Reference no: EM131702028

Payatas Power. On July 1, 2000, a mountain of garbage at the Payatas landfill on the outskirts of Quezon City in the Philippines fell on the surrounding slum community killing nearly 300 people and destroying the homes of hundreds of families who foraged the dump site. In 2007, Pangea Green Energy Philippines Inc. (PGEP), a subsidiary of Italian utility company Pangea Green Energy, announced an ambitious plan to drill 33 gas wells on the landfill to harvest methane gas from the bottom of the waste pile. An initial U.S.$4 million investment built a 200-kilowatt power plant to be fueled by the harvested methane. The power generated makes the landfill self-sufficient and allows excess power to be sold to the city power grid.

However, the real payoff will come from carbon-offset credits. Methane gas is 21 times more polluting than carbon dioxide as a greenhouse gas. Capturing and burning methane releases carbon dioxide and therefore has 21 times less emission impact—a reduction that can be captured as an offset credit. PGEP will arrange trading of those carbon credits in return for a donation of an estimated U.S.$300,000 to the Quezon City community—funds that will be used to develop the local infrastructure and build schools and medical centers for the Payatas community. The landfill has now been renamed Quezon City Controlled Disposal Facility.

1) The PGEP-Payatas project is being promoted as a win-win project for all parties involved. Is that an accurate assessment? Why or why not?

2) The Payatas project is estimated to generate 100,000 carbon credits per year. At an average market value of $30 per credit (prices vary according to the source of the credit), PGEP will receive an estimated $3 million from the project. On those terms, is the $300,000 donation to the Payatas community a fair one?

3) How could Quezon City officials ensure that there is a more equitable distribution of wealth?