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Climate finance through Clean Development Mechanism in Waste Management

Financial constraints become barriers to improve MSW management services, especially in lower-middle-income countries. The polluter pays principle is not easy to enforce in the countries where the population has never paid the actual cost of public services aimed at mitigating environmental damage. Having said that, the question persists, that who will pay for improving waste management?

Kartik Kapoor, WtERT Germany

The decomposition of waste in open dumps and landfills generates landfill gas (LFG), a major component of which is methane, a powerful greenhouse gas (GHG). Further, the leakages of waste in the environment also contribute directly and indirectly to greenhouse gases and have a multifold environmental impact. 

Opportunely, a new financing instrument became available on 16 February 2005: the clean development mechanism (CDM). One of the three "flexible mechanisms” of the Kyoto Protocol, it allows developing cities to obtain financial resources and state-of-the-art technology from industrialized countries to mitigate their GHG emissions. Incineration, Anaerobic treatment, Bio-gasification and Landfill gas recovery are the main types of waste treatment that can mitigate GHG emissions and could be promoted in developing cities through CDM projects1.

 As of 2020, there are 1012 projects registered on waste handling and disposal. To register under CDM following steps are followed

Project Design: Project participant prepares a project design document, making use of approved emissions baseline and monitoring methodology.

National approval: The Designated National Authority (DNA) of a country (also called Party) involved in a proposed CDM project activity shall approve the project.

Validation: Project design document is validated against CDM modalities by an accredited designated operational entity, private third-party certifier.

Registration: Registration is the formal acceptance by the Executive Board of a validated project as a CDM project activity.
Monitoring: Project participant responsible, monitors actual emissions according to approved methodology.

Verification: Designated operational entity verifies that emission reductions took place, in the amount claimed, according to the approved monitoring plan and then certification on emission reduction are issued.

The certification could be traded. If a project has acquired the credits, they could sell it to parties who are willing to purchase. For example in 2020 The German Environment Agency has published a tender to purchase 431,306 certified emission reductions (CERs) from CDM projects to voluntarily offset emissions. Agreements can also be made between parties,  like in one such project on integrated waste to energy in New Delhi, India approved under CDM has processed 2050 tons per day (TPD) of municipal solid waste (MSW) to generate about 20.9 MW of power, the project estimates to mitigate 308,262 tons of CO2 equivalent per annum at a fee of 51000 USD from Australian partners. However, a critique remains that significant numbers of CDM-approved emission baselines have been found, upon review, to result in over-crediting2

As of 1 January 2020, accounting for emissions and emission reductions will be governed by the Paris Agreement and the future of CDM is under discussion now, there is a risk that Kyoto Parties decide to halt the registration of new CDM activities by 2020 or shortly thereafter. On the other hand, it is worth noting that the CDM Executive Board is engaged in promoting the CDM as a tool for other uses (other than offsetting), including assisting countries in achieving their Nationally Determined Contributions (NDCs)3. There are lobbying groups for CDM to keep registering projects and issuing carbon credits until countries strike a deal on new carbon market rules. The earliest that can happen is November 2021, at Cop26 climate talks in Glasgow, UK4

Globally, a humongous amount of waste is generated, which is un-managed and there is a financial gap to realize the improvement in the waste management sector. Climate finance mechanism like CDM undoubtedly remains one of the important elements to fund the waste management projects in developing countries in coming times. 

You can read more about CDM here:
1) A Guide to Clean Development Mechanism Projects Related to Municipal Solid Waste Management
2) The future of the Clean Development Mechanism under a new regime of higher climate ambition –
3) What is the future of the CDM? – Climate Focus 
4) Fate of UN-led carbon market to be decided behind closed doors -

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