A.T. Biopower Rice Husk Power Project · Project Design Document for A.T. Biopower Rice Husk Power...

Project Design Document

for

A.T. Biopower Rice Husk Power Project

July 2003

Mitsubishi Securities

Clean Energy Finance Committee

TABLE OF CONTENTS A. General description of project activity.............................................................................. 1 B. Baseline methodology........................................................................................................ 13 C. Duration of the project activity / Crediting period ........................................................ 23 D. Monitoring methodology and plan .................................................................................. 24 E. Calculation of GHG emissions by sources....................................................................... 32 F. Environmental Impacts .................................................................................................... 43 G. Stakeholders comments .................................................................................................... 46

Annex 1....................................................................................................................................... 50 Annex 2....................................................................................................................................... 52 Annex 3....................................................................................................................................... 53 Annex 4....................................................................................................................................... 71 Annex 5....................................................................................................................................... 76 Appendices A: Annual Paddy and Husk Production in ATB’s Procurement Area B: ATB Organization as Relevant to MVP C: Summary of Public Participation Meetings (Pichit Site) D: Social Contract with Local Community Reference Files RF-I: Environmental Impact Assessment (English Summary) RF-II: EIA Opinion Survey

Project Design Document for A.T. Biopower Rice Husk Power Project

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A. General description of project activity

A.1. Title of the project activity: A.T. Biopower Rice Husk Power Project in Pichit, Thailand. (The Pichit Project or the Project.)

A.2. Description of the project activity:

A.2.1. Purpose of the Project activity The Project is designed to use for electricity generation rice husk that would otherwise be burned in the open air or left to decay. It involves the construction and operation of a new rice husk power plant in Pichit province, central Thailand, with approximately 22 MW gross generating capacity, 20MW net. Electricity will be sold through a 25-year power purchase agreement (PPA) with the Electricity Generating Authority of Thailand (EGAT). The Project will assist Thailand’s sustainable growth by providing electricity through biomass power production without relying on fossil fuel combustion. The plant is one of five similar rice husk power plants currently being planned by A.T. Biopower (ATB). Although originally presented as a single CDM project, this has now been separated into two or more projects with Pichit being the first, to make the Project more manageable in terms of financing and implementation.

A.2.2. Contribution to the sustainable development of the host country

According to the Power Development Plan (PDP) by the Electricity Generating Authority of Thailand (EGAT)1, Thailand’s demand for electricity will double from 100,322 GWh in 2001 to 203,778 GWh in 2012. Against this backdrop, securing steady supply sources of electricity is a matter of vital importance for the Thai economy. Biomass fuels, especially rice husk and bagasse, represent particularly rich energy resources for

1 EGAT Power Development Plan (PDD) 2001, Appendix 8


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Thailand. These renewable energy sources currently fuel less than 1% of Thailand’s electricity generation, which is dominated by natural gas, lignite and imported fuel oil. Recognizing the potential contribution of renewable energy to the Thai energy mix, the government has placed great importance on supporting environmentally friendly, indigenous, and renewable sources of energy. It is noteworthy that Thailand’s National CDM Strategy2 released by the Office of Environmental Policy and Planning, places biomass renewable energy at the top of the list of promising CDM project areas for Thailand. In addition to providing renewable energy, the Project will have an added contribution to Thailand’s sustainable development in that it will improve the disposal of a major source of agricultural waste.

A.2.3. Project plans

A.2.3.1. Electricity sales The main channel for EGAT’s purchases of renewable energy is the Small Power Producer Program3. Standardized power purchase agreements (PPAs) with EGAT under the SPP Program run from 6 to 25 years. ATB will apply for a 25-year firm agreement with a contracted capacity of 20 MW, whereby EGAT guarantees minimum purchase of 80% of the contracted capacity. Given ATB’s plan to operate the plant for 24 hours a day, 346 days a year, the minimum amount of electricity sales to EGAT will be 132,864MWh/yr:

20 MW × 24 hr × 346 day × 80 % = 132,864 MWh/yr It is expected that the plant will internally consume about 10% of the electricity it produces. Taking this into consideration, exporting the above amount to EGAT requires ATB to generate 147,627MWh/yr of electricity: (132,864MWh/yr)/(1 - 0.1) = 147,627MWh/yr

2 National Clean Development Mechanism Strategy Study for the Kingdom of Thailand 2002, p.7

3 A Small Power Producer (SPP) can be any private, government or state enterprise that generates

electricity either (a) from non-conventional sources such as wind, solar and mini-hydro energy or fuels

such as waste, residues or biomass, or (b) from conventional sources provided they also produce steam

through cogeneration.


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A.2.3.2. Sale of rice husk ash to cement manufacturers

Rice husk to be used as fuel by the Project will yield about 25,655 tonnes/yr of ash. Rice husk ash (RHA) produced in properly controlled facilities such as the Pichit plant is a non-crystalline silica ash suitable as a substitute for clinker. When RHA is used in lieu of the same amount of Portland cement, it would effectively displace GHG emission-intensive cement manufacturing process. Much research has been conducted on RHA’s role as a strengthening admixture for cement. ATB has entered into discussions with well-established Thai cement manufacturers for the sale of RHA. Although this will lead to both process- and energy-related emission reductions in cement manufacturing, the Project will not claim CERs for these reductions.

It is noted that a small number of rice husk power generation projects hitherto seen in Thailand have all procured their fuel entirely is mostly from one large core supplier. ATB’s plans to purchase rice husk from a large number of smaller suppliers set the Project apart from other undertakings for rice husk power generation.

A.2.3.3. Rice husk availability and procurement

Rice has always been Thailand’s flagship agricultural product, with Thailand being the world’s largest exporter of rice. Production is stable. From 1981 to 1999, the average yearly production was about 20 million metric tons a year, with a general increase of about 1 to 2% per year4. In the 1998-99 crop year, 23.5 million tonnes were produced, and in the record crop of 2000-01, some 26 million tonnes were produced. In Thailand, there is low demand for rice husk. Anecdotal evidence suggest that 1~2 percent is used for bedding in chicken coops, another 1~2 percent for brick making, and 20~25 percent used as fuel. When rice husk is used as fuel, they are mostly used at rice mills to produce heat or steam. Currently, 70~75 percent of rice husk is unused. Central Thailand, the location of the Pichit plant and fuel supply, is a rich alluvial plain with an extensive network of irrigation canals. Most farmers in the region enjoy three rice harvests a

4 Office of Agricultural Economics, Ministry of Agriculture and Cooperatives.


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year. As further discussed in B.3, ATB considers its fuel supply area to be the five provinces5 comprising Pichit province where the plant is located, plus four adjacent provinces within an economical transport distance, about 100 km. These provinces have annually produced 3.5 million ~ 4.5 million tonnes of paddy in 1996 to1999, amounting to about 20% of the nation’s total. Within the Project’s procurement area, it is estimated that there are over 1 million tonnes of rice husk, of which approximately 700,000 tonnes are unused. This large surplus rice husk represents almost five times the Project’s requirement as calculated in A.4.3.3. Table 1: Recent paddy and husk production within Project’s procurement area (metric tonnes)6

1996 1997 1998 1999

National Total 22,015,481 22,331,638 23,580,080 23,607,542

Nakhon Sawan 839,923 1,002,609 1,043,495 1,118,469

Pichit 750,621 843,081 1,056,038 1,120,248

Petchabun 517,748 504,850 469,986 463,390

Kamphaeng Phet 792,824 635,162 641,995 781,485

Phitsanulok 695,004 833,686 1,025,424 1,035,947

Pichit Vicinity (Paddy) 3,596,120 3,819,388 4,236,938 4,519,539

Pichit Vicinity (Husk)* 827,108 878,459 974,496 1,039,494

*At 23% mass of paddy ATB has entered into 8-year fuel supply agreements with about 30 rice millers, principally within 80 km of the proposed plant. The total quantity of rice husk already contracted represents most of the fuel needed to generate the planned amount of electricity for the Pichit plant. Rice husk will be delivered primarily by small local truckers.

It is noted a small number of rice husk power generation hitherto seen in Thailand have all procured their fuel entirely or mostly from one large core supplier. ATB’s plans to purchase rice husk from a large number of smaller suppliers set the Project apart from undertakings for rice husk power generation.

A.2.3.4. Financial plans The Project cost is estimated at US$32 million. This includes the cost of an EPC contract as

5 Thailand has 78 provinces. 6 Source: Office of Agricultural Economics


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well as the cost of land, interest during construction, project development fees, financing fees, and contingencies. The Project has been granted a 5-year subsidy for SPPs from the Ministry of Energy’s Energy Policy and Planning Office (EPPO), formerly National Energy Policy Office (NEPO). This subsidy is incorporated into the financial projections. ATB’s financial plan assumes a relatively conservative percentage of 60-15-25 among senior debt, mezzanine financing in the form of subordinated debt, and common equity. The major equity investors noted in A.3 are at an advanced stage of discussion to finalise their plans to provide about half of the common equity. For the remaining half, the interest of the potential investors ATB is in contact with is expressly tied to the Project’s designation as a CDM project.

A.3. Project participants: A.T. Biopower Co. Ltd. (ATB) ATB is a project development and finance company that undertakes a comprehensive development and finance responsibility. The Project will be managed by a full-time project development and management team of over ten staff at ATB, led by Dr. Thawat Watanatada, CEO. Dr. Watanatada has over 25 years of experience in infrastructure project development and finance, including 18 years at the World Bank in Washington.

Rolls-Royce Power Ventures Ltd. (RRPV) RRPV is the industrial investor in the Project. Part of the Rolls-Royce plc network, RRPV focuses on developing independent power projects between 5 MW to 150 MW in selected markets internationally. RRPV is headquartered in London. Al Tayyar Energy Ltd. (ATE) ATE is an energy investment and development company, based in the United Arab Emirates and Washington, DC. ATE focuses on renewable energy and energy efficiency projects in developing and newly industrialised countries. The Engineering Business Division of the Electricity Generating Authority of Thailand (EGAT EB) is the engineering partner for the Project. EGAT EB, the largest power engineering service provider in Thailand, combines expertise in the area of power planning, transmission and environmental engineering.


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A.4. Technical description of the project activity:

A.4.1. Location of the project activity The project is located in Pichit province, North of Bangkok.

Pichit

A.4.1.1. Host country Party(ies):

The Kingdom of Thailand

A.4.1.2. Region/State/Province etc.: Pichit

A.4.1.3. City/Town/Community etc.: Ampur Bang-moon-nak, Tambon Hor-krai

A.4.1.4. Detail on physical location, including information allowing the unique identification of this project activity:

The plant will be located on a 30 hectare site. About half the site will be used for plant buildings,


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equipment, and storage facilities. The rest will be used as buffer zones and green space.

Outdoor rice husk storage

Indoor storage

Boiler

Steam turbine

generator

Image of Pichit Plant Site

A.4.2. Category(ies) of project activity There are currently no defined categories of project activities available from the UNFCCC. Tentatively, the Project will be categorised as follows:

Renewable energy project: Grid-connected electricity generation

A.4.3. Technology to be employed by the project activity:

A.4.3.1. Technology to be employed The plant will operate using suspension-fired boilers, designed to burn ground rice husk in suspension. This particular boiler technology was adopted due to their ability to produce high quality ash product, which will be suitable as a substitute ingredient for cement. This will eliminate the environmental issue of ash disposal while at the same time reduce GHG emissions from cement manufacturing. As the first example to use this state-of-the-art technology in Thailand, the Project represents an important case of technology transfer. The Pichit plant will be constructed by Electrowatt-Ekono (Thailand) Ltd. (EWE) as EPC contractor, with McBurney Corp. (McB) as combustion technology provider. A highly qualified


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company will operate the plant under an O&M (Operation and Maintenance) contract. . EWE will be required to guarantee equipment performance, net power output, fuel consumption rates, reliability, availability, and emissions. Under the EPC contract, the construction cost and completion date will be guaranteed on a lump sum, fixed-price, date-certain basis.

A.4.3.2. Training as a way for technology transfer Under ATB’s general guidance, the O&M contractor will staff the plant with Thai staff (including the Site Manager), contributing to technology transfer of this state-of-the-art combustion and power generation technology. Whenever possible, preference will be given to recruiting suitably qualified staff from local communities. This will greatly enhance the well being of the communities surrounding the power plant. ATB places particular emphasis on staff training, providing all staff members with basic training consisting of:

• Basic safety • Basic plant knowledge • Basic rice husk fuel fired technology • Environmental awareness • Supervisory training (where applicable) In addition, classroom sessions will be held on job-specific subjects. This training will cover the following areas:

• Plant and steam cycle overview • Boiler design and operation • Turbine design and operation • Fuel handling equipment and operation • Ash handling equipment and operation • Water treatment and water chemistry • Power plant HV reticulation • Power plant control philosophy The most important training will be on-the-job training. This will include:


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• Start up • Shut down • Emergency Response

All the training will be supplemented by comprehensive Operations and Maintenance Manuals that will be supplied by EWE. Staff members will also be trained through work instructions for all key activities. These work instructions will be developed during the mobilization phase, the period of time running up to power plant commissioning and the start of operation. Please refer to Appendix E for further details.

A.4.3.3. Energy balance and related analysis Thorough laboratory tests conducted by ATB show the following characteristics for the rice husk to be used as fuel: Ultimate Analysis:

Carbon 37.13%Hydrogen 4.12%Oxygen 31.60%Nitrogen 0.36%Sulphur 0.05%Ash 17.75%Moisture 9.00%Total: 100.00%

Calorific Value: 13,607 kJ/kg → 0.013607 TJ/tonne As described in A.2.3.1, ATB expects to produce approximately 147,627 MWh of electricity annually, of which 132,864 MWh will be exported to EGAT, with the remaining 14,763 MWh consumed internally at the plant. In terms of energy, the amount of electricity produced at the Pichit plant will equal 531 TJ/yr: 147,627 MWh/yr x 3,600 MJ/MWh x (1 TJ/1millionMJ) = 531 TJ/yr ATB’s feasibility study indicates that the plant will convert approximately 30% of the heat


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generated in its boiler to electrical power. Therefore, the boiler needs to provide 1,770 TJ/yr of heat (energy) in order for the plant to generate the planned amount of electricity:

(531 TJ/yr) ÷ 0.3 = 1,770 TJ/yr Since the expected efficiency for the plant’s boiler is 90%, the rice husk to be combusted at the ATB plant must contain the following amount of energy: (1,770 TJ/yr) / (0.9) = 1,967 TJ/yr Based on the calorific value of 0.013607 TJ/tonne for the rice husk to be used as fuel, the quantity of rice husk needed to produce the required amount of energy is approximately 144,533 tonnes/yr: (1,967 TJ/yr) / (0.013607 TJ/tonne) = 144,533 tonnes/yr Given the ash content of 17.75%, the combustion of the above amount of rice husk will result in ash of 25,655 tonnes/year in volume. 144,533 tonnes/year x 17.75% = 25,655 tonnes/year The relationships are summarized in the following diagram:

Rice husk as fuel 144,533 tonnes/year

Energy 1,770 TJ/year

Electricity 531 TJ/yr =

147,627 MWh/year

Rice husk ash 25,655 tonnes/year

EGAT 132,864 MWh/year

Internal use 14,763 MWh/year

Other products of rice husk combustion - Mostly: O2, N2, CO2

- Small to trace amounts of : N2O, NO2, SO2,

0.013607 TJ/tonne approx. 30%

17.75%


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A.4.4. Brief explanation of how the anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed CDM project activity, including why the emission reductions would not occur in the absence of the proposed project activity, taking into account national and/or sectoral policies and circumstances:

The Project will reduce anthropogenic GHG emissions by displacing fossil fuel-based electricity generation with GHG-neutral biomass electricity generation. In addition, the Project will assist Thailand with greenhouse gas (GHG) reduction by curbing methane emissions from open-air burning of rice husk. The Project will generate on average approximately 83,582 tonnes of CERs annually, and about 585,076 tonnes for the entire 7-year initial crediting period.

The Project differs from any of a small number of undertakings hitherto seen in Thailand for rice husk power generation. While other projects rely on one large rice mill for the supply of all or nearly all of the rice husk to be used at their power plants, the Project sources its rice husk from more than 30 of the smaller mills for whom rice husk-fuelled power generation is not feasible. Without the Project, the rice husk at these mills would continue to be either dumped or burned in the open air or in simple incinerators. As further delineated in B.4, the Project has not been able to attract sufficient investment due to it being less attractive compared to other investment opportunities in Thailand’s power generation sector. If registered under the CDM, the Project will generate an estimated average of 82,582 tCO2/yr of CERs, which will significantly assist implementation of the Project. At the price of US$7, which the project participants expect when the Kyoto Protocol officially comes into force, the CERs will enhance the Project’s ROE by 7.2%, based on the Project’s financial plans described in Section A.2.3.4, bringing the ROE closer to a level acceptable to investors. An added incentive for investors is the higher status associated with CDM designation. The Project will publicly highlight its participants’ environmental commitment. When registered with the CDM Executive Board, the Project will be one of the first CDM projects in all Southeast Asia, let alone in Thailand. Project participants will also benefit from pioneering the learning experience for the CDM process.


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A.4.5. Public funding of the project activity: The financial plans for the Project do not involve public funding from Annex I countries.


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B. Baseline methodology

B.1. Title and reference of the methodology applied to the project activity. There are currently no approved methodologies provided by the UNFCCC. Therefore, a new baseline methodology, which is in accordance with the Marrakesh Accords, will be proposed, titled:

Grid-connected biomass power generation.

B.2. Justification of the choice of the methodology and why it is applicable to the project activity

The methodology follows approach 48(b) to determine the baseline for biomass-fuelled grid-connected power generation. In determining 48(b) as the appropriate approach for grid electricity, the methodology considers that the most economically attractive course of action will be followed in the absence of the project activity, subject to relevant constraints such as host country regulations. Due to the reasons provided in B.3 below, the Project will displace marginal electricity. The decision on what the marginal electricity is depends largely on the economy of the respective generating options, as well as host country energy priorities. Host country energy priorities take into consideration security of supply, fuel diversion and foreign exchange. Therefore, 48(b) is appropriate for determining the baseline for this Project. Further, neither 48(a) nor 48(c) are likely to provide a better or more accurate baseline scenario. This is due to the fact that emission patterns are projected to change, and that no reliable information is available to permit the use of 48(c). An assumption made in the methodology is that reliable grid data is available from official sources, in order to correctly follow the steps provided in the methodology. EGAT provides accurate data on electricity generation, and also provides reasonably accurate data on the associated fuel consumption, both for projection and actual.


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B.3. Description of how the methodology is applied in the context of the project activity: Here, the steps provided in the methodology are applied to the Pichit Project to ascertain that the Project will not occur as BAU, and to determine the baseline scenario for the Project. A suitability test and leakage assessment are also contained. Step 1: Is the project different to BAU? Of the typical barriers delineated in the methodology, the project faces the following two barriers most acutely, which together prevent it from being implement on a BAU basis.

Investment barrier As briefly touched upon in A.2.3.2, the Project will aim to sell as much of the RHA it produces to cement manufacturers, in order to negate potential environmental impacts from ash. In order to produce RHA that is suitable as cement ingredient, the Project uses for electricity generation state-of-the-art technology (suspension-fired boiler), much superior to those used by a small number of rice husk power plants hitherto seen in Thailand (stoker boiler). Needless to say, this has added considerably to the Project’s costs, lowering the project’s returns on investment (ROI). The low returns, exacerbated by the perceived risk associated with the absence of a core fuel supplier delineated in Section B.4., has made it impossible for ATB to find investors in a BAU basis. Technological barrier: The Project represents the first case of applying the suspension-fire technology to rice husk in Thailand. While the technology has a proven track record of combusting rice husk for power generation, it is by no means guaranteed that the technology will not encounter unforeseen problems when it is applied to Thai rice husk with their particular characteristics. In addition, the Project plan entails a comprehensive program to train local employees for operation and maintenance of a built on a technology nobody in Thailand has previous experience with.

Other barrier: Local communities, rarely differentiating between rice husk power generation and environmentally more hazardous modes of power generation such as coal-fired, are wary of having a rice husk power plant in their neighbourhood. For the ATB project, securing local community support presents a bigger challenge than for other similar projects.


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Other rice husk power generation projects typically build their power plants on or near the site of their core fuel supplier, who causes immense environmental problems of dust and smoke. Local residents can identify a direct link between the construction of the power plant to a significant alleviation of a current environmental hazard. This is not the case for ATB due to its plan to secure its rice husk fuel from a large number of smaller millers and therefore locate its plant away from any of the mills. It is noted that local community approval is vital to the Project. It is essential to obtain 50% community approval for an EIA, and 67% to be eligible under EPPO’s SPP program (refer to Section G). ATB has expended considerable effort in building community relations to date, holding numerous stakeholder meetings and organising community events. Further, ATB guarantees the environmental performance of the Pichit plant in the form of a social contract.

Step 2.1: Is the baseline the operating margin? As stated earlier in A.2.2, according to EGAT’s PDP, it is expected that electricity demand will continue to grow steadily and capacity additions are pipelined to meet this demand. A total of 12,591MW of additional capacity is planned between years 2006 and 2012, which represent the first crediting period for the Project. The Project will provide an additional 20MW capacity, representing less than 0.2% of the total planned capacity during this period. A plant of this size will neither displace nor delay the construction of the plants already pipelined. Thus, the most appropriate baseline will be the operating margin, rather than the build margin. It may be argued that given the size of the Project, the more likely targets for displacement are other, similarly-sized plants – i.e. those classified as Small Power Producers (SPPs). However, given that the aim of the SPP program is to increase renewable energy or energy-efficient generation, in line with the national priorities, these plants will be built regardless of the Project and therefore will not be displaced. The exception to this is where there is competing demand for rice husk to the extent that two plants cannot be built. In accordance with the methodology, a suitability test will be conducted to ascertain that there is an abundant supply of rice husk, in Step 3 below, and thus that no new rice husk plants will be displaced. Step 2.2: Is the operating margin a combination of all generation types? An analysis of the economics of the respective generation types and the PDP, as well as talks


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with EGAT officials pointed to heavy oil plants as being marginal. The basis of this judgment is that most of the heavy oil, which make up a significant part of the fuel mix, is imported. With increase in demand projected, purchase of expensive heavy oil will, according to EGAT7, cause “financial difficulty for EGAT and the country itself”. Based on this analysis, it can be concluded that the generation type to be displaced by the Project, hence the baseline scenario, is oil-fuelled generation. Despite this, talks with EGAT officials indicated that their policy was not to definitively point to a particular fuel to be displaced, however likely that may be. They pointed out that it is often a mistake to see a casual link of displacement between an increase in one component of the grid and a concurrent reduction in the other. A clear identification of the target for displacement not being possible, the baseline scenario was deemed to be grid average generation, in accordance with the methodology. The selection of the grid average generation as the baseline scenario will lead to a more conservative estimation of emissions. Although taking the grid average will necessitate the inclusion of carbon-intensive coal-fired plants, the inclusion of zero-emission hydro plants as well as the more efficient combined cycle natural gas plants will lead to a conservative shift in the baseline emissions. As calculated in E.4.1, the grid CEFs will range between 0.548 tCO2/MWh and 0.635 tCO2/MWh. This is considerably lower than the CEF of approximately 0.72 for oil-fuelled generation. Step 3: Is there a large surplus supply of biomass? As discussed in A.2.3.3, there is a low demand for rice husk in Thailand relative to the large quantities produced. It is estimated that 1~2 percent is used for bedding in chicken coops, another 1~2 percent for brick making, and 20~25 percent used as fuel. When rice husk is used as fuel, they are mostly for heat or steam generation at rice mills. Currently, 70~75 percent of rice husk is unused. Anecdotal evidence and discussions with rice millers suggest that the rice husk sold have remained fairly constant. As mandated in the methodology, an assessment of supply and demand is conducted in the form of a suitability test, which requires that the surplus supply of rice husk must be at least twice as large as the amount needed to fuel grid connected rice husk power plants. The amount of

7 EGAT website: http://pr.egat.or.th/english/enu5a.html


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biomass used for grid connected electricity generation was estimated using the relationship provided in the methodology:

Per unit rice husk requirement

(t/MW)

=

Rice husk used by

Pichit plant

(t)

÷

Pichit plant installed capacity

(MW)

= 144,632 t ÷ 22 MW = 6,570 t/MW

Demand

(t)

=

Installed capacity of all plants using rice husk for grid

electricity (MW)

x

Per unit rice husk

requirement

(t/MW) = 180 MW x 6,570 t/MW = 1,182,600 t

Data on installed capacity, both existing and planned under the SPP program, were obtained from EGAT8. From the Thai national inventory, total rice husk burned is 5,455,000 tonnes9. At the time of the inventory, there were no rice husk plants. Therefore, the total rice husk provided in the

8 Data on installed capacity, both existing and planned, were obtained from the list of Small Power

Producers (firm contracts). Where the plant uses more than one type of biomass as fuel, rice husk is

assumed to supply for two-thirds of the generating requirement.

http://www.egat.or.th/dppd/sppstatus_eng.pdf (last accessed July 2003) 9 Inventory 1990,

http://www.oepp.go.th/projects/climate/post/country/inventory/energy/table3_4.html#table3

(last accessed July 2003)


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inventory need not be corrected for grid electricity to obtain the “supply” defined in the methodology. Then, Supply:Demand = 5,455,000 ÷ 1,182,600

= 4.6

This is much greater than the 2:1 threshold for suitability given in the methodology. It can be seen that surplus supply, which, according to the national inventory, is currently burned in open air, represents over four times the demand. Thus, surplus rice husk is shown to be plentiful in Thailand. It is concluded that the Project will neither lead to the displacement of new rice husk plants nor fuel diversion to carbon-intensive fuels, fulfilling a key criteria of the accompanying methodology. As identified in the methodology, the Project will effectively utilise for power generation rice husk, established here as being an abundant agricultural residue. This will result in a reduction of GHG emissions associated with rice husk disposal. For the calculation of baseline and project emissions, refer to Section E.

B.4. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity (i.e. explanation of how and why this project is additional and therefore not the baseline scenario)

The Project, which introduces state-of-the-art technology to Thailand, provides clean energy by using otherwise unused agricultural waste as fuel. The project achieves GHG reductions from two emission sources – grid electricity generation and rice husk disposal. Earlier in Section B.3, the application of Step 1 of the methodology established the barriers which together prevent the Project from being implemented on a BAU basis. To recap, the barriers are: Investment barriers:

• Return on investment too low


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• High perceived risk by investors Technological barriers:

• The technology never applied in Thailand before • Lack of engineers and operating staff experienced in the technology Other barrier:

• More painstaking efforts needed than for other biomass power generation projects to secure community support, which is a prerequisite for government (EPPO) subsidies and an Environmental Impact Assessment approval.

This section elaborates on the investment barriers. Notwithstanding the incentives provided by EPPO subsidies and the SPP program which guarantees purchase of most of the electricity generated, it remains difficult to develop environmentally friendly electricity generation projects in Thailand. For the Pichit Project in particular, which aims to minimise the environmental impacts caused by power generation, one of the key features is its plans to reduce as much as possible the disposal of rice husk ash (RHA) by selling it to cement manufacturers as a replacement for clinker. The production of ash of a quality acceptable to cement manufacturers has meant the use of a state-of-the-art technology for the first time in Thailand and significantly adds to the capital required for the Pichit Project. This has aggravated the issue of low returns, common to most renewable energy projects in Thailand. The other major investment barrier is the perceived high risk of the Project when investors evaluate it. The Project differs from any of a small number of undertakings hitherto seen in Thailand for rice husk power generation. While other projects rely on one large rice mill for the supply of all or nearly all of the rice husk to be used at their plants, the Project sources its rice husk from a great number of smaller mills. ATB itself does not see anything inherently risky about not having a core investor. It expects the present oversupply of unutilised rice husk to continue, and is confident that, even in the unlikely event that supply becomes tight, the good will it has cultivated with rice millers and agreements it has entered into with many of them will ensure uninterrupted supply. However, accustomed to seeing a core fuel supplier in similar projects and wary of new ideas, investors are not convinced. They are worried that future popularity of rice husk power generation may boost demand for rice husk, prompting independent rice millers to raise prices in a mercantile manner, particularly in the second half of


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the Project’s life of 25 years (i.e. after the Kyoto Protocol initial commitment period is over). Furthermore, investors fear that when the supply and demand balance becomes tight, the availability of rice husk for ATB’s plant may be at risk, as there is no guarantee that the rice millers will honour the contracts they have entered into with ATB. From investors’ vantage point, the behaviour of independent rice millers will be in sharp contrast to that of the core suppliers whose long-term interest in the success of the power generation project he is closely involved in will restrain his demands for price increases and maintain his rice husk supply commitment. These concerns, coupled with investors’ aversion to an unfamiliar technology, have led to a higher perceived risk for the Project than its real risk as judged by ATB. Perceived risk, however, exerts strong influence on investor appetite. Despite ATB’s enthusiasm and the worthiness of the undertaking, it has not been possible to attract enough investors to the Project on a BAU basis. In the eyes of investors, the redeeming feature of the Project is its CDM potential. If registered under the CDM, the Project will generate an estimated average of 83,582 tCO2/yr of CERs. At the price of US$7 which, the project participants expect when the Kyoto Protocol comes formally into force, the CERs will enhance the Project’s ROE by 7.2%, based on the Project’s financial plans described in Section A.2.3.5.

(1) Common Equity amount: 25% x US$32million = US$8million (2) Annual revenue from CERs: (83,582tCO2/yr) x (US$7/tCO2) = US$585,074/yr (2)/(1): US$585,074/ US$8million = 7.2%

An added incentive for investors is the higher status associated with CDM designation. The Project will publicly highlight its participants’ environmental commitment. When registered with the CDM Executive Board, the Project will be one of the first CDM projects in all Southeast Asia, let alone in Thailand. Project participants will also benefit from pioneering the learning experience for the CDM process. Current talks to secure investment for the Project is contingent on the Project’s designation as a CDM project. The Project is clearly not the baseline scenario. With a few exceptions, rice mills in Thailand are too small to use the rice husk they produce for electricity generation. The Project will collect unused rice husk from these mills and utilize it as fuel for its power plant. Without the Project, the surplus rice husk at these mills would continue to be either dumped or burned in the open air


21

or in simple incinerators. As illustrated in Section E, the Project results in a reduction of emissions compared to the baseline scenario, totalling an estimated 585,076 tCO2 during the initial crediting period. Based on the foregoing assessments, the Project fulfils the criteria for additionality stipulated in Paragraph 43 of the CDM modalities and procedures.

B.5. Description of how the definition of the project boundary related to the baseline methodology is applied to the project activity

As per the methodology, the physical delineation is defined as the plant site, with the exception of off-site transportation, which is included within the project boundary. Gases and sources related to the baseline and project activities are as given in the methodology. The table given in Annex 3 is reproduced here: Table 2: Sources and gases

Source Gas Included in emission calculation? (Justification if not included)

CO2 Yes Grid electricity generation

N2O No. For purpose of simplification. This is conservative*.

CO2 No. CO2 from biomass is carbon- neutral as per IPCC guidelines10.

CH4 Yes Open air burning of surplus rice husk


Baseline

Transportation of rice husk (to disposal site)

CO2 No. For purpose of simplification. This is conservative.

CO2 No. CO2 from biomass is carbon- neutral as per IPCC guidelines.

CH4 Yes

Rice husk-fuelled electricity generation N2O No. For purpose of simplification.

This is conservative*.

CO2 Yes

Project

Transportation of rice husk (from rice mill to project site) N2O Yes

10 p4.73, Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual


22

CH4 Yes

CO2 Yes

N2O Yes Transportation of rice husk (on-site)

CH4 Yes

Rice husk storage

CH4 No. Rice husk will be stored for only a short period of time and hence the emissions will be minor. Further, it should be noted that in practice, rice husk is piled until there is a substantial amount to be burned in the open air.

CO2 Yes

N2O Yes

Start-up/auxiliary fuel

CH4 Yes *Grid electricity generation and open air burning of biomass both lead to N2O emissions, greater than that emitted by the project. For conservatism and simplification, this source is not included in emission calculations. Please refer to Note 2 to Annex 3 for further details.

B.6. Details of baseline development

B.6.1. Date of completing the final draft of this baseline section (DD/MM/YYYY) 15/07/2003

B.6.2. Name of person/entity determining the baseline Clean Energy Finance Committee Mitsubishi Securities Tokyo, Japan Tel: +81-3-6213-6860 E-mail: [email protected] Mitsubishi Securities is the CDM adviser to the Project. The firm is not a project participant.


23

C. Duration of the project activity / Crediting period

C.1. Duration of the project activity:

C.1.1. Starting date of the project activity: 01/01/2006 The starting date of the project activity is here defined as the date on which the Pichit plant will commence operation, subsequent to financial closure and plant construction.

C.1.2. Expected operational lifetime of the project activity: Minimum of 25 years.

C.2. Choice of the crediting period and related information:

C.2.1. Renewable crediting period (at most seven (7) years per period):

C.2.1.1. Starting date of the first crediting period (DD/MM/YYYY): 01/01/2006 The starting date of the crediting period is defined as the first day of operation of the Pichit plant. Should the commissioning of the plant be delayed, the starting date will also be delayed accordingly.

C.2.1.2. Length of the first crediting period: Seven (7) years.


24

D. Monitoring methodology and plan

D.1. Name and reference of approved methodology applied to the project activity: There are currently no approved methodologies provided by the UNFCCC. Therefore, a new monitoring methodology will be proposed. The methodology proposed in Annex 4 is titled:

Monitoring GHG emission reductions for biomass power generation using direct measurements and commercial records.

D.2. Justification of the choice of the methodology and why it is applicable to the project activity:

The monitoring approach involves, where possible, the direct measurements of the variables required to monitor baseline and project emissions. Commercial data will be collected and archived for the purpose of double-checking the measured data. In one case where direct measurement is not possible, commercial data will be used as the primary data, with an appropriate quality control measure. The methodologies are straightforward and orthodox in their approach. By obtaining actual data pertinent to the project activity, and by ensuring an appropriate quality control measure for every piece of data collected, it allows for the most accurate calculation of GHG emission reductions associated with the project activity. Where the collection of the relevant data is possible, as is the case for this Project, this approach is the most appropriate.

D.3. Data to be collected in order to monitor emissions from the project activity, and how this data will be archived:

ID

number

Data

type

Data

variable

Data

unit

Measured (m),

calculated (c) or

estimated (e)

Recording

frequency

Proportion of

data to be

monitored

How will the

data be

archived?

(electronic/

paper)

For how long is

archived data kept?

D.3-1 Quantitative Methane in

stack gas

% m quarterly - electronic minimum of two

years after last


25

issuance of CERs

D.3-2 Quantitative Amount of

rice husk

combusted

t fuel m monthly

(aggregate)

100% electronic minimum of two

years after last

issuance of CERs

D.3-3 Quantitative Fuel oil use L m continuous 100% electronic minimum of two

years after last

issuance of CERs

D.3-4 Quantitative Fuel for

on-site

transport

L m continuous 100% electronic minimum of two

years after last

issuance of CERs

D.3-5 Quantitative Off-site

transport

distance

km m

(by a third

party)

monthly

(aggregate)

100% electronic minimum of two

years after last

issuance of CERs

Spectroscopic measurements (D.3-1) will be carried out quarterly to obtain the proportion of methane in the stack gas emitted to the atmosphere. This, together with the aggregated monthly report on rice husk usage (D.3-2), will be used to calculate the total methane emission from rice husk combustion at the Pichit plant. Emission from fuel oil used as supplementary and start-up fuel is expected to be insignificant, but will be monitored and included in project emissions regardless. Flow meters will continuously record the amount of fuel being fed into the boilers (D.3-3). Transportation of rice husk and rice husk ash will occur both on- and off-site. On-site emissions will be calculated by obtaining the amount of fuel used (D.3-4). Off-site emissions will be calculated from distance records (D.3-5). ATB will be responsible for the execution of the monitoring plan. Based on the modern system it intends to use for control and reporting, ATB will collect and store relevant data in a systematic and reliable way, evaluate them regularly, generate reports, and ensure the availability of pertinent information for verification. An electronic spreadsheet file will be kept to accumulate all monitored variables, which will be presented to the DOE for verification. To facilitate this task, ATB will require the O&M contractor to continuously transmit to it the operations data generated by the power plant’s operational monitoring system. Appendix B gives ATB’s organization chart for monitoring and verification activities. To ensure


26

the quality of these activities, ATB will appoint Jackrit Watanatada, Assistant to CEO, as the executive to oversee the entire monitoring process. While Mr. Jackrit Watanatada will perform only a few monitoring functions directly and rely mostly on the work to be performed by the ATB and O&M contractor staff, he will be responsible for ensuring the accuracy and consistency in implementing the monitoring plan.

D.4. Potential sources of emissions which are significant and reasonably attributable to the project activity, but which are not included in the project boundary, and identification if and how data will be collected and archived on these emission sources.

The supply and demand analysis conducted in B.3 showed a significant amount of rice husk being wasted at present, and hence, there are no immediate leakage concerns. To negate future leakage concerns, supply and demand analysis will be conducted annually in the same manner as in B.3.

ID

number

Data

type

Data

variable

Data

unit

Measured (m),

calculated (c) or

estimated (e)

Recording

frequency

Proportion of

data to be

monitored

How will the

data be

archived?

(electronic/

paper)

For how long is

archived data kept?

D.4-1 Quantitative Total

capacity for

grid-connec

ted, rice

husk-fuelle

d plants

MW n/a

(official data)

annually 100% electronic minimum of two

years after last

issuance of CERs

D.4-2 Quantitative Rice husk

required

per unit

capacity

t/MW c annually 100% electronic minimum of two

years after last

issuance of CERs

D.4-3 Quantitative Surplus

rice husk

supply

t n/a

(official data)

annually 100% electronic minimum of two

years after last

issuance of CERs

As per the methodology, the ratio of the total biomass supply and biomass used for grid


27

electricity generation is to be greater than 2:1. This will be determined using the formulae provided below. As EGAT does not provide data on generated electricity for SPP projects, which biomass projects are categorised as, the capacity for rice husk plants (D.4-1) will be used. Amount of rice husk

required to fuel plants other than the

Pichit plant (t/MW)

=

Rice husk used by

Pichit plant

(t)

÷

Pichit plant installed capacity

(MW)

Demand

(t)

=

Installed capacity of other plants

using rice husk for grid electricity

(MW)

x

Amount of rice husk required to

fuel plants

(t/MW) and

Surplus rice husk (defined in

methodology)

=

Total surplus rice husk (national inventory)

+

Rice husk used to fuel existing plants

Once the threshold for “tight” supply is reached, appropriate measures delineated in Annex 4 will be taken.

D.5. Relevant data necessary for determining the baseline of anthropogenic emissions by sources of GHG within the project boundary and identification if and how such data will be collected and archived.

ID

number

Data type Data variable Data unit

Will data be

collected on this

item? (If no,

explain).

How is data

archived?

(electronic/ paper)

For how long is data

archived to be kept?

D.5-1 Quantitative Electricity

exported to

grid

MWh yes electronic minimum of two

years after last

issuance of CERs


28


electricity

generated

according to

generating

type

MWh yes electronic minimum of two

years after last

issuance of CERs

D.5-3 Quantitative Fuel

consumption

according to

generation

type

ML, Mt,

MMSCF

D, etc.

yes electronic minimum of two

years after last

issuance of CERs


rice husk

combusted

t fuel yes electronic minimum of two

years after last

issuance of CERs

Electricity exported to the grid (D.5-1) will be monitored through meter readings and indicates the amount of grid electricity that is displaced by the Project. ATB will issue monthly invoices to EGAT based on the readings, and will keep copies of the invoices and corresponding meter reading records for verification. Grid data (D.5-2, D.5-3) will be obtained as it is released by EGAT. This will be used to calculate the grid CEF, which will be multiplied with the exported electricity to determine the baseline emissions. The amount of rice husk consumed by the Project (D.5-4) will be used together with the measured carbon content and the IPCC default factor for the proportion of carbon released as methane in open-air burning to deduce the baseline emissions.

D.6. Quality control (QC) and quality assurance (QA) procedures are being undertaken for data monitored

Data

Uncertainty level of data

(High/Medium/Low)

Are QA/QC procedures

planned for these data?

Outline explanation why QA/QC procedures are or are not

being planned.

Project activity emissions:

D.3-1 Low Yes The sampling instruments will undergo maintenance

subject to appropriate industry standards. The spectroscopy


29

results will be compared to the IPCC default emission

factor. The larger of the two values will be used to ensure

conservatism.

D.3-2 Low Yes Trucks carrying rice husk will be weighed twice, upon

entry and exit. Meters at the weighing station will undergo

maintenance subject to appropriate industry standards. This

will be checked against purchase receipts and inventory

data.

D.3-3 Low Yes Meters will undergo maintenance subject to appropriate

industry standards. The meter readings will be checked

against purchase receipts and inventory data.

D.3-4 Low Yes Fuel pump readings will be compared against fuel

purchase invoices.

D.3-5 Low Yes The distance records will be compared against invoices

from rice husk and rice ash transport contractors.

Leakage

D.4-1 Low N/A This involves the use of official data released by EGAT.

Quality control of this data is beyond the control of the

project operators. However, data on installed capacity is

accurate.

D.4-2 Low Yes Rice husk consumption is monitored for the calculation of

both project and baseline emissions. QC measures are

outlined in D.3-2.

D.4-3 Low N/A This involves the use of official data, the Thai national

inventory. Quality control of this data is beyond the control

of the project operators.

Baseline emissions – fossil fuel-based steam generation:

D.5-1 Low Yes Meters will undergo maintenance/calibration subject to

appropriate industry standards. The accuracy of the meter

readings will be verified by EGAT, who will issue receipts.


Quality control of this data is beyond the control of project

operators. The data on generation is, however, considered

accurate.



30

Quality control of this data is beyond the control of project

operators. If considered unreasonable (i.e. will result in

less conservative calculations), this may be supplanted by

more acceptable values according to methods verified by

the DOE.

D.5-4 Low Yes As per D.3-2

Note: The numbers in the form of D.X-X correspond to the ID numbers used in tables D.3, D.4 and D.5

The plant operation and training procedures that will be put in place will also ensure the integrity of the data collected. These procedures are outlined below.

D.6.1. Operation and Maintenance logs Daily O&M logs will be maintained by each shift leader on a real time basis. They will provide detailed on-the-spot information about the operations at each of ATB’s plants. The O&M contractor will be instructed to immediately report to the ATB management, should an event of significance occur.

D.6.1.1. Operation and Maintenance Report This report will be developed by the O&M contractor each month and presented to ATB’s CEO and board of directors. The report will include the following topics:

• Summary • Accidents and malfunctions • Safety and environment • Plant performance and availability • Meter records • Fuel report • Personnel changes Data relevant to the monitoring plan will be selected and stored in the monitoring files.

D.6.1.2. Procedures for calibration of equipment EWE will be responsible for developing an “Equipment Calibration Procedures” booklet, which


31

will delineate the frequency and detail of each equipment calibration. The O&M contractor will be responsible for ensuring that equipment calibration be carried out as specified. It is important to note that ATB will be required to install and maintain all electricity metering equipment and associated transformers conforming to specifications set by EGAT. This consists of primary watt-hour metering equipment and back-up watt-hour metering equipment. The metering equipment is to be sealed in the presence of both EGAT and ATB representatives. The seals can only be broken in the presence of both EGAT and ATB representatives for inspection, testing or calibration.

D.7. Name of person/entity determining the monitoring methodology: Clean Energy Finance Committee Mitsubishi Securities Tokyo, Japan Tel: +81-3-6213-6860 E-mail: [email protected] Mitsubishi Securities is the CDM adviser to the Project. The firm is not a project participant.


32

E. Calculation of GHG emissions by sources

E.1. Description of the formulae used to estimate anthropogenic emissions by sources of greenhouse gases of the project activity within the project boundary: (for each gas, source, formulae/algorithm, emissions in units of CO2 equivalent)

The methodology applied to this Project specifies the following as project emissions:

• CH4 from biomass electricity generation • CO2, N2O and CH4 from on- and off-site transportation • CO2, N2O and CH4 from start-up/auxiliary fuel use The baseline and project emissions are calculated using the formulae provided in the baseline methodology (Annex 3). As per the methodology and consistent with IPCC Guidelines11, CO2 emission from rice husk combustion at ATB’s plants, being the release of the CO2 absorbed on a sustainable basis by rice as it grows annually, are not counted as project emissions.

E.1.1. Biomass electricity generation

Methane released from the combustion of biomass by the Project is calculated using the following equation. As described in A.4.3.3, ATB’s boilers will burn 144,632 tonnes of rice husk a year with a calorific value of 1,967 TJ. According to the IPCC Guidelines12, methane emission from wood/wood waste combustion in energy industries is 30kg/TJ. Annual CH4

released

(tCO2e/yr)

=

Heat value of rice husk used by Project (TJ/yr)

x

Methane emission factor

for rice husk combustion (tCH4/TJ)

x

GWP of CH4

(tCO2e/tCH4)

11 Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual, p.6.1.

Please also see Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories, Workbook

and IPCC Good Practice Guidance and Uncertainty Management in National Greenhouse Gas

Inventories, p.5.5 12 IPCC Guidelines. References are provided in Annex 5 for all IPCC default values used in Section E.


33

= 1,967 x 0.03 x 21 = 1,239 tCO2e/yr

To increase the accuracy of the Project’s methane emissions calculation, actual methane emissions from ATB’s boilers will be measured using a gas spectroscope every quarter. The results will be used for the above calculation once ATB’s plants commence operation. The measurements from the spectroscope will be compared with the IPCC default factor of 30kg/TJ for quality control purposes and will be replaced by the default factor should it lead to conservatism.

E.1.2. Transportation of biomass As transportation of rice husk from the rice mills to the Pichit plant will be contracted to truckers, the calculation of emissions will be based on distance travelled. Rice husk will mainly be transported by 15 tonne trucks. ATB estimates the average return trip distance to be 120 km13. The total distance travelled is given by:

Distance travelled

(km/yr)

=

Total rice husk

consumed by project (t/yr)

÷

Truck capacity

(t)

x

Return trip distance to supply site

(km)

= 144,533 ÷ 15 x 120 = 1,156,264 km/yr

15 tonne trucks fall into the category of heavy-duty vehicles. The IPCC default factors for CO2, CH4

and N2O from heavy duty vehicles (U.S.) are 1097 g/km, 0.06 g/km and 0.031 g/km, respectively.

13 For conservatism, it is assumed that trucks need to make return journeys without picking up other

loads.


34

Emission

factor

(tCO2e/km)

=

CO2

emission

factor

(tCO2/km)

+

CH4

emission

factor

(tCH4/km)

x

GWP of CH4

(tCO2e/tCH4)

+

N2O

emission

factor

(tN2O/km)

x

GWP of N2O

(tCO2e/tN2O)

= 1,097 x 10-6 + 0.06 x 10-6 x 21 + 0.031 x 10-6 x 310

= 1,108 x 10-6 tCO2e/km

The annual emission from off-site transportation is given by:

Annual

Emission

(tCO2e/yr)

=

Emission

factor

(tCO2e/km)

x

Distance

travelled

(km/yr)

= 1,108 x 10-6 x 1,156,264 = 1,281 tCO2e/yr

Within each plant site, diesel-fuelled dump trucks and bulldozers will transport rice husk to the boilers. Despite its minor impact, ATB will directly measure the fuel consumption of these trucks, which will be exclusively used for ATB on-site operations. It is not possible to project the amount of fuel that will be consumed for this purpose. Emissions from this source will be accounted for using fuel consumption rather than distance travelled as the basis of the calculation, for the actual annual calculation of CERs.

E.1.3. Start-up/auxiliary fuel use In start-up operations, 500-600 litres of fuel oil will be used several times a year. Assuming conservatively as many as five start-up operations a year, the total fuel oil consumption for this purpose will amount to about 3,000 litres. While GHG emission from this source is expected to be minimal in size, it is included in the calculations of project emissions. The IPCC carbon emission factor for residual oil, 21.1 tC/TJ, and fraction of carbon oxidised, 0.99, were used to determine the CO2 emission factor:


35

CO2

emission

factor

(tCO2/TJ)

=

C emission

factor

(tC/TJ)

x

Fraction of C

oxidised

x

Mass conversion

factor (tCO2/tC)

= 21.1 x 0.99 x 44/12 = 77.6 tCO2/TJ

Using the IPCC default emission factors for CH4 and N2O – 3 kg/TJ and 0.6 kg/TJ respectively: Emission

factor

(tCO2e/TJ)

=

CO2

emission

factor

(tCO2/TJ)

+

CH4

emission

factor

(tCH4/TJ)

x

GWP of CH4

(tCO2e/tCH4)

+

N2O

emission

factor

(tN2O/TJ)

x

GWP of N2O

(tCO2e/tN2O)

= 77.6 + 3 x 10-3 x 21 + 0.6 x 10-3 x 310

= 77.8 tCO2e/TJ

At 40.19 TJ/103t (IPCC factor for residual oil), the density for heavy fuel oil used on site is 0.89 kg/m3, or 0.89 x 10-6 t/L (refer to Annex 5 for details on selected densities). Fuel consumption

in energy equivalent

(TJ/yr)

=

Fuel oil consumption

(L/yr)

x

Net calorific value of fuel oil

(TJ/103t)

x

Density of fuel oil

(t/L)

= 3000 x 40.19 x 0.89 x 10-6

= 0.11 TJ/yr

Then,

Annual Emission

=

Emission factor

x

Fuel consumption in energy


36

(tCO2e/yr)

(tCO2e/TJ)

equivalent (TJ/yr)

= 77.8 x 0.11 = 8.6 tCO2e/yr

Fuel oil is also required to increase the efficiency of combustion when rice husk is extremely wet in the rainy season. However, with the precaution to cover rice husk with tarpaulin, such occasions are expected to be infrequent and short. Fossil fuel used for this purpose, heavily dependent of the weather, cannot be projected in advance. At current prices, fossil fuel is several times more expensive than rice husk as fuel. There are strong economic disincentives to use fossil fuel except when absolutely necessary. For this reason, the Project expects its use of fuel oil to be small in quantity. However, the Project’s fuel oil usage, be it for start-up, in the rainy season, or for any other purpose, will be accurately monitored and incorporated in the CER calculation as project emissions, using the emission factor calculated above. The following table summarises the input values used to compute project emissions using the above formulae:

E.2. Description of the formulae used to estimate leakage, defined as: the net change of

anthropogenic emissions by sources of greenhouse gases which occurs outside the project boundary, and that is measurable and attributable to the project activity: (for each gas, source, formulae/algorithm, emissions in units of CO2 equivalent)

As discussed in B.3, no leakage is anticipated for this Project.

E.3. The sum of E.1 and E.2 representing the project activity emissions: Given that no leakage is anticipated, the total project activity emission is represented by E.1. The expected emission from the project activity for each year in the crediting period is 2,529 tCO2e.


37

E.4. Description of formulae used to estimate the anthropogenic emissions by sources of greenhouse gases of the baseline: (for each gas, source, formulae/algorithm, emissions in units of CO2 equivalent)

E.4.1. Grid electricity generation The ensuing table represents the grid generation and fuel consumption as projected by EGAT14 for the first crediting period. Table 3: EGAT projection of grid during crediting period

Type of fuel 2006 2007 2008 2009 2010 2011 2012

Hydroelectric GWh 4372 4414 4201 4260 4269 4281 4303

% 3.1% 2.9% 2.6% 2.5% 2.4% 2.2% 2.1%

Natural Gas GWh 87134 85878 81501 87113 87493 82921 74362

% 62.1% 57.4% 51.3% 51.2% 48.3% 43.2% 36.5%

MMSCFD 1810 1752 1642 1764 1760 1658 1472

Heavy Oil GWh 1061 1061 1050 1047 1047 1047 1051

% 0.8% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5%

MLitres 257 257 255 254 254 254 255

Diesel Oil GWh 14 16 0 0 0 0 0

% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

MLitres 76 76 71 71 71 71 71

Lignite GWh 17259 17255 17310 16251 16253 16252 15798

% 12.3% 11.5% 10.9% 9.5% 9.0% 8.5% 7.8%

MTons 18.33 18.33 18.386 17.221 17.221 17.221 16.718

Imported Coal GWh 13979 23291 25170 25094 25094 25094 25170

% 10.0% 15.6% 15.8% 14.7% 13.9% 13.1% 12.4%

MTons 5.342 8.803 9.503 9.473 9.473 9.473 9.503

Other Purchases

SPP GWh 13786 14417 14417 14417 14417 14417 14417

% 9.8% 9.6% 9.1% 8.5% 8.0% 7.5% 7.1%

Lao PDR GWh 2810 3305 15332 18834 18784 18721 18698

% 2.0% 2.2% 9.6% 11.1% 10.4% 9.8% 9.2%

14 EGAT’s Power Development Plan (PDP) 2001 Appendix 8


38

New IPP GWh 0 0 0 3273 13626 29161 49732

% 0.0% 0.0% 0.0% 1.9% 7.5% 15.2% 24.4%

Total GWh 16596 17722 29749 36524 46827 62299 82847

% 11.8% 11.8% 18.7% 21.4% 25.9% 32.5% 40.7%

Grand Total GWh 140415 149637 158981 170289 180983 191894 203531

CO2 emissions for all generation types were obtained using the fuel consumption given in the table above. An illustration of the calculation method is given using projected data for imported coal in 2006. All input data used for the calculations, including the relevant section of EGAT-PDP, is provided in Annex 5.

CO2 emission from grid

(tCO2)

=

Grid fuel consumption

(103 t)

x

Net Calorific

Value (TJ/103 t)

x

C emission factor

(tC/TJ)

x

Fraction of C oxidized

x

Mass conversion

factor (tCO2/tC)

= 5.342 x 103 x 12.14 x 26.8 x 0.98 x 44/12 = 6,245,323 tCO2

The CO2 emission is summed for all generation types. Following the same procedures as for imported coal, the total CO2 emission for the grid in 2006 was calculated as 87,700,079 tonnes. The total electricity generated given in the table was used to obtain the CO2 emission factor.

CO2 emission

factor

(tCO2/MWh)

=

Sum of all CO2

emission from grid

(tCO2)

÷

Grid electricity generated

(MWh)

= 87,700,079 ÷ 140,599,000 = 0.624 tCO2/MWh

The CO2 emission displaced by the Project is calculated by multiplying the emission factor


39

obtained in Step 2 by the amount of electricity exported by the Project, 132,864 MWh.

CO2

emission

(tCO2/yr)

=

Electricity exported

by Project (MWh/yr)

x

CO2 emission

factor (tCO2/MWh)

= 132,864 x 0.624 = 82,907 tCO2/yr

In the calculation of the grid CEF, it is necessary to make assumptions concerning the “Other Purchase” category, as only data on generation is provided. The assumptions made are as follows:

• Small Power Producers – it is assumed that the current mix of the SPP, comprised mainly of biomass and natural gas plants, will stay constant during the initial crediting period, as the operation dates of most plants pipelined are not known. For the CEF, the same rate as the regular plants have been used. This is conservative, in that the smaller plants have a lower efficiency and hence lead to a higher CEF.

• New Independent Power Producers – The fuel mix of the IPPs are currently unknown. Discussion with EGAT officials indicated that the targeted fuel mix for New IPPs is 70% combined-cycle natural gas and 30% imported coal. As fuel consumption projections are not provided, the regular scale CEFs were used based on this information.

As with all the other components of the grid, the actual fuel mix of the SPPs and IPPs will be known ex post. If the monitored fuel mix will lead to a conservative baseline calculation, this will be reflected in the calculation of CERs. Another item of concern is the data for diesel. CEFs calculated from the given data was erratic, and on average, was over 3 t/MWh, with some being as high as 98t/MWh. Although representing less than 1% of the total generation and therefore the effects negligible, a plant efficiency of 35% was assumed (as opposed to approximately 38% for heavy oil), resulting in a CEF of 0.76 t/MWh, which is a much more reasonable and conservative figure. To estimate annual baseline emissions from grid electricity generation for the entire crediting


40

period, the preceding calculations are repeated for each year until 2012. The grid CEFs and emissions so derived are given in Table 4 below.

Table 4: Annual emission factor and carbon dioxide emissions for Thai Electricity Grid

Year Carbon Emission Factor tCO2/MWh

CO2 emissions from grid electricity

(tCO2)

2006 0.624 82,907

2007 0.635 84,369

2008 0.593 78,788

2009 0.570 75,732

2010 0.568 75,466

2011 0.573 76,131

2012 0.578 76,795

TOTAL 550,188

E.4.2. Open air burning for biomass disposal The amount of carbon released from open air burning of rice husk in the absence of the Project is determined from the amount of rice husk used by the Project. Lab analysis of rice husk gave a carbon fraction of 0.3713. Carbon released

(tC/yr)

=

Rice husk used as fuel by Pichit

plant (t biomass/yr)

x

Carbon fraction of biomass

(tC/t biomass)

= 144,533 x 0.3713 = 53,665 tC/yr

Annual CH4

released

=

Carbon released in total

x

Carbon released

as CH4 in open-air

x

Mass conversion

factor

x

GWP of CH4


41

(tCO2e/yr)

(tC/yr)

burning (%)

(tCH4/tC)

(tCO2e/tCH4)

= 53,665 x 0.005 x 16/12 x 21 = 7,513 tCO2e/yr

E.4.3. Baseline emissions summary

The table below summarises the result of the baseline calculations.

Table 5: Baseline emissions for crediting period

Year CO2 emissions from grid electricity

(tCO2)

CH4 emissions from open air burning of

rice husk (tCO2e)

Total baseline emissions

(tCO2e)

2006 82,907 7,513 90,420

2007 84,369 7,513 91,882

2008 78,788 7,513 86,301

2009 75,732 7,513 83,245

2010 75,466 7,513 82,979

2011 76,131 7,513 83,644

2012 76,795 7,513 84,308

TOTAL 550,188 52,591 602,779

E.5. Difference between E.4 and E.3 representing the emission reductions of the project activity:

The emission reduction of the Project is represented by the difference between E.4 and E.3, which is:

Emission reduction

= Emission from grid electricity generation

+ Emission from Open air

burning for rice husk disposal

- Emission from biomass fuelled-

electricity generation

- Emission from transportation of rice husk

for the Project

- Emission from fuel oil use for the Project


42

E.6. Table providing values obtained when applying formulae above: Table 6: Emission reductions of the project activity

Year Total baseline emissions

(tCO2e)

Total Project emissions

(tCO2e)

Emission reductions

(tCO2e)

2006 90,420 2,529 87,891

2007 91,882 2,529 89,353

2008 86,301 2,529 83,772

2009 83,245 2,529 80,716

2010 82,979 2,529 80,450

2011 83,644 2,529 81,115

2012 84,308 2,529 81,779

TOTAL 602,779 17,703 585,076


43

F. Environmental Impacts

F.1. Documentation on the analysis of the environmental impacts, including transboundary impacts

The controlled combustion of rice husk burning in a modern facility such as ATB’s eliminates serious environmental consequences that arise from the usual methods of rice husk disposal, i.e. dumping or open-air burning. The following picture illustrates the environmental hazard caused by open-air burning of rice husk.

Other points noted for ATB’s plants are as follows:

• SO2 emissions will be minimal. NOx emissions will be kept within the standards prescribed by the Ministry of Science, Technology and Environment and the Ministry of Industry. To ensure observance of the standards, a continuous air emission monitoring system (CEMS) will be installed.

• Particulates and fly ash will be captured in an electrostatic precipitator for controlled removal. Preliminary air dispersion simulations suggest that the maximum


44

concentrations of solid particulate emitted by the plant will be less than 20% of the national standard.

• Wastewater will not be permitted to leave the plant site. Instead, it will be first treated and then evaporated from an evaporating pond.

• Ash will be disposed of safely. If the 25,400 tonnes/yr of RHA expected from the project

cannot be sold, provision has been made to bury the ash on-site, thereby preventing it from escaping into the atmosphere or entering the local waterways via runoff.

• The large size of the site combined with tree plantings at each plant will buffer ambient

noise.

• EPC and O&M contractors will be required to guarantee that the plant will follow World Bank environmental guidelines for thermal power plants, in addition to Thailand’s NEB regulations.

F.2. If impacts are considered significant by the project participants or the host Party: please provide conclusions and all references to support documentation of an environmental impact assessment that has been undertaken in accordance with the procedures as required by the host Party.

According to Thai regulations, an Environmental Impact Assessment is required for the proposed plant. The assessment and mitigation plan for any impacts must be approved by the Office of Environmental Policy and Planning (OEPP) and National Environmental Board (NEB). In September 2001, ATB submitted its completed EIA for the Pichit site, whose English summary is attached as Reference File I. The EIA was approved by the National Environmental Board (NEB) on 20 November 2002. Approval of the Project’s EIA signifies conformity to all the Thai environmental standards specified in the Enhancement and Conservation of the National Environmental Quality Act B.E. 2535.

As part of EIA compliance, ATB will submit to the OEPP regular semi-annual EIA reports, which will include the following:

• Results of continuous monitoring of air emission from the stack


45

• Ambient air quality • Noise level at monitoring points in the neighbourhood • Water quality at the holding pond • Occupational health and safety • Record of accidents


46

G. Stakeholders comments G.1. Brief description of the process on how comments by local stakeholders have been

invited and compiled: ATB has held numerous meetings with local stakeholders. Appendix C lists 24 principal meetings held for the Pichit site. Local stakeholder comments are also sought in formal surveys. Opinion surveys were conducted amongst 20 community leaders and 150 villagers, in accordance with the methodology described in Reference File II. Such a comprehensive stakeholder consultation process is not mandated under Thai law.

G.2. Summary of the comments received: The opinion survey results were very positive for the Project, with as many as 87% of the respondents expressing agreement, while only 2.7% disagreed. Details are provided in Reference File II. Thai law requires that 50% of respondents agree to a project as part of an EIA assessment. However, in order to be eligible for the EPPO-SPP program, it is required that 67% approval is obtained. A recent public hearing conducted specifically for this purpose found 89% of respondents in favour of the Project. This figure is well over both the EPPO and EIA requirements.

G.3. Report on how due account was taken of any comments received:

G.3.1. Environmental Protection Guarantee Fund ATB is establishing an Environmental Protection Guarantee Fund to ensure that financial resources are available to pay for damages in the unlikely event that environmental degradation occurs as a result of the operations of its plants. During plant operation, the Fund earmarks annually a sum of 1 million baht (about US$23,000). Please refer to Appendix D for details.


47

A careful process has been developed to monitor the fund, meetings, actions, and public participation proceedings. These records will be available for inspection.

The monitoring procedure is summarized in the following table.

Performance Evaluation for:

Documentation Comments:

Environmental well-being & compliance

- Meeting minutes of Fund Committee meetings

Committee meetings will be held on a regularly scheduled basis, with details to be finalized at the start of construction.


- Independent 3rd

party assessments Technical expert assessments by an independent third party will support the Committee’s work in monitoring environmental impact.


- Fund’s bank statements

If local communities are compensated for environmental non-compliance, the Fund’s bank will record drawdowns from the Fund.

Community resident satisfaction

- Resident comment logs

Residents within the community will be encouraged to voice concerns with the local government, who will be responsible for bringing them to the Committee. The Committee will maintain a record of residents’ comments.

G.3.2. Socio-economic contribution to local communities ATB intends to make certain that its power plants will substantially contribute to the well being of the local communities. Many locals have become stakeholders in the Pichit Project. Rice millers and truckers, many of whom are residents in communities in the vicinity of the power plant sites, have entered into fuel supply and fuel transport agreements. Other local residents will be involved during plant construction as construction workers and civil work subcontractors, and during plant operation as skilled and unskilled operations and maintenance personnel. In addition, local communities have expressed strong support for ATB’s plans to make low cost steam available for paddy drying, as this helps farmers achieve better margins for their crop.


48

The list of specific local economic development impacts include;

• Creation of construction and power plant operation jobs (All contractors and suppliers to the project are mandated to give preference to local labour);

• Training and professional development (Training in equipment operation and computers; internet access will also be available for workers);

• Increased employment opportunities in rural areas (People may choose to work locally, instead of moving to urban centres for employment);

• Increased economic activity is expected in the local communities at all plant sites to meet transportation, housing, and catering needs, etc.;

• Increased prices for rice paddy (Since the Project requires very large quantities of rice husk, the newly created market will likely drive up prices paid to rice traders, as well as to farmers).

G.3.3. Community Development Fund To contribute to the local communities’ social development, ATB is establishing the Community Development Fund in addition to the Environmental Protection Guarantee Fund mentioned above. The fund earmarks 1 million baht (about US$ 23,000) annually. The annual endowment is not contingent on the Project’s financial performance. Run by a committee composed of local leaders, ATB representatives and 3rd party advisors, the fund’s mandate will be to design, organize, and run projects focusing on education for the youth, cultural life, and the environment. ATB’s discussions with local communities have revealed some common goals:

• Increase the number of young people continuing onto higher education (high school completion, technical college, etc.) through merit and need-based scholarships;

• Improve education experience at primary and secondary levels through donations and endowments to local schools;


49

• Increase computer literacy through factory-based and/or school-based computer facilities and workshops;

• Promote greater awareness and understanding of environmentally sustainable farming and irrigation techniques.

The fund will positively impact social development at community level, through streamlined, focused activities. Please refer Appendix D for more details.

50

Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: A.T. Biopower Co. Ltd. (Project participant) Street/P.O.Box: 719 Rama 9 Road Building: KPN Tower, 14th Floor City: Bangkapi,Huaykwang, Bangkok State/Region: Postfix/ZIP: 10320 Country: Thailand Telephone: +66 2717 0445 to 8 FAX: +66 2717 0449 E-Mail: URL: www.atbiopower.co.th Represented by: Title: Chief Executive Officer Salutation: Dr. Last Name: Watanatada Middle Name: First Name: Thawat Department: Mobile: Direct FAX: Direct tel: Personal E-Mail: [email protected]

http://www.atbiopower.co.th/

mailto:[email protected]

51

Organization: Mitsubishi Securities Co., Ltd. (CDM Advisor) Street/P.O.Box: 2-5-2 Marunouchi, Chiyoda-ku Building: Mitsubishi Building, 10th Floor City: Tokyo State/Region: Postfix/ZIP: 100-0005 Country: Japan Telephone: +81 3 6213 8500 FAX: +81 3 6213 6175 E-Mail: URL: http://www.mitsubishi-sec.co.jp/english_fs.html Represented by: Title: Chairman, Clean Energy Finance Committee Salutation: Mr. Last Name: Hatano Middle Name: First Name: Junji Department: Clean Energy Finance Committee Mobile: Direct FAX: +81 3 6213 6175 Direct tel: +81 3 6213 6860 Personal E-Mail: [email protected]

http://www.mitsubishi-sec.co.jp/english_fs.html

mailto:[email protected]

52

Annex 2

INFORMATION REGARDING PUBLIC FUNDING

The financial plans for the Project do not involve public funding from Annex I countries.

53

Annex 3

NEW BASELINE METHODOLOGY 1. Title of the proposed methodology: Grid-connected biomass power generation.

2. Description of the methodology: 2.1. General approach

□□ Existing actual or historical emissions, as applicable;

□□ Emissions from a technology that represents an economically attractive course of action, taking into account barriers to investment;

□□ The average emissions of similar project activities undertaken in the previous

five years, in similar social, economic, environmental and technological circumstances, and whose performance is among the top 20 per cent of their category.

The adoption of 48(b) as the baseline approach for this project is based on the view that in the absence of the CDM project, the most economically attractive course of action will be pursued for the grid, subject to relevant factors such as host country energy policies and environmental regulations. Moreover, neither 48(a) nor 48(c) will be an appropriate approach to determine the project’s baseline due to the reasons given below: • From official power generation forecasts by the relevant power generation company, it is

clear that existing actual or historical emissions will not be representative of the future emission patterns.

• There are no data to determine and analyse the top 20 percent of the projects similar to the project in social, economic, environmental and technological circumstances.

2.2. Overall description (other characteristics of the approach): The proposed methodology is an application of 48(b) of the CDM modalities and procedures. It looks at the plausible scenarios from an investment perspective to arrive at a baseline scenario for electricity generation. The methodology firstly determines whether the project is plausible as a business-as-usual project (Step 1). It then determines what will happen in the absence of the project – the baseline scenario in Steps 2.1-2.2. The supply and demand balance for the biomass and the issue of leakage will be considered in Step 3. The steps provided below are to be followed in Section B.3 of the CDM-PDD on a project-specific basis. If any of the questions posed in the following steps are answered with a no, this methodology is not applicable, and another methodology shall be applied to the project. Step 1: Is the project different to BAU?

54

Some grid-connected biomass power generation projects can be implemented as BAU and therefore constitute the baseline. However, a great many of them do not materialize due to the presence of barriers. Step 1 of the proposed baseline methodology ascertains what barriers exist to prevent the project under consideration from being implemented on a BAU basis. There being no guidelines currently available on the appropriate barriers to be considered, this methodology uses the same barriers as those provided for small-scale CDM project activities15. These are: (a) Investment barrier (b) Technological barrier (c) Barrier due to prevailing practice (d) Other barriers This methodology requires that one or more of these barriers be identified, to establish that the project would not have been implemented on a BAU basis. Should relevant guidance be provided in future, it will be used either in conjunction with or in lieu of these barriers. Examples of typical barriers in the context of grid-connected biomass power generation that the project must be shown to face are provided below: (a) Investment barrier • Return on equity is too low compared to conventional projects. • Real and/or perceived risk associated with the unfamiliar technology or process is too high

to attract investment. • There is a lack of support from funding sources to promote innovative projects. (b) Technological barrier • The project represents the first or one of the first cases of its kind in the country, leading to

technological concerns even when the technology to be employed is proven in other countries.

• There is a lack of skilled labour and/or proper training to operate and maintain state-of-the art technologies, leading to equipment disrepair and malfunctioning.

(c) Barrier due to prevailing practice • There is a lack of will to change the current practice in biomass disposal, with or without

regulations. • Developers lack familiarity with all available technological options, in particular

state-of-the-art technologies, and are reluctant to use them. (d) Other barriers • There is a lack of previous experience using the latest technologies, requiring too much of

precious management resources. This puts the project low in management priorities. • Many local communities fail to see the environmental friendliness of biomass power

generation and are opposed to the project, equating it with environmentally more

15 Attachment A to Appendix B of the Simplified Modalities and Procedures for Small-Scale Clean

Development Mechanism Project Activities

55

controversial conventional power stations.

Section B.3 of the accompanying PDD identifies the barriers on a project-specific basis. Step 2.1: Is the baseline the operating margin? In this step, the methodology determines whether the project activity will displace the operating margin or build margin after evaluating major relevant factors such as the host country’s energy policy and the characteristics of the Project. It is generally said that the build margin is the appropriate baseline to gauge the long-term impact of a new facility particularly in an environment of increasing electricity demand, which is the case for most countries. However, for most biomass power plants, the operating margin is often more relevant as the baseline even under the circumstances of growing electricity demand. To determine between build margin and operative margin displacement, the methodology proposes an analysis on the factors including the following two: • Size of the project relative to the total capacity growth planned for the grid and • Host country energy policies For grid-connected biomass energy projects, the analysis will typically show: • The relatively small size of the biomass power generation project means that it has little

impact on plans for constructing major new power stations. • In view of the importance of renewable energy sources emphasized in energy policies in

the host country, the project is unlikely to cause the cancellation of planned construction (build margin displacement) of another renewable energy plant of similar size. They will both be built.

The only exception to the second point above is when the supply-demand condition for the biomass to be used by the project is so tight that the two plants cannot both be built. This aspect is assessed as part of the suitability test stipulated in Step3. Step 2.2: Is the operating margin a combination of all generation types? Having established the operating margin as the baseline scenario in the previous step, the most likely marginal fuel needs to be identified in this step. The two major factors that must be considered to identify the marginal fuel are: • Host country energy priorities and • Operating economy of the different types of power plants. There are normally two leading candidates for the operating margin. One is single-cycle natural gas which is often marginal due to its low efficiency. The other is imported oil-fuelled power generation, a frequent target of reduction in an effort to curb oil imports and curtail current account deficit. Sometimes the operating margin can be identified with a fair amount of certainty by close examination of available data. At other times, it is possible to determine the operating margin on the basis of the government’s clear policies (e.g. let renewables displace diesel). If a generation

56

type can be definitively singled out as being the operating margin, this will be identified as the baseline scenario. However, in great many cases, a clear identification of the operating margin is not feasible due to a lack of sufficient data or definite government policy. In this case, this methodology views the grid average excluding the project as the operating margin to be displaced by the project. This view is based on the fact that the grid average without the project signifies the combination of all the economically attractive courses of action for grid power generation in a particular country or region. While admittedly not perfect, it is the most reasonable representation of the operating margin, in the absence of the data (such as well developed dispatch information) that allows precise determination of the operating margin. The use of the grid average as the operating margin is contingent on the following three conditions being met: • The project under consideration is grid-connected. • For conservatism, the grid average includes hydro which is often excluded from the

operating margin as “must run”. • The grid average carbon emission factor (CEF) is lower (and therefore more conservative

as the baseline) than the CEF of the most likely operating margin candidate rejected due to the lack of convincing evidence.

As the baseline is counterfactual, the grid average as the operating margin should be the average excluding the project emissions. However, for the purpose of simplification, the exclusion is deemed unnecessary in cases where the project emissions have only a negligible impact on the value of overage grid emissions. In other words, the grid average including the project will be used as a very close approximation of the grid average without the project, which is conceptually more accurate as the baseline. For biomass generation, the inclusion of the project in the grid average will in fact lead to conservatism. It is noted that when the supply-demand condition is tight for the biomass fuel to be used by the project, there is a possibility that the diversion of the biomass fuel to a new plant constructed by the project leads to be a decline in the output at existing power plants fuelled by the same biomass. In such a case, the existing power generation must be viewed as the operating margin, instead of the grid average this methodology proposes The methodology has a suitability test against its application to a tight supply-demand environment. Please refer to Step 3. Step 3: Is there a large surplus supply of biomass? The following must be ascertained to determine that the application of this methodology is appropriate for a project:

a) The project will not deplete the supply of the biomass in question to the extent that it will affect the construction of biomass power plants pipelined.

b) There is no competition for supply of the biomass that will result in a decrease in the load factor of other biomass-fuelled plants. Thus, biomass-fuelled generation is not the operating margin.

c) The project will not deplete the supply of biomass to drive current users, using the biomass for energy generation purposes, to divert to a fossil fuel to generate the equivalent energy. Thus there is no leakage.

It is thus crucial that there is an abundance of biomass that is not utilised. This methodology thus introduces a supply and demand test. A ratio of more than 2:1 in the following formula is

57

required for the methodology to be applied.

Supply:Demand =

Surplus amount of biomass, for which

there is no use

÷

Biomass required to fuel all plants using

same biomass = greater than 2:1

The “supply” referred to in this methodology is equivalent to the total biomass minus biomass consumed for conventional purposes (i.e. other than for grid electricity generation). The amount of surplus supply is to be obtained from the host country’s national inventory. The relevant input values and time span for the factors outlined above differ. For a) and b), which affect the baseline selection, it is necessary to include in the “demand” biomass necessary to fuel not only existing but also planned biomass plants. However the test need only be carried out once, when preparing the CDM-PDD, as they are both baseline issues. If the resulting supply-demand ratio is less than 2:1, supply will be considered tight and the baseline scenario deduced by this methodology incorrect. Then, this methodology will not be applicable to the project. c) is of both immediate and on-going concern. It is necessary that the supply-demand ratio is greater than 2:1 for the duration of the crediting period. Unlike a) and b) however, the “demand” here includes only the demand at that point in time, and does not include future demand. For the initial supply-demand assessment, the test carried out for a) and b) will automatically test for c). An assumption made is that there is minimal change in demand for conventional purposes. This assumption is necessary to make use of the official, national inventory data for this analysis. The appropriateness of this assumption is discussed in Section 3. Having ascertained for the project that there is enough biomass to fuel all plants pipelined, including the project plant, monitoring will be carried out to ensure the continuing applicability of the methodology to the project. As outlined in Annex 4, once the 2:1 threshold is reached, an independent survey will be conducted targeting the region encompassing the project’s procurement area. Depending on the survey result, an appropriate measure such as a discount factor will be planned and submitted to the Methodology Panel (or any other relevant authority) for approval. This will ensure leakage is dealt with in an appropriate manner, without unnecessarily increasing transaction costs by mandating comprehensive surveys even in situations where there is a clear abundance of biomass. The calculation method for supply and demand is illustrated below. Firstly, the host country’s national inventory is used to deduce the amount of surplus biomass.

Total surplus supply (national

inventory)

=

Total supply of biomass

-

Biomass used for grid-electricity

generation

-

Biomass used for conventional purposes (e.g. own heating)

= Biomass burned

(as given in national

+

Biomass disposed (as given in

national

58

inventory) inventory) As can be seen from the above relationship, the inventory will give the amount of major agricultural crop residues burned or disposed, which represents the surplus biomass factoring in the biomass used for conventional purposes as well as for grid-electricity generation. The amount required for grid-electricity generation is added back to the surplus supply to provide the “supply” as defined in this methodology.

Surplus supply (defined in

methodology)

=

Total surplus supply

+

Biomass used to fuel existing plants using same

biomass The amount of biomass necessary to fuel power plants is determined from the amount biomass-fuelled electricity generated for the grid, multiplied by the per unit biomass required. The biomass required by all plants is deemed equivalent to the project plant, as biomass plants are typically of similar scale and efficiency. Thus:

Per unit biomass required to fuel

plants (t/MWh)

=

Biomass used to fuel project plant

(t/yr)

÷


by project (MWh/yr)

Demand

(t/yr)

=

Grid electricity generated by power plants using same

biomass as the project, including the project plant*

(MWh/yr)

x

Per unit biomass required to fuel

plants

(t/MWh) *existing and planned

If there is no data on the amount of electricity generated, but plant capacity is available, a calculation based on the amount of biomass required per unit of installed capacity instead will give a reasonable estimation. It is noted that where abundance of unused biomass is ascertained, the biomass fuel the project uses would, in the absence of the project, be disposed of in the regular manner, which is the combination of dumping and open air burning or burning in simple incinerators. Since the combustion of the biomass in a controlled environment of a newly-built power station results in much lower GHG emissions, the project will contribute to the reduction of GHG emissions from biomass disposal. Calculation of baseline emissions Having established the baseline scenario through the preceding steps, this methodology uses official projections for the national/regional/local electricity grid to calculate the annual grid average carbon emission factors (CEFs) for the crediting period. The annual average CEF is then multiplied by the amount of electricity displaced by the project activity to arrive at the baseline emissions, using the formulae described in Section 6. Methane emission from uncontrolled burning of agricultural residue, which will be displaced by the project, is deduced from the amount of biomass consumed as fuel by the project, multiplied by a methane emission factor.

59

It is important to emphasise that the baseline scenarios and algorithms and parameters for baseline emission calculations are all determined ex ante. Related emissions for both grid electricity and biomass disposal are also determined ex ante on the basis of currently available information. Activity related data such as fuel consumed and electricity exported by the project will be monitored and used in the actual computation of CERs, once the project activity starts. One point of note is the calculation of the grid CEFs. The baseline scenario for electricity generation having being determined as the grid average generation, the definition of the baseline will dictate that the mix of generation types set ex ante remains unchanged, with only the CEFs (i.e. the efficiency of future plants) requiring monitoring. However, this approach is more applicable with baselines that specify a single generating type as the target for displacement. Taking into account the fact that biomass plants will have minimal impact on the grid fuel mix due to reasons delineated previously, it is appropriate for this methodology that both the mix of generation types and the respective CEFs – effectively the grid average CEF – be monitored. For this methodology, in the interest of conservatism, the monitored ex post grid CEF will replace the grid CEF calculated ex ante only when they represent a lower value. 3. Key parameters/assumptions (including emission factors and activity levels), and data sources considered and used: Key assumptions: The inherent assumption in applying this methodology is availability of official grid data for the country/region in which the project is located. Specifically, it is assumed that official projection for annual grid CEFs is available, or, in the case where this cannot be obtained, official fuel consumption and generation plans for each year of the crediting period are available. Furthermore, for monitoring purposes, official actual data on the grid must be released regularly. Uncontrolled burning is deemed as the mode of disposal for unwanted agricultural residue. This is a conservative assumption, in that emissions from dumped biomass will lead to higher emissions than that for uncontrolled burning. Calculations using IPCC default factors and biomass carbon fraction of 0.4 show that dumped biomass will emit five times more methane over a seven-year crediting period than uncontrolled burning. This figure will increase manifold if long-term effects spanning beyond the crediting period is considered. Please refer to Note 1 to Annex 3 for details. An assumption is necessitated to make use of official data when conducting the suitability test (Step 3, Section 2.2), which is that biomass consumed for conventional use remains constant. The assumption is reasonable in that most if not all of the future change in demand will stem from biomass used to fuel industrial-scale plants that supply electricity to the grid. Nevertheless, the suitability of this assumption to a specific project is to be confirmed in Section B.3 of the CDM-PDD. Data sources: Grid trend – Official power development plans issued by the relevant electricity generating authority/company. This will be used as a primary indication of the national and sectoral circumstances, as the energy plan is typically a reflection of the energy sector priorities as well as the pertinent national policies.

60

Emission factor (grid electricity) – The relevant electricity generating authority/company is the preferred data source for obtaining grid emission factors. Where there is no official grid carbon emission factor, but fuel usage and generation data are available, the emission factor may be calculated using appropriate IPCC factors and density data. Current use/disposal of biomass – The major source of data is official data, namely the host country national inventory. This may be strengthened with surveys carried out with producers of the agricultural waste, or by comparing with anecdotal evidence. Emission factor (biomass) – Default IPCC emission factors are used to compute both baseline and project emissions. Where local data is available, this should be used in lieu of the default factor. The default factors are provided in Section 6 below: Emission factor (other) – Where available, local data will be used. Otherwise, default IPCC emission factors will be used to compute baseline and/or project emissions. The default factors are also provided in Section 6. 4. Definition of the project boundary related to the baseline methodology: The physical boundary is defined as the project site. However, emission related to transportation, which occurs outside the plant perimeter, is an exception, and is included in the project boundary. The gases and sources related to both the baseline and project activities are summarised below. Where a source is not counted, justification is provided. Source Gas Included in emission calculation?

(Justification if not included) CO2 Yes Grid electricity generation


CO2 No. CO2 from biomass is carbon- neutral as per IPCC guidelines16.

CH4 Yes Open air burning of surplus biomass N2O No. For purpose of simplification.

This is conservative*.

Baseline

Transportation of biomass (to disposal site)

CO2 No. For purpose of simplification. This is conservative.

CO2 No. CO2 from biomass is carbon- neutral as per IPCC guidelines.

CH4 Yes Biomass electricity generation N2O No. For purpose of simplification.

This is conservative*. CO2 Yes N2O Yes Transportation of biomass

(from rice mill to project site) CH4 Yes CO2 Yes

Project

Transportation of biomass (on-site) N2O Yes

16 p4.73, Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual

61

CH4 Yes

Biomass storage

CH4 No. Biomass will be stored for only a short period of time and hence the emissions will be minor. Further, it should be noted that in the current (baseline) practice, biomass is piled until there is a substantial amount to be burned in the open air.

CO2 Yes N2O Yes

Start-up/auxiliary fuel CH4 Yes

*Grid electricity generation and open air burning of biomass both lead to N2O emissions, greater than that emitted by the project. For conservatism and simplification, this source is not included in emission calculations. Please refer to Note 2 to Annex 3 attached to this Annex for details. The definition of the project boundary, as well as gases and sources, may differ slightly depending on the characteristics of the specific project to which the methodology is applied. 5. Assessment of uncertainties: The most significant uncertainty is the accuracy of official projections which will be used for calculating future annual grid average CEFs to serve as the baseline CEFs. To minimize the risk of over-issuance of CEFs as a result of this uncertainty, the methodology mandates the annual collection of official data to monitor the grid CEF. Where the CEF calculated ex post will result in a downward revision of CERs, this will supplant the CEF calculated ex ante. The proposed methodology deems the baseline for surplus biomass to be uncontrolled burning. The uncertainty lies in the assumption that all agricultural waste for which uses cannot be found will be burned, whilst in reality, a significant quantity of the agricultural waste is dumped. The methodology duly addresses this uncertainty by erring on the side of conservatism, as dumping of biomass will result in higher baseline emissions due to the larger quantities of methane – a potent greenhouse gas – produced. The other uncertainty relates to the possibility of competing use of biomass. Should biomass supply become tight, different baseline scenarios as well as the issue of leakage will have to be considered. As per Step 4, Section 2.2, the methodology duly addresses this aspect by introducing initial and ongoing suitability tests. When the given threshold for supply:demand is crossed, a survey will be conducted by an independent party, the result of which will be used to determine an appropriate measure to account for any leakage. 6. Description of how the baseline methodology addresses the calculation of baseline emissions and the determination of project additionality: In Step 1, Section 2.2, the project is established as not occurring under BAU. Then, in the subsequent steps, a scenario that is different to the project is established as the baseline scenario (i.e. BAU), taking into consideration factors such as host country energy plans and priorities, regulations and prevalent practice, and investment, technological, institutional and other barriers. This satisfies the latter of the two conditions given in Paragraph 43 of the CDM Modalities and

62

Procedures17, which states: “A CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity”. The following formulae describe the calculation of baseline and project emissions, based on the relevant sections of the IPCC guidelines18. The difference between the two emission levels will be used to establish that the project will indeed lead to a decrease of emissions as compared to the baseline. This fulfils the other condition given in Paragraph 43.

6.1 Input variables Where reliable local or project-specific data is available, these will be used in the formulae provided below. Where unavailable, the following IPCC default factors may be used.

Source Variable IPCC default Reference19

Net calorific value Various Table 1-2, 1-3 C emission factor Various Table 1-1 Fraction of C oxidised Various Table 1-6 Grid fuel consumption Electricity

generating company

Grid electricity generation

Electricity generating company


Electricity exported by project

Project-specific

C fraction of biomass Various Table 4-17 CH4 emission factor 0.005 Table 4-16

Open air burning of surplus biomass

Biomass used by project

Project-specific

Heat value of biomass Various Table 1-13 Biomass electricity generation CH4 emission factor 30 kg/TJ Table 1-7 CO2 emission factor 1097 g/km

3172.31 g/kg CH4 emission factor 0.06 g/km

0.18 g/kg N2O emission factor 0.031 g/km

0.09 g/kg

Table 1-32 (US heavy duty diesel vehicles, uncontrolled – this is most conservative)

Truck capacity Project-specific

Transportation emission

Return trip distance Project-specific C emission factor 21.1 t C/TJ Table 1-1 Fraction of C oxidised 0.99 Table 1-6 CH4 emission factor 3 kg/TJ Table 1-7

Start-up/auxiliary fuel use (assuming heavy oil)

N2O emission factor 0.6 kg/TJ Table 1-8

17 Decision 17/CP.7 Modalities and procedures for a clean development mechanism as defined in Article

12 of the Kyoto Protocol, http://unfccc.int/resource/docs/cop7/13a02.pdf (accessed July 2003) 18 Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual 19 Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual, unless

otherwise stated

63

Other data:

GWP CH4 21 GWP N2O 310 Mass conversion factor (tCO2/tC) 44/12 Mass conversion factor (tCH4/tC) 16/12

6.2 Baseline Emissions

Grid electricity generation – CO2 Step 1: For each generation type, fuel consumption data is obtained from official sources and used in the following calculation.

CO2 emission from grid

(tCO2)

=

Grid fuel consumption

(103 t)

x

Net Calorific

Value (TJ/103 t)

x

C emission factor

(tC/TJ)

x

Fraction of C oxidized

x

Mass conversion

factor (tCO2/tC)

The total grid CO2 emission is obtained by summing for all generation types. Step 2: The total electricity generated is again obtained from official sources and used to obtain the CO2 emission factor.

CO2 emission

factor

(tCO2/MWh)

=

Sum of all CO2

emission from grid

(tCO2)

÷

Grid electricity generated

(MWh)

Step 3: The CO2 emission displaced by the project is calculated by multiplying the emission factor obtained in Step 2 by the amount of electricity exported by the project.

CO2 emission

(tCO2/yr)

=


by project (MWh/yr)

x

CO2 emission

factor (tCO2/MWh)

Open air burning for biomass disposal – CH4 Step 1: The amount of carbon released from open air burning of biomass in the absence of the project is determined by multiplying the amount of biomass used by the project with the carbon fraction of biomass.

64

Carbon released

(tC/yr)

=

Biomass used as fuel

(t biomass/yr)

x

Carbon fraction of biomass

(tC/t biomass) Step 2: Annual CH4

released

(tCO2e/yr)

=

Carbon released in total

(tC/yr)

x

Carbon released

as CH4 in open-air burning

(%)

x

Mass conversion

factor

(tCH4/tC)

x

GWP of CH4 (tCO2e/tCH4)

6.3 Project Emissions Biomass electricity generation – CH4 Methane released by the project is calculated using the following equation. The actual heat value of biomass is relatively easy to obtain and is preferred over the IPCC default factor. After the commencement of the project activity, the actual methane emission factor is to be deduced from stack gas measurements. Annual CH4

released

(tCO2e/yr)

=

Heat value of biomass used

by project

(TJ/yr)

x

Methane emission factor

for biomass combustion (tCH4/TJ)

x

GWP of CH4

(tCO2e/tCH4) Transportation of biomass – CO2, N2O, CH4 As off-site transportation is often contracted out, this methodology uses the distance between the project plant and biomass supply site as the basis for the calculations. If fuel consumption data can be obtained, the basis for the calculation can be changed from emission per unit distance to emission per unit of fuel. For on-site transportation, where fuel consumption data can be easily obtained, this is usually the case. Step 1: Distance travelled

(km/yr)

=

Total biomass

consumed by project (t/yr)

÷

Truck capacity

(t)

x

Return trip distance to supply site

(km)

Step 2: Emission

factor

(tCO2e/km)

=

CO2 emission

factor (tCO2/km

)

+

CH4 emission

factor (tCH4/km

)

x

GWP of CH4

(tCO2e/tCH4)

+

N2O emission

factor (tN2O/km

)

x

GWP of N2O

(tCO2e/tN2O)

65

Step 3:

Annual Emission (tCO2e/yr)

=

Emission factor

(tCO2e/km)

x

Distance travelled (km/yr)

Start-up/auxiliary fuel use – CO2, N2O, CH4 Step 1: The CO2 emission factor is calculated using IPCC default values.

CO2 emission

factor (tCO2/TJ)

=

C emission factor

(tC/TJ)

x

Fraction of C

oxidised

x

Mass conversion

factor (tCO2/tC)

Step 2: The CO2 emission factor from above is summed with the CO2 equivalent values for CH4 and N2O emission factors to obtain the total emission factor for fuel use. Emission

factor (tCO2e/TJ)

=

CO2 emission

factor (tCO2/TJ)

+

CH4 emission

factor (tCH4/TJ)

x

GWP of CH4

(tCO2e/tCH4)

+

N2O emission

factor (tN2O/TJ)

x

GWP of N2O

(tCO2e/tN2O) Step 3: The above value is multiplied with the project fuel consumption expressed in energy equivalent.

Annual Emission

(tCO2e/yr)

=

Emission factor

(tCO2e/TJ)

x

Fuel consumption in energy equivalent

(TJ/yr) 7. Description of how the baseline methodology addresses any potential leakage of the project activity: For biomass energy projects, a potential leakage source is the diversion from biomass to a more carbon-intensive fuel as it begins to be used for power generation. To address this, the methodology has as part of its criteria a suitability test, which assesses whether leakage from this source will occur, either immediately or in the future. It is necessary to ascertain that there is an abundant source of biomass. Where tight biomass supply is an immediate concern, the test deems the methodology unsuitable for a project. If and when tight supply is detected through monitoring, a discount factor is to be introduced to duly account for possible leakage. It should be noted that the definition of “tight” supply for this methodology – 2:1 supply to demand ratio – means that potential leakage will be identified prior to it becoming a real issue. 8. Criteria used in developing the proposed baseline methodology, including an

66

explanation of how the baseline methodology was developed in a transparent and conservative manner: In determining the baseline for grid electricity generation, the first criterion is transparency. The methodology is clearly transparent in that it requires the use of official grid data sourced from a relevant power generating company. Official projections and stated host country energy priorities is used as an indicator of the baseline scenario. Moreover, the official grid CEF is used to determined the emissions associated with the displacement of grid electricity. All data used is readily available to the public and can easily be double-checked by the DOE. The possibility of competing use of biomass is also discussed transparently, relying again on official data – the national inventory and grid biomass electricity data. The methodology clearly discusses whether the baseline determination is appropriate, and the possibility of fuel diversion to a more carbon-intensive fuel based on variables that can be easily examined. The use of a supply-demand ratio gives a straightforward and transparent assessment of the issues relating to competing use of biomass. The baseline selection is carried out in a conservative manner. The selection of the grid average electricity as the baseline scenario for biomass electricity generation projects is conservative in most cases, as it includes in the calculation hydro- and renewable power with zero or very low emission. The approach thus avoids overestimation of the baseline, which may arise from prematurely selecting, as the target of displacement, more carbon-intensive power generation such as coal-fuelled or oil-fuelled electricity, which are the typical targets for displacement. Due to the uncertainty relating to the disposal method of agricultural waste identified in Section 5 above, transparency and conservatism was given precedence over accuracy in determining the baseline scenario for surplus biomass. There are two methods of disposing biomass for which no use is found – dumping and uncontrolled burning. As the methodology applies to situations where there is no reliable data on the ratio of the respective modes of disposal, it selects as the baseline scenario uncontrolled field burning, which results in a considerable conservative estimation of emissions in comparison to when dumping is selected as the baseline. Therefore, the baseline methodology is clearly conservative. The methodology also includes in the calculation of project emissions even minor emission sources, such as start-up fuel use and transportation, whilst neglecting emission reduction sources such as N2O from field burning, which will ensure that emission reductions are not over-stated. 9. Assessment of strengths and weaknesses of the baseline methodology: The strength of the proposed methodology is in the transparency of the grid average CEFs used for calculating CERs for each year. Also, by recalculating the weighted average CEF for the grid based on official actual data ex post, to supplant ex ante calculations only when it leads to a conservative CER amount, the methodology has in effect a built-in automatic update function that concurrently ensures conservatism. The transparency and conservatism related to this methodology is discussed in length in Section 8 above. The weakness of the methodology lies not in the methodology itself but in the possibility of misguided application of the methodology. If it is reasonable to predict a specific fuel(s) that will be replaced by the project activity, this methodology is not pertinent. However, when the displacement of a carbon-intensive fuel is likely but inconclusive, the use of this methodology

67

may be preferable for the sake of conservatism. The same applies to biomass disposal, which is assumed to be uncontrolled burning. If the prevalent mode of disposal can be ascertained as dumping, the calculation of emissions will change drastically and this methodology is therefore not suitable. Applicability is limited to those projects where official grid data can be readily obtained, not only for current data, but also the grid projection and periodic, future actual data. As official data must be obtained from the relevant local generating company, this methodology is not suitable in regions where official data cannot be obtained, or the reliability of the data is suspect. This is a weakness given that many developing countries lack the sufficient capacity to produce such reliable periodic grid data. Applicability will also be limited to those projects that specifically have as its baseline emission the grid average emission. The methodology, with some modification, may be adapted to other projects where the baseline fuel mix can be to some extent verified ex post, such as those that involve dispatch order analysis. This methodology and accompanying monitoring methodology, which will monitor the actual fuel mix and emission factors, is not applicable to those projects that involve fixing a priori a specific technology(ies) that the project will displace. 10. Other considerations, such as a description of how national and/or sectoral policies and circumstances have been taken into account:

For electricity generation, the official energy plan is central in setting the baseline. This implicitly takes into account all national and sectoral policies and circumstances surrounding electricity generation in that the actual fuel mix is a reflection of these circumstances. For biomass, an important consideration is the degree to which the agricultural waste is currently utilised. Sectoral policies and circumstances are to be discussed as part of the baseline “tests” provided in Step 4, Section 2.2, to assess the prevailing practice for biomass disposal. In monitoring supply and demand, future sectoral policies will be implicitly but accurately taken into account.

68

Note 1 to Annex 3: Emission from Biomass Disposal GHG emissions stemming from the two modes of biomass disposal – open air burning and dumping – are compared. Using the formulae provided in the IPCC guidelines, the emissions were calculated for 1000 tonnes of biomass assuming the following typical properties:

Variable Value Degradable Organic Carbon (DOC) 0.45 (typical value for biomass) Fraction of degradable organic carbon dissimilated (DOCF)

0.77 (default)

Methane generation rate constant (k) 0.05 (default) Methane correction factor (MCF) 0.6 (for piles over 5 metres deep) Fraction of CH4 in landfill gas (F) 0.5 (default) Oxidation factor (OX) 0 (value for uncovered piles) Mass of biomass (M) 1000 t

For the calculation of CH4 emission from dumping, the following first-order-decay model was used:

Methane emissions = ( ) ( ) ( ) ( )OXeFDOCxDOCxMCFxMAx

xtkF −×

×

××××××∑ −− 1

1216 )(

where t and x represent the year of emission and year of disposal, respectively. When 1000 tonnes of biomass is dumped in year 1, 2.4 tonnes of CH4 is released in the same year. With a GWP of 21, this translates to 51 tonnes CO2e. As the release of CH4 from piles occur over a long time span, by year 7, the emission accumulates to 327 tonnes CO2e. It can be seen from the ensuing table that when long-term effects are accounted for, emission from dumping is significantly higher again.

Year CH4 emission (t CH4) CO2 equivalent (tCO2e) 1 2.4 51 2 2.4 49 3 2.3 48 4 2.2 47 5 2.2 45 6 2.1 44 7 2.0 43 8 2.0 41 9 1.9 40

10 1.9 39 In comparison, according to IPCC guidelines, field burning of biomass is said to release 0.005 units of CH4 as a fraction of carbon released. Assuming the same properties, 1000 tonnes of biomass will release 56 tonnes CO2e when burned: Carbon released = 1000 t biomass x 0.4 tC/t biomass = 400 tC CH4 released as CO2e = 400tC x 0.005 x 16 tCH4/12 tC x 21 tCO2e/tCH4 = 56 tCO2e

69

Thus, the GHG effects of both disposal methods over a 7-year span can be summarised as follows: Year Biomass disposed

(t) Emission if dumped

(tCO2e) Emission if burned

(tCO2e) Difference

(tCO2e) 1 1000 51 56 -5 2 0 49 0 49 3 0 48 0 48 4 0 47 0 47 5 0 45 0 45 6 0 44 0 44 7 0 43 0 43

Total 1000 327 56 271 Clearly, dumping of biomass will result in higher emissions as compared to burning.

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Note 2 to Annex 3: N2O Emission from Biomass Combustion N2O is released when biomass is combusted, both in controlled and uncontrolled burning. Generally, N2O emission is indirectly proportional to combustion temperature. Thus, it can be stated that with the high boiler temperatures, N2O emission from biomass-fuelled power generation is lower than that for open air burning. The same conclusion can be drawn when using IPCC default values, as shown below.

Variable IPCC default value Reference Energy N2O emission factor for biomass

4 kg/TJ Table 1.8

Net calorific value (bagasse/agriculture)

8.8 TJ/kt Table 1.24

Agricultural residue burning Dry matter fraction (for rice) 0.83 (taking the middle of the range of

0.78 ~ 0.88) Table 4.17

Carbon fraction (%dm) 0.4144 Table 4.17 N:C 0.014 Table 4.17 Fraction oxidised 0.9 p4.83 N2O emission ratio 0.007 Table 4.16 Assuming 1000 tonnes of biomass, for power generation, N2O emission = amount of biomass x net calorific value x N2O emission factor = 1000 t x 8.8TJ/103 t x 4 kgN2O/TJ = 35 kgN2O or 0.035 tN2O With the same amount of biomass, for field burning, C released = amount of biomass x dry matter fraction x fraction of C x oxidation factor = 1000 t x 0.83 x 0.4144 x 0.9 = 310 tC N2O emission = C released x ratio N:C x N2O emission factor x mass conversion factor = 310 tC x 0.014 tN/tC x 0.007 x 44 tN2O/28 tN2 = 0.048 tN2O It can be seen that biomass combustion for power generation will result in 0.035 tN2O, which is lower than the 0.048 tN2O emitted from field burning. Thus, it is concluded that not counting N2O emission from biomass combustion will contribute to conservatism when calculating CERs.

Annex 4

NEW MONITORING METHODOLOGY Proposed new monitoring methodology Monitoring GHG emission reductions for biomass power generation using direct measurements and commercial records. 1. Brief description of new methodology In this monitoring methodology, the emissions related to the following sources will be monitored: • Baseline emission from grid electricity generation • Baseline emission from biomass disposal (uncontrolled combustion) • Project emission from biomass electricity generation • Project emission from fossil fuel use • Project emission from transportation In addition, biomass supply and demand will be monitored, as per the accompanying baseline methodology. 2. Data to be collected or used in order to monitor emissions from the project activity, and how this data will be archived The following table represents data that will be collected in order to calculate project emissions.

ID number

Data type

Data variable

Data unit

Measured (m), calculated (c) or estimated (e)

Recording frequency

Proportion of data to be monitored

How will the data be archived? (electronic/ paper)

For how long is archived data kept?

1 Quantitative Methane in stack gas

% m minimum of four times per year

- electronic minimum of two years after last issuance of CERs

2 Quantitative Amount of biomass combusted

t fuel m monthly (aggregate)

100% electronic minimum of two years after last issuance of CERs

3 Quantitative Fuel oil use L m continuous 100% electronic minimum of two years after last issuance of CERs

4 Quantitative On-site use of transport fuel

L m continuous 100% electronic minimum of two years after last issuance of CERs

5 Quantitative Off-site transport distance

km m (by a third party)

monthly (aggregate)

100% electronic minimum of two years after last issuance of CERs

Spectroscopic measurements (Data 1) will be carried out quarterly to obtain the proportion of methane in the stack gas emitted to the atmosphere. This data, together with the aggregated monthly report on biomass usage (Data 2), will be used to calculate the total methane emission from biomass combustion. Where spectroscopic or equivalent measuring instruments are not available, particularly for small projects, methane emission can be calculated using IPCC

default factors, as given in the accompanying baseline methodology. Emissions from fuel oil used as supplementary and start-up fuel are expected to be insignificant, but will be monitored and included in project emissions regardless. Flow meters will continuously record the amount of fuel being fed into the boilers (Data 3). This will be double-checked against fuel purchase receipts. Transportation of biomass will occur both on- and off-site. On-site emissions can be calculated by obtaining the amount of fuel used (Data 4). Off-site emissions can be calculated by recording the distance travelled by the trucks (Data 5). This is based on the assumption that fuel consumption data is readily available for on-site transportation, whereas off-site transportation is contracted out. However, either mode of monitoring is acceptable for both on- and off-site transportation emissions. Baseline emissions will be monitored through the following variables:

ID number

Data type Data variable Data unit

Will data be collected on this item? (If no, explain).

How is data archived? (electronic/ paper)

For how long is data archived to be kept?

6 Quantitative Electricity exported by project

MWh yes electronic minimum of two years after last issuance of CERs

7 Quantitative Grid CEF tCO2e/ MWh

yes electronic minimum of two years after last issuance of CERs

8 Quantitative Amount of biomass combusted

t fuel yes electronic minimum of two years after last issuance of CERs

Emission from grid electricity generation will be obtained by multiplying the amount of electricity exported by the project (Data 6) with the grid CEF (Data 7). The grid CEF, if not obtained directly, can be calculated from grid fuel consumption and generation data. The amount of biomass consumed by the plant (Data 8) will be used together with the carbon content of biomass and the IPCC default factor for methane emission to calculate methane emitted from open-air burning. An electronic spreadsheet file will be kept in which all monitored variables are accumulated. This will be presented to the DOE for verification. All hardcopy material relating to these variables will also be stored for reference. 3. Potential sources of emissions which are significant and reasonably attributable to the project activity, but which are not included in the project boundary, and identification if and how data will be collected and archived on these emission sources In the accompanying baseline methodology, an analysis is conducted to firstly establish that there is a significant surplus of biomass. Hence, there is no leakage associated with the project. To ensure that there is a continuing surplus, the methodology mandates on-going monitoring of a surplus indicator.

ID number

Data type

Data variable

Data unit

Measured (m), calculated (c) or estimated (e)

Recording frequency

Proportion of data to be monitored

How will the data be archived?

For how long is archived data kept?

(electronic/ paper)

9 Quantitative Amount of grid electricity generated using same biomass as project

t n/a (official data)

annually 100% electronic minimum of two years after last issuance of CERs

10 Quantitative Biomass required for grid electricity generation

t c annually 100% electronic minimum of two years after last issuance of CERs

11 Quantitative Surplus biomass supply

t n/a (official data)

annually 100% electronic minimum of two years after last issuance of CERs

As per Annex 3, biomass supply must be abundant – the ratio of biomass surplus (unused biomass) and biomass used for grid electricity generation is to be greater than 2:1. This will be determined using the formulae provided below. The amount of electricity generated from the specific biomass (Data 9) will be obtained from the electricity generating company, the surplus biomass supply (Data 11) from the national inventory.

Supply:Demand =

Surplus amount of biomass, for which

there is no use

÷

Biomass required to fuel all plants using

same biomass = greater than 2:1

where: Demand

(t/yr)

=

Electricity generated by power plants

using same biomass (MWh/yr)

x

Per unit biomass

requirement (t/MWh)

and:

Per unit biomass

requirement (t/MWh)

=

Biomass used by project (t/yr)

÷


by project (MWh/yr)

Supply as defined by the accompanying baseline methodology is:

Surplus supply (defined in

methodology)

=

Total surplus supply (national inventory)

+

Biomass used to fuel existing plants using same

biomass Once the threshold for “tight” supply is reached, a survey will be commissioned to an independent party. As the above calculation provides an indication of the national situation, the survey to be conducted will target the region that is affected by the project, that is, the area within the project’s procurement distance, and the immediate surrounding regions (say, an area

within 200% of the project’s maximum procurement distance). Depending on the results of the survey, an appropriate measure will be developed to account for potential leakage, whether it be a discount factor or otherwise. This will be submitted to the Methodology Panel (or the relevant authority at that time) for approval. 4. Assumptions used in elaborating the new methodology:

As is the case for the accompanying baseline methodology, this monitoring methodology assumes that official data necessary to calculate project and baseline emissions (given in Sections 2 and 3) are readily available. Otherwise, no explicit assumptions are made. 5. Please indicate whether quality control (QC) and quality assurance (QA) procedures are being undertaken for the items monitored. (see tables in sections 2 and 3 above) All except one variable – related to off-site transportation – used in calculating project and baseline emissions are either directly measured or are official data publicly available. In order to ensure the quality of the data, in particular those which are measured, the data are double-checked against commercial data. The quality control measures planned for the Project are outlined in the following table.

Data

Uncertainty level of data (High/Medium/Low)

Are QA/QC procedures planned for these data?

Outline explanation why QA/QC procedures are or are not being planned.

1 Low Yes The sampling instruments will undergo maintenance subject to appropriate industry standards. The spectroscopy results will be compared to the IPCC default emission factor. The larger of the two values will be used to ensure conservatism.

2 Low Yes Trucks carrying biomass will be weighed twice, upon entry and exit. Meters at the weighing station will undergo maintenance subject to appropriate industry standards. This will be checked against purchase receipts and inventory data.

3 Low Yes Meters will undergo maintenance subject to appropriate industry standards. The meter readings will be checked against purchase receipts and inventory data.

4 Low Yes Fuel pump readings will be compared against fuel purchase invoices.

5 Low Yes The distance records submitted by the truckers will be compared to the average distance between the plant and the fuel supply site.

6 Low Yes Meters will undergo maintenance/calibration subject to appropriate industry standards. The accuracy of the meter readings will be verified by receipts issued by the purchasing power company, a national or regional authority in most cases.

7 Low N/A This involves the use of official data released by the power generating company. Quality control of this data is beyond the control of the project operators. However, the data, if considered unreasonable, may be supplanted by more accurate data according to methods verified by the DOE.

8 Low Yes As per 2-2 9 Low N/A This involves the use of official data released by the power

generating company. Quality control of this data is beyond

the control of the project operators. 10 Low Yes The fuel consumption per unit of electricity generated by

the project will be a fair indication of the consumption for other grid-connected biomass plants, which are all likely to be similarly sized. Thus, quality control for the project activity will in effect be quality control for this data also.

11 Low N/A This involves the use of official data released by the national government and the power generating company. Quality control of this data is beyond the control of the project operators.

6. What are the potential strengths and weaknesses of this methodology? The use of measured data will ensure high accuracy of the monitored variables. Also, the use of publicly available official data where necessary increases the transparency of the monitoring process. The use of commercial records as a quality control measure, which are directly or indirectly verified by independent outside parties, will ensure high accuracy for the monitored data. At the same time, the effective use of existing systems in place will streamline the monitoring and verification process and reduce the costs to be borne by the project operator. Another merit of using commercial data is that the proportion of data monitored will be high, in many cases being 100%. Also, by monitoring project emissions from sources that have only minor impacts on the total project emissions such as start-up fuel use and on- and off-site transportation, this methodology eliminates potential sources of leakage and ensures a conservative calculation of emission reductions stemming from the project activity. The downside of this, however, is that the monitoring and archiving of emissions from such minor sources will be a laborious process. Although the monitoring of these emission sources is desirable in the interest of conservatism, it is an added burden for project operators, who, particularly for biomass projects, may not have the sufficient capacity to carry this out. 7. Has the methodology been applied successfully elsewhere and, if so, in which circumstances? This methodology has not been applied in the context of a CDM project.

Annex 5

TABLE: BASELINE DATA Forecast of Total Energy Generation and Fuel Requirement in Thailand20

Type of fuel 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Hydroelectric GWh 5052 3552 3552 4351 4303 4372 4414 4201 4260 4269 4281 4303 % 5.0% 3.3% 3.1% 3.5% 3.3% 3.1% 2.9% 2.6% 2.5% 2.4% 2.2% 2.1%Natural Gas GWh 62999 72889 77086 83865 88454 87134 85878 81501 87113 87493 82921 74362 % 62.8% 67.6% 66.9% 68.0% 67.2% 62.1% 57.4% 51.3% 51.2% 48.3% 43.2% 36.5% MMSCFD 1475 1603 1697 1769 1841 1810 1752 1642 1764 1760 1658 1472Heavy Oil GWh 4178 2787 4794 1070 1059 1061 1061 1050 1047 1047 1047 1051 % 4.2% 2.6% 4.2% 0.9% 0.8% 0.8% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% MLitres 1063 684 1137 259 257 257 257 255 254 254 254 255Diesel Oil GWh 34 12 12 10 10 14 16 0 0 0 0 0 % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% MLitres 36 39 37 75 75 76 76 71 71 71 71 71Lignite GWh 15213 14603 15106 17311 17257 17259 17255 17310 16251 16253 16252 15798 % 15.2% 13.6% 13.1% 14.0% 13.1% 12.3% 11.5% 10.9% 9.5% 9.0% 8.5% 7.8% MTons 14.51 14.771 15.179 18.386 18.33 18.33 18.33 18.386 17.221 17.221 17.221 16.718Imported Coal GWh 0 0 0 0 3809 13979 23291 25170 25094 25094 25094 25170 % 0.0% 0.0% 0.0% 0.0% 2.9% 10.0% 15.6% 15.8% 14.7% 13.9% 13.1% 12.4% MTons 0 0 0 0 1.523 5.342 8.803 9.503 9.473 9.473 9.473 9.503Other Purchases SPP GWh 10215 11232 12057 13786 13786 13786 14417 14417 14417 14417 14417 14417 % 10.2% 10.4% 10.5% 11.2% 10.5% 9.8% 9.6% 9.1% 8.5% 8.0% 7.5% 7.1%Lao PDR GWh 2631 2690 2640 2921 2857 2810 3305 15332 18834 18784 18721 18698 % 2.6% 2.5% 2.3% 2.4% 2.2% 2.0% 2.2% 9.6% 11.1% 10.4% 9.8% 9.2%New IPP GWh 0 0 0 0 0 0 0 0 3273 13626 29161 49732 % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.9% 7.5% 15.2% 24.4%Total GWh 12846 13922 14697 16707 16643 16596 17722 29749 36524 46827 62299 82847 % 12.8% 12.9% 12.8% 13.5% 12.7% 11.8% 11.8% 18.7% 21.4% 25.9% 32.5% 40.7%Grand Total GWh 100322 107765 115247 123314 131535 140415 149637 158981 170289 180983 191894 203531

20 EGAT Power Development Plan PDP 2001, Electricity Generating Authority of Thailand, Appendix 8

Input variables

Source Variable Value Reference21

Net calorific value (TJ/kt) Natural gas = 52.3 Heavy oil = 40.19 (residual fuel oil) Diesel oil = 43.33 Lignite = 12.14 (Thailand) Imported Coal = 26.38 (imported hard coal, Thailand)

Table 1-2, 1-3

C emission factor (tC/TJ) Natural gas = 15.3 (dry) Heavy oil = 21.1 (residual fuel oil) Diesel oil = 20.2 Lignite = 27.6 Imported Coal = 26.8 (anthracite)

Table 1-1

Fraction of C oxidised Gas = 0.995 Oil and oil products = 0.99 Coal (default) = 0.98

Table 1-6

Grid fuel consumption Refer to table above EGAT PDP Grid electricity generation

Refer to table above EGAT PDP


Electricity exported by project

132,864 MWh/yr Calculated

C fraction of biomass 0.3713 t C/t biomass Lab analysis CH4 emission factor 0.005 Table 4-16,

Open air burning of surplus biomass

Biomass used by project

144,632 t/yr Calculated

Heat value of biomass 0.013607 TJ/t Lab analysis Biomass electricity generation CH4 emission factor 30 kg/TJ Table 1-7 CO2 emission factor 1097 g/km

3172.31 g/kg CH4 emission factor 0.06 g/km

0.18 g/kg N2O emission factor 0.031 g/km

0.09 g/kg

Table 1-32 (US heavy duty diesel vehicles, uncontrolled – this is most conservative)

Truck capacity 15 t ATB data

Transportation emission

Return trip distance 120 km (average) ATB data C emission factor 21.1 t C/TJ Table 1-1 Fraction of C oxidised 0.99 Table 1-6 CH4 emission factor 3 kg/TJ Table 1-7

Start-up/auxiliary fuel use (assuming heavy oil)

N2O emission factor 0.6 kg/TJ Table 1-8

21 Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual, unless

otherwise stated

Other data:

GWP CH4 21 GWP N2O 310 Mass conversion factor (tCO2/tC) 44/12 Mass conversion factor (tCH4/tC) 16/12

In converting volume-based fuel consumption to mass-based, the following densities were used: Natural gas = 0.774kg/m3 Specific gravity is typically around 0.6 (density of nat. gas = density of air (1.29kg/m3) x 0.6 = 0.774) Heavy oil = 0.89kg/m3 Heavy oil densities are between 0.9 and 1.0 kg/m3 at 15ºC. For a conservative calculation of baseline emissions, the lower limit was used, adjusted for higher temperatures (30ºC). For consistency, project emissions for on-site fuel use were calculated using the same value.

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