Media Center

printer friendly version

The Energy and Environmental Benefits of Methane Utilization Projects

Keynote Speech by
Dr. Bindu N. Lohani
Vice President, Finance and Administration
Asian Development Bank

At the Methane to Markets Partnership Expo

30 October 2007
Beijing, People's Republic of China

I.  Introduction

Vice Chairman Xie Zhenhua, Minister Liang Jiakun, Ambassador Randt, Mr. John Beale, distinguished guests and speakers, ladies and gentlemen: It is a great pleasure to represent the Asian Development Bank at the Methane to Markets Partnership Expo. This premier annual event is a significant one, which draws together a large number of representatives from governments and companies to exchange ideas and showcase innovations on methane utilization projects.

I would like to congratulate the National Development and Reform Commission and the U.S. Environmental Protection Agency for organizing this significant event. I am extremely honored to deliver the keynote speech this year, and I thank the hosts for their kind invitation.

I want to begin by reaffirming ADB’s continued support for the Methane to Markets Partnership. We are delighted to be one of the co-sponsors of this Expo, and to support the participation of thirty-eight representatives from ten of our developing member countries. I believe their participation will benefit all parties present here – policy makers, project developers, technology providers, research institutions, financiers, and buyers of carbon credits.

I.  Why methane projects?

Ladies and gentlemen, there is no doubt that we have to reduce global methane emissions, and that by doing so, we will promote energy security, improve the environment and reduce greenhouse gas emissions. Let me build on these points and add my view, especially in the context of the Asia Pacific region, on why capturing and utilizing methane is so important.

Today, three characteristics of developing Asia are highly relevant to this issue: population growth; rapid urbanization; and its dramatic rise in energy consumption.

Population growth and food demand

Population growth, particularly in Asia, has been startling. The world has grown from 2.5 billion people just one generation ago (1950) to over 6.5 billion today.¹ The UN Department of Economic and Social Affairs predicts that world population will reach about 8.3 billion in 2030, and more than half will live in Asia.²

Of course, this will sharply increase the demand and competition for food and water and, in fact, already has. Food production levels and efficiencies are also rising. However, in many areas, agricultural wastes go untreated, contaminating soil and water bodies. In many parts of Asia, environmental degradation has started to affect agricultural productivity and people’s health. Along with the massive consumption of agricultural products, associated methane emissions are also projected to rise. Between 2000 and 2020, methane emissions from rice production, livestock waste, and livestock ruminants, are projected to increase by 22%, 24%, and 30%, respectively.³ It is thus imperative to properly manage agricultural wastes and, wherever possible, put it to use as energy.

Urbanization and waste management

Rapid urbanization brings tremendous challenges to policy makers and city managers. In recent years, there has been a dramatic increase in the number of megacities worldwide. Twenty of the world’s 7,100 cities are now classified as megacities, and 11 of these are located in Asia.⁴ Seven Asian megacities have population of about 20 million, and some of them, such as Shanghai and Metro Manila, account for about 35% of their respective countries’ GDP.⁵ According to a recent UN report, between 2000 and 2030, Asia’s urban population will nearly double from over 1.3 billion to more than 2.6 billion. By 2030, Asia will have almost seven out of every ten urban inhabitants in the world. For China alone, it is projected that in less than a decade, more than half of its population, some 870 million people will live in urban centers.⁶

While urbanization could improve economic prosperity, it also brings social and environmental challenges, including the need to manage the voluminous solid waste and wastewater discharge from households and industries. The time to act is now, to help cities address these associated issues as they grow. Construction of proper sanitary landfills and waste water treatment facilities, with methane capture and utilization objective is a highly effective way forward.

Energy demand and implication on security and climate

Asia’s energy scenario in the next two decades could shape the world. Asia now accounts for 28% of the world’s energy-related carbon dioxide emissions, more than thrice its share three decades ago.7 The International Energy Agency estimates that under the current “business-as-usual” scenario, energy use in Asia will increase by about 90% from today’s levels by 2030.8 This will have significant implications for the region’s energy security and climate change.

The most recent report of the Intergovernmental Panel on Climate Change (IPCC) suggests that the current trajectory of global greenhouse gas emissions could increase global mean temperatures by 1.8 to 4.0 degrees Celsius by the end of this century. Many scientists warn that an increase of only 2 degrees could push the planet over a tipping point, triggering self-enforcing feedback loops that would completely alter the climate system. This would have a devastating impact on populations in Asia and around the world. Impacts include greater frequency and intensity of extreme weather events such as storms, droughts and heat waves. The adverse effects of climate change represent barriers to future growth and can potentially undermine recent economic accomplishments in Asia. Unless actions are taken now, progress achieved in meeting the Millennium Development Goals could all be reversed in the next two generations.

It is critical that the region strive to become as energy efficient as possible. A prime example is the ongoing initiative of the Chinese government and the NDRC to dramatically improve energy efficiency in China. In parallel, economies should promote the use of cleaner energy sources. The use of wind, hydro and geothermal resources is expanding. Among fossil fuels, the use of natural gas instead of the primitive fuels being used today can significantly reduce emissions of local pollutants. If supplied by efficient systems that minimize direct leakage, natural gas can help the transition towards a low-carbon economy.

And as everyone here knows, methane is over 20 times more potent as a heat-trapping gas than carbon dioxide. It is important to capture methane whenever and wherever possible, from livestock waste, municipal waste, coalmines and outdated gas transmission and distribution networks, so that more can be delivered to markets. Our mothers always say “do one good deed a day.” In this case you are doing two – one by recovering methane and combusting it into carbon dioxide, a much weaker greenhouse gas; the other by displacing dirtier fuels, such as kerosene and diesel, as well as wood chips taken from forests at a rate faster than they can regenerate.

II.  M2M Opportunities in Asia

Let me provide a quick overview of the Methane to Market opportunities in Asia. I would like to acknowledge the efforts of our friends at US EPA who helped me in getting these data. The good news is that there is great potential for all four sectors under the M2M Partnership: agriculture, landfill, coal mining and oil and gas.

Agricultural methane emissions are projected to increase significantly over the next 20 years not only as a direct result of population growth but also because of changing diet preferences – people consuming more meat and dairy products than grains and vegetables. Between 2000 and 2020, China’s livestock manure emissions will increase by 43%, while India will increase by 28%. In South and Southeast Asia, emissions will increase by 54%.⁹

Livestock manure emissions can now be captured and used as energy source through anaerobic digesters. Small-scale, ambient temperature digesters have been used in developing countries such as China, India, and Vietnam, for household energy generation. For example ADB is a financing partner of China’s “Efficient Utilization of Agricultural Wastes Project”. Aside from household biogas digesters, it uses a bundling approach to package 16 medium-scale biogas digester systems for confined livestock farms. In addition to the energy benefits, we expect that the bundled project activity will be eligible for carbon credits and generate additional revenues. The architects of this project, some of whom are here today, are thinking of expanding this scheme to over 300 medium sized biogas digesters in six provinces across China.

I strongly believe that the landfill sector in Asia has very strong potential for methane recovery and use. Landfills are the world’s third largest anthropogenic emission source, accounting for about 12% of global methane emissions.¹⁰ China accounts for about onesixth (13.3%) of global landfill methane emissions. Global methane emissions from landfills are expected to grow by 9% between 2005 and 2020.¹¹

Although waste management practices are improving, most developing countries lack regulation to control landfill methane emissions; thus the landfill sector is expected to remain a significant source of methane emissions. With the ballooning urban population in all parts of Asia, waste management must be made one of the highest priorities to prevent serious local health and environmental problems. India’s landfill methane emissions in particular are projected to increase by 20% between 2005 and 2020 while China’s will increase by 8%.¹² Assuming there is a functional carbon market by the year 2020 methane abatement measures could reduce Asia’s landfill emissions by about 40% for a break-even carbon price of $15 per ton of carbon dioxide equivalent (tCO2e), and about 50% for a price of $30/tCO2e, according to the U.S. Environmental Protection Agency.

Coal Mine Methane or “CMM” accounts for 6% of global methane emissions.¹³ China and the U.S., being among the world’s largest producers of coal, consequently emit significant volumes of CMM. Other Asian countries like Vietnam and Indonesia have some coal mines that produce substantial volumes of CMM. It is critical that methane be captured from active underground mines for safety reasons, but also it is important for the energy value as well as mitigating the climate change impact. There has been technological progress in capturing more CMM and utilizing the resulting thermal energy from the oxidation process to produce heat, electricity, and even refrigeration. The U.S. EPA estimates that with state-of-the-art technologies, emissions in the coal sector in China, South Asia, and Southeast Asia could be cut by 84% by 2020, at a price range of $15 - $30 per ton of carbon dioxide equivalent.¹⁴

Methane emissions from Natural Gas systems are projected to increase by approximately 20% (18-23%) worldwide from 2005 to 2020. Developing countries will experience the largest percentage increases in emissions, as consumption and production of natural gas are expected to increase. China, for instance, is rapidly developing its natural gas infrastructure, and using state-of-the-art technology will allow more methane to reach markets and potentially receive carbon credits under the CDM.

III.  ADB support for methane and clean energy

As a development partner in the Asia and Pacific region, ADB is working with its developing member countries to meet the challenges of environmental management and clean energy.

Since the 1980s, we have financed clean energy and environmental management projects, including renewable energy projects. Examples include: the “Shandong Hai River Basin Pollution Control Project” which involved construction of landfill sites in Shandong province in China; and, the “Renewable Energy Development Project” which supported the introduction of renewable energy technologies in India. Since 2001, we have supported a growing number of methane projects such as coalmine methane, landfills, and agricultural waste utilization projects. We are currently looking at projects to reduce leakage from natural gas transmission and distribution systems. We have seen that it is indeed technically and financially feasible and profitable to capture methane and use it as a valuable energy source.

Our Clean Energy and Environment Program aims to improve energy security in Asia, and to facilitate the region’s transition to low-carbon economies. Raising awareness about climate change and how it affects the region’s development has been important to this process. A study we undertook in 1994, the Asia Least-cost Greenhouse Gas Abatement Study, helped 12 of our developing member countries in formulating national strategies for abatement of GHG emissions. We expanded this initiative in 2001 through the Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement Program which identified concrete ideas and projects that are potentially eligible under the Clean Development Mechanism.

In recent years, we have beefed up our clean energy and environment program through several targeted initiatives with complementing objectives and mechanisms. Let me introduce just a few.

• First, the Carbon Market Initiative, or “CMI” provides up-front financing and ongoing technical support for GHG mitigation projects. The objective of the CMI is to “make projects happen” and help meet the world’s needs for energy and climate change mitigation. The CMI now has over US$150 million to co-finance Clean Development Mechanism projects in Asia. As you would imagine, many of these are methane utilization projects. I would like to take this opportunity to invite you to our CMI Forum which will be held tomorrow during lunch hours, here at China World Hotel. The CMI Forum will be a unique opportunity to interact with ADB’s specialists on how to make CDM projects happen through the services under CMI.



• Second, the Energy Efficiency Initiative is designed to expand our lending and investments in energy efficiency projects to at least $1 billion a year. As part of this Initiative, we recently established the Clean Energy Financing Partnership Facility to mobilize additional funds and share the risks of using new technologies with lenders and investors in developing countries.



• Third, to respond to the anticipated impacts of climate change in the region, we have provided support for adaptation. For instance, we have conducted risk assessments in the developing Pacific countries and identified appropriate responses. Adaptation support will be expanded across Asia through a regional technical assistance project on formulating national adaptation plans, "climate proofing" development projects, and specific adaptation investments.



• Fourth, we have launched regional knowledge hubs to support and strengthen the region’s capacity to generate innovative concepts, technology, and management practices for clean energy and the environment. We are very happy to see our knowledge hub partners from Tsinghua University’s Institute of Energy, Environment and Economy here at this event. They represent one of the leading knowledge institutions on climate change mitigation technologies.

IV.  Moving Forward through Partnerships

Progress has been made. But given the magnitude of the energy and climate challenge, much more remains to be done. Capture and utilization of methane is an important part of the solution.

I believe a three-pronged approach is needed to promote more M2M projects in Asia: first is to improve the awareness of methane reduction opportunities and its potential energy and carbon credit value; second is to facilitate and enhance access to methane capture technologies and management practices; and third is to facilitate access to capital to make projects happen. And that, ladies and gentlemen, is the challenge for us during this Expo and beyond – how can we “make projects happen”.

ADB is committed to doing its part. China, as one of the largest and fastest growing economies in Asia, is a key partner in moving forward. We are happy to collaborate further with the Chinese government and companies to address development and environmental challenges. ADB is already a partner in wastewater treatment projects in the cities of Baoding, Guiyang, Hefei, and Nanjing, and in sanitary landfill projects in Anhui, Jilin, and Shandong provinces. We are eager to do more.

We are also very happy to have collaborated with the NDRC and the Ministry of Finance to establish the China Clean Development Mechanism Fund in 2005 which aims to support clean energy and GHG mitigation activities in China. We hope to work with the government to disseminate information and raise awareness among project sponsors to further develop the CDM market in China.

On a very sad note, I would like to extend my deepest condolences and sympathy to the families and friends of Mr. Ju Kuilin and Ms. Wei Lijun of the Ministry of Finance who passed away recently in a tragic accident. Mr. Ju was the first President of the China CDM Fund after its establishment in 2005. Both Mr. Ju and Ms. Wei were staunch supporters of ADB’s efforts to provide value-added services for clean energy projects. We will continue to collaborate with the Chinese government as well as our other partners in the Asia- Pacific region to promote and demonstrate new opportunities and solutions that can address both energy and environmental issues.

Let me close by reiterating that environmental management, energy security and climate change are critical issues for Asia’s sustained growth. Capturing more methane and delivering it to markets is a very effective way of addressing these concerns. We should thus work in a concerted effort to meet this tremendous challenge. Let us demonstrate our continued support and commitment to come up with real policy and financing solutions to make Asia’s energy production and use cleaner, more efficient, and less polluting.

Let’s go make projects happen. Thank you.