Assessment of Landfill Gas Potential: El Valle Landfill Cuenca, Ecuador

Prepared for: Municipalidad de Cuenca, Ecuador

Prepared under: U.S. Environmental Protection Agency

Landfill Methane Outreach Program Contract: EP-W-06-22 TO 006

By: Eastern Research Group, Inc.

and Carbon Trade, Ltd

June 25, 2007

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Status: Final Date: June 25, 2007

TABLE OF CONTENTS 1. INTRODUCTION..........................................................................................................................................................1 2. PROJECT LIMITATIONS...........................................................................................................................................2 3. LANDFILL GAS............................................................................................................................................................2 4. LANDFILL DATA.........................................................................................................................................................3

4.1. SITE LOCATION AND OPERATION............................................................................................................................3 4.2. WASTE INPUTS ........................................................................................................................................................4

5. WASTE COMPOSITION.............................................................................................................................................5 6. RECYCLING ACTIVITIES.........................................................................................................................................5 7. SITE CONSTRUCTION...............................................................................................................................................5

7.1. GENERAL OBSERVATIONS.......................................................................................................................................6 7.2. ENVIRONMENTAL DATA ..........................................................................................................................................6 7.3. WASTE DEPTH ........................................................................................................................................................6 7.4. WASTE PLACEMENT................................................................................................................................................6 7.5. BASE LINING...........................................................................................................................................................7 7.6. CAPPING LAYER ......................................................................................................................................................7

8. GAS AND LEACHATE ................................................................................................................................................7 8.1. LEACHATE ..............................................................................................................................................................7 8.2. GAS .........................................................................................................................................................................8

9. GAS MODELING..........................................................................................................................................................8 9.1. EMISSION MODELING .............................................................................................................................................8 9.2. MODEL PARAMETERS .............................................................................................................................................9

10. BASELINE RESULTS OF GAS MODEL............................................................................................................10 11. ANTICIPATED COLLECTION EFFICIENCY .................................................................................................12

11.1. AVAILABLE AREA..................................................................................................................................................12 11.2. OXYGEN INGRESS..................................................................................................................................................12

12. CALCULATED GAS AVAILABILITY ...............................................................................................................13 13. OPTIONS FOR UTILIZATION............................................................................................................................14

13.1. THERMAL ENERGY................................................................................................................................................14 13.2. ELECTRICAL ENERGY ...........................................................................................................................................15

14. EMISSIONS TRADING.........................................................................................................................................16 15. OUTLINE SPECIFICATION OF A GAS EXTRACTION SYSTEM ...............................................................18 16. FINANCE MODEL.................................................................................................................................................20 17. CONCLUSIONS......................................................................................................................................................22 REFERENCES ......................................................................................................................................................................23

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LIST OF TABLES & FIGURES TABLE 1 - WASTE INPUT 1996-2007 ..........................................................................................................................................4 TABLE 2 - WASTE COMPOSITION................................................................................................................................................5 TABLE 3 - AVERAGE RAINFALL (MM) (SOURCE: WWW.WORLDCLIMATE.COM)...........................................................................6 TABLE 4 - MODEL INPUT PARAMETERS ....................................................................................................................................10 TABLE 5 - LANDFILL GAS MODEL RESULTS .............................................................................................................................11 TABLE 6 - ESTIMATED AVAILABLE THERMAL ENERGY............................................................................................................14 TABLE 7 - TYPICAL COST OF ELECTRICAL GENERATOR EQUIPMENT .......................................................................................15 TABLE 8 - ESTIMATED AVAILABLE EMISSION REDUCTIONS.....................................................................................................17 TABLE 9 - INDICATIVE BILL OF QUANTITIES FOR GAS EXTRACTION SYSTEM ..........................................................................19 TABLE 10 - INDICATIVE CONSTRUCTION COST ESTIMATE FOR GAS EXTRACTION AND FLARING (PLATFORM 1) .....................20 TABLE 11 - INDICATIVE CAPITAL COST ESTIMATE FOR ELECTRICAL ENERGY PRODUCTION ...................................................20 TABLE 12 - INDICATIVE OPERATION COST ESTIMATE FOR ELECTRICAL ENERGY PRODUCTION...............................................20 TABLE 13 - FINANCIAL MODEL ASSUMPTIONS.........................................................................................................................21 TABLE 14 - FINANCIAL MODEL REVENUE ASSUMPTIONS.........................................................................................................21 TABLE 15 - FINANCIAL MODEL RESULTS - ELECTRICAL ENERGY PRODUCTION.......................................................................21 TABLE 16 - FINANCIAL MODEL RESULTS - FLARING ONLY......................................................................................................21 FIGURE 1 - BASELINE LANDFILL GAS EMISSIONS (BOTH AREAS OF THE SITE)..........................................................................11 FIGURE 2 - PASSIVE VENT GAS SAMPLING ...............................................................................................................................32 FIGURE 3 - TYPICAL SLOPE PROFILE ........................................................................................................................................33 FIGURE 4 - SLOPE FAILURE AND WASTE BREAKOUT..................................................................................................................34 FIGURE 5 - LEACHATE COLLECTION AND PUMPING STATION ....................................................................................................35 FIGURE 6 - POSSIBLE LEACHATE BREAKOUT POINT...................................................................................................................36 FIGURE 7 - UPPER SURFACE......................................................................................................................................................37 FIGURE 8 - OLD DISPOSAL SITE (BACKGROUND) ......................................................................................................................38 EQUATION 1 - FIRST ORDER DECAY MODEL ..............................................................................................................................9 EQUATION 2 - BASELINE GHG EMISSIONS .................................................................................................................................9 EQUATION 3 - AVAILABLE EMISSION REDUCTIONS ..................................................................................................................16 EQUATION 4 - EMISSION REDUCTIONS FROM FOSSIL FUEL OFFSET..........................................................................................17 APENDICES Appendix I ................................................................................................................................................................... Drawings Appendix II............................................................................................................................Financial Model Results Example Appendix III .............................................................................................................................................. Gas Analysis Record Appendix IV .....................................................................................................................................................................Photos

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EXECUTIVE SUMMARY The El Valle landfill is owned and operated by the Municipal Sanitation Company of Cuenca, Ecuador (Empresa Municipal de Aseo de Cuenca – EMAC). The landfill accepts domestic and commercial waste from Cuenca and the surrounding area. The site accepted approximately 1.3 million tonnes of domestic, industrial, and inert waste during the period 1980 to 2001. The site closed in 2001 and waste was diverted to EMAC’s new site at Pichacay. Under contract to the United States Environmental Protection Agency (U.S. EPA), Carbon Trade Ltd. completed an initial assessment of the El Valle landfill’s potential to generate methane. Analysis of the data provided by EMAC indicates that the site could be currently emitting 590 m3/hr of landfill gas, containing approximately 50% methane, but that this volume continues to decrease into the future. The site currently has limited gas control measures in the form of four (4) perimeter passive gas wells that have been drilled into the waste. Typically, construction techniques and materials used at the site mean that not all of this landfill gas will be available for collection and utilization. It was noted that the site has a leachate treatment system that collected leachate at a drain at the base of the site. In the absence of local industry and with a relatively low quantity of energy available from the landfill gas (as is typical of smaller closed landfill sites), the opportunity for development of landfill gas to energy projects using El Valle’s remaining landfill gas is limited. However, a small gas collection and flaring project may be technically feasible. Gas wells in addition to the existing four wells would be required to be drilled into the waste to allow for the addition of a gas collection and flaring system for environmental control, which may qualify for emission reduction credits. 1. INTRODUCTION The U.S. EPA is working in conjunction with the Ministerio del Ambiente, Republica del Ecuador on a cooperative program to promote the beneficial use of landfill methane, while also reducing landfill methane emissions to the atmosphere. Some of the key activities of this cooperative program include the following:

(1) identifying suitable landfills with sufficient quantities of high quality gas that can be used to meet local energy needs,

(2) conducting a workshop to train landfill owners, municipal officials, and local

organizations on the ways to develop landfill methane projects, and

(3) conducting a workshop to bring together landfill owners, project developers, and financial institutions to help promote the development of landfill methane projects in Ecuador. To support these activities, the U.S. EPA has contracted with two companies: Eastern Research Group, Inc. (ERG) and Carbon Trade, Ltd. (Carbon Trade).

An important part of identifying landfills that are good candidates for energy projects involves conducting site visits to landfills that have been identified by El Ministerio del Ambiente del Ecuador. Several site visits were completed between October 23 and 27, 2006. ERG and Carbon Trade collected information on landfill design, waste volume, waste composition and gas composition to be used to assess the gas potential of the landfill. Information was also collected on the local energy users that could potentially be interested in using the energy produced by the landfill.

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This assessment report summarizes the findings of the site visit to El Valle Landfill in Cuenca, Ecuador. This report includes a brief assessment of the gas potential of the landfill and examines the opportunities that may exist for using the landfill gas to meet the energy needs of local utilities or industries. This report also includes technical information that will be helpful to potential project developers as they assess the potential of a landfill methane energy project on the site. The site visit included non-invasive analysis of the landfill gas, as well as a “walk-over” inspection of the leachate control measures, containment technology, topography, and general operation of the landfill. Physical work on the site was limited to collection of gas samples and measuring leachate depths where possible. 2. PROJECT LIMITATIONS The information and predictions contained within this assessment report are based on the data provided by the site owners and operators. Neither the U.S. EPA nor its contractors can take responsibility for the accuracy of this data. Measurements, assessments, and predictions presented in this report are based on the data and physical conditions of the landfill observed at the time of the site visit. Note that landfill conditions will vary with changes in waste input, management practices, engineering practices, and environmental conditions (particularly rainfall and temperature). Therefore, the quantity and quality of landfill gas extracted from the landfill site in the future may vary from the values predicted in this report, which are based on conditions observed during the site visit. The El Valle landfill site does not have a current gas collection, flaring or utilization system. The estimated capital, operational costs, and return on investment resulting from installing such a system at the El Valle site are based on current, typical, costs in Latin America, but no warranty is given or implied on the accuracy of these data. While all due care and attention has been given to development of this report, potential investors in landfill gas utilization projects at El Valle landfill are advised to satisfy themselves as to the accuracy of the data and predictions contained in this report. This report has been prepared for the U.S.EPA Methane to Markets Partnership and is public information. 3. LANDFILL GAS Landfills produce biogas (normally called landfill gas) as organic materials decompose under anaerobic (without oxygen) conditions. Landfill gas is composed of approximately equal parts methane and carbon dioxide, with a smaller percentage of oxygen, nitrogen, and water vapor, as well as trace concentrations of volatile organic compounds (VOCs) and hazardous air pollutants (HAPs). Both of the two primary constituents of landfill gas (methane and carbon dioxide) are considered to be greenhouse gases (GHG), which contribute to global warming. However, the Intergovernmental Panel on Climate Change (IPCC) does not consider the carbon dioxide specifically present in raw landfill gas to be a GHG. IPCC considers landfill as to be “biogenic” and thus, part of the natural carbon cycle. Because IPCC does not consider landfill gas to be a GHG, only the methane content of the gas is included in calculations of atmospheric emissions.

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Methane is a more potent GHG than carbon dioxide (CO2), with a global warming potential over 20 times that of CO2. Therefore, the capture and combustion of methane (transforming it to carbon dioxide and water) in a flare, an engine generator or other device, results in a substantial net reduction of GHG emissions. Additional benefits beyond GHG emission reductions include the potential for improvement in local air quality through the destruction of HAPs and VOCs through landfill gas combustion. There are two natural pathways by which landfill gas can leave a landfill: by migration into the adjacent subsurface and by venting through the landfill cover system. In both cases, without capture and control, the landfill gas (containing methane) will ultimately reach the atmosphere. The volume and rate of methane emissions from a landfill are a function of the total quantity of organic material buried in the landfill, the material’s age and moisture content, compaction techniques, temperature, and waste type and particle size. While the methane emission rate will decrease after a landfill is closed (as the organic fraction is depleted), a landfill will typically continue to emit methane for many (20 or more) years after its closure. A common method for controlling landfill gas emissions is to install a landfill gas collection system that extracts landfill gas under the influence of a small vacuum. Landfill gas control systems are typically equipped with a combustion (or other treatment) device designed to destroy methane, VOCs, and HAPs prior to their emission to the atmosphere. Good quality landfill gas (high methane content with low oxygen and nitrogen levels) can be utilized as a fuel to offset the use of conventional fossil fuels or other fuel types. The heating value typically ranges from 15 megajoules (MJ) to 18 MJ per cubic meter, which is approximately one half the heating value of natural gas. Existing and potential uses of landfill gas generally fall into one of the following categories: electrical generation, direct use for heating/boiler fuel (medium-Btu), upgrade to high Btu gas, and other uses such as vehicle fuel. This study focuses on evaluation of a potential electrical generation, direct heating or flaring projects at the El Valle landfill. 4. LANDFILL DATA Prior to the site visits, the landfill site operator, EMAC, was requested to provide information on the waste inputs, engineering details, and environmental conditions of the landfill site. Data provided by the operator has been edited into a standard format. The following data were obtained for the El Valle landfill. Data were updated during the site visits.

4.1. Site Location and Operation The El Valle landfill is located approximately 20 kilometers (km) to the southwest of City of Cuenca in the province of Santa Ana. The area is generally rural and has little industrial development. Access to the site is good with the public road located to the upper side of the landfill. The site occupies a total area of 21 hectares (Ha) of which 14 Ha is the property of the operator EMAC and the other seven Ha is in multiple private ownership.

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4.2. Waste Inputs The site started to accept waste in 1981 and was completed in 2001. The waste was deposited in two basic phases, the older site to the west of the site operated from 1980 until approximately 1995 and has now been returned to agricultural grazing land, and the recent phase to the east covering an area of two Ha was completed in 2001—this is the only area to have a final capping layer. Data provided by the site indicate that there are approximately 1.35 million tonnes of waste in place as of 2001, of which approximately 832,000 tonnes have been placed in the older dump site and approximately 523,000 tonnes in the more recent capped area. There is no weighbridge operated on the site; therefore, the quantity of waste may be an estimate based on the number and capacity of trucks arriving at the site. EMAC estimates that 85.3% of the waste is of domestic origin, with 8% inert and 6.7% industrial waste. Annual waste input to the current phase of operation is shown in Table 1.

Table 1 - Waste Input 1996-2007

Year Industrial (6.7%)

Domestic (85.3%)

Inert (8%)

Total Tonnes

1980 2848 36264 3401 42513 1981 2917 37135 3483 43534 1982 2987 38025 3566 44578 1983 3059 38945 3652 45656 1984 3131 39858 3738 46727 1985 3202 40767 3823 47793 1986 3741 47627 4467 55835 1987 3822 48659 4564 57045 1988 3903 49686 4660 58249 1989 3983 50710 4756 59449 1990 4063 51728 4851 60642 1991 4401 56036 5255 65693

1992 4485 57105 5356 66946 1993 4569 58166 5455 68190 1994 4652 59220 5554 69426 1995 4734 60265 5652 70651 1996 5212 66350 6223 77784 1997 5299 67460 6327 79085 1998 5385 68558 6430 80373 1999 5470 69644 6532 81646 2000 5555 70717 6632 82904 2001 3377 42989 4032 50397 Total Disposal Old Area 55762 709931 66582 832276 Total Disposal New Area 35030 445983 41827 522840 Total 90793 1155914 108409 1355116

1. Disposal area 1 2. Disposal area 2

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5. WASTE COMPOSITION The Municipality also provided information in Table 3 on the general composition of the waste being deposited in the El Valle landfill.

Table 2 - Waste Composition

Waste Category Composition

(%) Food 66% Paper and Cardboard 12.5% Plastics 4.6% Metal 1.5% Glass 1.7% Grass clippings, manure and other ‘green’ rapidly degradables - Garden waste - Wood (lumber and tree trunks) 0.8% Rubber, tires, textiles 0.3% Special organic waste including hazardous household waste and large objects (e.g.; refrigerators and furniture)

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Other inert waste including rubble and construction wastes 12.6% Comparison with other published information on the composition of waste in Ecuador5 shows that the percentage of organic waste at the El Valle landfill is extremely high. More than 66% of the waste can be categorized as rapidly decaying and over 13% of waste categorized as moderately or slowly decaying. 6. RECYCLING ACTIVITIES A small percentage of the organic fraction of the waste stream, mainly food and green waste, is collected from markets and municipal gardens. This waste is not disposed of in the landfill site but is converted to compost in a worm or “lombriculture” project at the El Valle landfill. This process is aerobic and therefore does not generate any methane. The lombriculture project was still operating during the site visit. The lombriculture project accepts approximately 6 tonnes of waste per week from the public agricultural markets in Cuenca to produce bagged compost. There are no longer any other recycling operations on the El Valle site. 7. SITE CONSTRUCTION A site visit was completed on October 24, 2006 to examine the engineering of the landfill site and obtain monitoring data where available. The following items describe the pertinent features of the landfill site.

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7.1. General Observations The El Valle landfill site is constructed on a hillside of the Santa Ana region of Cuenca to the southwest of the city. The site was constructed in two sandstone canyons. The local strata is described a “relatively impermeable” and approved for the “natural” collection of leachate. There is little local industry and most of the surrounding area is agricultural. However, there are a number of residential developments to the northwest edge of the older disposal site, as well as buildings buildings associated with the site operations to the immediate south. The composting plant, which is located within a short distance from the newer disposal area, consists of several open vermiculture rows and two small office or storage buildings. The landfill is now entirely grassed over and the original dump area has been divided into a number of fields separated by fences.

7.2. Environmental Data The site is at a considerably higher altitude than the City of Cuenca at 2530m (8300 feet). Barometric pressure readings on the site noted 740 mB, equivalent to 2730 m under standard atmospheric conditions. Average rainfall data are available for the City of Cuenca, as shown in Table 3.

Table 3 - Average Rainfall (mm) (source: www.worldclimate.com)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 62.2 84.8 99.0 115.2 64.0 50.7 40.3 36.2 59.8 96.2 96.0 78.4 887.2mm

Based upon the average annual rainfall data, the site is categorized as slightly dry, thus reducing the rate of waste degradation. However, it is noted that the rainfall pattern indicates that there is no distinct dry season and therefore the moisture content of the waste, and the capping layer, may be consistently elevated. Further discussion of the effect of moisture content on the generation of landfill gas is given in section 10 of this report.

7.3. Waste Depth There are no drawings of the original canyon although the plans of the site dated 1995 show the approximate position of the drainage along the base of the canyons. The site operators indicate that the current waste is an average of 15 m.

7.4. Waste Placement Waste has been placed in the site in distinct terraces, each of which is reported to be 5m deep. Compaction and placement of the waste was undertaken with a tracked bulldozer and the general form of the landfill is constructed with excavators.

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Layers of waste, approximately 0.60m to 0.80m, were compacted in place and these were capped with daily cover consisting of building rubble and road construction waste. The waste layers were built to a depth of 5.0m before the next layer was constructed, leaving a stepped profile to the front edge of the site. No detailed information has been provided for the construction of the older dump site; but a similar profile, although with apparently lower depth layers, exists.

7.5. Base Lining There is no engineered lining to the site. The operator states that the natural terrain was classed as low permeability.

7.6. Capping Layer The operators of El Valle state that daily cover was used on the landfill only in the last five (5) years of operation of the site. No information is available that describes the final capping of the site. Visual examination of the current capping layer indicates that the thickness may be variable. There are a number of locations on the lower sections of the site, particularly adjacent to the leachate treatment plant, where there is breakout of waste. This may be as a result of a number of causes, but the location of the breakout is likely to be a result of a combination of slope instability, erosion caused by surface water movement or inadequate compaction of the capping layer. Almost all of the site is now covered with a good growth of vegetation. 8. GAS AND LEACHATE

8.1. Leachate Leachate is the liquor produced by contamination of water within the landfill site by a wide range of solutes resulting from the disposal and decomposition of waste (including organic and in-organic components) in landfills. The water content results from drainage of moisture from the original waste, water resulting from degradation, and surface water (rainfall) entering the site. Leachate is highly contaminative and usually has a very low concentration of dissolved oxygen. There is no formal leachate collection system, however, leachate is collected from the base of the original canyons where they emerge from the waste mass. The leachate drains discharge into a storage tank system at the base of the site adjacent to the composting facility. The storage tanks do not perform any leachate treatment and a series of pumps is used to return leachate to the site. There is significant evidence of leachate breakout from the lower slopes of the newer area of the landfill site. For example, the grass has died back over distinct areas covering the site. It is not known if these breakout points are associated with the recycling of leachate, however, it is reasonable to interpret that the bulk of the waste mass is saturated. No facilities existed for the measurement of leachate depth in the waste. Access to the four landfill gas wells was not available during the site visit and therefore, while gas samples could be taken, the wells could not be dipped for leachate depth.

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We therefore conclude, that given the evidence of leachate breakout and the high organic content of the waste in the El Valle site, that leachate levels may have significant effects on the ability to collect landfill gas from the site.

8.2. Gas Landfill gas is currently vented from the site through four passive vents. These vents were drilled into the waste to the west side of the newer areas of the site and have been terminated with steel tubes protected by modified oil drums. Each of the four passive vents was (at one time) fitted with a burner tip that could be manually ignited. The burner tip included reduction of the steel pipes to approximately one half inch (1/2”) diameter. None of the passive vents was burning at the time of the site visit. Measurements of gas concentration were taken all four passive vents. All four vents showed levels of methane that are typical of landfill gas. The maximum recorded methane concentration was 58.8% v/v. The lowest methane concentration measured was 29.7% v/v. No significant concentrations of either hydrogen sulfide or carbon monoxide were found in any of the samples. Flow rate measurement in the small diameter vent tubes was not possible, but none of the vents had a detectable gas velocity or gas pressure. In addition, the diameter of the vents prevented the measurement of leachate depth within the passive vents. However, with the correct tools it would be possible to open the vents for depth measurements. It is possible that the vent boreholes could be substantially full of leachate. While it is stressed that this is not confirmed, this can result in the type of measurements taken at the site, namely high methane concentrations, but with very limited gas flow rates. No other evidence of gas escaping from the site was found. The ground surface was saturated at the time of the visit due to continuous rainfall and this moisture would serve to reduce the permeability of the capping layer. Complete data gas analysis data is attached to this report. 9. GAS MODELING

9.1. Emission Modeling The estimation of emission indicates the potential total landfill gas emissions from the site. This calculation should not be confused with the recoverable landfill gas, which could be available for utilization. Recoverable landfill gas is estimated in the following section of this report. The baseline for the estimated amount of methane generated by the site has been calculated with the use of two gas models that are based on first order decay mathematics: the Carbon Trade model and the U.S. EPA Mexico LFG Model landfill gas model. Both the proprietary Carbon Trade model and the U.S. EPA Mexico LFG Model are based on the following equation (Eqn.1);

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Equation 1 - First Order Decay Model )(

00 %1 lag

vol

ttkn ekMLQ −−∑= Where: Q total quantity of landfill gas generated (normal cubic meters) n total number of years modeled t time in years since the waste was deposited tlag estimated lag time between deposition of waste and generation of methane. %vol estimated volumetric percentage of methane in landfill gas L0 estimated volume of methane generated per tonne of solid waste k estimated rate of decay of organic waste M mass of waste in place at year t (tones) When the amount of landfill gas being generated by the site has been theoretically determined, the following equation (Eqn. 2) can be used to estimate the effective number of tonnes of carbon dioxide equivalent being emitted by the site. This factor of 211 is used to estimate the greenhouse gas potential, in tonnes of carbon dioxide equivalent, resulting from the emission of methane. Equation 2 - Baseline GHG Emissions

4.221% CHvolCO QT

eqρ×××=

Where: TCO2eq. Total tonnes of carbon dioxide equivalent generated %vol Estimated volumetric percentage of methane in landfill gas. Q Total quantity of landfill gas from Eqn. 1 (Normal cubic meters) ρCH4 Density of Methane = 0.0007168 Tonnes / cubic meter

9.2. Model Parameters The value of the model parameters Lo and k depend on the available organic fraction, the temperature, and moisture content of the waste. For this analysis, three potential sets of values were developed for these variables based on three references. One set of values for these variables was developed from the recommendations of SCS Engineers, Inc. through the development of the U.S. EPA Mexico LFG Model3. A second set of values for these variables comes from the recommendations of the current IPCC Guidelines for National Greenhouse Gas Inventories4 based on the waste composition data provided by the Municipality of Cuenca and available meteorological information for Cuenca. The third set of values for these variables comes from the Carbon Trade Model. Table 4 shows three sets of model parameters used in the gas models to develop three sets of comparative emission estimates. It should be noted that the U.S. EPA Mexico LFG Model recommendation and IPCC Guideline recommendations have been used in the U.S. EPA Mexico LFG

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Model. The Carbon Trade model also includes a gas production smoothing function, as well as classifying four different k values for domestic, industrial, commercial, and inert wastes.

Table 4 - Model Input Parameters

Parameter Source Value Rationale

CTL 84 m3 High Organics U.S. EPA Mexico 84 m3 Medium Rainfall Lo

(Ultimate methane generation potential)

IPCC Guidelines 70.8 m3 Calculated from available carbon content

CTL Average 0.0806 Calibrated to similar sites

U.S. EPA Mexico 0.08 Medium rainfall K (Methane generation rate constant)

IPCC Guidelines 0.05 IPCC Guidelines

CTL 50% v/v U.S. EPA Mexico 50% v/v

%vol (Methane percentage volume) IPCC Guidelines 50% v/v

Accepted norm for average methane concentration in landfill gas under extraction conditions.

10. BASELINE RESULTS OF GAS MODEL Comparison of the Carbon Trade model and U.S. EPA Mexico LFG Model (run with both the Mexico model and IPCC values for k and Lo) are presented in Figure 1 and the expected gas production rates for the next 20 years are presented in Table 6. The different gas models have a moderate agreement for the current rate of landfill gas generation at the El Valle landfill. The EPA Mexico LFG Model indicates a significantly higher generation of landfill gas than the other two models. The models estimate that the site should currently be producing approximately 590 m3/hr of landfill gas at 50% methane and that this emission rate will decrease in the coming years in the absence of further waste input.

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El Valle Landfill, Cuenca

0

200

400

600

800

1000

1200

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Time

Gas

Pro

duct

ion

Rate

m3/

hr

CTL Model LMOP Mexico Model IPCC Model Figure 1 - Baseline Landfill Gas Emissions (Both areas of the site)

Table 5 - Landfill Gas Model Results

Year CTL Model M3/hr

LMOP Mexico Model m3/hr

IPCC Model m3/hr

Average m3/hr @ 50% CH4

2007 474 737 559 590 2008 434 681 532 549 2009 399 628 506 511 2010 368 580 481 477 2011 341 535 458 445 2012 317 494 436 416 2013 295 456 414 389 2014 276 421 394 364 2015 259 389 375 341 2016 243 359 357 320 2017 229 331 339 300 2018 216 306 323 281 2019 204 282 307 264 2020 193 261 292 249 2021 183 241 278 234 2022 174 222 264 220 2023 165 205 251 207 2024 157 189 239 195 2025 150 175 227 184 2026 143 161 216 173 2027 136 149 206 164

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11. ANTICIPATED COLLECTION EFFICIENCY The estimate of landfill gas generation by the site does not imply that all the gas can be collected for combustion or flaring. Many engineering issues, plus access to the entire waste mass at the El Valle landfill site, must be taken into account to assess the actual amount of gas that could be collected from the site.

11.1. Available Area Because the El Valle landfill is now closed and waste has not been deposited in the site since 2001, the majority of settlement of the waste will have occurred. The site is therefore suitable for the installation of a subsurface (buried) gas collection system. However, it should be noted that the depth of the capping layer has not been confirmed and that subsurface pipes should not be installed in the waste mass, but only within the depth of the capping layer. The top surface of the newer area of the El Valle landfill is relatively flat and the side slopes are stepped as each of the layers of the site developed. It should therefore be possible to access most of the area for installation of gas wells and pipes. However, the stability of the side slopes should be confirmed prior to movement of heavy drilling equipment and this area may be more suitable for the installation of “drive-in” type gas wells, which typically have a lower collection efficiency. The older area of the site, in private ownership, and now fenced off and utilized as agricultural land, is considered to be entirely inaccessible for the installation of gas collection systems. However, since the waste in this area is at least 12 years old, the amount of gas available is not likely to be economic to recover. The evidence of high leachate levels within the El Valle site indicates that the radius of influence (the area that individual gas wells can exert suction on) may be limited at this site. In addition, the very high organic loading of the site will result in a waste mass with lower permeability than is typical. We therefore consider that the gas collection system efficiency will be lower than normal—50% efficiency is estimated. The amount of methane collected could increase by using a leachate pumping system installed within the gas bore holes. This has proven to be effective on many saturated landfill sites, however, satisfactory disposal of the leachate collected in this way must be considered as an environmental priority. With the addition of leachate pumping systems, the gas collection efficiency could rise to a more typical value of 70%.

11.2. Oxygen Ingress Landfill gas that is generated within the waste mass results in a positive pressure within the waste. If the landfill gas is uncontrolled, this pressure drives the gas out of the waste mass by the route of least resistance. Commonly, this results in landfill gas escaping from the surface of the site. But the pressure can also cause the gas to move laterally. For example, gas can move through porous geology or disturbed soils caused by excavations if the capping layer offers a higher resistance. In extreme cases, landfill gas has been known to travel many hundreds of meters along pipes or ducts laid close to the waste. The difference between the site pressure and atmospheric pressure is the driving force of gas migration by this means.

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Landfill gas collection systems operate by exerting a small vacuum on the pressure gradient waste mass (typically between 5 mB and 50 mB) and thus inducing a pressure gradient. The pressure gradient causes the landfill gas to flow toward the gas wells in preference to its normal migration routes. However, the presence of the vacuum within the waste can also cause air (containing oxygen) to migrate into the site particularly if the sealing of the base or capping layer is poor. Ingress of oxygen into the waste mass alters the anaerobic conditions in the waste to aerobic, thereby reducing the amount of methane generated. To avoid pulling oxygen into the landfill, landfill gas is extracted from some distance below the surface of the site. Higher quality sealing of the capping layer will allow extraction from nearer the surface of the site. On the El Valle site, the observed properties and the reported thickness of the capping layer indicate that permeability is reasonably low. In addition, the good quality of topsoil has allowed the growth of vegetation, which will retain moisture within the soil and hence reduce permeability. With the prediction of high leachate levels within the waste, extraction of gas should occur as near the surface as possible. However, it is strongly recommended that this assumption is confirmed through a more detailed feasibility study, including the use of gas pumping trials at El Valle. 12. CALCULATED GAS AVAILABILITY Based on the site data provided and the site visit, Carbon Trade estimates that approximately 90% of the newer area of the landfill site would be available for installation of a gas collection system. An adjustment factor based on the available area and sealing conditions on the current phase of the landfill can be calculated as follows:

Availability Factor = 90% (Available Area) x 70% (Collection Efficiency), provided that the leachate level is low or that leachate pumps are fitted.

The available gas is therefore 63% of the baseline estimated gas generation from the newer area of the site. It is presumed that the older area of the site, which is currently in private ownership and under agricultural grazing, is not available for gas extraction. Applying the availability factor to the data in Table 5 gives an estimated available gas flow shown in Table 6. Landfill methane has a calorific value of approximately 35.5 MJ/m3, however, because the landfill gas contains approximately 50% combustible and 50% non-combustible compound, the resultant thermal energy contained in landfill gas is 17.75 MJ/m3. Table 6 also shows the estimated available thermal energy.

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Table 6 - Estimated Available Thermal Energy

Year

Average m3/hr available @ 50% CH4

Thermal Energy MJ/hr

Thermal Energy mmBTU/hr

Thermal Energy kW Thermal

2007 207 3670.3 3.476 1019.5 2008 191 3396.0 3.216 943.3 2009 177 3147.9 2.981 874.4 2010 165 2922.7 2.768 811.9 2011 153 2717.6 2.574 754.9 2012 143 2530.2 2.396 702.8 2013 133 2358.5 2.234 655.1 2014 124 2200.9 2.084 611.4 2015 116 2055.8 1.947 571.1 2016 108 1922.0 1.820 533.9 2017 101 1798.5 1.703 499.6 2018 95 1684.2 1.595 467.8 2019 89 1578.3 1.495 438.4 2020 83 1480.1 1.402 411.1 2021 78 1388.9 1.315 385.8 2022 73 1304.1 1.235 362.2 2023 69 1225.2 1.160 340.3 2024 65 1151.7 1.091 319.9 2025 61 1083.2 1.026 300.9 2026 57 1019.3 0.965 283.1 2027 54 959.6 0.909 266.6

13. OPTIONS FOR UTILIZATION A number of options exist for the utilization of landfill gas for industrial and agricultural processes, as well as the generation of electrical energy. The methane content of landfill gas can also be separated from the other components and used to supplement natural gas supplies or, in certain circumstance, compressed for use as vehicle fuel. In addition, because methane from solid waste disposal on land is one of the major sources of greenhouse gas emissions, its capture and oxidation to carbon dioxide results in an environmental benefit. This benefit may be measured and traded under a number of different emission reduction trading schemes worldwide.

13.1. Thermal Energy Landfill gas has been used in a number of industrial or agricultural processes that require thermal energy input. In circumstances where there is a direct use for heat within a reasonable distance from the landfill site, a potential exists for low cost utilization of the landfill gas. Landfill gas has been used for projects including firing brick kilns or other ceramic manufacture, plus heating of greenhouses and other industrial space. It should be noted that the combustion products of landfill gas, without

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pretreatment, may contain compounds that are hazardous to health, including dioxins and furans. Therefore, direct use of landfill gas in agricultural processes must be carefully controlled. The current estimated thermal energy available from the El Valle landfill indicates that the economics of transporting the landfill gas significant distances from the landfill is not likely to be economical. However, it was noted that the Cuenca Municipality operates a separate collection scheme for clinical waste. This waste is currently incinerated at a local hospital away from the landfill. In circumstances where a centralization of waste disposal is made at the El Valle landfill, the current estimated flow of landfill gas the site would be a significant source of energy to fuel an autoclave.

13.2. Electrical Energy Electrical energy can be produced with a variety of technologies. The majority of landfill gas to energy projects use spark ignition engines of 1.0 megawatt (MW) capacity, while very large projects have used conventional gas turbines producing upwards of 10 MW. Recently developed microturbine technology, typically in the 50 kilowatt (kW) to 250 kW range, have been used on a number of smaller landfill gas projects because the new technology offers low emissions and low maintenance costs. However, microturbines also have lower thermal efficiency than spark ignition engines. Table 7 shows a typical cost comparison for microturbines and spark ignition engines.

Table 7 - Typical Cost of Electrical Generator Equipment

Spark Ignition Engine Micros Turbine Typical electrical capacity 1000 kW 100 kW Minimum electrical capacity 300 kW 30 kW Typical efficiency 38% net electrical 30% net electrical Minimum fuel gas quality 35% v/v at 100 mB 45% v/v at 7 Bar Capital cost per kW From $520 USD / kW

(@minimum 500kW)1 From $7,200 kW (@30kW) to $2,500 USD / kW (@400kW) 1

Operating Cost per kWh $0.013 USD / kWh2 $0.014 USD / kWh2

NOx emissions <500ppm <15ppm 1 Capital cost of the engines / turbine only. Not including fuel supply equipment. 2 Operating cost of the engines / turbine only. Not including fuel supply system.

From the predicted gas availability at the El Valle landfill site, it is unlikely that there will be sufficient gas to economically operate a spark ignition engine—particularly in view of the reducing availability of methane. The use of a microturbine may be an option for the site because the capacity of this equipment will allow the installation of multiple units that can be individually moved to other projects as the gas yield declines. The capital cost of installation of microturbines is very dependant on the capacity of the project. The installation of a single turbine results in a high cost per kW but the cost per kW falls rapidly with increasing capacity.

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Many microturbine systems are equipped with exhaust gas heat recovery (co-generation). While microturbines provide a lower electrical efficiency than spark ignition engines, they will produce additional heat as a result. With lower exhaust emissions, microturbines can also be used to provide carbon dioxide gas to agricultural production. Due to contaminants within landfill gas, it is inadvisable to use landfill gas for agricultural production of food. However, other non-food products such as cut flowers or tree seedlings can benefit from the increased carbon dioxide levels provided. 14. EMISSIONS TRADING It is now possible to account for, and transfer, the reduction in greenhouse gas emissions resulting from activities that reduce or capture any of the six main greenhouse gases. Because methane from solid waste disposal on land is one of the major sources of greenhouse gas emissions, its capture and oxidation to carbon dioxide results in an environmental benefit. This benefit may be measured and traded under a number of different emission reduction trading schemes world wide. In order to qualify for trading of emission reductions, normally a project must be able to prove that there is no requirement under law, or mandated by waste disposal licenses or other regulations, to control the emission of the particular greenhouse gas relating to the project. This appears to be the case at the El Valle landfill site. The calculation of emission reductions is defined by methodologies relating to the particular trading mechanisms. As part of all methodologies, it must be proven that normal business practice does not alter the emissions of greenhouse gases. Examination of the El Valle landfill site indicates that some of the methane generated by the site has been (periodically) combusted in passive landfill gas flares on the current site boundary. In assessing the amount of emission reductions available from the site, a small adjustment factor could reasonably be applied. In the absence of evidence of the effectiveness of the passive flaring of landfill gas, an adjustment factor of 10% is reasonable. The following Equation 3 estimates the number of emission reductions available in each year from the El Valle landfill as a result of flaring the landfill gas only (without recovery of energy). Equation 3 - Available Emission Reductions

4.221%. CHAvailvolCOAvail QAFT

eqρ××××=

Where: TAvailCO2eq. Total emission reductions available in Tonnes of Carbon Dioxide Equivalent. %vol Volumetric percentage of methane in landfill gas. QAvail Total quantity of landfill gas available. AF Adjustment Factor (10% in this case) ρCH4 Density of Methane = 0.0007168 Tonnes / cubic meter

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While flaring is the normal method for thermal oxidation of landfill gas, any process which prevents the emission of methane to the atmosphere would also qualify for tradable emission reductions. The carbon dioxide created by the thermal oxidation of methane is considered to be "short cycle" and the product of the normal carbon cycle; and therefore, does not need to be accounted for under the current methodologies. If electrical energy production is also included, and that power is either exported to the local distribution network or used to displace other usage of electricity, it is possible to gain additional emission reductions as a result of the displacement of fossil fuel use. To calculate the number of emission reductions available in each year from the export of electricity, the following equation is used: Equation 4 - Emission Reductions from Fossil Fuel Offset

ortedexpgridCO MWhEFTeq

×=.2

Where: TCO2eq. Total emission reduction in Tonnes of Carbon Dioxide Equivalent EFgrid The grid emission factor for Ecuador = 0.66531 tCO2/MWh 2. MWhexported Total number of mega-watt hours exported to the grid. On the basis of the calculated availability of landfill gas at the El Valle landfill, and assuming that all the methane is used for energy generation and/or flaring, the possible number of emission reductions generated is shown in Table 8. Emission reductions produced by the generation of electricity result from the displacement of the use of fossil fuels and are therefore additional to flaring activities. The estimates shown in Table 8 are based on the assumption that an enclosed flare is used to ensure a high combustion efficiency.

Table 8 - Estimated Available Emission Reductions

Year CO2 Equivalent Tonnes Flaring Activities$

Additional CO2 Equivalent Tonnes from Electricity Generation*

2007 12224 1768 2008 11334 1636 2009 10503 1516 2010 9731 1408 2011 9079 1309 2012 8426 1219 2013 7833 1136 2014 7299 1060 2015 6824 990 2016 6409 926 2017 5993 866 2018 5578 811 2019 5222 760 2020 4925 713

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Table 8 - Estimated Available Emission Reductions (Continued)

Year CO2 Equivalent Tonnes Flaring Activities$

Additional CO2 Equivalent Tonnes from Electricity Generation*

2021 4628 669 2022 4332 628 2023 4094 590 2024 3798 555 2025 3620 522 2026 3382 491 2027 3204 462

$Based on the assumption that leachate levels in the waste are high. * Provided that the installed capacity of electricity generating equipment exceeds gas availability at all times.

15. OUTLINE SPECIFICATION OF A GAS EXTRACTION SYSTEM In order to collect the landfill gas from the El Valle landfill, a gas collection system must be installed. The following general description outlines the equipment and operations required for this purpose. The four existing passive gas vents can be converted into active gas wells. Landfill gas will be collected from the site through a number of vertical gas wells that are drilled into the waste mass. As the site is now closed it is not practical to install horizontal collection systems. The technology used for the gas wells will vary depending on the locations. However, permanent gas wells are normally drilled, using heavy duty drilling equipment, into the waste mass to within 2 m of the base of the site. The gas wells are lined with MDPE well tube, which is perforated below the surface. The top section of the well tube is solid (non-perforated) and is sealed with hydrated sodium bentonite. In locations that are not suitable for permanent installation, for example in areas where access for heavy drilling equipment is restricted, temporary gas wells will be installed. The temporary gas wells consist of either steel perforated tubes that are driven into the site to a depth of approximately 10m. It is important that all wells have a solid (non-perforated) section from the surface to a depth of several meters and that this is sealed to prevent air ingress. The actual length of solid pipe should be varied based on the depth of leachate found during drilling operations. Each gas well will be equipped with a flow control valve and with facilities to collect gas samples and measure flow rates and vacuum. The gas wells will be connected to a non-perforated MDPE pipe network through facilities that will allow the operator to control the flow of landfill gas and record primary constituents of the gas as well as pressure and temperature at each location. Dewatering facilities are located in the pipe network to allow liquid condensates to be returned to the waste mass through a liquid seal, or via pumps arranged such that no oxygen can enter the collection system even in the event of failure. Final dewatering of the landfill gas will be located prior to entry to the flare or utilization equipment. Landfill gas will be drawn out of the collection pipe network by the vacuum created by a centrifugal gas pump. The same gas pump is used to pressurize the landfill gas prior to injection into the flare stack or delivery to power generation equipment.

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Two different types of flare stack exist for thermal oxidation of landfill gas. Larger installation will normally utilize an enclosed flare, in which the landfill gas is combusted in a temperature controlled chamber. These flares have very high efficiency of oxidation of methane and also destruction of the hazardous air pollutants found in landfill gas. Simpler, "elevated" or "candle stick" flares burn gas in an open flame and do not achieve such high combustion efficiency, but offer considerably lower capital costs. In order to maximize the destruction of methane, it is necessary to use an enclosed flare, which will offer around 99% efficiency compared to candle stick flare efficiency of around 50%. However, with the predicted gas availability at the El Valle landfill, it may be preferable to use lower cost equipment, particularly in cases where most of the landfill gas is delivered to power generation or other utilization equipment. An outline layout of a gas collection system for El Valle is shown in Appendix I, Drawing 1. For the purposes of this design the Radius of Influence (ROI) of the gas wells is assumed to be approximately the same as the depth of the wells (in this case 18 m to 20 m). This assumption must be confirmed through the use of a gas pumping trial. The gas collection pipe networks at El Valle could be buried with the capping layers. This avoids the possibility of damage from vehicles or vandalism. However, it is usually necessary to have greater gradients in buried pipe network to maximize condensate drainage and avoid future maintenance that may require the pipes to be excavated. Table 9 shows an indicative bill of quantities for the new area of El Valle.

Table 9 - Indicative Bill of Quantities for Gas Extraction System

Description Unit Qty Mobilization of Drill Rig Ea 1 Setup at location Ea 40 Drill 300 mm Diameter holes 0-10 m M 400 Drill 300 mm Diameter holes 10-30 m M 400 90 mm plain well screen M 200 90 mm slotted well screen M 1000 End Caps Ea 40 Gravel M 1200 Bentonite Seals Ea. 40 63 mm wellheads Ea 40 125 mm Surface laid pipe line M 1100 200 mm Surface laid Pipe M 900

Table 10 shows an indicative capital cost for the construction of a gas collection system. These data represent the average costs of similar systems in Latin America and must be confirmed by obtaining quotations from specialized contractors and equipment suppliers.

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Table 10 - Indicative Construction Cost Estimate for Gas Extraction and Flaring (Platform 1)

Item Indicative Cost Drilling of 18 gas wells $130,400 Installation of Pipe Network $231,500 High Temperature 300 m3/hr Flare Stack $290,0001 (Alternative) Candle Stick 100 m3/hr Flare Stack $156,0002 General Civil Engineering $11,700 Spares and Tools $10,700 General Installation Costs $10,000 Engineering Design and Management $115,000 Contingency $75,000 Total indicative Construction Cost (with High Temperature Flare)

$874,300

Total indicative Construction Cost (with Candle Stick Flare)

$740,300

1. Including provision of portable gas analysis, flow rate and data logging. 2. Use of a candlestick flare will result in a reduction in the number of emission credits

available. 16. FINANCE MODEL An initial finance model has been developed for the municipality of Cuenca using the inputs listed in Tables 11, 12, 13, and 14.

Table 11 - Indicative Capital Cost Estimate for Electrical Energy Production

Capital Costs Gas Collection System (Table 11) $740,300 350 kW Reciprocating Engine system (average cost Table 8) plus installation costs.

$290,000

Total Capital Cost $1,030,300

Table 12 - Indicative Operation Cost Estimate for Electrical Energy Production

Operating Costs Labor $10,000 Insurance $10,000 Gas System Maintenance 5% of Initial cost per Annum Imported Electricity $0.12 kWh imported Generating Equipment Operating Cost

$0.013 / kWh exported

Miscellaneous Costs $2 per Operating Hour Annual Inflation 3%

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Table 13 - Financial Model Assumptions

Tax, Depreciation and Duration and General Assumptions

Equipment Depreciation 10% per year Emission Reduction Contract 10 Years Energy Contract 20 Year Tax Before Tax Flare system availability 95% Engine / Turbine System availability

85%

Table 14 - Financial Model Revenue Assumptions

Revenue Electricity Tariff $0.095 / kWh

Emission Reduction Credits $5 USD, $10 USD and $15 USD Installed Capacity (Flare) 300 m3/hr Installed Capacity (Generation) 350 kW from 2008 to 2028 Waste Heat Nil Value

Two financial model scenarios have been run, both with and without power generation. An example of the output of the financial model can be seen in Appendix II and a summary in Tables 15 and 16. In both cases, the Internal Rate of Return and Net Present Value (based on a 15% discount rate, not including return of initial investment) have been modeled.

Table 15 - Financial Model Results - Electrical Energy Production Capital Cost: $1,030,300 Including Engine

Emission Reduction Value $5 / Tonne

Emission Reduction Value $10/Tonne

Emission Reduction Value $15/Tonne

IRR Negative 14.9% 33.3% NPV (@15% $215,025 $1,027,039 $1,839,026

Table 16 - Financial Model Results - Flaring Only Capital Cost: $874,300 Flaring Only

Emission Reduction Value : $5 / Tonne

Emission Reduction Value: $10/Tonne

Emission Reduction Value $15/Tonne

IRR Negative Negative Negative NPV (@15% Negative Negative $211,026 The financial model also has been used to determine the necessary value of emission reductions required to obtain an IRR of 20% (before tax and interest) using the same input variables. This indicated that, for a flaring only project, it would be necessary to obtain a net price of $22.40 USD per tonne of carbon dioxide equivalent.

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17. CONCLUSIONS The analysis documented in this assessment report indicates that a small scale power generation project may be feasible at the El Valle landfill site, but is limited. The altitude of the site may reduce the efficiency of landfill gas engines and this must be accounted for in future developments. The economics of power generation at the site rely heavily on the supported tariff for renewable energy in Ecuador. There is not likely to be any significant, direct, local purchaser of power. However, the proximity of the City of Cuenca may offer the opportunity to sell power directly to the consumer, if it were possible to use the grid network for distribution of this power. Despite the relatively small number of emission reductions available at the El Valle landfill, there is a possibility that these can be traded internationally. With the growth in climate change investment programs, options may develop that are more financially attractive for the development of smaller methane sources. It should be noted that the development of a landfill gas project at El Valle may be contractually linked to the new Pichacay landfill site in Cuenca. This would enable sharing the development costs of both flaring and energy production for the site, making a more financially attractive prospect. In addition, if trials indicate that the site is not saturated with leachate, or landfill gas systems include the installation of leachate extraction technology, the amount of landfill gas recoverable from the site is likely to increase.

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REFERENCES 1. Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories. Paris:

Intergovernmental Panel on Climate Change, United Nations Environment Programme, Organization for Economic Co-Operation and Development, International Energy Agency.

2. Emission Factor - Ecuadorian Electricity Grid, (2003 – 2005), Cordelim, Ministry of

Environment, Ecuador. 3. U.S. EPA Mexico Landfill Gas Model Users Manual

http://www.epa.gov/landfill/int/UsersManualMexico_LFG_modelV1_5.pdf 4. 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 5, Chapter 3.

Paris: Intergovernmental Panel on Climate Change, United Nations Environment Programme, Organization for Economic Co-Operation and Development, International Energy Agency.

5. ANÁLISIS SECTORIAL DE RESIDUOS SÓLIDOS ECUADOR, Organización

Panamericana de la Salud, Organización Mundial de Salud, 2002

APPENDIX I

DRAWINGS

APPENDIX II

FINANCIAL MODEL EXAMPLE

Carbon Trade LtdInitial Finance Model

Operating Income 3/10/2007

El Valle(in U.S. dollars)

Year Ending 31-Dec-08 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 31-Dec-24 31-Dec-25 31-Dec-26 31-Dec-27Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

General InformationContracted Tonnes CO2e Flaring 130,278 16,284 15,163 14,137 13,196 12,330 11,532 10,795 10,113 9,481 8,895 8,351 0 0 0 0 0 0 0 0 0Contracted Tonnes CO2e Offset 2,111 1,966 1,833 1,711 1,599 1,495 1,400 1,311 1,229 1,153 1,083 0 0 0 0 0 0 0 0 0Contracted kWh 350 330 320 300 300 300 280 260 250 250 230 230 230 210 171 161 152 143 135 127Flare System Availability 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0%Engine System Availability 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0%Flare Equipment Operating Hours 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322 8,322Engine Equipment Operating Hours 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446 7,446

Prices:Emission Reduction Price (US$/Tonne) 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00kWh Price (US$/MWh) 10 10 10 10 11 11 11 12 12 12 13 13 14 14 14 15 15 16 16 17

RevenuesSale of CERs - Contract 1,304,574 164,639 151,634 141,374 131,959 123,299 115,317 107,946 101,128 94,812 88,953 83,512 0 0 0 0 0 0 0 0 0Sale of kWh's 260,610 245,718 238,272 223,380 223,380 223,380 208,488 193,596 186,150 186,150 171,258 171,258 171,258 156,366 127,201 119,764 112,819 106,329 100,262 94,586Total Revenues 1,304,574 425,249 397,352 379,646 355,339 346,679 338,697 316,434 294,724 280,962 275,103 254,770 171,258 171,258 156,366 127,201 119,764 112,819 106,329 100,262 94,586

CostsGas System Maintenance 1,174,638 43,715 45,026 46,377 47,769 49,202 50,678 52,198 53,764 55,377 57,038 58,749 60,512 62,327 64,197 66,123 68,107 70,150 72,254 74,422 76,655Engine System Maintenance 33,879 31,943 30,975 29,039 29,039 29,039 27,103 25,167 24,200 24,200 22,264 22,264 22,264 20,328 16,536 15,569 14,666 13,823 13,034 12,296Labour 268,704 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 13,842 14,258 14,685 15,126 15,580 16,047 16,528 17,024 17,535Electricity 134,169 4,993 5,143 5,297 5,456 5,620 5,788 5,962 6,141 6,325 6,515 6,710 6,912 7,119 7,333 7,553 7,779 8,013 8,253 8,501 8,756Insurance 254,444 10,000 10,300 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 13,842 14,258 14,685 15,126 15,580 16,047 16,528Miscellaneous 447,231 16,644 17,143 17,658 18,187 18,733 19,295 19,874 20,470 21,084 21,717 22,368 23,039 23,730 24,442 25,176 25,931 26,709 27,510 28,335 29,185

2,279,186 119,232 119,856 120,917 121,679 124,458 127,321 128,333 129,434 131,594 134,816 136,198 139,616 143,137 144,827 144,771 147,651 150,710 153,948 157,363 160,955

Operating Income beforeDepreciation, Interest & Tax (1,030,300) 306,017 277,496 258,730 233,660 222,221 211,376 188,101 165,290 149,368 140,288 118,572 31,642 28,121 11,539 (17,570) (27,887) (37,892) (47,619) (57,101) (66,369)

Initial Capital Cost (1,030,300)

IRR 19.9%

Total Operating Cost

APPENDIX III

GAS MONITORING RECORD

Recorded By: AL & CS

Site Monitoring Record

Site Name: El Valle, Cuenca Record Date: 24th October 2006 Weather: Cloud and Rain Atmos. Pressure mB: 740

ID CH4 (%) CO2 (%) O2 (%) H2S (ppm) CO (ppm) mB Depth Time GMT Note No. 030 40 28.2 4.3 23 0 - 20m 22:42:34 1 031 41 28.4 2.7 18 0 - 18m 22:43:37 2 032 58.8 38.3 0.4 12 55 - 12m 22:45:30 3 033 29.7 25.5 5.4 9 0 - 8m 22:48:32 4

Note No Note 1 Passive Vent 1 2 Passive Vent 2 3 Passive Vent 3 4 Passive Vent 4

Note – all depths reported by operator, not measured

APPENDIX IV

PHOTOS

Figure 2 - Passive Vent Gas Sampling

Figure 3 - Typical Slope Profile

Figure 4 - Slope failure and waste breakout

Figure 5 - Leachate collection and pumping station

Figure 6 - Possible leachate breakout point

Figure 7 - Upper surface

Figure 8 - Old Disposal Site (background)