About
Methane is responsible for nearly half of net global warming to date. However, finance for methane emissions reduction accounts for less than 2% of international climate finance. A ten-fold increase is necessary to meet the more than USD 110 billion needed to reduce methane emissions on a global scale.
Fifty-one billion tons of greenhouse gases reach the atmosphere annually, of which three billion tons of CO2e come from methane escaping from water, including hydropower reservoirs. Although methane capture technologies are available to harvest methane from water, the lack of proper financing mechanisms prevents them from scaling. Considering the climate crisis, a financial solution that tackles methane abatement amidst an increase in hydropower generation is vital.
INNOVATION
Reservoir Methane Capture Mechanism is the first structure to mainstream and commercialize methane capture technologies on hydropower plants. The mechanism proposes a methane capture-as-service approach that displaces ownership from economic benefits, enabling hydropower operators to adopt the systems without incurring the risks associated with new technology outside their business scope. The instrument provides short-term, stable, and tangible revenues using methane captured from hydropower reservoirs to generate carbon credits and fuel biogas generators. As a result, it reduces emissions from a previously unaddressed carbon source.
IMPACT
Hydropower in Brazil is the primary source of electricity. Although regarded as clean energy with low-carbon emissions, hydropower generation emits methane that can now be captured and utilized. The mechanism helps hydropower companies become even more sustainable and meet their emissions targets. The pilot will be comprised of five sets of methane and biogas plants. At scale, the instrument will avoid 6.8 million tons of CO2e emissions per year, equivalent to 1.5 million automobiles or 3.7 million cattle heads.
DESIGN
The instrument is centered around a special purpose vehicle (SPV), managed by Open Hydro, which owns both the methane capture and biogas plants and absorbs potential risks. Bluemethane will develop the methane capture plant, a local developer will be responsible for the biogas plant, and the hydropower plant operator will provide water usage rights.
The plant captures methane through a closed-circuit hydro cyclone-like tank. This captured methane is then fed into a biogas plant, generating energy to be sold in the Brazilian market under the distributed energy framework. Revenues based on carbon credits sales will rely on the proper measurement and monitoring of these assets by a third-party verifier.
Details
Invest
Type | Role of capital | Amount |
Grant | Proof-of-Concept | USD 6.5M |
Concessional Capital | Pilot | USD 27M |
Commercial Debt | Pilot | USD 27M |
News & Events
Accelerating climate finance — Lab leads innovation in finance with 7 new deals from methane to affordable housing to climate-smart shrimp
March 3, 2022LONDON – The Global Innovation Lab for Climate Finance (the Lab) has selected seven new climate finance ideas for its 2022 acceleration program. The Lab will develop cutting-edge financial concepts that tackle barriers to investment and unlock sustainable private financing in emerging economies. Pilots are planned for Brazil, India, Kenya, South Africa, and Southeast Asia. “The 2022 Lab […]
Lab acelera mecanismo de captação e comercialização de metano em hidrelétricas brasileiras
March 3, 2022LONDRES – O Laboratório Global de Inovação em Finanças Climáticas (Lab), que em 2021 mobilizou mais de US$ 800 milhões para o enfrentamento da crise do clima em economias emergentes, vai acelerar um novo instrumento financeiro brasileiro neste ano: o Mecanismo de Captura de Reserva de Metano – Reservoir Methane Capture Mechanism. A ideia é […]
Contact
Proponents
Louise Parlons Bentata, Bluemethane
Maria Ubierna, Open Hydro