Find out how carbon credit financing helped turn a dump site in Mumbai, India into a green landscape.
Overview
From a dump site to a beautiful green space: Asian Development Bank's Asia Pacific Carbon Fund helped transform Mumbai's Gorai garbage site into an award-winning sustainable area.
Project information
Project snapshot
- 2007: Launch of the Gorai Landfill Closure and Gas Capture Project
- 2009: Inauguration of the great green 19 hectare park
- 2010: Completion of project construction
- 2030: Estimated project end of operations
- Rs503 million ($9.31 million): Total project cost
- Rs245 million (56%): Carbon financing
- Implementing agency
- Municipal Corporation of Greater Mumbai: Principal implementor
- Infrastructure Leasing & Financial Services: Technical adviser
Challenge
Closing up a garbage landfill
The Gorai dumpsite in Mumbai, India was once a 19-hectare area covered with an 80-foot-high mountain of solid waste. Located close to a creek and surrounded by residential developments, the landfill posed serious environmental and health hazards and emitted methane gas which has 21 times the global warming potential of carbon dioxide.
In 2007, the Municipal Corporation of Greater Mumbai decided to embark on the Gorai Landfill Closure and Gas Capture Project, which aimed to close the dumpsite and transform the methane it generated into electricity. However, the project's large scope and technological requirements called for a considerable amount of funding.
Solutions
Carbon credits transformed the environment
What are carbon credits?
A carbon credit is a financial instrument representing one ton of carbon dioxide or any equivalent greenhouse gas reduced from the atmosphere. Projects that prevent or remove greenhouse gases from the atmosphere are eligible to earn these credits. It is a tradable certificate which industrialized countries can purchase or pay to offset their carbon emissions. The fund is administered by a carbon investment fund or any organization sponsoring the carbon reduction project. It is also known as CER or certified emissions reduction.
The corporation decided to secure the needed funding through ADB's Asia Pacific Carbon Fund (APCF). Although carbon credits or CERs are usually earned after project completion, ADB's APCF advanced the payment to the municipal government amounting to 56% of the $9.31 million capital cost. In exchange, the fund secured a portion of the CERs expected to be generated.
Thus, the project was completed in 2 years, resulting in a major transformation of the city landscape. Among the more noticeable changes were the considerably cleaner air, better views, reduced temperature, and increased market values of the surrounding area.
Results
An award-winning example:
The project became one outstanding showcase of how the carbon credit financing mechanism works to bring about a better environment and a more sustainable development. It was India's first project of this nature, and is expected to be replicated throughout the country.
The project won the City to City Barcelona FAD Award 2014 given by FAD (Fostering Arts and Design) and Barcelona City Hall, which grants international recognition to cities all over the world that experience outstanding urban transformation processes. The award extolled the method of landfill closure which was described as "a paradigm for many other cities in successful management, re-naturalization and productivity."
Power generation from the methane gas alone is expected to meet the area's demand for the next 10 years. CERs to be generated over a period of 10 years is expected at $1.2 million.
Lessons
Carbon credit financing can stimulate massive efforts towards reducing greenhouse gases, and this impact can be reproduced worldwide.
ADB's APCF is unique from all other carbon funds because it advances payment for future carbon credits, which is vital to solve financing gaps especially at the most critical stage--the initial phase of implementation. APCF's long-term incentive feature encourages investors and stakeholders to act immediately in response to climate change, and need not be hampered by lack of funds.
Meet the Experts
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Nishant Bhardwaj serves as senior program manager of the Institute for Sustainable Communities (ISC) managing ISC’s work on the USAID Low Emissions Asian Development (LEAD) Program. Bhardwaj has over 16 years of professional experience in development finance, specializing in energy infrastructure and carbon finance. He is based in New Delhi.
Prior to joining ISC, Bhardwaj spent 7 years with the Asian Development Bank in Manila, where he managed the Asia Pacific Carbon Fund, a $152 million fund invested in 70 clean development mechanism projects. The fund was highly successful, supporting over 1800 MW clean energy projects in 11 countries in Asia. Previously, Bhardwaj was with IT Power Group and Development Alternatives. During his association with these organizations, he implemented and managed several significant energy and climate change policy assignments for private sector and international agencies including the World Bank, European Commission, United Nations Development Programme, Department of International Development, and the Foreign and Commonwealth Office UK.
Bhardwaj has a Master of Technology in Energy Engineering from the Indian Institute of Technology, Delhi and his Master of Science in Environmental Sciences.
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Daisy Inocentes was CDM (clean development mechanism) market analyst for ADB's Asia Pacific Carbon Fund for 5 years. She was involved in the development, negotiation, and administration of transactions involving clean development mechanism , climate change mitigation and renewable energy projects; project monitoring and reporting; due diligence review, project analysis; risk identification and mitigation; and project monitoring.
She served as the focal person coordinating among project sponsors, investors, and other departments within ADB and the UNFCCC.
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Resources
ADB's online learning materials site K-Learn featured this project in an article entitled "Carbon Credits: Improving Financing and Sustainability of a Landfill Closure Project."
The landmark project was featured in The Times of India’s online edition.
Frequently asked questions about ADB's Asia Pacific Carbon Fund
A report by the Municipal Corporation of Greater Mumbai on the landfill closure project
An article by Sustainable Cities Collective about how the project won the global sustainable city project award
Technical and scientific details about the project
Lessons from Mumbai's Solid Waste Management Project
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Disclaimer
The views expressed in these articles are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.