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Additionality in NovaGerar Gas to Energy Landfill Project. Amr Abdel-Aziz, Ph.D. Consultant. New Policies Attractive econ. Baseline. Baseline. Emissions. Emissions. Project. Project. 2004. 2025. 2004. 2025. Year. Year. Additionality. Definition.

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Additionality in novagerar gas to energy landfill project
AdditionalityinNovaGerar Gas to Energy Landfill Project

Amr Abdel-Aziz, Ph.D. Consultant


Additionality

Baseline

Baseline

Emissions

Emissions

Project

Project

2004

2025

2004

2025

Year

Year

Additionality

Definition

  • Emission reductions that are additional to any that would occur in the absence of the project

Importance

Environmental Additionality

Project Additionality

  • Most critical issue for project acceptance

  • Project will be refused if additionality is not proven


Additionality1
Additionality

How to Demonstrate

  • Flow chart of series of questions that lead to narrowing down of potential options

  • Qualitative or quantitative assessment of different potential options and an indication of why the project is more likely

  • Qualitative or quantitative assessment of one or more barriers facing proposed project

  • An indication that the project type is not common practice in the proposed area of implementation


Additionality2

Institutional

Technology

Economic

Additionality

In Easier Terms

Barriers


Novagerar landfill project
NovaGerar Landfill Project

Some Used to Generate Electricity

CH4

Excess Flared


Project design
Project Design

12 MW

11 MW

Difference Flared

9 MW

7 MW

5 MW

4 MW


Additionality in am003

Not Required

Additionality in AM003

Baseline and project are the only plausible options

  • Continue BAU (no collection)

  • LFG collection and flaring

  • High efficiency flaring and power generation

Calculate a conservative IRR (excluding CERs)

Project IRR  4%

IRR < Conservative

acceptable IRR

N

Not Additional

Gov. Bond Rate = 22%

Additional

Y

Additional


Irr calculations elements
IRR Calculations -- Elements

  • Capital Costs (-ve)

    • Electricity Generator (1 kW * 12 unit)

    • Flaring equipment

    • Gas plant

    • Assembling and testing

    • Connection to grid

  • Operating Costs (-ve)

    • Gas plant and flaring equip. O&M

    • Maintenance and supervision

    • Administrative expenses (PCF and EB)

    • Land rent

  • Others (-ve)

    • Income Tax

  • Revenue (+ve)

    • Carbon credits

    • Electricity sales



Irr calculations cash flow
IRR Calculations – Cash Flow

Flaring and collection

Incremental

Incremental

Generators

IRR  4% < Benchmark IRR  Additional


Benchmark irr
Benchmark IRR

  • Government bond rate plus suitable project risk premium

  • Commercial lending rate

  • Expert views on expected IRRs for this or comparable project types

  • Other hurdle rates that can be applied for the country or sector


Application of additionality test
Application of Additionality Test

Y

Part 1: Has construction of the project already started

N

Y

Part 2: Is Execution of Project based on direct on indirect legal obligation?

N

Project is more attractive

IRR  4% < acceptable IRR

Part 3a: Financial or Economic barrier (Benchmark Approach)

Project Economically less attractive

Y

Part 4: Are many projects, based on same type of technology recently implemented without CDM (50/20 test)

No landfill in Brazil employs this technology

N

Project Additional


General advice when proving additionality
General Advice When Proving Additionality

  • Transparent information should be provided

  • Documented evidence has to be available

  • Conservative interpretation of documented evidence as how it is used to demonstrate additionality

  • Conservative assumptions to be used


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