MANILA, January 14, 2010—The Land Bank of the Philippines (LANDBANK) and the World Bank today signed an agreement where the World Bank will purchase carbon credits for a project designed to reduce greenhouse gas emissions from landfills and livestock farms in the country.
Called the Methane Recovery from Waste Management Project, this project will help address emissions of methane gas which is a highly potent Greenhouse Gas (GHG) estimated to account for nearly one third of the GHG emissions from the Philippines. Among the largest sources of methane emissions in the country is the decomposition of waste in landfills and livestock farms. The project will provide incentives for piggeries and landfill operators to adopt cleaner technologies that capture methane and use it as fuel to generate electricity which will substitute for grid electricity generation that otherwise would be supplied by GHG emitting fossil fuel power plants.
The Certified Emission Reductions (CERs) derived from these projects under the framework of the Clean Development Mechanism (CDM) of the Kyoto Protocol will be purchased by the World Bank on behalf of the Spanish Carbon Fund as a way of encouraging investments in technologies and business models that help address climate change.
The Methane Recovery from Waste Management Project will be managed and implemented by LANDBANK. The total value of the Emission Reduction Purchase Agreement (ERPA) is EUR 2,437,500 over the period of 2010 – 2013.
LANDBANK President and Chief Executive Officer Gilda E. Pico said the signing of the Emission Reduction Purchase Agreement (ERPA) with the World Bank affirms LANDBANK's commitment to contribute to the United Nations Framework Convention on Climate Change objective of stabilizing greenhouse gases emissions at safe levels thereby helping address the global warming problem.
"LANDBANK is the very first bank in the Philippines to venture and seal a carbon sale-purchase agreement with a carbon buyer for CDM projects," said LANDBANK President Pico. "Along with this distinction is the responsibility of carrying out concrete efforts that will contribute in addressing the problem of climate change. Nevertheless, we are gratified to be doing our share towards this noble objective."
The CDM refers to the mechanism provided by the Kyoto Protocol designed to assist developing countries like the Philippines in achieving sustainable development by permitting industrialized countries to finance projects for reducing GHG emissions in developing countries and receive credits for doing so.
As the financial intermediary and Coordinating and Managing Entity (C/ME) for the project, LANDBANK will establish subproject agreements with local government units, private piggeries, project developers and service providers to acquire CERs for subsequent sale to the World Bank under the newly signed ERPA.
World Bank Country Director Bert Hofman said he is happy to have signed the ERPA with LANDBANK, stressing that the deal concretely demonstrates how carbon finance could be used to encourage private and public investments into projects that reduce greenhouse gas emissions. "Initiatives like these not only mitigate climate change while contributing to sustainable development; they also help achieve cleaner air and a cleaner environment, thus improving the quality of life of many Filipinos," he said.
Mr. Hofman said that the ERPA with LANDBANK represents an innovative approach in scaling up the projects under the CDM. He said that the methane recovery project will have a "programmatic approach" in providing carbon finance, a departure from a conventional approach where projects under the CDM were processed individually.
"Individual projects, while important, produce small volumes of emission reductions and benefit only a few players. The use of a programmatic approach allows multiple projects to be combined under one institution or intermediary, like LANDBANK, thus generating significant impact, and benefiting more players including poor communities," said Mr. Hofman.
In addition to reducing GHG emissions, the project will assist the Philippines in introducing cleaner technologies to manage the 14 million tons of solid waste and 22 million tons of organic wastewater it produces each year. Management of this waste and of its health and environmental impacts are a growing concern in the country. Current waste management practices in piggeries and landfills not only emit methane and odor but also create potential for ground water contamination and run-off into rivers and streams.