CCAC Case Study: Enabling and Accelerating Sustainable Organic Waste Management in Costa Rica

Costa Rica has passed and begun implementing exemplary policies supporting emissions reductions, environmental protection, and establishment of a circular economy.

Costa Rica’s updated Nationally Determined Contribution includes targets for reducing short-lived climate pollutants – primarily black carbon and methane – with several policy instruments employing a significant focus on circular solutions. 

Costa Rica’s two primary methane-producing sectors are agriculture and waste. The waste sector – which produces emissions such as methane from rotting organic waste, and black carbon from open burning of waste – is the easiest entry point for all countries to develop circular economy solutions and reduce greenhouse gases.

Around 80% of Costa Rica’s solid waste goes to landfills. While Costa Rica’s greenhouse gas emissions from waste are relatively low – 1.86 million tonnes of carbon dioxide equivalent – current production of organic waste is unsustainable due to landmass restrictions and the closure of old dumpsites. This increases pressure for alternative sustainable approaches to waste management. 

Countries with small carbon footprints like Costa Rica also look for secondary incentives for lowering their emissions. Like many developing countries over 50% of Costa Rica’s waste is organic matter – providing huge opportunities for reduction and valorisation. Diverting organic waste from landfills prolongs their lifespan and reduces methane emissions, while also enabling value-adding activities such as composting, protein production with black soldier fly technology, and anaerobic digestion. These economic benefits are one part of the broader benefits of SLCP mitigation across agriculture, health, food security, and employment.

Several of Costa Rica’s foundational waste policies – such as the National Decarbonisation Plan, Action Plan for Integrated Waste Management, NAMA (National Appropriate Mitigation Action) 2020 on Solid Waste, and the National Plan on Composting – recognise the fundamental role of waste sorting in maximising waste valorisation, and focus policy on composting for organic waste methane mitigation.

Costa Rica’s National Decarbonisation Plan sets a goal of adapting its waste management system for maximum efficiency, including developing a strategy for better technological options to reduce methane from organic waste. This goal supported the rationale for a CCAC supported project exploring the potential for sustainable organic waste value-adding.

Challenges

Barriers to advancing the goals of Costa Rica’s decarbonisation and waste sector plans include establishing adequate stakeholder coordination, installing adequate infrastructure, increasing public awareness and participation, and having financially sustainable solutions for sorting and processing waste.

It is estimated that Costa Rican municipalities collect 78% of ordinary waste, of which 68% is sent to landfills, while the remaining 10% goes to illegal dumps. Waste collection infrastructure is poorer in rural areas and leads to increased open dumping and burning, particularly of agricultural waste. Some areas have no final waste disposal sites, with the closest facilities up to 300 km away.

Costa Rica faces limited capacity among local municipalities to identify and prepare commercially viable local waste management solutions – the processes for which can be highly complex. The cross-cutting nature of issues such as waste and climate change – which can fall under the purview of several different national ministries and poses challenges for budget allocation, capacity building and inter-ministerial coordination. 
The separation, recovery and treatment of organic waste involves coordination between institutions such as the Ministry of Health, Ministry of Environment and Energy, and Municipal Development and Advisory Institute (IFAM), along with changes in citizen behaviour.

Currently however, municipal governments and local populations are insufficiently aware of the link between waste management and large-scale environmental outcomes like climate change or establishing a circular economy and are instead focused more on day to day outcomes of waste management.

An extra challenge lies in establishing the policy directives, business case, and investment assessments required by the financial industry. As organic waste management is a relatively small and new area for financial investment, there are extra hurdles for proving the commercial viability of the sector before investors can make long-term decisions. 

Project Approach
 

The CCAC supported local implementing partner Fundación Centro de Gestión Tecnológica e Informática Industrial (CEGESTI) in their proposal for an action project that was endorsed by the government of Costa Rica. The project - “Accelerating actions to improve organic waste management and reduce methane” (the Acceleration Project) contained three main targets.

The first was to practically accelerate the development of organic waste methane mitigation actions by conducting pre-feasibility assessments for three methane mitigation projects, as well as building the capacity of stakeholders in national and local government, financial institutions, and the private sector to assess and manage potential organic waste methane projects in future. Pre-feasibility studies differ from feasibility studies in that they are designed to explore the potential of project ideas at a much earlier stage of planning and commitment.

The second target was to explore potential funding programs for similar projects through engagement with the financial sector and local and national governments as a part of reaching Costa Rica’s NDC goals. The third target was to share the lessons learned from the Acceleration Project with other stakeholders in solid waste emissions mitigation through the CCAC Waste Hub and other international forums.

Identifying Appropriate Projects

CEGESTI developed a methodology to assess 13 proposed organic waste methane mitigation projects of different scales. As seen in Table 1, the criteria included mitigation potential, abatement cost, maturity of each project, technology replicability, and project alignment with government plans.

The projects included composting plants, home composting, anaerobic digestion and landfill gas capture and had diverse mitigation potentials – from hundreds of tons of CO2 equivalent to nearly one million tons over eight to 20 years. All of the projects identified, with the exception of the landfill gas capture project, were to be operated by municipal governments.

The three projects selected were: a municipal composting plant in the canton of Coto Brus; two composting plants in penal centres of the Ministry of Justice and Peace; and a landfill gas capture and electricity generation project in the Aczarrí landfill – the largest in the country.

CEGESTI noted that the prioritisation of assessment criteria was an important determinant in which projects scored best. For the Acceleration Project, the primary goal was to accelerate methane reductions, requiring large-scale projects. Home composting projects were highly rated, but their mitigation potential was much lower than the potential of larger-scale technologies.

Pre-Feasibility Studies

The pre-feasibility studies analysed the cost-benefit ratio, market opportunities, and emissions mitigation potential of the three selected projects. These elements were assessed against local contextual factors to identifying the most appropriate models for the economic and social factors of the Costa Rican context. The pre-feasibility studies also included recommendations for developing possible implementation plans (where appropriate) for each project.

The economic feasibility components looked at the main costs of investment and operation, direct income, and perceived benefits such as operational savings and the social price of carbon. The indirect benefits captured in the social cost of carbon and the dignity and reintegration of incarcerated prisoners – emerged as an important variable for two of the three projects.

The studies encouraged broader consideration of the total cost-benefit scenarios for projects at the penal centres. For example, prisoners would receive reduced sentences, as well as skills training and work experience for their participation in the composting project. Not only would this reduce the daily financial burden of incarceration carried by the state, but it would also reduce recidivism. The report noted this project was profitable if seed funding was granted on a no-return basis, and that the project could be replicated in other communities.  

The pre-feasibility studies highlighted the relationship between commercial viability for products of the three projects and existing regulatory frameworks. For example, compost products are currently not regulated for quality and origin, which undermines the profitability of local smaller scale operations. The commercial viability of energy generation from captured landfill gas is also limited by the lack of a feed-in tariff mechanism to allow the Costa Rican Electricity Institute (ICE) to purchase electricity from private producers, as from insufficient mechanisms to connect with local and international carbon markets. This raises the investment barrier for these technologies and makes them uncompetitive in current markets.

That all three case study projects required broader cost-benefit considerations to become financially sustainable indicates the importance of integrated government planning and coordination, both horizontally and vertically. As organic waste management on a commercial scale is still a relatively underdeveloped area, many countries have gaps in legislation, regulation, and coordination which limit the potential for private sector investment.

Benefit / Outcomes

Each of the three projects benefitted from the expanded data, stakeholder engagement, and awareness of feasibility needs generated by the study.

The more detailed planning for the composting plant in Coto Brus project led municipal politicians to attract financial support from the Japanese International Cooperation Agency to expand infrastructure and public awareness activities. Empresas Berthier – the company who run the Azcarri landfill now seeks to enter into an agreement with ICE (the Costa Rican Electricity Institute) to sell them the excess electricity they would not need. The Ministry of Justice and Peace were also satisfied with the incarceration facility project and expressed they would like to take the project to other facilities, particularly women's and youth prisons.

Government stakeholders highlighted several immediate benefits beyond the potential emissions reductions, financial benefits, and social benefits. Primarily these related to new lines of communication between ministries as well as with local governments, and new areas for consideration with financial institutions. The project identified coordinating bodies such as IFAM as suitably placed to implement such directives, facilitate more training to assist project development, and conduct feasibility studies, while noting that IFAM has a difficult task overseeing all 84 municipalities.

The Acceleration Project also showed that municipalities are better placed to acquire and use financial support than government ministries as their budgets are exterior to the national budget and subject to different management requirements.

While Costa Rica’s Green Protocol for Banking (2019) establishes its guidelines to improve the supply of banking products and services for projects with socio-environmental benefits, a few financial institutions cover projects linked to solid waste management and methane emissions reduction.

The Acceleration Project identified that specific government policy directives to channel environmental funding towards waste methane mitigation projects would be influential in addressing this funding gap. It also identified that the national government could better channel existing municipal funding for environmental management projects to the organic waste methane mitigation by providing clear requirements for municipalities to invest in this sector.

As one of Costa Rica’s main actions to reduce methane emissions as a Global Methane Pledge (GMP) signatory, organic waste management has the potential to attract financial resources to help Costa Rica achieve its GMP commitments. There are already international institutions dedicated to structuring and financing methane mitigation projects by both private and municipal entities.

Additional interviews and workshops with financial sector representatives the Acceleration Project found that the banking sector does not yet understand the composting business and therefore access to sources of financing is limited. This was partly due to a lack of government directives mandating investment in the sector, as had been applied to other areas such as electric vehicles.

Results and Lessons Learned

The outcomes of the Acceleration Project showed overall that increased proof of concept –through pre-feasibility studies and better identification of financing sources –does advance the implementation of methane gas mitigation projects. The success of the Acceleration Project led the Government of Costa Rica to request additional support to expand organic waste methane mitigation to other cities.

The project also elevated awareness of organic waste methane mitigation potentials among stakeholders, including municipalities, national government ministries, and financial institutions. For government stakeholders this meant creating a foundation of data and proof of concept for projects which could be presented for approval, which had formerly been at the stage of ideas. This has enabled more concrete discussion and assessment of organic waste methane mitigation projects.

The Acceleration Project also showed that government policy, even when relatively well established, must clearly direct financial institutions and municipalities to prioritise investment in certain environmental projects. It also showed that in the absence of these investments, government leadership in establishing large-scale case study projects can lower the barriers to entry for other projects by demonstrating commercial viability and compliance with regulatory frameworks.