64

of about 50 000-100 000), collection and flare capital costs will be approximately $630 000, increasing to $3.6 million for a 10 million-ton landfill. Annual operating costs could range from less than $100 000 to more than $200 000. Energy recovery capital costs (including gas treatment) can range from $1 000-1 300 per net kW. Direct use is typically less expensive, with pipeline construction representing the principal cost. Overall, typical electric generation costs for a complete system (gas collection and energy recovery) range from 4-7¢/kWh. These costs are based on equipment and labor costs in the United States, and may vary over a wider range in other countries. Also, in many countries, some landfills and other solidwaste disposal sites already collect their CH, and either vent or flare it (often for safety reasons). For these sites, the cost of electric generation would be lower than stated above (SAR II, 22.4.4.2; SAR III, 9.4.1).

8.2.3 Methane Recovery and/or Reduction from Wastewater CH, emissions can be virtually eliminated if wastewater and sludge are stored and treated under aerobic conditions. Options for preventing CH, production during wastewater treatment and sludge disposal include aerobic primary and secondary treatment and land treatment. Alternatively, wastewater can be treated under anaerobic conditions and the generated CH, can be captured and used as an energy source to beat the wastewater or sludge digestion tank. If additional CH, is available, it can be used as fuel or to generate electricity. As a last resort, the gas may be flared, which converts the CH, to CO2, with a much lower global warming potential.

Wastewater treatment costs are highly dependent on the technological approach employed and site-specific conditions. Capital costs of aerobic primary treatment can range from $0.15-3 million for construction, assuming a range of 0.5-10 million gallons (2 000-40 000 m3) of wastewater flow per day; annual operation and maintenance costs are estimated to range from $20 000-500 000 for these volumes. Costs of aerobic secondary treatment can be moderately high because of the energy and equipment requirements, and depend to a great extent on the daily volume of wastewater flow into the facility. Costs can range up to $10 million depending upon the technology selected and volume requirements, with the high-end handling approximately 100 million gallons (0.4 x 106 m3) per day. Finally, costs for anaerobic digestors of wastewater and flaring or utilization can range from $0.1-3 million for construction and $10 000-100 000 for operation and maintenance, assuming wastewater flows of 0.1-100 million gallons (400 to 0.4 x 106 m3) per day (SAR II, 22.4.4.2).

High-rate anaerobic processes for the treatment of liquid effluents with high organic content (e.g., sewage, food processing wastes) can help reduce uncontrolled CH, emissions and are particularly suited to the warmer climates of most developing countries. Both Brazil and India, for example, have developed extensive and successful infrastructure for these technologies, which have lower hydraulic retention times than aerobic

processes and therefore are much smaller and cheaper to build. More importantly, unlike aerobic processes, no aeration is involved and there is little electricity consumption.

For upflow anaerobic sludge blanket reactors of 4 000-10 000 m3 capacity (capable of handling a chemical oxygen demand of 20-30 kg/m3/day), capital costs have been estimated to be in the range of $1-3.5 million, with annual operating costs in the range of $1-2.7 million. At these costs, the total CH, production cost would fall in the range of $0.45–1.05/GJ, with values at the upper end for Europe and at the lower end for Brazil. Using these estimates, all of the costs would be recovered, as CH, would be produced at a price lower than that of natural gas almost anywhere in the world (SAR II, 22.4.4.2).

In many countries, future actions that reduce CH, emissions from solid-waste disposal sites and wastewater treatment facilities are likely to be undertaken for environmental and public health reasons; CH, reductions will be seen as a secondary benefit of these actions. In spite of the benefits, however, a number of barriers prevents CH, recovery and source reduction efforts described above from tapping more than a small portion of the potential, especially in non-Annex I countries. These barriers include the following (SAR II, 22.5.3):

• There is a lack of awareness of relative costs and effectiveness of alternative technical options.

While recently developed anaerobic processes are less expensive than traditional aerobic wastewater treatment, there is less experience available.

• It is less economical to recover CH, from smaller dumps and landfills.

• Many countries and regions where natural gas is not used extensively and equipment may not be readily available [e.g., Mexico City, New Delhi, Port-au-Prince (Haiti), and much of sub-Saharan Africa] have limited infrastructure and experience for CH, use.

• The existing waste disposal "system" may be an open dump or an effluent stream with no treatment, therefore no capital or operating expenses. The barriers previously noted, combined with the unhygienic conditions of the .proposed site, may make it difficult to attract investment capital for CH, recovery and use.

• Different groups are generally responsible for energy gener ation, fertilizer supply and waste management, and CH recovery and use can introduce new actors into the waste disposal process, potentially disturbing the current balance of economic and political power in the community (e.g., failure to reach an agreement has delayed the start-up of a landfill gas recovery demonstration project funded by the Global Environment Facility in Lahore, Pakistan). This problem applies to both Annex I and non-Annex I countries.

For the successful implementation of CH, control projects, these barriers need to be addressed through appropriate measures. In

65

Administrative, Institutional and Political Considerations

Administrative/

Institutional Factors -Difficult to measure results

-May shift power balances

- Widely replicable

Political Factors -Opposition from some institutions - More support than regulations

Administrative/ Institutional Factors - Limited certainty in reductions

- Requires institutional support

- Widely replicable, if institutional framework exists

Political Factors -More support than regulations

Administrative/ Institutional Factors -Certainty in reductions -Requires institutional infrastructure -Replicable if enforcement infrastructure exists and politically supported

Political Factors - Opposition from industry

Administrative/ Institutional Factors - Less certainty in reductions -Requires inst. support -Should be customized to local economic conditions

Political Factors Opposition possible

costs, while anaerobic treatment costs will be in the low to medium range.

Macro-economic consequences also are generally favourable. The waste stream is a source of raw material for the production of recycled products, compost or energy recovery-contributing to economic production and creating jobs, while providing health and air pollution benefits that can make major contributions to development for lower-income countries. Acquiring knowledge in some technologies may imply foreign exchange costs for those non-Annex I countries that do not have them. For this reason, technical assistance is an important measure from a developmental and environmental perspective for lower-income non-Annex I countries.

Equity considerations are also generally favourable, within and across countries, as well as across generations. The poor suffer more the consequences of improper waste management, and are

67

also more likely to benefit from the jobs created. Future generations will benefit insofar as today's waste stream is a considered a resource, reducing the consumption of primary raw materials. As with the technical options, the measures are not mutually exclusive. The choices involved depend on the circumstances within a given region or country. Institution building and technical assistance may be starting points for non-Annex I countries, while voluntary and regulatory initiatives may be more appropriate for Annex I countries. In countries with welldeveloped waste management infrastructures, opposition to regulatory measures could be expected from the affected industry, although U.S. experience indicates that this opposition can be surmounted. Regulatory programmes may be hardest to implement successfully in most countries, while marketbased programmes will depend both on national priority given to waste management and on international financing sources available.

9.1

Introduction

This section describes measures to control GHG emissions from more than one sector. The measures discussed include subsidies, taxes, tradable quotas and permits, and joint implementation.24

cost of a given emission abatement is minimized, all emissions should be taxed at the same rate per unit of contribution to climate change. The tax rate needed to achieve a particular emission target must be found by trial and error over a number of years.

A tax on the carbon content of fossil fuels-a carbon tax-is generally proposed in lieu of a tax on the CO2 emissions from fossil fuel use, since it has a similar impact and is much simpler to administer. A CO2 emissions tax would require every source that uses fossil fuels to monitor its emissions and to pay the corresponding taxes. A carbon tax would affect the same emissions, but would involve only the fuel producers or distributors, most of which already are involved in the collection of other energy-related taxes. In practice, existing excises on energy products complicate the design of a carbon tax that changes prices in proportion to CO2 emissions.

A carbon tax is a more efficient instrument for reducing energyrelated CO2 emissions than are taxes levied on some other bases, such as the energy content of fuels or the value of energy products (ad valorem energy tax). Model simulations for the United States indicate that for an equivalent reduction in emissions, an energy tax would cost 20-40% more than a carbon tax, and an ad valorem tax would be two to three times more costly. This is because an energy tax raises the price of all forms of energy, whether or not they contribute to CO2 emissions, whereas a carbon tax changes relative costs, and so provides incentives for fuel switching.

Analysts agree that actions to respond to climate change should include all GHGs (taking into consideration their heat-trapping potentials and atmospheric lifetimes) and carbon sinks. A carbon tax on fossil fuels (or a tax on fossil fuel CO2 emissions) could therefore be complemented by emissions taxes on non-energy sources of CO2, emissions taxes on other GHGs, and tax rebates or subsidies for carbon sequestration. The administrative challenges and difficulties of monitoring emissions (sequestration) by these diverse sources may make the use of taxes (rebates/subsidies) impractical in some or all of these situations.

"This section is based on SAR III, Chapter 11, An Economic Assessment of Policy Instruments for Combatting Climate Change (Lead Authors: B.S. Fisher, S. Barrett, P. Bohm, M. Kuroda, J.K.E. Mubazi, A. Shah and R.N. Stavins).

**The term "tradable quota" is used to describe internationally traded emission allowances, while "tradable permit" refers to domestic trading schemes. Chapter 11 of SAR III uses the term "joint implementation" to include "activities implemented jointly" and that usage is continued here.

25Technology transfer is not included since it is the subject of a Special Report.

26In most economic systems, a tax will be shifted, at least in part, to customers or to suppliers of capital, labour and other inputs in unpredictable ways.

"Strictly speaking, the term "emission charge" or "fee" would be more appropriate, because this is a payment for a right to emit; however, the term “emission tax" is adopted because it is so widely used.