This document summarizes Pollutech Environmental Consultants' experience with a Clean Development Mechanism (CDM) project involving an anaerobic wastewater treatment system at a rum distillery in Nicaragua. The project would reduce greenhouse gas emissions by 192,000 tons of CO2 per year by treating wastewater anaerobically to produce biogas. It describes the CDM process, participants, financing organizations, and attributes such as enhancing project value through certified emission reductions but also complexity and risks.

1. CEIA CDM WORKSHOP
EXPERIENCE WITH CDM
“A VIEW FROM THE TRENCHES”
POLLUTECH ENVIRONMENTAL CONSULTANTS
GREGORY M. BROWN, P.ENG, M.A.Sc, MBA

2. POLLUTECH ENVIRONMENTAL CONSULTANTS
 Leaders in the implementation of environmental
technologies nationally and internationally for
industrial and municipal applications
 Incorporated in Ontario in 1969, serving our
clients for 32 years
 Permanent offices in Oakville and Sarnia, Ontario,
Canada
 Strategic alliances in USA, Spain, China, Egypt,
Uruguay, Chile, Costa Rica, and Nicaragua

3. POLLUTECH ENVIRONMENTAL CONSULTANTS
 Pollutech provides independent and objective
waste & energy management services
 With Climate Change projects we facilitate the
generation and sale of greenhouse gas emission
reductions

4. CLEAN DEVELOPMENT MECHANISM
 The Clean Development Mechanism was created
by Article 12 of the Kyoto Protocol
 Article 12 of the Kyoto Protocol allows parties not
included in Annex 1 (developing countries) to
benefit from project activities resulting in
certified emissions reductions, and Annex 1
parties to use certified emission reductions to
contribute to compliance with their quantified
emission limitation and reduction commitments

5. CLEAN DEVELOPMENT MECHANISM
 The specific rules governing the implementation
of the CDM are hoped to be decided (???) at the
COP 6bis meeting in June 2001
 This presentation provides a summary of a
Pollutech project involving the ongoing
application of the CDM to an energy from waste
project in Nicaragua

6. COMPAŇIA LICORERA DE NICARAGUA
 Established in 1890
 150,000 L per day rum
distillery
 Light and aged rum
products
 Commercial alcohol
production
 Flor de Caňa present in 19
countries around the
world
 ISO 9001/9002, HACCP, &
Kosher Certification
 Pursuing ISO 14000

7. WASTEWATER MANAGEMENT
 Characterization of
wastewater discharges
 Evaluation of water
conservation initiatives
 Evaluation of pollution
prevention initiatives

8. WASTEWATER MANAGEMENT
 Distillery operations
generate 750 GPM of high
strength wastewater
• 51,000 mg/L BOD
• 64,000 mg/L COD
• 5,500 mg/L TSS
• 208,000 kg/d BOD
• 262,000 kg/d COD
• 22,000 kg/d TSS

9. TECHNOLOGY EVALUATIONS
 Pilot scale testing of ADI
anaerobic technology
conducted
• 94% BOD removal
• 82% COD removal
• 76% TSS removal
 Generation of biogas
100
90
80
% Removal
70
60
50
40
30
• 65% methane
20
10
• 33 % carbon dioxide 0
2
1.5
1
0.5
0
VA/PA Ratio
11/21 12/11 12/31 01/20 02/09 03/01 03/21 04/10 04/30
Date
COD BOD TSS VA/PA

10. PROCESS SCHEMATIC
Distillery
Slops Wastewater
Cooling Wastewater

11. Distillery
Slops Wastewater
Cooling Wastewater
Anaerobic
Treatment

12. Distillery
Biogas
Slops Wastewater
Cooling Wastewater
Anaerobic
Treatment
To Spray Irrigation
or
Receiving Steam

13. Distillery
Biogas Boiler
Slops Wastewater
Cooling Wastewater
Anaerobic
Treatment
Steam
To Spray Irrigation
or
Receiving Steam
To Distillery

14. Distillery
Slops Wastewater
Cooling Wastewater
Anaerobic
Treatment
Steam
Turbine
Biogas Boiler
Steam
To Spray Irrigation
or
Receiving Steam

15. Distillery
Slops Wastewater
Cooling Wastewater
Anaerobic
Treatment
Boiler Electrica
Steam
Turbine
l
Energy
Biogas
Steam
To Spray Irrigation
or
Receiving Steam
To Distillery

16. Distillery
Slops Wastewater
Cooling Wastewater
Anaerobic
Treatment
To Distillery
Boiler Electrica
Steam
Turbine
l
Energy
Biogas
Steam
To Spray Irrigation
or
Receiving Steam
To Distillery
To
National
Grid

17. Distillery
Slops Wastewater
Cooling Wastewater
Anaerobic
Treatment
To Distillery
Boiler Electrica
Aerobic
Treatmen
t
Steam
Turbine
l
Energy
To
National
Grid
Biogas
Steam
To Spray Irrigation
or
Receiving Steam

18. PROJECT IMPLEMENTATION
 International Request for Proposals
 Technical and Financial Analyses of Bids
 Site visits to distilleries with similar technology
 Project initiation in 3rd - 4th Q 2001

19. GREENHOUSE GAS EMISSIONS
 Current operations generate
236,000 ton CO2e/year
 Energy from waste project
emissions are 44,000 ton
CO2e/year
 Emission reduction equivalent to
192,000 ton CO2e/year
 US$0/year at US$0/ton C
 US$1,044,480/year at US$20/ton C

20. THE CDM PROCESS
 To be certified, projects will require
• voluntary participation approved by each Party
involved
• real, measurable and long term benefits
related to the the mitigation of climate change
• reductions that are additional to any that
would occur in the absence of the certified
project activity

21. THE CDM PROCESS
 CDM projects are required to result in emission
reductions that are “additional to any that would
have occurred in the absence of certified project
activity”
 The easiest tests of additionality are the
introduction of new technologies to the market or
projects where emission credits are a critical
economic factor
 All CDM projects are nation to nation bilateral
agreements requiring the consent of the
Canadian and host country governments

22. THE CDM PROCESS STEPS
 Establishment of emissions baseline
 Quantification of emission reductions achieved
by the project
 Verification of emission reductions on an annual
basis
 Host Country project recognition
 Investor Country project recognition
 Host Country - Investor Country Project
Agreement
 Registration of project with the UNFCCC
 Sale of Credits on the world market annually

23. THE CDM PARTICIPANTS
 Canadian CDM/JI Office
 Nicaraguan CDM Office

24. THE WORLD BANK PROTOTYPE CARBON FUND
 Project has been preselected by the PCF
 $US3.0 million to purchase GHG credits
 Project Identification Notice (PIN)
 Nicaragua “No Objection”
 Project Concept Note (PCN)
 Nicaragua “Letter of Endorsement”
 Project Appraisal Document (PAD)
 Monitoring and Verification Protocol (MVP)
 Emissions Reductions Purchase Agreement (ERPA)

25. THE CDM PARTICIPANTS
 Canadian Commercial Corporation (CCC)
 Export Development Agency (EDC)
 Financing Agencies
• International Finance Corporation (IFC)
• Inter-American Investment Corporation (IIC)
• Central American Bank for Economic
Integration (CABEI)
 UNFCCC

26. CDM PROJECT COORDINATION
CLNSA
CANADA
CDM
NICARAGUA
CDM
IFC
CABEI
IIC
CCC UNFCCC
EDC
POLLUTECH

27. CDM PROJECT ATTRIBUTES
 CDM can enhance the value
and cash flow of international
development projects
 CDM can result in complex
implementation models
 Complexity can increase
transaction costs
 Uncertainty - Need definitive
rules for CDM projects
 Risk - Sale of Emission
Reduction Credits

28. POLLUTECH ENVIRONMENTAL CONSULTANTS
 Visit us in the Ontario Pavilion
 Visit us at www.pollutech.com