Not long ago, Destills, a producer of cane-alcohol, had a big problem. The company was generating a huge amount of waste during distillation. While many tequileros and other alcohol makers simply dump the waste into streams and aquifers, damaging the earth and violating environmental codes, Destills was eager to do the decent thing.
While visiting industry expos abroad, the director of the company learned about a method of treating the waste in biodigester tanks, extracting methane gas that could replace expensive fuel used in production. The company decided to invest.
Though Destills has yet to complete the first phase of the project, early estimates put operational cost savings as high as 50 per cent. “This is a viable and interesting project because, first, you’re aiding the environment by not polluting and, second, you’re economising on production,” says Nohemi Garcia, the company manager.
Destills is one of dozens of companies in Mexico that hopes to sell the greenhouse gases it will avoid producing as credits traded on the United Nation’s Clean Development Mechanism. Under the CDM, developed countries offset their Kyoto Protocol obligations to reduce emissions by purchasing CRs, or carbon credits, from projects in developing countries.
Many such projects have found a home in Mexico, a country that champions itself as a leader in Latin America on climate change. At least 119 Mexican projects such as the Destills endeavour are registered under the CDM, and many more are seeking approval. Results, however, have been mixed.
A combination of problems has thwarted the runaway success many had hoped for. For one thing, nearly all the projects registered under the CDM – 93, according UN data – have to do with methane capture, largely on pig farms and landfills.
But many variables play into the feasibility of capturing biogas from waste. On pig farms, disinfectant and antibiotics administered to pigs can inhibit production. At landfills, methane output depends on the weather, the quality of the rubbish and the size of the dump.
Initial projections for Mexico’s Aguascalientes landfill project, for example, were significantly higher than the final output.
That mismatch of promises with results has been experienced around the world. “It’s incredibly frustrating,” says Eduardo Piquero of MGM Innova, a developer of emission-reduction projects.
“When we got started in 2007, everyone thought landfills were going to be a huge source of methane production,” he says. “Now, I would look to alcohol production. There’s a little room in animal waste. I would discourage, of course, going on to landfills.”
Other problems have to do with the CDM itself. Credits equalling about a ton of reduced, or avoided, greenhouse emissions are trading at about €11 ($15) each. But in 2008, they were trading as high as €28, making it difficult for investors to forecast profits. Furthermore, the accreditation process is both rigid and time-consuming, with approval often taking two years or more.
Still, disappointment with the CDM may have more to do with adjusting expectations than actual failure. Indeed, there have been successes. The northern city of Monterrey, for example, generates 120,000 MW of electricity annually from its landfill project, which it says is enough energy to power 90 per cent of the city’s street lamps, or 35,000 homes. In May last year, the World Bank signed a big emissions-reduction contract with the operator.
Meanwhile, the number of alcohol-to-methane projects is growing. Developers see promise in untapped areas such as energy recycling. Through sales of carbon credits, Quimobásicos, also based in Monterrey, was able to repay in just four months the $1m investment on a programme to burn off a refrigerant-gas byproduct, according to Mr Piquero, who works with the company.
Despite the diminished prospects, some remain hopeful about the potential of landfills. A handful of Mexican cities is awaiting approval by the UN to start trading on the CDM. While its methane output has yet to be measured, the Bordo Poniente, the 50m ton dump located on a barren stretch of land outside Mexico City, has at least foreign companies circling.
“The private sector keeps knocking,” says Fernando Menendez, the director of Mexico City’s waste commission. Sceptical about the immediate riches a landfill can bring, he favours the value of long-term contracts. “The fact is that if you add the carbon bonds to the electricity you generate to all the items you can recycle, you’re going to make it. But you’re not going to be rich overnight,” he says. “It’s going to take a while.”
Nobody is in doubt that projects such as the Bordo will generate money in the future. For the moment, it is a matter of figuring out exactly when and how – and, of course, how much.
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