Wasted Potential: What we've learned after rating 100+ landfill gas projects

Last month QCIntel reported that brokers and carbon traders are noticing a surge of interest in landfill gas projects. They linked this to the ICVCM’s “fast-track” listing but also recalled that Calyx Global noted the benefits of such projects in 2022.

Indeed, in November 2022, we published our first blog post on landfill gas (LFG) projects. In that post, we emphasized the popularity of nature-based projects in the carbon market and along with that, the “wasted potential” when buyers overlook LFG. At that time, we noted how REDD+ projects tended to garner more attention and popularity amongst buyers, but rated worse in our assessments. By contrast, we highlighted how LFG projects have the potential to generate better ratings, but were largely underappreciated. 

Earlier this month, we published “The Calyx Global Landfill Gas Ratings Framework,” providing insight into how we evaluate the carbon integrity risks associated with LFG projects. The paper outlines our risk rating process and offers guidance to project developers seeking to achieve a higher rating within our system. Our primary consideration for this project type revolves around determining if the project is additional, with a secondary focus on the risk of over-crediting.

At this time last year, we had rated 65 LFG projects. In the year since we have almost doubled this number. Read on to discover the insights we have gained in the past year regarding the risk profile of LFG projects.

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What is a landfill gas project?

Landfills produce methane, a greenhouse gas (GHG) and a primary component of LFG, during the decomposition of organic waste. Landfill gas projects are designed to capture this methane, preventing it from being released into the atmosphere. Methane is a powerful greenhouse gas, 20 times more potent than carbon dioxide.

Methane emissions are reduced when LFG is either destroyed or used to produce electricity. In LFG projects, methane is collected in pipes and, if the methane content is high enough, the captured methane can be used to produce electricity. Projects that generate energy from the methane can then displace fossil fuel usage, further avoiding the generation of GHG emissions. 

The above image shows an LFG flare.

It is worth noting that once the methane content of the landfill gas falls below a certain level, it cannot be used to generate electricity and the gas will need to be flared instead. When the methane content falls again, there may simply not be enough methane to keep a flare alight. At this point, the gas is known as low calorific landfill gas, and it is typically vented into the atmosphere untreated.

How do LFG projects fare in Calyx’s Ratings System?

To date Calyx Global has conducted assessments on more than 125 LFG projects. These projects have received a varied range of ratings, with some achieving high scores for GHG integrity, while others have performed less adequately. However, it is worth noting that, in general, landfill gas projects overall have demonstrated better performance than most other types of projects evaluated by Calyx Global.

Figure: GHG Ratings for LFG Projects compared to all projects rated to date by Calyx Global

Our distribution of LFG project ratings has shifted in the last year. The proportion of A-rated projects decreased, and there are many more B-rated projects, with the addition of a few A+ and E-rated projects. This change is mainly due to an increase in the number of ratings for projects from the United States. Projects located in the U.S. have an inherently higher risk of non-additionality due to local and state regulations sometimes requiring the destruction of LFG. As such, they tend to receive lower ratings than those located in other countries that clearly do not have, or fully implement, regulatory requirements for the destruction of landfill gas. That said, LFG projects still tend to perform better overall. 

Why do LFG projects earn high GHG ratings from Calyx Global?

Additionality for landfill gas projects can be relatively straightforward. This is particularly true in countries where there are few or no landfill gas regulations nor incentives to reduce or utilize landfill gas. There are some instances where additionality is less clear – for example, in developed countries that enforce the processing of landfill gas with regulations, or where governments provide incentives to generate electricity from landfill gas, for example, through feed-in-tariffs.

There may be challenges in determining a baseline for emissions, and our ratings reflect an investigation on how well baseline emissions are estimated. The main issue relates to the oxidation factor applied by the project. This factor estimates how much of the methane was oxidized as it passed through the topsoil layer, and subsequently, how much of the LFG destroyed by the project cannot be counted as emission reductions. Projects are allowed to use a default factor that tends to underestimate this parameter, leading to more credits being issued than there should be (over-crediting). We look at other factors as well when analyzing a baseline, which are discussed in our LFG ratings framework.

Aside from the concerns related to baselines and non-additionality, other aspects of LFG projects tend not to incur risks to GHG integrity. For instance, measuring emissions from LFG projects is typically a straightforward process. Additionally, LFG projects are characterized by minimal to no risks of leakage, overlapping claims and non-permanence.

Rightsizing

The objective of Calyx Global’s “Rightsizing” initiative is to address one specific issue: over-crediting. This is, in fact, the key issue for most LFG projects; and since many of them have a relatively lower risk of non-additionality, and no non-permanence risk, they are excellent candidates for rightsizing. 

Most LFG projects rated by Calyx have a risk of over-crediting between 25% and 50%, with a few that exceed this amount (for reasons other than the oxidation factor). With the option of rightsizing, a buyer could potentially retire or cancel a portion of the issued credits without making associated climate claims against the credit, in order to negate the estimated overestimation of emission reductions by the project. 

For example, if a project has a risk of up to 50% over-crediting, the buyer can rightsize by purchasing one extra credit for retirement for every two that they plan to use as offsets. With proper execution, such as retiring or canceling an adequate number of credits, a C-rated project has the potential to elevate its status to an A or even an A+.

In sum…

There is much “wasted potential” in the carbon market since LFG projects get comparatively little attention. While other project types, such as nature-based projects, may have more charisma, landfill gas projects can have robust GHG integrity when it comes to carbon credit creation.

Calyx Global will soon release our first ratings for commercial-scale manure management. Keep an eye out for the ratings, as well as upcoming blogs in our Waste series to learn more about how smelly projects have the potential to shine in the carbon market. 

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