1. Max Spedding Director Projects Waste 2012 - Coffs Harbour 2 May 2012
CALCULATING THE COST OF CARBON AND THE LANDFILL GATE
Max Spedding
Director Projects
Waste Coffs Harbour
2 May 2012

2. Background There are around 450 landfills in Australia.
The Carbon Price Mechanism (CPM) includes landfills but limits ‘coverage’ to sites emitting over a ‘threshold’ level.
Only waste landfilled after June 30, 2012 is covered by the CPM.
Landfill emissions from waste deposited prior to June 20, 2012 (legacy waste) is included in the threshold assessment but does not create any carbon permit liability.

3. Landfill Emissions
When landfilled waste decomposes without oxygen it produces methane. This occurs over a long period – up to years.
47.6 kg of methane = 1 tonne CO2-e (when the global warming potential of 21 is used).
Methane is a greenhouse gas and covered by NGERS.
NGERS landfill emission reporting is based on the International Panel for Climate Change (IPCC) first order of decay modeling.
This modeling in turn is based on the organic content (DOC) of the waste landfilled and the fraction of that organic material that decomposes in the landfill (DOCf).

4. Legacy Waste vs. Non Legacy Emissions
SA Landfill, 200,000t mixed waste deposited each year

5. Direct Carbon Costs and Landfills
For landfills the CPM carbon permit liability will commence on July 1, 2012.
For landfills there are four ‘variables’ to consider when calculating the direct carbon cost impact:
Will the landfill be ‘covered’ by the scheme?
What is the waste composition?
What is the future carbon price?
What is the landfill’s gas collection efficiency

6. Coverage
Initial Threshold: All landfills with annual emissions greater than 25,000 tonnes CO2-e will be covered from July 1, 2012.
Prescribed Distance Rule: Because of concerns that waste may diverted from ‘covered’ landfills to ‘uncovered’ sites provision has been included in the legislation to reduce the threshold in certain areas. This issue will be reviewed in 2015/16.
Extent of coverage: With the threshold at 25,000 tonnes it is expected that approximately 25% of landfills will be ‘covered’. These will receive around 75% of waste landfilled.

7. Carbon Liability Default Waste Composition
Emissions in CO2-e per tonne of waste
‘Kerbside’ Municipal
1.19
‘Wet’ Commercial
1.08
‘Dry’ Commercial
0.96
Construction
0.17

8. Gas Collection Efficiency
Using NGER modelling a landfill’s gas collection efficiency is determined by dividing the actual gas collected & combusted each year by the modeled gas generated for the same year.
e.g. 55,000 collected =50 %
110,000 generated
Gas collection reporting procedures are prescribed in the NGER determination.
Generally collection is between 30-60%.

9. Future Carbon Cost
As landfill emissions are released over time an estimate of the future carbon cost needs to be made whilst the ‘fixed’ price applies and permits cannot be purchased and banked.
The carbon cost of a tonne of mixed waste can be estimated by: a) using a discount method for the cashflow derived form the modeled emissions at each landfill and an estimate of the future cost of permits for each year; or
b) assuming permits are purchased as they become available during the fixed price period and buying the balance in 2015/16
At this time the updated Treasury forecast ( ) of carbon prices (Government policy) is considered the most robust carbon price indicator available to landfill owners.

10. The IPCC Model – Emissions against time
Wet Temperate Decomposition Rate
Emissions are influenced by local climate conditions.

11. Australian Carbon Price Forecast
Source: Strong Growth, Low Pollution - Modelling a Carbon Price, 21 September, 2011

12. Direct Carbon Cost Calculation
For waste received in 2012/13 the CPM will create a new direct carbon liability to the landfill owner equal to:
Liability = Composition x (1- Collection) x Future Carbon
Liability Efficiency Cost
Some landfills operating in a competitive environment may be disadvantaged by their gas collection efficiency performance.
This competition may prevent full direct carbon cost pass through to customers but this competition will also encourage emission abatement – the point of the whole scheme.