Assessing the Economic Viability and Environmental Benefits of Treating Organic Waste Using Anaerobic Digestion

The report analyzes the Oko Oba Abattoir's anaerobic digestion (AD) facility, finding that while the current 'business-as-usual' (BAU) model is economically viable with a 6% IRR, scaling the facility to achieve a 100% fuel switch from charcoal to biogas would increase the IRR to 14%. The study highlights that high upfront capital expenditures (CAPEX) are a primary barrier to private investment, suggesting that grants, low-interest loans, and investment tax credits could improve project economics. Environmentally, the project reduces methane emissions by up to 726 MT/year and improves local air quality by avoiding PM2.5 emissions from charcoal burning. The facility is currently non-operational due to storm damage and requires approximately $21,400 for repairs.

• The business-as-usual (BAU) scenario, which processes 330 kg/day of feedstock and replaces approximately 20% of charcoal fuel used for animal skin cleaning, is economically viable with a project internal rate of return (IRR) of approximately 6% and a payback period of about 12 years.
• Scaling the facility to achieve a 100% fuel switch from charcoal to biogas would increase the project IRR to 14%, though it requires an additional CAPEX investment of approximately $129,000 (₦ 45,798,000) during the expansion year.
• Further capacity expansion to co-digest 2 tons per day of animal waste and 200 kg per day of food waste for domestic cooking (Scenario 2) maintains an IRR of 14% but reduces the payback period to 10.5 years, which is 8 months shorter than the 100% fuel switch scenario.
• High upfront costs are a significant barrier to private sector investment; for the BAU scenario, the upfront CAPEX investment was ₦ 43,650,000 (approximately $103,000).
• Financial and policy mechanisms can significantly improve project viability: a grant covering 50% of upfront CAPEX in the BAU scenario more than doubles the equity IRR, and an investment tax credit (ITC) covering 30% of CAPEX would increase the IRR by 2 percentage points for scenarios 1 and 2.
• The project provides substantial environmental and health benefits, with methane mitigation ranging from 108 MT/year in the BAU scenario up to 724-726 MT/year in the most expanded scenario, and PM2.5 avoidance increasing from 0.03 MT/year (BAU) to 0.15 MT/year (full fuel switch).
• The facility is currently non-operational due to storm damage and requires ₦ 36 million (approximately $21,400 as of November 2024) for repairs, including a new storage balloon and roofing.

APA

Wu, Y., & Ayandele, E. (2024). Assessing the Economic Viability and Environmental Benefits of Treating Organic Waste Using Anaerobic Digestion. RMI. https://rmiwastemapprod.blob.core.windows.net/cms/assets/RMI_Oko_Oba_Biogas_Analysis_3cf3086de6.pdf

Chicago

Wu, Yuchen, and Ebun Ayandele. Assessing the Economic Viability and Environmental Benefits of Treating Organic Waste Using Anaerobic Digestion. RMI, 2024. https://rmiwastemapprod.blob.core.windows.net/cms/assets/RMI_Oko_Oba_Biogas_Analysis_3cf3086de6.pdf.

Wikipedia

{{cite report |last1=Wu |first1=Yuchen |last2=Ayandele |first2=Ebun |title=Assessing the Economic Viability and Environmental Benefits of Treating Organic Waste Using Anaerobic Digestion |publisher=RMI |date=December 2024 |url=https://rmiwastemapprod.blob.core.windows.net/cms/assets/RMI_Oko_Oba_Biogas_Analysis_3cf3086de6.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wu2024assessing, author = {Wu, Yuchen and Ayandele, Ebun}, title = {{Assessing the Economic Viability and Environmental Benefits of Treating Organic Waste Using Anaerobic Digestion}}, institution = {RMI}, year = {2024}, month = dec, url = {https://rmiwastemapprod.blob.core.windows.net/cms/assets/RMI_Oko_Oba_Biogas_Analysis_3cf3086de6.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }