, the verification of Bundle 1 will not be done at this time.

With the approval of LISCOP Additional Financing, there is a potential to have an additional bundle of sub-projects. The World Bank will assess the practicality of adding new sites either to the existing Bundle 2 that is under validation or have a new bundle.

Component of the Carbonshed Project is the Community Benefit Plan (CBP). The project community benefits premium amounting to approximately US$ 50,000.00 will be used as one time grant by the Community Development Carbon Fund for the identified alternative livelihood projects for waste pickers displaced by the closure or upgrading of open dumps either into MRFs or sanitary landfills. The objectives of the plan are (1) to identify and implement projects that would help alleviate economic condition of the displaced waste pickers of LGUs’ MRF; and, (2) to strengthen the capacity of the waste pickers in managing and operating micro-enterprise projects.

As of September 21, 2012, some nine (9) LGUs expressed intention and submit livelihood proposals for funding under the CBP grant, comprising of some 300 waste pickers, with about 60% women participation. As of October 6, 2012, six (6) LGUs have so far complied with the submission requirement and selection criteria such as: (1) organized group of waste pickers duly accredited by the LGU (2) high receptivity of the LGU and (3) available resources. Seventy-four percent (74%)) of the fund was committed and soon for award and procurement pending revision of TOR on the planned disbursement of the fund by the consulting firm engaged by WB. The rest of twenty-six percent (26%) of unallocated fund awaits LGU proposal submission by October 15, 2012.

The approach and framework in the identification of the livelihood project is based on the preference that would develop the waste-pickers to actively participate in all stages of planning, implementation, operation, maintenance and evaluation. The University of the Philippines at Los Banos Foundation, Inc., the consulting firm hired for this project for period of one (1) year from April 25, 2012 to April 24, 2013, is responsible for the implementation of the CBP, including conduct of training needs assessment for project beneficiaries and conduct of technical and capability building seminars in collaboration with LLDA, LGU and WB. Some of the livelihood modules approved include: livestock production (cattle/horse/hog raising/fattening) for Sta. Cruz and Liliw, Laguna and Tanay, Rizal; variety store and junkshop for Antipolo, Rizal; paper bag, paper charcoal and novelties for Teresa, Rizal; eco-bags and crafts and rice retailing for GMA. The implementation of the CBP will be conducted in a participatory manner to involve the consulting firm, LLDA, LGU and CBP beneficiaries. Ensuring the long term sustainability of the livelihood projects is one great challenge facing the LGU as they have to identify and create bridging projects to sustain the livelihood and lessons learned beyond the duration of the CBP.

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.

Bundle 1:

Bundle 2:

Cavite: General Mariano Alvarez

Laguna: Siniloan, Nagcarlan

Laguna: Kalayaan, Liliw, Sta. Cruz

Pila, Pangil, Pakil, Mabitac

Rizal: Tanay, Teresa, Morong

Silang, Sta. Rosa City

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.

The Feasibility Study for each of the sub-projects was done under LISCOP. The diagram serves as a reference in understanding the accomplishments presented herein.

PREPARATION OF THE PROJECT DESIGN DOCUMENT (PDD)

The PDD is a technical document containing all the necessary information regarding the CDM-eligible subprojects ranging from their operation, implementation and determination of carbon emission reduction based on the approved methodology o f the CDM-EB. The PDD is required for the following purposes:

  • The Designated National Authority (DNA) as basis for the issuance of the Letter of Approval required for validation and registration.

  • The Validator licensed by UNFCCC-CDM-EB to validate projects undergoing the registration as CDM-eligible.

  • The CDM-EB certifies that the projects meet the requirements of CDM. Part of the registration process is the posting of PDD in the UNFCCC website for critiquing of international stakeholders.

The following PDDs were prepared:

  1. Bundle 1- Laguna de Bay Community Waste Management Project: Avoidance of Methane Production from Biomass Decay through composting 1”

  2. Bundle 2 – Laguna de Bay Community Waste Management Project: Avoidance of Methane Production from Biomass Decay through composting 1”

  3. Bundle 1- Laguna de bay Community Waste Management Project: methane Recovery in Wastewater Treatment 1”. The PDD was revised to include the two private sector proponents.

  4. Bundle 1 – Laguna de Bay Watershed rehabilitation Project 1( Tanay and Caliraya sites)

  5. Bundle 1- Laguna de Bay Watershed Rehabilitation Project 1 (San Pablo, Siniloan and Makiling sites)

The Methane Recovery PDD showed that the total emission reductions (ERs) were very low. The registration of this bundle of sub-projects was temporarily put on hold until substantial ERs are attained. Otherwise, the transaction cost could be greater than the Carbon credit.

VALIDATION AND REGISTRATION OF SUB-PROJECTS

In September 2006, the firm TUV Industries Service GmbH, licensed by the UNFCCC to audit and validate if projects are CDM- eligible. Experts are based in Germany while their local counterparts are based in their Manila office who conducted the pre-validation and validation activities and meetings were held in between. The results of evaluation were communicated to the CFT and TTL for corrective actions while electronic discussion required a lot of technical input from the CFT until such requirements were satisfied. In addition, the validator took charge of submitting the PDDs and the result of their evaluation to the UNFCCC-CDM-EB.

On reforestation, it did not meet the land eligibility criteria, thus the PDDs were not submitted for registration. But still, the reforestation and afforestation were still carried out in the Caliraya watershed because of the considerable environmental benefits in carbon dioxide sequestration and erosion mitigation. This activity was supported by the MOA between LLDA, CBK and NPC.

As a requirement for the validation and registration to the CDM-EB, letters of approval were given by the Designated National Authority (DENR) for the two bundles of Methane Avoidance projects.

On March 16, 2008, the first bundle of the Laguna de Bay Community Waste Management Project: Avoidance of Methane Production from Biomass Decay through Composting -1 has been registered with the UNFCCC-CDM-EB as a CDM project and was certified to produce Carbon credits.

OUTPUT OF THE CONSULTANT

These documents were produced from the services of the Daruma Technologies, Inc. to the LLDA-CFT.

  • CDM Toolkit

  • Appraisal Manual for CDM Projects

  • CDM Methodological Procedures

  • Web Layout

One of the significant output is the Greenhouse Gas Inventory in the Laguna de bay Watershed, which shows the different sources of greenhouse gas emissions. This will serve as a baseline from which other interventions will be assessed. The spreadsheet to determine the GHG emission and the GIS-based maps were also provided.

Estimated ERs over Crediting Period: BUNDLE 1 MRF SUB-PROJECTS

(7 Sub-Projects - General Mariano Alvarez, Cavite; Kalayaan, Laguna; Liliw, Laguna; Morong, Rizal;Sta Cruz, Laguna, Tanay, Rizal and Teresa, Laguna )

Years

Annual estimation of emission reductions in tones of CO2-e

2009

2,047

2010

3,659

2011

5,047

2012

6,288

2013

7,426

2014

8,473

2015

9,463

TOTAL

42,403

Source: Laguna de Bay Community Waste Management Project, LLDA Bundle 1

Estimated ERs over Crediting Period : BUNDLE 2 : MRF SUB-PROJECTS

(11 Sub-Projects - Lucban, Quezon, Pakil; Laguna, Pangil; Laguna, Pila; Laguna, Mabitac; Laguna, Sta. Rosa, Laguna; Nagcarlan, Laguna; Siniloan, Laguna; Angono, Laguna; Victoria, Laguna; Antipolo, Rizal )

Years

Annual estimation of emission reductions in tones of CO2-e

2011

43,131

2012

48,319

2013

55,468

2014

64,223

2015

68,499

2016

72,869

2017

77,414

TOTAL

429,923

Source: Laguna de Bay Community Waste Management Project, LLDA Bundle 1