“Programme for supporting up-scaled mitigation action in

Peru´s solid waste sector”

- Programme Solid Waste NAMA – Peru -

NAMA performance metrics and MRV system

Lima, June 2015

EXECUTIVE SUMMARY

Programme Solid Waste NAMA – Peru

NAMA performance metrics and MRV system

ACRONYMS AND ABBREVIATIONS

BAU Business-as-usual

CAF Banco de Desarrollo de América Latina (Development Bank of Latin America)

CERs Certified Emission Reductions

DOE Designated Operational Entities

EU European Union

GDP Gross Domestic Product

GHG Greenhouse gases

INDCs Intended Nationally Determined Contributions

ISWM Integrated Solid Waste Management

IPCC Intergovernmental Panel on Climate Change

KfW Kreditanstalt für Wiederaufbau (German Development Bank).

LFGE Landfill gas capture with electricity generation

M&E Monitoring and Evaluation system

MBT Mechanical biological treatment

MINAM Ministerio del Ambiente (Ministry of Environment of Peru)

MRV Measuring, Reporting and Verification

MSW Municipal Solid Waste

NAMA Nationally Appropriate Mitigation Actions

NEFCO Nordic Environment Finance Corporation

NOAK Nordic working group for global climate negotiations

NPI Nordic Partnership Initiative on Up-scaled Mitigation Action

PBC Performance Based Climate Finance

PUCP Pontificia Universidad Católica del Perú (Pontifical Catholic University of Peru)

SIGERSOL Sistema de Información para la Gestión de Residuos Sólidos (Information System for Solid Waste Management)

UNFCCC United Nations Framework Convention on Climate Change

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EXECUTIVE SUMMARY AND MAIN CONCLUSIONS

The Nordic Partnership Initiative on Up-scaled Mitigation Action (NPI) and the Government of Peru have agreed to develop a Pilot Programme for the construction of appropriate favourable frameworks for a NAMA (Nationally Appropriate Mitigation Actions) within the solid waste sector in Peru, in order to attract international funds for mitigation actions.

For this purpose, the Ministry of Environment of Peru (MINAM) is leading the Programme “Solid Waste NAMA - Peru”, supported by the Nordic Environment Finance Corporation (NEFCO) and the Nordic working group for global climate negotiations (NOAK). This Programme has the duration of 2 years (2013 to 2015). The consortium of companies (hereinafter: the Consortium) composed of NIRAS (Denmark), Perspectives Climate Change (Spain and Germany) and ECO Consultorias e Ingenieria (Peru), Miranda & Amado Abogados (Peru) and Pontificia Universidad Católica del Peru (PUCP - Peru) has been contracted to execute the Programme.

This report represents the deliverable D-III/2.2 (NAMA performance metrics and MRV system) of the Programme. The main purpose of the present report is to design the Measuring, Reporting and Verification (MRV) system for the solid waste NAMA in Peru, in order to control the degree of fulfilment of the objectives and goals set by the mitigation projects, programmes, or entire policy instruments underpinning the NAMA. Furthermore, a robust MRV system can help build trust regarding the effectiveness of the envisaged mitigation actions by ensuring consistency and quality of data; it can help increase the transparency of the financial flows and facilitate the political decision-making process by helping to keep track of the alignment of the NAMA with the national priorities.

The MRV system has been designed for the three following technologies included in the NAMA:

T1: Landfill gas capture with flaring (Flaring)

T2. Landfill gas capture with energy generation (heat or electricity) (LFGE)

T3: Source separated organic composting (Composting)

In addition, MINAM and NEFCO expressed the interest in designing an MRV system also for T4: Mechanical Biological Treatment (MBT), a technology that is not going to be included in the NAMA. The objective of this report is therefore to design the MRV system for these four technologies.

These technologies were selected by CCAP1, “based on a participatory process including the relevant actors of the sector”, out of the eight technologies originally analysed and prioritised by the Consortium in the report: “GHG mitigation options in municipal solid waste sector” (deliverable D-II/3.3 of the Programme).The present NAMA covers the whole of the country, however, only includes the waste generated in the urban areas and composed of the following waste types: domestic waste, garden and park waste, market waste, waste from commercial / institutional activities and waste collected from sweeping and cleaning.

A comprehensive set of performance metrics and indicators was developed. To do so, a hybrid approach was performed combining three different analyses: a causal chain analysis (mitigation and sustainable development impact assessment), a sustainable development co-

1 See CCAP’s report: “Policy Report: Peru Waste NAMA options report”, November 2014 (pg. 46)

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benefits analysis and an analysis of the mitigation methodologies and standards available for the technologies covered by the MRV system of the NAMA.

The causal chain analysis shows the mitigation and sustainable development impacts of the NAMA implementation. This way, based on the identified impacts of the implementation of the NAMA, those impacts were assessed based on their relevance for the MRV system, and the selected ones where assigned at least one performance indicator. Further, the causal chain distinguishes between the regulatory and fiscal policy instruments and mitigation projects from the beginning, and then indicates the interrelation among them if applicable. Thus, the set of indicators identified by this analysis can be separated in indicators of the regulatory and policy analysis and those from the technological mitigation actions. The table below summarizes the two sets of indicators.

Table 1: Indicators of the regulatory and policy analysis

# Proposed regulatory and policy change Proposed Indicator

P1 Development of guidelines for municipalities to set quantitative goals for waste policies

Share of municipalities having quantitative goals

P2 Requirement for periodic monitoring and reporting of GHG emissions from waste disposal sites

Share of sites that do the periodic monitoring and reporting according to regulation

P3 Requirement of methane (landfill gas) collection for new landfills

- Share of new landfills that do collection of LFG - Average collection rate of LFG in the new landfills

P4 Application of equal or greater tipping fees to alternative waste reduction technologies with respect to usual landfill disposal tipping fees

Average level of tipping fee to alternate technologies per tonne of waste treated

P5 Raise technical standards for disposal sites and ensure an adequate tipping fee is provided to maintain the facility quality standards

Share of facilities that fulfil the technical standards

P6 Allow the municipalities to sell materials directly to industry Share of municipalities that have sales contracts with industries

P7 Create a technical support programme for municipalities including training and capacity building

Number of municipalities having undergone training and technical support

P8 Expand formalization program for waste pickers

- Share of municipalities that have completed the formalization program

- Number of waste pickers formalized

P9 Provide financial incentives for investment in alternative technology (reducing both GHGs and waste impacts)

Average level of financial incentive per tonne of waste treated

P10 Support and create markets for waste-based commodities, e.g.: Creating certification programme for high quality compost

Volume of compost certified (tonnes per annum)

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P11 Create financial incentive for municipalities pursuing regional aggregation of waste and regional waste reduction facilities including LFGE, flaring and composting

Average level of financial incentive per tonne of waste treated

Source: own elaboration, 2015

Table 2: Selection of indicators for each prioritised impact

# Prioritised impact Indicator(s)

I1 Creation of new jobs 1.1 Number of new short-term jobs created (#)

1.2 Number of new long-term jobs created (#)

I4 Reduction of GHG emissions in the atmosphere due to avoided methane release

4.1 Reduction of CH4 emission (tCH4)

I5 Reduction of GHG emissions from fossil-fuel switch

5.1 Annual energy generated (MWh/year)

5.2 GHG emission reductions due to fossil-fuel switch (tCO2e)

I7 Reduction of GHG emissions in the atmosphere due to avoided waste disposal in landfills

7.1 Reduction of CH4 emission (tCH4)

I8 Increase of GHG emissions due to the energy consumption for the plant operation

8.1 Annual electricity consumed (MWh/year)

8.2 GHG emission due to electricity consumption (tCO2e)

Source: own elaboration, 2015

Regarding the contribution of the NAMA towards sustainable development, an analysis was performed based on available public tools and guidelines, such as the sustainable development CDM tool (SD Tool) or United Nations’ “Sustainable Development Indicators: Guidelines and Methodologies”. Following these guidelines, a set of economic, social and environmental indicators was developed and the ones that had a high relevance for the current NAMA were selected. The following table summarizes the findings of this section, while more details can be found in the Table 19 in the section 3.3.2.

Table 3: Identified sustainable development co-benefits indicators and parameters Source: own elaboration, 2015

# Sustainable Development Criterion Indicator

SD1 Job creation Long term jobs

Short term jobs

SD2 Economic growth

New investments

New industrial/commercial activities

New infrastructures

New business opportunities

SD3 Technology transfer

New imported technology

Adaptation of new viable technologies

Technical knowledge of activities related to the technologies

SD4 Energy (diversification and conservation of the energy sources, energy security)

Use of renewable energies (assuming organic waste are considered renewable resources)

Energy supply

Reduction/increase of transport (costs)

Payment capacity and/or energy reliability

SD5 Payment balance (improvement of country’s payment balance) Reduction of external dependence in energy

sources

SD6 Increase of savings or revenues Increase of municipal / industrial revenues

Cost savings of leachate treatment

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Life extension of costly landfills

SD7 Leverage of funds Leverage of local and private funds

SD8 Health and safety (improvement of sanitary conditions and safety standards)

Disease reduction, disease prevention

Air pollution reduction in indoor places

Improvement of sanitation and waste management

SD9 Education (ease of access to education, providing information, research or raising awareness)

Work-related educational background

Improvement of educational services

Knowledge dissemination related to the NAMA / project.

SD10 Welfare (improving working and local life conditions)

Improvement of working conditions

Direct or indirect increase of resources availability to local population

Improvement of distribution of wealth

Local involvement

SD11 Conservation of natural resources and land use

Forests protection

Vegetal life protection

Biosphere protection

SD12 Local environmental impact reduction

Odour reduction

SOx, NOx, ashes, noise, particles and dust reduction

Reduction of explosions and fire risks

Quantity and quality of water

Ecological state improvement of water

Prevention of end of the useful life of products / equipment (solid waste generation and disposal)

Production / use of manure, mineral fertilizer or other soil nutrients

Source: own elaboration, 2015

Finally, as the last methodological approach followed in order to ensure completeness of the MRV system, an analysis of the available MRV methodologies and standards at the international level for the four mitigation technologies considered was carried out. The following table summarises the indicators and parameters that should be included in the MRV system.

Table 4: Indicators and parameters from methodologies and Standards analysis

Indicator Technology associated to the indicator

Parameters

Amount of landfill gas captured T1 and T2 FCH4,PJ,y , OXtop_layer, Opj,h, T, P

Methane fraction in the landfill gas T1 and T2 wCH4,y

Electricity generation using landfill gas T2 EGBL,y, EGPE,y FEEL, TDLy

Quantity organic waste composted / treated in tonnes (wet weight) by waste type, if differences expected (through representative sampling)

T3 Qy, Qcompost,y, Qtransport,y, Qres-waste,y

Parameters related to methane emissions from anaerobic disposal in a landfill of the solid waste/compost

T3 and T4 φdefault, F, DOCf,default, MCFdefault, DOCj, kj, PJ

Used quantities of fossil fuel for transportation and /or on-site consumption (gas oil, diesel, fuel oil, natural gas)

T1, T2, T3, T4 FCBL,I,y, FCPE,I,y, NCVi, EFCO2,I,y, EFCO2,transport

Electricity consumption T1, T2, T3, T4 ECBL,y, ECPE,y, EFEL

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Average truck capacity T1, T2, T3, T4 CTy, CTres-waste,y

Average incremental distance T1, T2, T3, T4 DAFw, DAFres-waste

CH4 emissions from composting and MBT T3 and T4 EFCH,default

N2O emissions from composting and MBT T3 and T4 EFN2O,default

Source: own elaboration, 2015

The international best practice suggests that a strong MRV system requires strict calculations of the GHG emissions, the use of sophisticated monitoring devices2, a periodic calibration of those devices and a clear process for the reporting and verification of the data. Each of these elements could potentially represent an implementation barrier for the MRV system, both technically and economically. On the basis of these considerations, the following tables show the most important barriers associated to the NAMA and their possible mitigation actions:

Table 5: Barriers to the MRV system implementation and mitigation actions

Potential Barrier to the implementation of the MRV system

Possible mitigation of the barrier

Elevated implementation costs of the MRV system

Elaborate a cost-benefit assessment for the MRV system before its implementation.

Elevated operating costs of the MRV system or verification third party services

Elaborate a cost-benefit assessment for the MRV system before its implementation.

Lack of funding for the NAMA implementation

Ensure a correct funding scheme for the NAMA, which guarantees the implementation of it. This could be done by several ways, including government’s funds, tipping fees, additional incomes from sales of electricity or compost, etc. A complete analysis of this subject was done in the Financing Scenarios Report delivered on September 15 of 2014 in the framework of this project.

Lack of market for waste based commodities

Support and create markets for waste based commodities. Support compost sales price. Continue plans to install source separated organic composting plants next to 31 landfills built in the National Program. Promote source separated organic collection from large generators.

Payment delinquency Support research to reduce payment delinquency.

Insufficient data availability Temporary use of IPCC’s default values, update of the calculations with measured values as soon as MRV system is implemented.

Insufficient data quality Specify the uncertainty level on the calculations, updating monitoring and report techniques, use of monitoring devices aligned with international standards.

Low availability of suitable monitoring devices

On short term: importation of monitoring devices On long term: encourage the private sector for the national production of suitable monitoring devices.

Limited availability of maintenance and calibration of monitoring devices

On short term: importation of monitoring devices On long term: encourage the private sector.

Governmental limited capacities for the management of an MRV system in the solid waste sector

Capacity building through specific seminars and workshops for the management of the MRV system.

2 E.g. gas flow meter placed directly on the installation, with regular maintenance and testing to ensure accuracy and calibration

according to manufacturer`s specifications (valid for all devices). The uncertainty level should be low (e.g. +/- 1 %). If sophisticated meter devices are used usually no separate monitoring of gas temperature and pressure would be necessary when flow meters used automatically measure temperature and pressure (expressing LFG volumes in normalized cubic meters). Gas quality analysers shall continuously measure methane fraction in landfill gas. Electricity shall be measured with an electricity meter that should be installed, maintained and calibrated according to equipment manufacturer instructions and be in line with national standards.

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Complexity of CDM methodologies for the sector

Creation of new simpler methodologies based on CDM ones.

Lack of capable local professionals in the country or necessity of technical advice.

On short term: hiring foreign companies to implement and manage the MRV system. On long term: encourage the private sector to fill this niche.

Lack of institutional technical capacity particularly at municipality level

Include in the NAMA a Technical Support Platform to build capacity at the municipal level (both district and provincial level). MINAM, with the help of expert consultants, should be the responsible for the mitigation of this barrier.

Lack of experience for any technology within the country

On short term: hire foreign companies to implement the technologies as pilot plants, use of IPCC’s default values until MRV system is implemented. On long term: learning from the pilot plants implemented, use of the measured values by the MRV system.

Social complaints against the new infrastructures

Organisation of divulgation campaigns about the NAMA activities and the MRV system to citizens, elaborate environmental impact assessments of the new infrastructures, develop collaboration between NAMA implementers / MRV developers and the local communities. MINAM, jointly with the local government where the new infrastructures will be built, should be the responsible for the mitigation of this barrier.

Lack of environmental education and awareness

Organisation of divulgation campaigns about environmental behaviour between the local citizens, explaining them how important are their incomes to the overall function of the NAMA and its MRV system. MINAM, jointly with the local government where the new infrastructures will be built, should be the responsible for the mitigation of this barrier.

Possible inefficiency of institutional organization for the MRV system

Creation of a management framework of the MRV system in an institutional and organisational level, with the responsibility of supervising the MRV system in all its phases, accounting to investors and government and coordinating all the rest of the parts involved. This will represent the reference institution to which will coordinate all the MRV system. MINAM, in its quality of NAMA coordinator and in particular the Directorate “Dirección General de Cambio Climático, Desertificación y Recursos Hídricos”, should be the responsible for the mitigation of this barrier. This activity could also involve some interactions with other Peruvian Ministries. Some external help (e.g. consultancy) for optimal institutional set-up could also be needed.

Continuity of MRV operations despite a possible change of local / national government

Through the quantification and dissemination of costs and expected benefits of NAMA, make sure this is fully agreed by stakeholders, both public and private, and is seen as an important priority for the country.

Core effective solid waste management services and facilities not yet in place

Ensure that NAMA addresses integrated solid waste management (ISWM) principles and is in line with the priorities of Peruvian policymakers.

Lack of a strong waste management infrastructure

Peru could consider providing incentives nationally or via regional governments for municipalities to form associations to create combined SWM service areas for collection, transport, and treatment of waste. This barrier is especially important on the gas capture and flaring or LFGE technologies.

Source: own elaboration, 2015

Based on the results of the analyses shown so far, the MRV system for the Solid Waste NAMA in Peru has been designed. Firstly, the boundaries of the MRV system have been defined, for all the four technologies considered, as reported below.

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Figure 1: MRV System boundary for NAMA projects using T1 and T2

Source: own elaboration, 2015

Figure 2: MRV System boundary for NAMA projects using T3 and T4 Source: own elaboration, 2015

The proposed outline for the monitoring report of the MRV system of the Solid Waste NAMA is also reported below. More details can be found in the section 5.2.1.

LFG used

Waste collection and transportation

Gen-sets LFG collection system

Electricity / heat

National power grid (EFgrid)

LFG generation

Electricity/heat for

operation

Energy (Fuel) for

operation

Flaring system Projectboundary

TransportCH4

Waste generation

LE

LFGburnt,y

Qfuel

ECEL EGEL

Qy,j

CO2CO2

CO2

CO2

Pointofmeasuring

Landfillsite

FCH4,flared,y

FCH4,used,y

T1 T2

Disposal on landfill

(residual

material)

Fresh waste (transport)

Composting / MBT

National power grid (EFgrid)

Pre-sort / -treatment

Electricity/heat for

operation

Energy (Fuel) for

operation

Compost

Projectboundary

Transport

Transport

CH4

Landfill / disposal site

Qfuel

ECEL

Qcom

Qy,j

CO2CO2

CO2

CO2

Pointofmeasuring

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Figure 3: Proposed outline monitoring system for the NAMA Source: own elaboration, 2015

An institutional set-up for the NAMA organisation has been also proposed, as outlined below. The main recommendation consists in creating a NAMA Coordinating Entity in charge of leading and coordinating all the operation related to the NAMA itself. More details can be found in the chapter 5.2.2.

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Figure 4: Proposed institutional set-up for the Solid Waste NAMA of Peru Source: own elaboration, 2015

Finally, regarding the MRV system procedures, as general indication it is recommended that the disposal site operators should report the data directly to a NAMA Coordinator Entity, who will also be in charge of collecting and organising the data and information from all sites. In order to fulfil this requirement, the plant operators shall complete the monitoring report (or similar) using the template provided as an annex to the present report and including the unique identification number corresponding to the operator / plant. It is recommended that the NAMA Coordinator produces annual reports regarding the performance of the NAMA and allow the verification of the data provided by a third party independent verifier. The NAMA Coordinator Entity should provide all guidance required by the plants operators regarding the monitoring procedures and parameters. The relevant templates for monitoring, reporting and verification are provided in the annexes of this report (see ANNEX 4: VERIFICATION TEMPLATE).