Introduction to Clean Development Mechanisms (CDMs)

The 1997 Kyoto pact, effective next Feb. 16, sets mandatory targets for industrial nations to reduce emissions by 2012. The Clean Development Mechanism is one way that affluent nations can meet their targets by investing in renewables as well as investing in emerging markets promoting sustainable development, while meeting their CO2 targets as stipulated under the Kyoto Protocol.

An Model Methane Digester Case Study: AgroSuper Chile

One pioneer is Chilean food producer agrosuper, spotting the Kyoto opportunity, installed $30 million in technology to handle the waste of 100,000 pigs, covering pits with vast plastic sheets and drawing off the methane, some to flare, some to use in generators to power farm operations. By eliminating methane fumes from animal waste it can then sell the resulting "credits" to Japanese and Canadian utilities, requiring that much less of them as they reduce carbon dioxide emissions at their coal and oilburning power plants. Agrosuper’s 20 Certified Emission Reductions (CERs) are equivalent to 20 tons of carbon dioxide.

Opportunity to Leverage Less Expensive Approaches to Sustainable Development in Emerging Markets

Japan says up to one-third of its required cutbacks may come from foreign sources.  Don Wharton, director of sustainable development for Canada's transalta utility, said the CDM is "absolutely essential" because there's too little time to install new technologies at home. "We believe most large Canadian companies will have to rely on offsets (credits) to meet their reduction requirements," he said. Transalta and Tokyo Electric Power Co. Found a partial answer in pig manure pits in the green valleys south of Santiago.

Natsource (a UK based CO2 trading company), believes this could be an enormous financial opportunity, as well as a sound environmental practice.
Agcert, is installing methanecapture technology at 30 pig farms in Brazil. In one Brazilian state alone, Minas Gerais, 3.4 million pigs produce 7 million tons of waste per year.

Why Methane?

Though less prevalent than carbon dioxide, methane is a more potent greenhouse gas. Each ton of contained methane earns CDMs currently sell for about $10. However that carbon price is expected to rise, and big players are jumping into the market. A firm called CO2e ("carbon dioxide equivalent"), a subsidiary of the New York financial house Cantor Fitzgerald, brokered the agrosuper deal and is developing another involving Brazilian power plants using sugar cane, a renewable fuel less carbon heavy than coal or oil. China, meanwhile, is working to qualify more than 500 projects for salable credits.

What are CDMs?

CDMs can play a key role in improving the financial viability of Integrated Farming Proects. IF&WMS digesters make use of the huge quantity of methane, reduce the use of fossil fuels, and produce valuable nutrients as fertilizers from the animal wastes. The CO2 produced by burning methane is compensated for by the carbon sinks of the crops produced in the IFS without having to purchase polluting chemical fertilizers. Generating CDM credits by sequestering CH4 and CO2 in compost could help finance the plant and providing financing for future expansion both onsite and to other regions.