## Creating Opportunities for LFG Management Projects 

## in Latin America through International Carbon Financing

### Carl R. Bartone, Horacio Terraza and Francisco Grajales

Latin America and the Caribbean Region

The World Bank

Washington, DC

#### ABSTRACT

The emergence of international carbon emission credits trading has
stimulated new LFG management projects in developing countries
worldwide. Among the sources of carbon finance that give priority to LFG
methane emissions reductions are a number of funds that are managed by
the World Bank, including the Prototype Carbon Fund (PCF), the
Netherlands Clean Development Mechanism Facility (NCDMF), the Community
Development Carbon Fund (CDCF), and the Italian Carbon Fund (ICF). Prior
to the establishment of these carbon emission credits trading funds, the
Bank also financed first-generation LFG-to-energy (LFGTE) projects in
Latvia, Mexico, and Uruguay through Global Environment Facility (GEF)
grants. Second-generation LFG projects financed through carbon credits
have or are being developed in Argentina, Brazil, Latvia, South Africa,
and Vietnam. By catalyzing LFG project financing through these funds,
and by thus creating a market for specialized consultancy services in
this field, the World Bank has helped generate significant business
opportunities in developing countries for both private project
financiers and service providers.

The Bank's Latin American and Caribbean (LAC) Region quickly recognized
the importance of carbon financing for LFG projects and, in 2003, the
World Bank and a group of partners established the LFGTE Initiative for
promoting new LFG project opportunities in LAC. In the first phase of
activities, a *Handbook for the Preparation of LFGTE* *Projects* was
prepared to assist local authorities and project proponents in
developing new projects. The *Handbook* draws heavily on a large number
of LFGTE case studies that were documented and published under the
initiative, so ensuring that the Handbook focuses on best practices in
the field. Through a number of regional and national workshops, and an
LFGTE Initiative's website, these tools are being disseminated
throughout the region.

The second and final phase of the regional initiative is currently
underway, financing the preparation of pre-investment studies for ten
landfill sites in Brazil, Colombia, Mexico, Peru and Uruguay. Selection
of these ten sites was based general technical aspects as well as on
strong expressions of interest from local decision makers, including
willingness to form partnerships with private investors and operators.
The *Handbook* methodology forms the basis of the pre-investment
studies. The studies will result in full business plans, economic
assessments, innovative financing arrangements incorporating carbon
emission credits trading through the PCF and other existing carbon
funds. The World Bank will mobilize investment financing for bringing
this set of new LFG projects online. This presentation will summarize
Bank's experience in LFG project financing, the methodological approach
developed in phase one of the regional initiative, and the lessons
learned from the case studies as well as from the pre-investment work
carried out to date.