Weisberg 2011 biocycle

Value of Carbon Offsets from Composting and Digester

Projects

Peter WeisbergBiocycle Global 2011

San Diego, CAApril 6, 2011

The Climate Trust

• Provided $11M in financing to carbon projects

• Reduced 2.5 million mtCO2-e

• Offset programs– First U.S. state-based

compliance program – Oregon– First voluntary state program -

Colorado– First by natural gas-only firm –

NW Natural3

Priority project sectors

1. Dairy Digester 2. Organic Waste Digestion3. Composting4. Forestry

Carbon Offset “Profit”=(Offsets)(Price) -

(Transaction Costs)

Dairy offset revenue- 2,500 cows; digester reduces 8,750 mt CO2e every year

$= (Offsets)(Price) – (Transaction Costs)

Price = $6

Year 1 Carbon Sales Profit: $10,000

Year 2-10 Carbon Sales Profit: $40,000

NPV (10 years, 7%) = $250,000

Transaction Costs

• Project Preparation: $20,000 - $50,000 upfront

• Verification: $8,000 - $12,000 annually• Monitoring equipment: $0 - $15,000

upfront• Registry fees: $0.23/credit issued

Importance of Scale

• Dairy projects need 1,000+ cows• Organic waste digestion or composting

projects need 15,000+ tons of eligible feedstock per year. Eligible:

• Post-consumer food waste• “Agro-industrial” waste water

California’s Carbon Market

• Cap-and-trade system begins in 2012• Offsets = 8% of compliance

– 1st Period (’12-14) – 39 million offsets– 2nd Period (‘15-17) – 92 million offsets

• Air Resource Board approved offsets– CAR Livestock (Dairy Digesters)– CAR Forestry– CAR Ozone Depleting Substances

California Carbon Market: Supply Currently ~2.2 million eligible offsets

Carbon Price• Air Resource Board Approved:

– $7 - $9– Small transactions, ~25,000 offsets

• Un-Approved:– $3-6

• Future– Legal challenges – More protocols

Value of Carbon Credits to Dairy Digester

• 2,500 cow digester• ~3.5 mt CO2e per cow per year

• ~8,750 mt CO2e reduced

Carbon price($/mt CO2e)

$4.00 $8.50 $15.00

Net Present Value(10 years, 7%)

$165,000 $440,000 $840,000

% of Capital Cost(~ $2.1 million)

8% 20% 40%

Value of Carbon Credits to Organic Waste Digester

• 40,000 tons of MSW food waste• ~0.5 mt CO2e per ton of food waste per year

• ~20,000 mt CO2e reduced per year

Carbon price($/mt CO2e)

$4.00 $8.50 $15

Net Present Value(10 years, 7%)

$410,000 $1 million $2 million

Thank you!

Peter WeisbergSenior Project AnalystThe Climate Trust

503-238-1915 [email protected]