Kunak Jaya _Final_ - 14_4_08

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 .1 CDM – Executive Board

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CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD)

Version 03.1 - in effect as of: 28 July 2006

CONTENTS A. General description of project activity B. Application of a baseline and monitoring methodology C. Duration of the project activity / crediting period D. Environmental impacts E. Stakeholders’ comments

Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information

Annex 4: Monitoring plan Annex 5: Calculation of heating values of biomass fuel and fuel needs for the plant Annex 6: Measurement of heating value for EFB Annex 7: Details of leakage calculation Annex 8: Cost-benefit analysis of using EFB for mulching Annex 9: Illustration of technical barriers in EFB combustion Annex 10: Weighted average cost of capital calculation


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SECTION A. General description of project activity A.1. Title of the project activity:

KUNAK JAYA BIO ENERGY PLANT, MALAYSIA

Version 2.0 25/02/2008

A.2. Description of the project activity:

The project activity involves the installation of a new biomass energy plant at the new palm oil refinery and kernel crushing plant of TSH-Wilmar Sdn Bhd located at Kunak Jaya (the Refinery). The biomass energy plant will utilise, biomass waste, a renewable biomass that is produced from palm oil mills to generate steam and power. The project activity will reduce the energy system’s dependency on fossil fuel resources and the emissions of GHG emissions.

Under the baseline situation, the electricity and steam required by the Refinery would be imported from the power grid and produced in a biomass boiler respectively. The biomass boiler in the baseline would use only mesocarp fibre, and palm kernel shell (PKS) and a small amount of palm kernel cake (PKC) as fuel and no empty fruit bunches (EFB) would be use as EFB is well known to be a difficult fuel to handle.

In the project situation, the biomass energy plant on site will use biomass waste to generate useful power and steam. The biomass waste used in the project activity will be sourced from palm oil mills and is made up of EFB, PKS, mesocarp fibre and PKC. There is a significant contribution in reducing the methane emission from the landfills previously used for deposition of EFB.

The project activity consists of two parts:

1) Production of CO2-neutral electricity that will replace conventional electricity generation based on fossil fuel and thereby reducing GHG emission in the electricity production.

2) Start of utilisation of EFB as a fuel and that will lead to avoided methane emissions from landfill sites where EFB was deposited.

Other expected benefits from the project activity include:

• Sustainable development

The project activity will contribute to the use of sustainable renewable energy sources in the power generation system and support the country’s fifth fuel policy that promotes the use of renewable energy.

• Environmental sustainability

The project activity will have a positive impact on the environment as it will reduce power production based on fossil fuels and lead to an increased sustainability in the power generation sector. Furthermore, the power plant will be equipped with high-efficient technologies that


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reduce the fuel consumption per unit output and increase the combustion efficiency. Pollution control equipment will be installed in order to ensure minimum emissions of particulates and other pollutants from the plant.

The project activity will lead to reduced disposal of waste products from the palm oil mill and increase the utilisation of the energy content in waste products.

• Social sustainability

The project activity will generate new jobs for people from the surrounding area since the biomass energy plant is more labour intensive than buying power from grid. The workers will need to be trained in using the state of the art machinery.

Economic spill over of the Kunak Jaya Bio Energy Project will also increase business opportunities for local suppliers in transportation, maintenance and repair, parts supply, food and other services.

• Economic sustainability

The project activity will lead to economic sustainability as the fuel sources are sustainable, indigenous resources, which reduces fuel imports and negative impact on foreign exchange. The project activity will also have a positive impact on the economic performance of the Refinery, as energy production will be more reliable and efficient, leading to a more reliable production at the Refinery.

Additional to a business-as-usual scenario

The project activity is additional to a business-as-usual scenario as it will be among the first cogeneration plants in Malaysia fired mainly with EFB from palm oil mills, to supply electricity and steam to a palm oil refinery. The business-as-usual scenario for power generation is to purchase power from the grid and to produce steam with use of the same types of biomass as in the project activity.


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A.3. Project participants:

Table A.1: Project participants

Name of Party involved (*) ((host) indicates a host Party)

Private and/or public entity(ies) project participants (*) (as applicable)

Kindly indicate if the Party involved wishes to be considered as project

participant (Yes/No)

Malaysia (Host) Private entity TSH-Wilmar (BF) Sdn Bhd (TSH-Wilmar)

No

United Kingdom Private Entity: EnergiMidt Handel A/S

No

(*) In accordance with the CDM modalities and procedures, at the time of making the CDM-PDD public at the stage of validation, a Party involved may or may not have provided its approval. At the time of requesting registration, the approval by the Party (ies) involved is required.

A.4. Technical description of the project activity: A.4.1. Location of the project activity: The Kunak Jaya Bio Energy Project is located at KM 1, Kampung Kunak Jaya, 91207 Kunak, Sabah. A.4.1.1. Host Party(ies):

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

Sabah

A.4.1.3. City/Town/Community etc: Kunak Jaya

A.4.1.4. Detail of physical location, including information allowing the unique identification of this project activity (maximum one page):


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Figure A.1 : Location Map of Project Activity. A.4.2. Category(ies) of project activity: The project activity falls under Sectoral Scope 01: energy industries (renewable - / non-renewable sources) as per the sectoral scoped related to approved methodologies and Designated Operational Entities (DOEs).


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A.4.3. Technology to be employed by the project activity : The project activity, cogeneration plant involves the installation of two new biomass fired steam boilers and a new condensing steam turbine. To further improve the use of EFB as a source of energy, a fuel preparation system will be established to prepare the EFB as a fuel. The fuel preparation system consists mainly the shredding of the very bulky EFB into fibres and a reduction of moisture content to obtain better combustion properties. The two new boilers are: Boiler 1 Vickers boiler producing 48 bar (g) super heated steam at 450ºC at a capacity of 52 tonnes per hour using biomass waste as fuel. It has an automatic combustion control system that ensures the effectiveness of biomass combustion and control of emission. Emission is mitigated using multi-cyclone system and the emission control complies with the prevailing emission regulation standards in Malaysia. Boiler 2 Another biomass boiler is a 30t/hour steam generation boiler supplied by Mc Kenzie. This boiler is designed to produce 20 bar saturated steam for the needs of the Refinery. The steam generated in the Boiler 1, will be used to run the 10 MWh full condensing and multi stage Siemens steam turbine detailed below:

o Turbine Type : SIEMENS GK 26/40 o Turbine Speed : 10,673 rpm o Generator Speed : 1,500 rpm o Main Steam Pressure : 43 bar (abs) o Main Steam Temp. : 425 Deg C o Pressure at Exhaust : 0.2 bar (abs) Fully Condensing

The plant is constructed to supply at least 65,700 MWh of electricity for consumption of the Refinery every year. The commissioning programme for the new installation will include adequate training and familiarisation of the new technology among the relevant operators and maintenance staff. This is important as it will minimise the maintenance costs and dependency on the foreign technical support for the aforesaid equipment. The Kunak Jaya Bio Energy Project plant requires a steady supply of biomass. The sources of fuel comprise 70% of EFB, 15% mesocarp fibre, 10% PKS and 5% PKC (on weight basis).


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A.4.4. Estimated amount of emission reductions over the chosen crediting period:

Table A.3: The total GHG emission reductions in tCO2-e over the crediting period

Years Annual estimation of emission reductions in tonnes of CO2e

Year 1 42,018 Year 2 45,669 Year 3 49,195 Year 4 52,599 Year 5 55,887 Year 6 59,061 Year 7 62,126

Total estimated reductions (tonnes of CO2e) 366,555 Total number of crediting years 7

Annual average over the crediting period of estimated reductions (tonnes of CO2e) 52,365

A.4.5. Public funding of the project activity: No public funding from parties included in Annex I of convention is involved in the project activity. SECTION B. Application of a baseline methodology B.1. Title and reference of the approved baseline methodology applied to the project activity: ACM0006 (version 06): “Consolidated baseline methodology for grid-connected electricity generation from biomass residues” version 06 (ACM0006 (version 06). The methodology refers to the following tools for specific parts of the calculations:

• “Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site“; (version 02)

• “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion” (version 01); and

• “Tool to calculate project emissions from electricity consumption (version 01)” • ACM0002 (“Consolidated baseline methodology for grid-connected electricity generation from

renewable sources”); The reference to the ACM0002 is according to the EB 351 ACM002 has been replaced with the “Tool to calculate emission factors for electricity system” (version 01)

1 The Board in approving the above tool, requested the secretariat to amend all the approved methodologies and tools that refer to ACM0002, replacing the reference to ACM0002 by a reference to the above approved tool. This will constitute a revision of the methodologies and these revisions shall come into effect 2 November 2007, 17:00 GMT


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Finally the methodology refers to the “Combined tool to identify the baseline scenario and demonstrate additionality”. The latest version of the tool is version 02.1 (Combined Additionality Tool). B.2. Justification of the choice of the methodology and why it is applicable to the project activity This consolidated methodology covers a number of different project types for power generation with biomass residues. This methodology is applicable to biomass residue fired electricity generation projects activities, including cogeneration plants. The consolidated methodology ACM0006 (version 06) has a number of applicability criteria discussed in the table set out in Section B.2 below. Applicability criterion Project compliance with the criterion The methodology is applicable for “biomass residue fired electricity generation project activities, including cogeneration plants

Since the project activity is a cogeneration plant using biomass residues for generating power and heat, thus it meets the criteria.

Biomass residues are defined as biomass that is a by-product, residue or waste stream from agriculture, forestry and related industries. This shall not include municipal waste or other wastes that contain fossilized and/or non-biodegradable material

The biomass residues used as fuel in the project activity include EFB, mesocarp fibres, PKS and PKC from palm oil mills. None of these wastes contains fossilized waste or municipal solid waste.

The installation of a new biomass residue fired power plant at a site where currently no power generation occurs (greenfield power projects);

There was no power production at the site before the project activity – it is a greenfield power project.

No other biomass types than biomass residues, as defined above, are used in the project plant and these biomass residues are the predominant fuel used in the project plant (some fossil fuels may be co-fired)

There will not be other types of biomass used other than biomass from oil palm mills as covered by the definition of biomass residue. Small amounts of fossil fuels may be used as back up fuel. This use will be monitored and calculated as project emissions.

For projects that use biomass residues from a production process (e.g. production of sugar or wood panel board), the implementation of the project shall not result in an increase of the processing capacity of raw input (e.g. sugar, rice, logs, etc) or in other substantial changes (e.g. product range) in this process;

The utilisation of the biomass residues does not affect the production process of the palm oil mills as the production of crude palm oil is guided by the harvesting and demand in the market. The project activity will not result in any change in the processing capacity or product.

The biomass residues used by the project facility should not be stored for more than one year;

The biomass fuel will typically only be stored for one week. There is a good supply over the whole year of biomass residues so seasonal storage is not necessary and not possible either

No significant energy quantities, except from transportation or mechanical treatment of the biomass residues, are required to prepare the

There is only simple mechanical treatment of the biomass residues before they are used as fuel –shredding of the EFB. The energy used for these


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Applicability criterion Project compliance with the criterion biomass residues for fuel combustion, i.e. projects that process the biomass residues prior to combustion (e.g. esterification of waste oils)

activities are included in the project emissions

As discussed in the table the Kunak Jaya Bio Energy Project clearly falls within the application criteria of ACM0006 (version 06). A further application criterion is that the project activity must fall under one of the approved baseline scenarios. This will be discussed and documented below. B.3. Description of how the sources and gases included in the project boundary Table B.1: Sources and gasses included in the project boundary

Source

Gas

Justification / Explanation

CO2 Included By using the calculations prescribed by the ACM0006.

CH4 Excluded For the purpose of simplification – this is conservative.

Grid electricity generation

N2O Excluded For the purpose of simplification – this is conservative.

CO2 Excluded Emissions are not included as biomass is the baseline for the heat production.

CH4 Excluded For the purpose of simplification – this is conservative.

Heat generation


CO2 Excluded Biomass is considered carbon neutral. CH4 Included Methane emissions from previously land-

filled biomass waste products are calculated and considered part of the

Bas

elin

e

Disposal of biomass


CO2 Excluded CO2 emissions from biomass are considered carbon neutral.

CH4 Included Methane emissions from the utilisation of the biomass as fuel are calculated and included in the project emissions.

Pro

ject

Combustion of biomass residues for renewable electricity and/or heat generation

N2O Excluded For the purpose of simplification.


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Source

Gas

Justification / Explanation

CO2

Included Emissions from using fossil fuels for

start-ups or when biomass humidity is too high at the project site.

CH4

Excluded For the purpose of simplification. It is

assumed that CH4 emissions to be very small.

On-site fossil fuel and electricity consumption due to the project activity (stationary or mobile)

N2O Excluded For the purpose of simplification. It is assumed that N2O emissions to be very small.

CO2 Included Emissions from transportation of biomass residues to the project plant by vehicles.

CH4 Excluded For the purpose of simplification. It is assumed that CH4 emissions to be very

Transportation of biomass and ash

N2O Excluded For the purpose of simplification. It is assumed that N2O emissions to be very

CO2

Excluded

CH4

Storage of biomass

N2O

The biomass will only be stored for a short period of time – up to one week.

CO2

Excluded

CH4

Waste water from the treatment of biomass residues

N2O

Wastewater from the preparation of EFB will be sent to Kunak Palm Oil Mill biogas plant (Methane Recovery and Utilisation Project at TSH Kunak Oil Palm Mill, Reg. No. 0916) for treatment. The methane is collected and used in gas engines for power production. There is no project emission from the water as emission in relation to the biogas plant will be handled in relation to that project.

CO2 Included Emissions from transportation of waste water from the project plant to Kunak Palm Oil Mill biogas plant by vehicles.

CH4 Excluded For the purpose of simplification. It is assumed that CH4 emissions to be very small.

Transportation of waste water

N2O Excluded For the purpose of simplification. It is assumed that N2O emissions to be very small.


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B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: The identification of the baseline scenario is in accordance to ACM0006 (version 06) with demonstration of additionality using steps prescribed in the latest version of the Combined Additionality Tool. The Combined Additionality Tool prescribes four steps to establish the baseline scenario and demonstrate additionality: STEP 1. Identification of alternative scenarios STEP 2. Barrier analysis STEP 3. Investment analysis (if applicable) STEP 4. Common practice analysis These four steps will be undertaken in the following. STEP 1. Identification of alternative scenarios Step 1a. Define alternative scenarios to the proposed CDM project activity Pursuant to the Combined Additionality Tool, project proponent shall identify all alternatives scenarios that are available to the project proponent and that provide outputs or services with comparable quality, properties and application areas as the proposed CDM project activity. In applying Step 1 of the Combined Additionality Tool, ACM0006 (version 06) requires realistic and credible alternatives should be separately determined regarding:

• How power would be generated in the absence of the CDM project activity; • What would happen to the biomass residues in the absence of the project activity; and • In case of cogeneration projects: how the heat would be generated in the absence of the project

activity. The plausible baseline scenarios for power generation identified in ACM0006 (version 06) are set out in Table B2 with comments and conclusion for each plausible baseline scenario discussed in the corresponding right columns. Table B.2: Realistic and credible alternatives for power generation:

Plausible baseline

scenarios for power

generation

Description Comments Realistic and credible

alternative? (Yes/No)

P1

The proposed project activity not undertaken as a CDM

This is a realistic and credible alternative.

Yes


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Plausible baseline

scenarios for power

generation



project activity.

P2 The continuation of power generation in an existing biomass residue fired power plant at the project site, in the same configuration, without retrofitting and fired with the same type of biomass residues as (co-)fired in the project activity.

Continuation of power generation is not applicable as the project activity is a greenfield project where no prior energy production took place. This is not a realistic and credible alternative.

No

P3 The generation of power in an existing captive power plant, using only fossil fuels.

Generation of power in an existing captive power plant is not applicable as the project activity is a greenfield project where no prior energy production took place. This is not a realistic and credible alternative.

No

P4 The generation of power in the grid.

In absence of the project activity, the equivalent power generated by the project activity would be purchased by refinery from the grid. Hence this is a realistic and credible alternative.

Yes

P5 The installation of a new biomass residue fired power plant, fired with the same type and with the same annual amount of biomass residues as the project activity, but with a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project plant and therefore with a lower power output than in the project case.

The project activity is not claiming to be more efficient than other projects options. There is no common practice of installing lower efficiency electricity generation in palm oil mills. Thus the installation of a lower efficiency power plant at the site would not be a realistic and credible alternative.

No


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Plausible baseline

scenarios for power

generation



P6 The installation of a new biomass residue fired power plant that is fired with the same type but with a higher annual amount of biomass residues as the project activity and that has a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project activity. Therefore, the power output is the same as in the project case.

The project activity is not claiming to be more efficient than other projects options. There is no common practice of installing lower efficiency electricity generation in palm oil mills. Thus the installation of a lower efficiency power plant at the site would not be a realistic and credible alternative.

No

P7 The retrofitting of an existing biomass residue fired power, fired with the same type and with the same annual amount of biomass residues as the project activity, but with a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project plant and therefore with a lower power output than in the project case.

Retrofitting of an existing biomass residue fired power is not applicable as the project activity is a greenfield project involving construction of a new plant. This is not a realistic and credible alternative.

No

P8 The retrofitting of an existing biomass residue fired power that is fired with the same type but with a higher annual amount of biomass residues as the project activity and that has a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project activity.

Retrofitting an existing biomass residue fired power is not applicable as the project activity is a greenfield project involving construction of a new plant. This is not a realistic and credible alternative.

No


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Plausible baseline

scenarios for power

generation



P9 The installation of a new fossil fuel fired captive power plant at the project site.

Installation of new fossil fuel fired captive power plant at the project site would be economically unattractive. In addition it would also lead to higher baseline emissions. Thus it is a conservative assumption to eliminate this alternative. Therefore this is not a realistic and credible alternative.

No

Pursuant to Table B2, the realistic and credible alternatives identified for power generation are:-

• P1; and • P4.

The plausible baseline scenarios for generation of heat identified in ACM0006 (version 06) are set out in Table B3 with comments and conclusions for each plausible baseline scenario discussed in the corresponding right columns. Table B.3: Realistic and credible alternatives for heat generation

Plausible baseline

scenarios for heat

generation



H1 The proposed project activity not undertaken as a CDM project activity

This is a realistic and credible alternative

Yes

H2 The proposed project activity (installation of a cogeneration power plant), fired with the same type of biomass residues but with a different efficiency of heat generation (e.g. an efficiency that is common practice in the relevant industry sector)

The project activity is not increasing the efficiency of heat production compared to the baseline. This is not a realistic and credible alternative.

No

H3 The generation of heat in an existing captive cogeneration plant, using only fossil fuels

Generation of heat in an existing captive cogeneration plant is not applicable because

No


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Plausible baseline

scenarios for heat

generation



the project activity is a greenfield project where no prior energy production took place. This is not a realistic and credible alternative.

H4 The generation of heat in boilers using the same type of biomass residues

The biomass of the same type could also have been used for the generation of heat in the baseline. This is a realistic and credible alternative.

Yes

H5 The continuation of heat generation in an existing biomass residue fired cogeneration plant at the project site, in the same configuration, without retrofitting and fired with the same type of biomass residues as in the project activity

Generation of heat in an existing captive cogeneration plant is not applicable because the project activity is a greenfield project where no prior energy production took place. This is not a realistic and credible alternative.

No

H6 The generation of heat in boilers using fossil fuels

Installation of new fossil fuel fired captive power plant at the project site would have been one of the realistic and credible alternative.

Yes

H7 The use of heat from external sources, such as district heat

There is no district heating system in the region. This is not a realistic and credible alternative.

No

H8 Other heat generation technologies (e.g. heat pumps or solar energy)

Other renewable energy technologies are not available for generation of steam at the required temperature and pressure. This is not a realistic and credible alternative.

No

Pursuant to Table B3, the realistic and credible alternatives identified for heat generation are:-

• H1; • H4; and • H6.


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In accordance to type and specifications of boiler discussed in Section A.4.3, four types of biomass fuel specified for use in the Kunak Jaya Bio Energy Project are:

a) EFB b) PKS c) Mesocarp fibre d) PKC

Pursuant to ACM0006 (version 06), which reads: “Where the project activity uses different types of biomass residues, the baseline scenario should be identified for each type of biomass residue separately. Biomass residues from different sources should be considered as different types of biomass residues k. Similarly, biomass residues with different uses in the absence of the project activity should be considered as different types of biomass residues k”, Each type of biomass residues are explained and documented in separate tables i.e. Table B.4A to Table B.4D.


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Table B.4A: Realistic and credible alternatives for use of EFB

Plausible baseline

scenarios for use of EFB



B1 The biomass residues are dumped or left to decay under mainly aerobic conditions. This applies, for example, to dumping and decay of biomass residues on fields.

Use of EFB for mulching is economically unattractive especially in Sabah where the land is dominated by hilly terrain.2 Besides that, there are innumerable problems associated with EFB application as a mulch3 such as:

• Distance of the field from mill,

• Heavy traffic causing damage to field roads

• Harvesting paths requiring frequent upgrading, which can be costly,

• Field inaccessibility to light vehicles during rainy months,

• Mulching field close to worker’s quarters can encourage breeding of flies and rhinoceros beetle,

• Insufficient vehicles during peak cropping months as vehicles are given priority for FFB evacuation

• Settlers are not given benefit to mulch their field in the case of Government land scheme.

No

2 Calculated value of EFB as fertilizer is MYR10.33 /ton and the costs of distribution are calculated as MYR9.50/ton. See Annex 8 for more details. 3 Dr, Chow Mee Chin, MPOB, 2006: “An Assessment Of Potential And Availability Of Palm Biomass For Bioconversion To Bioethanol” page 35-36. Downloaded from www.eib.ptm.org.my


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Plausible baseline




Mulching is only done by bigger plantation4.There are still companies that dispose the empty fruit bunches using landfill method particularly mill with smaller plantations or estates5. The EFB used in this project activity will be sourced from palm oil mills using landfills and such actual landfills can be verified during validation. Thus this is not a realistic and credible alternative following the barriers discussed above.

B2 The biomass residues are dumped or left to decay under clearly anaerobic conditions. This applies, for example, to deep landfills with more than 5 meters. This does not apply to biomass residues that are stock-piled or left to decay on fields.

Landfill is the common practice in the region due to abundant EFB supply. The EFB used in this project activity will be sourced from palm oil mills using landfills and such actual landfills can be identified during validation. This is a realistic and credible alternative.

Yes

B3 The biomass residues are burnt in an uncontrolled manner without utilizing it for energy purposes.

Open burning of biomass residues is prohibited according to the Malaysian Legislation – Environmental Quality Act 1974 (amended 2000).This is not a realistic and credible alternative.

No

4 Ludin, N., et. Al, “Palm Oil Biomass for Electricity Generation in Malaysia”, (http://www.biogen.org.my/bris/Biogen/Tech/(d)Documents/technology(d)7.pdf) accessed 4 January 2008 5 Ludin, N., et. Al, “Palm Oil Biomass for Electricity Generation in Malaysia”, (http://www.biogen.org.my/bris/Biogen/Tech/(d)Documents/technology(d)7.pdf) accessed 4 January 2008


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Plausible baseline




B4 The biomass residues are used for heat and/or electricity generation at the project site

EFB is a difficult fuel to handle as it has high silica and moisture content. As such, both the costs of EFB fuel preparation and associated risks involved are high. Therefore, EFB will not be used for heat and/or electricity generation at the project site. This is not a realistic and credible alternative.

No

B5 The biomass residues are used for power generation, including cogeneration, in other existing or new grid-connected power plants.

EFB is a difficult fuel to handle. Costs of EFB fuel preparation and associated risks involved are big and rendering such projects not commercially feasible. (See results of calculations set out in Step 3 below).

Furthermore, there has not been any project in Malaysia using EFB as fuel for electricity production – except for CDM projects. Thus this is not a realistic and credible alternative.

No

B6 The biomass residues are used for heat generation in other existing or new boilers at other sites

EFB is a difficult fuel to handle. Costs of EFB fuel preparation and the associated risks involved are big and rendering such projects not commercially feasible. (See results of calculations set out in Step 3 below).

There has not been any project in Malaysia using EFB as fuel for heat production – except for CDM projects. Thus this is not a realistic and credible alternative.

No


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Plausible baseline




B7 The biomass residues are used for other energy purposes, such as the generation of biofuels

The technology to convert EFB into biofuels is still in a laboratory scale6 and can thus it is not a realistic and credible alternative for the project proponent.

No

B8 The biomass residues are used for non-energy purposes, e.g. as fertilizer or as feedstock in processes (e.g. in the pulp and paper industry)

EFB is not used for non-energy purposes like fertilizer due to eco-conditions in this region mainly due to adverse field conditions such as like hilly areas and steep terrain. (See comments in scenario B1 of this Table B.4A)

Use of EFB in the production of pulp and paper is relatively a new technology in this region and hence would not be financially attractive without registration as a CDM project activity. Therefore this is not a realistic and credible alternative.

No

Pursuant to Table B.4A, the realistic and credible alternative identified for use of EFB is:-

• B2 Table B.4B: Realistic and credible alternatives for use of PKS

Plausible baseline

scenarios for use of PKS



6 Danish Technical University, 2006: “Ethanol potential for Empty Fruit Bunches pre-treated by Wet-Explosion” downloaded from www.eib.ptm.org.my


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Plausible baseline





PKS is a useful resource and is not dumped or left to decay. Hence it cannot be taken as a realistic and credible alternative.

No


PKS is a useful resource and is not dumped or left to decay. Hence it cannot be taken as a realistic and credible alternative. It is also a conservative assumption to rule out this alternative.

No


PKS is a useful resource and is not burnt in an uncontrolled manner. Further, open burning of biomass residues is prohibited according to The Malaysian Legislation – Environmental Quality Act 1974 (amended 2000). This is not a realistic and credible alternative.

No


In the absence of the project activity, PKS would have been used for heat generation at project site. This is a credible and realistic alternative.

Yes

B5

The biomass residues are used for power generation, including cogeneration, in other existing or new grid-connected power plants

There has not been any project in Malaysia for use of PKS as fuel for grid connected electricity production7 – except for CDM projects. This is not a realistic and credible alternative.

No

7 EPU, 2006: 9th Malaysia Plan 2006-2010: p 401: “Under the Small Scale Renewable Energy Power Programme (SREP) two projects with a combined grid connected capacity of 12 MW were implemented” – during the 8th Plan from 2000-2005. These were the Kunak Biomass Power Plant (10 MW) and a landfill gas project (2 MW)


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Plausible baseline





PKS is to a certain extent used as fuel in palm oil mills. It is estimated that around 50% of the available PKS is used for energy in palm oil mills.8 There is thus a large excess of PKS in the palm oil mill that can be used for other purposes. However, there are only a few other industries in East Sabah. Thus there is no demand for the excess PKS. This is thus not a realistic and credible alternative.

No


The technology to convert PKS into biofuels is still in a laboratory scale and the yields from PKS are not attractive compared to other sources of biomass9. Thus, this is not a realistic and credible alternative for the project proponent.

No


No technology exists currently to use PKS for non-energy purposes. Thus this is not a realistic and credible alternative.

No

Pursuant to Table B.4B, the realistic and credible alternative for use of PKS is:-

• B4

8 Anders Evald et all. 2005: Renewable Energy resources. Pages 19-20 Downloaded from www.eib.ptm.org.my 9 Danish Technical University, 2006: “Ethanol potential for Empty Fruit Bunches pre-treated by Wet-Explosion”

Table p 11. Downloaded from www.eib.ptm.org.my


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Table B.4C: Realistic and credible alternatives for use of mesocarp fibre

Plausible baseline

scenarios for use of

mesocarp fibre




Mesocarp fibre are a useful resource and are not dumped or left to decay. Hence this is not a realistic and credible alternative.

No


Mesocarp fibre are a useful resource and are not dumped or left to decay. Hence this is not a realistic and credible alternative. It is a conservative assumption to rule out this alternative.

No


Mesocarp fibre is a useful resource and is not burnt in an uncontrolled manner. In addition, open burning of biomass residues is prohibited according to The Malaysian Legislation – Environmental Quality Act 1974 (amended 2000). This is not a realistic and credible alternative.

No


In the absence of the project activity, mesocarp fibre would have been used for heat generation at project site. This is the most realistic and credible alternative.

Yes

B5 The biomass residues are used for power generation, including cogeneration, in other existing

There have not been any projects in Malaysia for using mesocarp fibre as fuel for grid

No


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Plausible baseline

scenarios for use of

mesocarp fibre



or new grid-connected power plants3

connected electricity production10 – except for CDM projects. This is not a realistic and credible alternative.

B6 The biomass residues are used for heat generation in other existing or new boilers at other sites4

Mesocarp fibre is used as fuel in palm oil mills. However, there are only a few other industries in East Sabah. Thus, there is no demand for the excess mesocarp fibre. This is thus not a realistic and credible alternative.

No


The technology to convert mesocarp fibre into biofuels is still in a laboratory scale and the yields from mesocarp fibre are not attractive compared to other sources of biomass11. This is thus not a realistic and credible alternative for the project proponent.

No


No technology exists currently to use mesocarp fibre for non-energy purposes. Thus this is not a realistic and credible alternative.

No

Pursuant to Table B.4C, the realistic and credible alternative for use of mesocarp fibre is:-

• B4

10 EPU, 2006: 9th Malaysia Plan 2006-2010: p 401: “Under the Small Scale Renewable Energy Power Programme (SREP) two projects with a combined grid connected capacity of 12 MW were implemented” – during the 8th Plan from 2000-2005. These were the Kunak Biomass Power Plant (10 MW) and a landfill gas project (2 MW) 11 Danish Technical University, 2006: “Ethanol potential for Empty Fruit Bunches pre-treated by Wet-Explosion”



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Table B.4D: Realistic and credible alternatives for use of PKC

Plausible baseline

scenarios for use of PKC




PKC is a useful resource and is not dumped or left to decay. Hence this is not a realistic and credible alternative.

No


PKC is a useful resource and is not dumped or left to decay. Hence this is not a realistic and credible alternative. It is also a conservative assumption to rule out this alternative.

No


PKC is a useful resource and is not burnt in an uncontrolled manner. In addition, open burning of biomass residues is prohibited according to The Malaysian Legislation – Environmental Quality Act 1974 (amended 2000). This is not a realistic and credible alternative.

No


PKC is a useful resource with a high commercial value12 by-product produced by the Refinery. PKC has high net calorific value and is a more economical supplement (to other biomass fuel discussed in Table B.4A to Table B.4C)

Yes

12 PKC has a cost of MYR27.80/GJ compared to the other biomass fuels with a price between MYR1.50 and MYR5.70 /GJ

Source: Financial spreadsheet for the Kunak Jaya Bio Energy Project.


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Plausible baseline




as compared to conventional fossil fuel e.g. Medium Fuel Oil (MFO). Thus, the use of PKC is a realistic and credible alternative.

B5

The biomass residues are used for power generation, including cogeneration, in other existing or new grid-connected power plants

There has not been any project in Malaysia using PKC as fuel for grid connected electricity production13 – except for CDM projects. This is not a realistic and credible alternative

No


PKC is a useful resource with a high commercial value and therefore would not be normally use by other project proponent a source of energy in other existing or new boiler at other sites. This is not a realistic and credible alternative.

No


The technology to convert PKC into biofuels is still in its laboratory stage and the yields from PKC are not attractive as compared to other sources of biomass14. Thus, this is not a realistic and credible alternative for the project proponent.

No

B8 The biomass residues are used for non-energy purposes, e.g. as fertilizer or as feedstock in processes (e.g. in the pulp and

The use of PKC as animal feed is not an alternative as the PKC will be used in the baseline as a source of energy

No

13 EPU, 2006: 9th Malaysia Plan 2006-2010: p 401: “Under the Small Scale Renewable Energy Power Programme (SREP) two projects with a combined grid connected capacity of 12 MW were implemented” – during the 8th Plan from 2000-2005. These were the Kunak Biomass Power Plant (10 MW) and a landfill gas project (2 MW) 14 Danish Technical University, 2006: “Ethanol potential for Empty Fruit Bunches pre-treated by Wet-Explosion”



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Plausible baseline




paper industry) and also to compensate for any shortage in other biomass fuel in the absence of the project activity (as discussed in scenario B4in Table B.4D). This is not a realistic and credible alternative.

Pursuant to Table B.4C, the realistic and credible alternative for use of PKC is:-

• B4 Sub-step 1b. Consistency with mandatory applicable laws and regulations Baseline scenarios B3 in Table B.4A to Table B.4D refers to uncontrolled burning of biomass residues. These baseline scenarios are not in compliance with existing Malaysia legislation. Open burning of biomass residues is prohibited according to The Malaysian Legislation – Environment Quality Act 1974 (amended 2000). Thus these baseline scenarios have thus been disregarded as realistic and credible alternatives. Other realistic and credible alternatives discussed in Table B.4A to Table B.4D are all in compliance with Malaysia legislation. Following Step 1 of the Combined Additionality Tool i.e. “Identification of alternative scenarios”, the following realistic and credible alternatives are identified: For power: P1 and P4 For steam: H1, H4 and H6 For biomass residues- (i) EFB: B2 (ii) PKS: B4 (iii) Mesocarp fibre: B4

(iv) PKC: B4 Based on the above discussions, the most credible combinations of baseline scenarios are as follow:-

1. Generation of power in the grid (P4), the generation of heat in boilers using biomass residues (H4) from PKS, mesocarp fibre and PKC (B4) and dumping or leaving EFB to decay under anaerobic conditions in deep landfills (B2), which is consistent with Scenario 3 of “Table 2:Combinations of project types and baseline scenarios applicable to this methodology” prescribed in ACM0006 (version 06) (“Alternative 1”);


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2. Generation of power in the grid (P4), the generation of heat in boilers using fossil fuels i.e.

medium fuel oil (MFO), (H6) and dumping or leaving EFB to decay under anaerobic conditions in deep landfills (B2), which is consistent with Scenario 2 of “Table 2:Combinations of project types and baseline scenarios applicable to this methodology” prescribed in ACM0006 (version 06) (“Alternative 2”); and

3. The proposed project activity not undertaken as a CDM project activity (P1 and H1)

(“Alternative 3”) STEP 2. Barrier analysis This step serves to identify barriers and to assess which alternatives are prevented by barriers discussed in Sub-step 2a below. As prescribed in ACM0006 (version 06), the barrier analysis consists of two sub-steps namely: Sub-step 2a: Identify barriers that would prevent the implementation of alternative scenarios

identified in Step 1 above. Sub-step 2b: Eliminate alternative scenarios which are prevented by the identified barriers Sub-step 2a. Identify barriers that would prevent the implementation of alternative scenarios Sub-step 2a requires the establishment of a complete list of realistic and credible barriers that may prevent alternative scenarios to occur. The complete list of realistic and credible barriers that may prevent implementation of alternative scenarios are analysed as follows:

• Investment barriers • Technology barriers • Lack of prevailing practice

• Market barriers

Sub-step 2b. Eliminate alternative scenarios which are prevented by the identified barriers This step identifies alternative scenarios which are prevented by at least one of the barriers listed in Sub-step 2a above and eliminate those alternative scenarios from further consideration. Alternatives to power generation:


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Out of the nine (9) alternatives to power generation analysed in Sub-step 1a and Sub-step 1 b above, only alternative P1 and P4 can be considered as realistic and credible baseline scenarios and are subjected to barrier analysis prescribed in Step 2. Table B.5: Barrier analysis for alternatives to power generation

Alternatives to power generation Barrier P1: Proposed project activity not

undertaken as a CDM project activity.

P4: Generation of power in the grid.

Investment Power production based on biomass and specifically EFB has meet strong investment barriers in Malaysia. The barriers are mainly the following15: 1. Tariff not meeting market IRR

expectations; 2. Lack of long term fuel supply; 3. Lack of financing; and 4. Certain provisions in Renewable

Energy Power Purchase Agreement (REPPA) unacceptable to SREP developers.

The only biomass power projects that have been implemented has been registered as CDM projects or are in the application process: • Lahad Datu Edible Oil (Reg. No.

395) • Sandakan Edible Oil (Reg. No. 402) • Sahabat Empty Fruit Bunch Biomass

(Reg. No. 288); and • Kunak Bio Energy Project (in

process for registration as a CDM project activity)

No investment barriers

15 Erik Dugstad et al 2007: Options for implementation of the RE target in 9th Malaysia Plan. Page 3 Summary Downloaded from www.eib.ptm.org.my


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Technology The formation of clinker and slag in the boiler and this has the following effects16:- • Damage to boiler tubes by direct

abrasion; • Damage to boiler tubes due to

impact of dropping large mass of clinker/slag; and

• Reduction in boiler efficiency due to formation of slag/clinker layer on boiler tubes

Difficulties in the fuel preparation of EFB17

The EFB is very bulky and with high moisture content. Therefore it is necessary to press the EFB and shred the EFB to obtain a particular size that is acceptable for use in the boiler. Furthermore the equipment used in the preparation of the EFB fuel will generally experience significant wear and tear which is due to the high presence of silica content in the EFB resulting in an increase in the maintenance cost.

Risk of technological failure: The project activity faces significant risks in performance of the technology illustrated by the low availability of the Kunak Bio Energy Project (in process for registration as a CDM project activity), which only had an availability of 25% in the first year and 50% in the second year after commissioning.

No technology risk

16 Experience from Kunak Bio Energy Project – see photos in Annex 9 17 Experience from Kunak Bio Energy Project


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Lack of prevailing practice

The experience with biomass power is very limited in Malaysia and the negative perceptions of the major players is one of the major barriers – according to Minister for Energy, Lim Keng Yaik18: What can we do to tap the high potential of renewable energy in our country? While there are barriers that need to be ironed out, I strongly believe that the biggest barrier is our mindset and perceptions. In this instance, all of us are victims to the old way of thinking”

Power from the grid is the prevailing practice

Market There are significant market barriers in utilising EFB as fuel for biomass power plant. In a major study for the EFB supply chain19 one of the conclusions is as follows: “The demand of EFB fuel is subjected to various barriers such as accessibility of fuel due to high transportation costs, uncertainty of EFB fuel prices… difficulty in handling as well as fluctuation of supply due to cropping seasons (peak/off peak)”

Power readily available

It may be observed in Table B.5 that there are very significant barriers for the proposed project activity to be undertaken not as a CDM project activity (P1) as compared to generation of power in the grid (P4) as the use of power from the grid is well known and has low technology risk.

18 Speech by The Minister for Energy Water and Communication Y.B. Dato' Sri Dr. Lim Keng Yaik at the National Renewable Energy Forum 21/09/2006. Downloaded from www.ktak.gov.my 19 Eco-Ideal Consulting & Mensilin Holdings, 2005: Barrier Analysis for the Supply Chain of Palm Oil Processing Biomass (Empty Fruit Bunch) as Renewable Fuel. Page 43 Downloaded from www.eib.ptm.org.my


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Alternatives to heat generation: Among the nine (9) alternatives to heat generation analysed in Sub-step 1a and Sub-step 1b above, only alternatives H1, H4 and H6 can be considered as realistic and credible baseline scenarios and are subject to barrier analysis prescribed in Step 2. Table B.6: Barrier analysis for alternatives to heat generation

Alternatives to heat generation Barrier H1: Proposed

project activity not undertaken as a CDM project activity.

H4: Generation of heat in boiler using the same type of biomass residues i.e. mesocarp fibre, PKS and PKC.

H6: Generation of heat in boiler using fossil fuels i.e. MFO

Investment Similar barriers as for P1 (discussed in Table B.5) but less pronounced as steam production requires lower temperature and pressure of the boiler and therefore less investment. Investment in fuel preparation equipment is not commercially practical due to low use for steam boiler.

No investment barrier No investment barrier

Technology Similar barriers as for P1 (discussed in Table B.5) but less pronounced as steam production requires lower temperature and boiler pressure. Thus there is less risk of corrosion

No technology risk No technology risk

Lack of prevailing practice

Similar barriers as for P1 (discussed in Table B.5) but less pronounced as steam production requires lower temperature and boiler pressure.

No barrier No barrier


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Alternatives to heat generation Barrier H1: Proposed

project activity not undertaken as a CDM project activity.

H4: Generation of heat in boiler using the same type of biomass residues i.e. mesocarp fibre, PKS and PKC.

H6: Generation of heat in boiler using fossil fuels i.e. MFO

Market Similar barriers as for P1 (discussed in Table B.5)

No barrier No barrier

As discussed in Table B.6, there are significant barriers for H1 – Proposed project activity not undertaken as a CDM project activity for heat generation using biomass residue from EFB, whilst there are no significant barriers for alternatives H4 and H6- as baselines for the project activity. For the four biomass types (EFB, PKS, mesocarp fibre and PKC) identified in Sub-step 1a and Sub-step 1b, only one alternative was identified for each biomass type as discussed in Sub-step 1b. Thus, no barrier analysis was conducted in relation to these alternatives. Outcome of Step 2b From Sub-step 2a and Sub-step 2b, it is observed that Alternative 3 (P1 and H1) identified in Step 1 experiences significant barriers. Following Sub-step 2b, alternatives scenarios to the project activity that are not prevented by any barriers are as follow:-

• P4: The generation of power in the grid

• H4: The generation of heat in boilers using the same type of biomass residues

• H6: The generation of heat in boilers using fossil fuels

• B4: The biomass residues i.e. mesocarp fibre, PKS, and PKC are used for both heat and electricity generation and

• B2: The biomass residues i.e. EFB are dumped or let to decay under clearly anaerobic

conditions.

Following Sub-step 2a and Sub-step 2b, there are still several alternative scenarios i.e.: 1. P4, H4, B4 and B2 (i.e. Alternative 1); and 2. P4, H6 and B2 (i.e. Alternative 2)


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remaining, but do not include the proposed activity undertaken without being registered as a CDM project activity (i.e. P1 and H1). Thus, explanations using qualitative and quantitative arguments on how the registration of the CDM project activity will alleviate the barriers that prevent the proposed project activity from occurring in the absence of the CDM are set out below. This is in line with the Combined Additionality Tool which reads: “If there are still several alternative scenarios remaining, but which do not include the proposed project activity undertaken without being registered as a CDM project activity, explain using qualitative and quantitative arguments how the registration of the CDM project activity will alleviate the barriers that prevent the proposed project activity from occurring in the absence of the CDM.” Qualitative arguments As set out briefly in Step 2, the project activity experiences financial and technological barriers and risks. Details of the technological barriers and risks are further discussed in Annex 9. The registration of the project activity as a CDM project activity allows the project proponent to accept the inherent risks of the power plant arising from technological risks of utilization EFB as a primary biomass fuel. This contribution from sale of CERs may also assist in overcoming the barriers posed by employment of new technology to ensure the project activity is reasonably viable from commercial perspective. In addition, it can be justified that CDM will help to overcome the major barriers based on the financial contribution to the project activity. The income from sale of CERs can be calculated as 0.044 MYR/kWh as average for the first 7-years crediting period. This can be compared with the cost of purchasing power from the grid of 0.20 RM/kWh. Thus, the sale of CERs gives an increase of 22% in the value of the power produced. This argument will be further developed in the investment analysis process described in Step 3. Additional income from sale of CERs assists to overcome investment barriers of the project activity. Such additional revenue also enables the project proponent to accept risks associated with low availability of the power plant due to the inherent technological risks arising from use of EFB as biomass fuel. Finally, this extra incentive also assists to overcome perceived barriers posed by the new technology employed in the project activity Quantitative arguments From the quantitative viewpoint, the financial indicator set out below has been identified as most suitable for the project type and decision making context:

• Project internal rate of return (“Project IRR”) In demonstrating how registration of the project activity as a CDM project activity will alleviate the barriers that prevent the proposed project activity from occurring in the absence of the CDM, the Project IRR of the project activity is set out in Table B.7 for further discussion:


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Table B.7: Project IRR of the project activity without and with CDM registration Financial indicator Project activity without CDM

registration Project activity with CDM

registration Project IRR 5.6%20 11.9%21

As observed from the above table, registration of the project activity as a CDM project activity is critical to ensure a commercially reasonable return of 11.9%, which is relatively close to the weighted average cost of capital22 of the company of 11.4%23. STEP 3. Investment analysis Step 3 involving investment comparison analysis is also conducted to determine if Alternative 1, Alternative 2 or Alternative 3 shortlisted in Step 1 is the most economically or financial attractive. Similar financial indicator i.e. Project IRR is applied and computed for Alternative 1, Alternative 2 and Alternative 3. In undertaking the investment comparison various variables and input data for project cost, revenues, operating and maintenance cost have been included. Outcome of Step 3 The investment comparison analysis yielded the following results in Table B.8:- Table B.8: Project IRR of Alternative 1, Alternative 2 and Alternative 3 Financial indicators Alternative 1 Alternative 2 Alternative 3 Project IRR 28.1%24 -25 5.6%26

20 Please refer to column C34, worksheet Proj NPV_without CERs, filename Copy of Copy of Kunak Jaya-IRR 080308 (TAS)_DNV (Old basis). 21 Please refer to column C36, worksheet Proj NPV_with CERs, filename Copy of Copy of Kunak Jaya-IRR 080308 (TAS)_DNV (Old basis). 22 Prescribed in Sub-step 2b – Option III, para 4C of “Tools for the demonstration and assessment of additionality, Version 04 (EB36)”. 23 Please refer Annex 10 for detailed calculation 24 Please refer to column C33, worksheet Proj NPV-Baseline1(Grid&B.mass), filename Copy of Copy of Kunak Jaya-IRR 080308 (TAS)_DNV (Old basis). 25 Please refer to column C33, worksheet Proj NPV-Baseline2(Grid&MFO), filename Copy of Copy of Kunak Jaya-IRR 080308 (TAS)_DNV (Old basis). 26 Please refer to column C34, worksheet Proj NPV-without CERs, filename Copy of Copy of Kunak Jaya-IRR 080308 (TAS)_DNV (Old basis).


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As observed from the above results, Alternative 1 is the economically or financially more attractive alternative scenario and can be concluded as the baseline scenario. Sensitivity analysis A sensitivity analysis is also included to assess whether the conclusion regarding the financial attractiveness identified in Table B.8 is robust to reasonable variations in the critical assumptions applied to all three baseline scenarios i.e. Alternative 1, Alternative 2 and Alternative 3. The result of the sensitivity analysis is set out in Table B.9. Table B.9: Result of sensitivity analysis on Alternative 1, Alternative 2 and Alternative 3.

Project IRR (%) Variables Sensitivity test range Alternative 1 Alternative 2 Alternative 3

-5.0% 30.7 - 8.5 -2.5% 29.6 - 7.1

No change 28.1 - 5.6 +2.5% 27.4 - 4.1

Fixed and variable costs

+5.0% 26.3 - 2.3 -5.0% 24.0 - 4.2 -2.5% 26.1 - 4.9

No change 28.1 - 5.6 +2.5% 30.0 - 6.3

Price per MT of steam

+5.0% 32.0 - 7.0 -5.0% 18.5 - 1.6 -2.5% 23.4 - 3.8

No change 28.1 - 5.6 +2.5% 32.6 - 7.4

Running hours

+5.0% 37.1 - 8.9 Sensitivity analysis on the Project IRR taking into account reasonable variations in the assumptions of the critical variables has been carried out. Table B.9 sets out the results on sensitivity analysis performed on Project IRR, taking into account variations in fixed and variable costs, running hours and price of steam per MT. The sensitivity analysis result in Table B.9 further concludes that Alternative 1 is the most financially attractive scenario and is the baseline scenario.


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In addition, the sensitivity analysis results on Project IRRs of Alternative 3 are in general well below the 11.4%27, which is the weighted average cost of capital28 of the company. These results also support the conclusion that the project activity is unlikely to be financially attractive without CDM registration. Step 4: Common practice analysis Sub-step 4a: Analyse other activities similar to the proposed project activity Energy consumption in the industry accounts for close to 40% of total energy consumption in Malaysia. A broad variety of fuels is used currently, by far dominated by fossil fuels, and only to a very small extent – less than 0.5%, and not accounted for in official energy statistics. Figure B.1: Distribution of fuels used in the total industrial sector in Malaysia, 2003. Source: National Energy Balance, PTM

Figure B.1 depicts that the energy use in the industry in Malaysia is dominated by the used of fossil fuels. Very few companies have been using biomass residue as fuel. Most of the biomass fuel used is PKS i.e. cement industry whereas the use of EFB has been very limited (and mainly confined to CDM projects). The statistics clearly set out that the use of biomass (what more EFB) in industrial application is very limited in Malaysia – i.e. outside palm oil mills. 27 Please refer Annex 10 for detailed calculation

28 Prescribed in Sub-step 2b – Option III, para 4C of “Tools for the demonstration and assessment of additionality, Version 04 (EB36)”


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There are in total 107 palm oil mills and 3 palm oil refineries in the state of Sabah. Out of this, only 429 projects in the region are of similar to the Kunak Jaya Bio Energy Project and are registered as CDM projects. Thus the Kunak Jaya Bio Energy Project is additional to the business as usual scenario. In addition, it could also be viewed that no other project activities similar to the Kunak Jaya Bio Energy Project will be implemented without registration as CDM project activities which will assist to alleviate and mitigate the inherent and associated risks involved in the implementation of such high efficient biomass boilers for power production in Malaysia. Sub-step 4b: Discuss any similar options that are occurring Save and except for Kunak Jaya Bio Energy Project, there have not been other similar project ongoing in Malaysia and thus no further discussion have been concluded. Summary of choice of baseline scenario The only remaining alternative identified following Step 1, Step 2 and Step 3 above is a combination of baseline scenario as prescribed in Scenario 3, Table 2 of ACM0006 (version06) which reads: “The project activity involves the installation of a new biomass residue fired cogeneration plant at a site where no power was generated prior to the implementation of the project activity. The power generated by the project plant is fed into the grid or would in the absence of the project activity be purchased from the grid. The biomass residues would in the absence of the project activity (a) be used for heat generation in boilers at the project site and (b) be dumped or left to decay or burnt in an uncontrolled manner without utilizing it for energy purposes. This may apply, for example, where the quantity of biomass residues that was not needed for heat generation was dumped, left to decay or burnt in an uncontrolled manner prior to the project implementation. The heat generated by the new cogeneration plant would in the absence of the project activity be generated in boilers using the biomass residues that are fired in the cogeneration plant.” The description fits precisely to the situation and circumstances in the project activity. The cogeneration plant is built to supply electricity and heat to the Refinery, which is newly constructed. Thus, there was no heat or power production at the site prior to the project activity. As discussed in the baseline, the electricity requirement of the Refinery would have been met through purchase from the grid, whilst the requirement for heat would have been fulfilled by a biomass steam boiler. The biomass residue would either have been used in the baseline steam boiler as prescribed in the baseline (in the case of PKS, PKC and mesocarp fibre) or been dumped in deep or shallow landfills (in the case of EFB).

29 See barrier analysis for power above for the list of projects


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B.5. 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 (assessment and demonstration of additionality): This section elaborates the additionality of this project activity. The basic demonstration of additionality is handled in the previous section by means of the Combined Additionality Tool. Two elements included in the argument are: 1) The timeline of the related documents of the project activity indicate that CDM was seriously

considered in the decision to proceed with the project activity. 2) The financial impact of sale of CERs on commercial viability of the project activity. Timeline

The Kunak Jaya Bio Energy Project was submitted previously to the CDM Executive Board and was rejected after a series of reviews.

A chronology of the previous submission discussed earlier is set out below:

1. January 2006: A Board meeting was convened by the project proponent, TSH-Wilmar resolved to proceed with the project activity taking into consideration that the project activity i.e. Kunak Jaya Bio Energy Project shall qualify as a CDM project activity.

2. July 2006: Engagement of a CDM project consultant.

3. August 2006: Initiation of work at site.

4. 17th January 2007: Site validation by DOE i.e. Det Norsket Veritas.

5. 21st March 2007: National approval from Designated National Authority of Malaysia was obtained.

6. 17th April 2007: Submission of Kunak Jaya Bio Energy Project to CDM Executive Board for registration.

7. 27th July 2007: The CDM Executive Board accepted information provided during review of the project activity and agrees to register the project with correction i.e. the project participant and DOE to submit a revised PDD containing an investment comparison analysis that the project activity is less financially attractive than at least one alternative, and a corresponding revised validation report (EB 33; Point 70b).

8. 5th September 2007: Initial trial run of the project activity.

9. 19th October 2007: The CDM Executive Board could not register the project activity as the project participant and DOE failed to provide an investment comparison of the two separate alternatives presented in the PDD that could be used


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to determine whether the project activity scenario was more or less financially attractive than the baseline scenario presented (EB 35; Point 76b.

This PDD represent the fourth version (including all PDD previously submitted to CDM Executive Board) for registration. The project activity remains identical despite the different version of PDD. As CDM registration was seriously considered (as shown in the above chronology of events) prior to proceeding with the Kunak Jaya Bio Energy Project, the project activity thus clearly fulfils with the requirements in the additionality tool which reads:

“Provide evidence that the incentive from the CDM was seriously considered in the decision to proceed with the project activity. This evidence shall be based on (preferably official, legal and/or other corporate) documentation that was available at, or prior to, the start of the project activity”.

Thus, it is clear from the above chronology events, that the project proponent has emphasized and taken into account CDM registration as a key factor prior to initiation of the Kunak Jaya Bio Energy Project and the project activity only commenced operation after the project activity was submitted for registration as a CDM project activity.

The financial impact of sale of CERs on commercial viability of the project activity The approval and registration of the Kunak Jaya Bio Energy Project as a CDM project activity will assist the project activity to overcome the associated and related barriers (as discussed in Section B.4 and further detailed in Annex 9) in implementation and completion of the project activity and other company(ies) in Malaysia that decides to embark on to the similar project activity in the future. The benefits arising from successful implementation, completion and registration of the project activity as a CDM project activity by the CDM Executive Board are as follow:

• The project activity will unquestionably reduce anthropogenic greenhouse emissions by generating electricity supply via clean energy source;

• The income derived from the sale of CERs to Annex 1 party will assist to overcome the barriers

as demonstrated in Section B.4 above as it will the additional revenue coming from the sale of CERs will also helps to mitigate the extra costs arising from the related technological barriers, rendering the project activity to be reasonably and commercially viable; and

• The investment cost involved for development of clean technologies project is considerably

high presently. In general, this poses difficulties for companies to embark on similar project as Kunak Jaya Bio Energy Project without the project activity being registered as a CDM project activity. As mentioned in Section B.4, Kunak Jaya Bio Energy Project is one of the few biomass fired power plants in Malaysia (using EFB as fuel), which have not been registered as a CDM project activity. Registration of the project activity as a CDM project activity does not only open a new funding possibility solely for the Kunak Jaya Bio Energy Project, but also encourages new entrant(s) to participate in similar project activity in the country.


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B.6. Emission reductions:

B.6.1. Explanation of methodological choices: The first methodological choice is to decide on the appropriate baseline methodology. In this PDD, ACM0006 (version 06) was applied as the appropriate baseline methodology based on justification discussed in Section B.2. The second choice is the baseline scenario described in detail in Section B.4 above. The conclusion is that this project should be evaluated under Scenario 3 of Table 2 of ACM0006, (version 06). This scenario is relevant since Kunak Jaya Bio Energy Project is a greenfield project where the baseline scenario established in Section B.4 is Scenario 3 ,Table 2 of ACM0006, (version 06) i.e.:

• Power would have been purchased from the grid • Heat would have been generated from biomass • Biomass could have been left to decay in dumpsites of more than five (5) meters depth.

According to the applied methodology, the project boundary encompasses:

• The power plant at the project site;

• The means for transportation of biomass residues to the project site (e.g. vehicles);

• All power plants connected physically to the electricity system that the CDM project power plant is connected to. The spatial extent of the project electricity system, including issues related to the calculation of the build margin (BM) and operating margin (OM), is further defined in the “Consolidated baseline methodology for grid-connected electricity generation from renewable sources”(ACM0002)30.

• The site where the biomass residues would have been left for decay or dumped. This is applicable only to cases where the biomass residues would in the absence of the project activity be dumped or left to decay.

The physical site is the bio-energy plant itself, including a fuel feeding system, boiler system and steam turbine and generation system. The first interface of the project boundary is at the fuel feeding system, so fuel storage system is excluded. Another interface is the ash and waste water disposal. The actual plant layout is shown in figure B.2, while a schematic presentation is in Figure B.3.

30 The reference to the ACM0002 is according to the EB 3530 ACM002 has been replaced with the “Tool to calculate emission factors for electricity system” (Version 1)


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Figure B.2: Site plan for Kunak Jaya Bio Energy Project and the Refinery

Figure 4: Project Boundary (just check image)

Figure B.3 : Project Boundary


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Figure B.3: Schematic presentation of Kunak Jaya Bio Energy Project

Figure B.3 : Project Boundary

The emission reductions in the year, y, will be calculated using the formula (1) in the ACM0006 (version 06):

ERy = ERheat, y + ERelectricity, y + BEbiomass, y − PEy − Ly (1) Where: ERy = Emissions reductions of the project activity during the year y in tons of CO2, ERelectricity,y = Emission reductions due to displacement of electricity during the year y in tons

of CO2 ERheat,y = Emission reductions due to displacement of heat during the year y in tons of

CO2, BEbiomass,y = Baseline emissions due to natural decay or burning of anthropogenic sources of

biomass during the year y in tons of CO2 equivalents, PEy = Project emissions during the year y in tons of CO2, and Ly = Leakage emissions during the year y in tons of CO2.

Transport of biomass fuel

Biomass fuel preparation

Bio energy plant

Electricity generation

Steam to process

Ash Electricity to process

Transport of waste water

Project Boundary


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Project emissions The emissions generated within the project boundary occur from the combustion of the biomass fuel, which comprises EFB, PKS, PKC and mesocarp fibre. As all of these are renewable energy sources the CO2 emissions are defined as being zero. Biomass energy sources emit an amount of CO2, which equals the amount of CO2 taken up during the growing of the biomass source and CO2 emission is therefore neutral. Only emissions of methane from the combustion are considered as project emissions. Project emissions include CO2 emissions from transportation of biomass to the project site (PETy) and CO2 emissions from on-site consumption of fossil fuels due to the project activity (PEFFy) and, where this emission source is included in the project boundary and relevant, CH4 emissions from the combustion of biomass (PEBiomass,CH4,y). It also includes electricity used for preparation of the biomass: PEy = PETy + PEFFCO2, y + PEEC,y + GWPCH 4 · ( PEBiomass,CH 4, y + PEww,CH4,y) (2) Where: PETy = CO2 emissions during the year y due to transport of the biomass to the project

plant in tons of CO2, PEFFCO2,y = CO2 emissions during the year y due to fossil fuels co-fired by the generation

facility in tons of CO2, PEEC,y = CO2 emissions during the year y due to electricity consumption at the project

site that is attributable to the project activity (tCO2/yr) GWPCH4 = Global Warming Potential for methane valid for the relevant commitment

period, PEBiomass,CH4,y = CH4 emissions from the combustion of biomass during the year y. PEww,CH4,y = CH4 emissions from waste water generated from the treatment of biomass

residues in year y (tCH4/yr)

Biomass fuel transportation:

The bio energy plant will consume EFB, PKS, PKC and mesocarp fibre, which are a waste products obtained and purchased from palm oil mills in the surroundings. The fuel will be transported from a number of palm oil mills with an average distance to Kunak Jaya Bio Energy Project of 60 km.

The formula to calculate the emissions from the transport is

yCOkmyy

kykT

y EFAVDTL

BFPET ,2,

,,

⋅⋅=∑

(2a)


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Where,

PETy = CO2 emissions during the year y due to transport of the biomass residues to the project site (t CO2/year)

TLy = Average truck load of the trucks used (tons) during the year y

BFT,k,y = Quantity of biomass residue type k transported to the project site during the year y (tons)

AVD y = Average round trip distance (from and to) between the biomass residue fuel supply sites and the site of the project site during the year y (km)

EFkm,CO2,y = Average CO2 emission factor for the trucks measured during the y (t CO2/km)

The project activity is expected to use 109,067 tons of biomass waste, EFB31 as fuel annually (BFEFB,k,y) and average 20 ton per truck (TLy), it will be 5,453 trips to bring fuel to the project site. The average distance to the palm oil mills is 60 km, so the round trip will be 120 km. (AVDy = 120 km). With an efficiency of 39 litre diesel per 100 km then the fuel use per km will be 0.39 litre. The emission of CO2 from one litre of diesel is 2.7 kg CO2/litre (calculated from IPCC default values for diesel). That leads to an emission factor of 1.053 kg/km (EFkm,CO2,y= 0.001053 t/km)

PET EFB,y = 109,067/20 *120*0.001053 t CO2/year = 689 t CO2/year.

The project activity is expected to use a further 25,051 tons of biomass waste, PKS as fuel annually (BFPKS,,k,y) and average 20 ton per truck (TLy), it will be 1,253 trips to bring fuel to the project site. The average distance to the palm oil mills is 60 km, so the round trip will be 120 km. (AVDy = 120 km). With an efficiency of 39 litre diesel per 100 km then the fuel use per km will be 0.39 litre. The emission of CO2 from one litre of diesel is 2.7 kg CO2/litre (calculated from IPCC default values for diesel). That leads to an emission factor of 1.053 kg/km (EFkm,CO2,y= 0.001053 t/km)

PET PKS,y = 25,051/20 *120*0.001053 t CO2/year = 158 t CO2/year.

The project activity is expected to use a further 57,841 tons of biomass waste, mesocarp fibre as fuel annually (BFfibre,,k,y) and average 20 ton per truck (TLy), it will be 2,892 trips to bring fuel to the project site. The average distance to the palm oil mills is 60 km, so the round trip will be 120 km. (AVDy = 120 km). With an efficiency of 39 litre diesel per 100 km then the fuel use per km will be 0.39 litre. The emission of CO2 from one litre of diesel is 2.7 kg CO2/litre (calculated from IPCC default values for diesel). That leads to an emission factor of 1.053 kg/km (EFkm,CO2,y= 0.001053 t/km)

PET Fibre,y = 57,841/20 *120*0.001053 t CO2/year = 365 t CO2/year.

31 The ACM0006 prescribes to use the dry weight for the calculation of transport emissions – footnote 9 on page 24 – however it is chosen to use the wet weight in this calculation as it gives a more correct picture of what is happening – and it is more conservative than using the wet weight.


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Transportation of wastewater from fuel preparatory system

Waste water from the fuel preparatory system is produced when the EFB is pressed and shredded to reduce the moisture content. The waste water is collected in a holding tank before it’s pumped into tankers and transported to off-site waste water treatment system in Kunak Palm Oil Mill, located 30km from the site of Kunak Jaya Bio Energy Project. The waste water will be used to generate biogas in the off-site treatment facility and thus will not contribute to any project emissions.

Project emission here is considered for transportation of the waste water from Kunak Jaya Bio Energy Project to Kunak Palm Oil Mill.

The project activity is expected to release approximately 34,902T/yr of waste water and average 32 ton per truck (TLy), it will be 1,091 trips to bring fuel to the off-site treatment facility. The distance to Kunak Palm Oil Mill is 30 km, so the round trip will be 60 km. (AVDy = 60 km). With an efficiency of 39 litre diesel per 100 km then the fuel use per km will be 0.39 litre. The emission of CO2 from one litre of diesel is 2.7 kg CO2/litre (calculated from IPCC default values for diesel). That leads to an emission factor of 1.053 kg/km (EFkm,CO2,y= 0.001053 t/km)

PET ww,y = 34,902/32 *60*0.001053 t CO2/year = 69 t CO2/year.

Transportation of ash:

Ash is a waste product from the bio energy plant and is to be transported back to the plantations as potash for application to the field. This will be done by trucks and result in emission of CO2 from the combustion of diesel oil. These emissions are handled in the preceding calculations because the transport of the fuel is calculated as return trips. The ash will be brought back to the plantations in these return trips. There will much less ash than EFB so the transport needs will be even less than the return trips.

Total transport emissions

The total emissions (PETy) from transport will this be (689 + 158 + 365 + 69 =) 1,281 t CO2/year.

Use of fossil fuels

Fossil fuels are expected to be used for the following processes in the Kunak Jaya Bio Energy Project:

1) MFO as start-up fuel for the biomass boiler

2) MFO as backup fuel for the steam boiler

3) Diesel for a diesel generator set used as backup for the biomass power plant.

After the implementation of the Kunak Jaya Bio Energy Project the diesel consumption will be monitored and the project emissions will be calculated based on the prescriptions following the “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion” Version 1.


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CO2 emissions from combustion of respective fuels are calculated as follows: PEFC,j,y = ∑∑∑∑FCi.j.y x COEFi,y Where: PEFC,j,y = The CO2 emissions from fossil fuel combustion in process j during the year y

(tCO2 / yr); FCi,j,y = The quantity of fuel type i combusted in process j during the year y (mass or

volume unit / yr); COEFi,y = The CO2 emission coefficient of fuel type i in year y (tCO2 / mass or volume

unit); i = The fuel types combusted in process j during the year y.

Table B.10: The fuel types and combustion processes on the Kunak Jaya Bio Energy Project

i = MFO i = Diesel

j = Start up fuel for biomass steam boiler

N/A 480 l

j = Start up fuel for biomass power boiler

N/A 240 l

j = Back up fuel for biomass steam boiler

900,000 l N/A

j = Generator set for back up for power production

N/A 599,280 l

Total amount of fuel type used 900,000 l 600,000 l


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Because of the lack of more detailed data the project emissions are calculated based on Option B in the Tool:

COEFi,y = NCVi,y x EFCO2,i,y

The following values has been used for the calculations

Table B.11: Calculations of COEFi,y

NCV EFCO2 COEF

MFO 41.4996 GJ/ton 78 kg/GJ 3.24 t CO2/ton

Diesel 42.4960 GJ/ton 74 kg/GJ 3.14 t CO2/ton

The NCV values have been obtained from the Malaysian National Energy Balance. The latest published version is from 2005.

The total project emissions can thus be calculated as follows

Table B.12: Total CO2 emissions from use of fossil fuel

Total annual use in ton COEF Total emissions

MFO 882 T/yr32 3.24 t CO2/ton 2,855 tCO2/yr

Diesel 504 T/yr33 3.14 t CO2/ton 1,585 tCO2/yr

Total 4,440 tCO2/yr

Electricity consumption at the project site

According to ACM0006 (version 06) CO2 emissions from on-site electricity consumption (PEEC,y) should be calculated using the latest approved version of the “Tool to calculate project emissions from electricity consumption”. In applying the tool, the project plant as well as any other biomass-fired power plants at the project site should not be considered as captive power plants. As there is no on site fossil fuel fired power plant this means that all electricity consumption on site in relation to the project should be calculated as project emissions based on import at electricity from the grid. The on-site electricity consumption attributable to the project activity (ECPJ,y) should include all electricity consumption that is consumed by the project activity (e.g. for mechanical treatment of the biomass), except for auxiliary electricity consumption by the project plant (e.g. for pumps, vans, etc.).

32 MFO density of 0.98kg/l – IPCC default value 33 Diesel Density of 0.84 kg/l – IPCC default value


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The power consumption for the pre-treatment of EFB at the project site is expected to be 22 kWh/ton of EFB. Based on an annual consumption of 109,067 t EFB the expected power consumption for fuel preparation can be calculated as 2,379 MWh/year. Project emissions from consumption of electricity from the grid are calculated based on the power consumed by the project activity and the emission factor of the grid, adjusted for transmission losses, using the following formula: PEEC,y = ECPJ,y x EFgrid,y x (1 + TDLy ) Where: PEEC,y = The project emissions from electricity consumption by the project activity

during the year y (tCO2 / yr); ECPJ,y = The quantity of electricity consumed by the project activity during the year y (MWh); EFgrid,y = The emission factor for the grid in year y (tCO2/MWh) TDLy = The average technical transmission and distribution losses in the grid in year y

for the voltage level at which electricity is obtained from the grid at the project site

TDL is estimated from the annual “Statistics of electricity supply Industry in Malaysia34” from the Malaysian Energy Commission. The transmission losses are not reported directly but the production, purchase and sales of electricity for the Sabah Electricity Sdn. Bhd. (SESB) was reported as follows

Table B.13: Production, purchase, sales and losses of electricity for the Sabah Electricity Sdn. Bhd.

MWh/year 2002 2003 2004

Production 1252 1401 1394

Purchase 1457 1583 1863

Total available 2709 2984 3257

Sales 2182 2332 2557

Losses 527 652 700

Losses in percent 19% 22% 21%

34 The latest version available from the homepage of the Energy Commission (www.st.gov.my) on 17 December 2007 was for 2005.


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The average losses for SESB for the last three years reported are 21% (see Table B.13). The data reported by the Energy Commission includes both technical and commercial losses. This means that it will be conservative to use the default value of 20% from the “Tool to calculate project emissions from electricity consumption”.

The project emissions from use of electricity can thus be calculated in the following table

Table B.14: Project emissions from use of electricity

ECPJ,y EFgrid,y TDLy PEEC,y

2,379 MWh 0.8 t CO2/MWh 0.20 2,284 t CO2/year

Methane emissions from burning of biomass

The combustion of biomass can lead to methane emissions. The formula for calculating the emissions is:

PEBiomass,CH 4, y = EFCH 4,BF x Σ BFk,y x NCVk (2c) Where: BFk,,y = Quantity of biomass type k used as fuel in the project plant during the year y in

a volume or mass unit, NCVk = Net calorific value of the biomass type k in terajoules (TJ) or MWh per mass or

volume of biomass, EFCH4,BF = CH4 emission factor for the combustion of biomass in the project plant tons CH4

per TJ or MWh.

The amount of methane emission from energy production based on biomass is set at a level of 30 kg/TJ according to the default value in the 2006 IPCC Guidelines (quoted from ACM0006). According to the ACM0006 (version 06), the level of uncertainty for such emissions is larger than 100% and therefore a conservativeness factor of 1.37 is used. The value used in the formula will thus be 41.1 kg CH4 /TJ. The additional energy used in for the power production in the plant will be 1,230 TJ and this will amount to a total of 1,062 tonnes CO2eqv/year.

The emission of N2O is assumed to be minor and is not considered in the calculations.

Project emissions of methane from waste water treatment (PEWW,CH4,y)

There are no project emissions from wastewater treatment in this project. Wastewater from the preparation of the EFB for the Kunak Jaya Bio Energy Project is done at the Kunak Palm Oil Mill where the waste water is treated in a biogas plant. The biogas plant is in the process of being registered as a CDM project activity and all emission in relation to the plant will be monitored and due account will be taken of the emissions in the biogas monitoring system. So there are no emissions at the site of the Kunak Jaya Bio Energy Project.


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If there in the future will be fuel preparation at the site the emissions should be calculated as follows:

PEWW,CH4,Y = VWW,y x CODww,y x Bo,wwx MCFww

Where:

PEWW,CH4,y = CH4 emissions from waste water generated from the treatment of biomass residues in year y (tCH4/yr)

VWW,y = Quantity of waste water generated in year y (m³/yr) CODWW,y = Average chemical oxygen demand of the waste water in year y (t COD/m³) Bo,WW = Methane generation potential of the waste water (t CH4/t COD) MCFWW = Methane correction factor for the waste water

Emission Reductions from electricity production

The emission reductions from electricity production to the refinery are calculated from the following formula:

ERelectricity, y = EGy x EFelectricity, y (4) Where: ERelectricity,y = Emission reductions due to displacement of electricity during the year y in tons

of CO2 EGy = Net quantity of increased electricity generation as a result of the project activity

(incremental to baseline generation) during the year y in MWh EFelectricity,y = CO2 emission factor for the electricity displaced due to the project activity

during the year y in tons CO2/MWh

The Sabah electricity grid system consists of two major grids; the West Coast Grid and East Coast Grid. This is also the delineation used by a study published by the Malaysian Energy Center (PTM) on power sector baselines in Malaysia.

Pusat Tenaga Malaysia (The Malaysian Energy Centre) has been producing a report on power sector baselines in Malaysia. The base years for the calculation are 2002-0435, for which the latest statistics are available. Information in the report has been obtained from Sabah Electricity Sdn Bhd (SESB).

35 PTM is in process of updating the report for 2005 and 2006, but it is still not available (as of 17. December 2007). No substantial changes have happened in the East Sabah grid in the two years. (personal communication with En Azman, PTM)


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Table B.15: Data for power generation in Sabah

No Area Technolog

y Fuel Type

Capacity

[MW]

Annual Generation

[GWh] CO2-emission [tCO2]

1

1. Tawau DG/GT Diesel 64.5 110 88,000

2. Sandakan DG/GT Diesel 73 12 9,600

3. Kunak DG Diesel 6.6 17 13,600

4 Lahad Datu DG Diesel 31.6 138 110,400

5. Kota Kinabatangan

DG Diesel 3.5 9 7,200

6. Sandakan DG MFO 60 290 232,000

7. Sandakan DG MFO 34 126 100,800

Total 273 702 561,600 1 Since actual fuel use data has not been available the emission coefficient for the grid system is obtained from Table I.D.1 in AMS I.D, which prescribes emission factors for diesel generator systems. The system is supplied by power plants with a capacity higher than 200 kW and the table prescribe an emission coefficient of 0.8 kgCO2/kWh.

The Table B.15 above shows that all units connected to the transmission grid are either diesel or medium fuel oil fired. It is considered that all or some of these units will be in operation for at least the crediting period and that the project activity will displace diesel fired units throughout the crediting period. The baseline is therefore static for the crediting period using an emission coefficient of 0.8 kg CO2eqv/kWh.

The project proponent has chosen to use ex-ante calculation of the power baseline (in accordance with “Tool to calculate the emission factor for an electricity system” version 01) based on the latest 3 years of available data. EGy corresponds to the net quantity of electricity generation produced for onsite use at the Refinery from the project activity (EGy = EGproject plant,y). The baseline is that this electricity would have been imported from the grid.

Baseline emissions due to natural decay of the biomass in a dumpsite

The EFB used as fuel in the Kunak Jaya Bio Energy Project would have been deposited in a landfill as described in B4 above. The “Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site (version 02)”has been used for the calculations. The method below is used to evaluate the yearly methane generation potential in the landfill. The quantity of methane projected to be formed during a given year is estimated using a first order decay model based on the discrete time estimate method proposed in the IPCC Guidelines:


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)1(12

16)1( )(

1,4,,4

kjxykjj

y

x jxjfCHySWDSCH eeDOCWMCFDOCFGWPfBE −−⋅−

−

−⋅⋅⋅⋅⋅⋅⋅⋅⋅−⋅= ∑∑ϕ

Where:

BECH4,SWDS,y = Methane emissions avoided during the year y from preventing waste disposal at the solid waste disposal site (SWDS) during the period from the start of the project activity at the end of the year y (tCO2e)

φ = Model correction factor to account for model uncertainties (0.9)

f = Fraction of methane captured at the SWDS and flared, combusted or used in another manner

GWPCH4 = Global Warming Potential (GWP) of methane, valid for the relevant commitment period

OX = Oxidation factor (reflecting the amount of the methane from SWDS that is oxidised in the soil or other material covering the waste)

F = Fraction of methane in the SWDS gas (volume fraction) (default 0.5)

DOCj = Fraction of degradable organic carbon (by weight) in the waste type j

DOCf = Fraction of DOC that can be decompose (IPCC default 0.5)

MCF = Methane Correction Factor (fraction – see table below)

Wj,x = Amount of organic waste type j prevented from disposal in the SWDS in the year x (tonnes)

k j = Decay rate for the waste type j

j = Waste type distinguished into the waste categories as illustrated in the table below

x = Year during the crediting period: x runs from the first year of the first crediting period (x-1) to the year y for which avoided emissions are calculated (x=y)

y = Year for which methane emissions are calculated

The MCF is determined from the IPCC 2006 guidelines for waste according to the following Table B.16:

Table B.16: IPCC default values for the methane correction factor (MCF)

Type of site Methane correction factor (MCF) default values

Managed 1.0


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Type of site Methane correction factor (MCF) default values

Unmanaged – deep (≥5m waste) 0.8

Unmanaged – shallow (<5m waste) 0.4

Default value – uncategorised SWDSs 0.6

In the present case the landfills are unmanaged and >5 meters deep. Therefore the MCF to be used is 0.8.

For determining the decay constant k, the guidance from IPCC 2006 is suggested as described in the Table B.17 below.

Table B.17: IPCC (2006) Default values for the decay factor

Boreal and Temperate (MAT<20ºC)

Tropical (MAT>20ºC) Waste type j

Dry (MAP/PET<1)

Wet (MAP/PET>1)

Dry (MAP<1000mm

)

Wet (MAP> 1000mm)

Pulp, paper, cardboard (other than sludge), textiles

0.04 0.06 0.045 0.07 Slowly degrading

Wood, wood products and straw

0.02 0.03 0.025 0.035

Moderately degrading

Other (non-food) organic putrescible garden and park waste

0.05 0.10 0.065 0.17

Rapidly degrading

Food, food waste, beverages and tobacco (other than sludge)

0.06 0.185 0.085 0.40


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Malaysia clearly qualifies under the tropical, moist and wet conditions. The Mean Annual Temperature (MAT) is around 26 degrees Celsius and the Mean Annual Precipitation (MAP) is 2000-4000 mm depending on location, both above the benchmarks of MAT of 20 degrees and MAP of 1000 mm.

The “Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site (version 2)”prescribes that values for wood waste should be used for EFB for both kj and DOCj.

The project proponent will undertake field tests to allow a better quantification of the decay constant (kj) to be reported in the monitoring report and thus revise the estimate of the baseline emissions of methane based on the calculations.

Table B.18: IPCC (2006) Default values for DOCj

Waste type j

DOCj (% wet waste)

DOCj (% dry waste)

Wood and wood products

43 50

Pulp, paper and cardboard (other than sludge) 40 44

Food, food waste, beverages and tobacco (other than sludge)

15 38

Textiles 24 30

Garden, yard and park waste 20 49

Glass, plastic, metal, other inert waste 0 0 The parameters for wood waste are chosen to the consistent with the requirements of the ““Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site (version 02)”.

Assessment of leakage:

No significant leakages are foreseen as a result of the project activity. All the equipment for the Kunak Jaya Bio Energy Project is new and is not transferred from another project activity and do not result in any leakage.

The methodology ACM0006 (version 06) prescribes that an assessment of the risk of leakage from diversion of the use of biomass from existing use towards the CDM project activity. Three methods are suggested:

L1 is only applicable when all biomass fuel originates from the project entity. This approach is not applicable in this case since the project activity will import part of the biomass fuel.

L2 should demonstrate that there is produced at least 25% more biomass waste in the region than is used by the CDM project activity.


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L3 should demonstrate that producers of biomass waste are not able to sell their product.

Here it is chosen to follow approach L2 because more direct data are available for this approach.

The total processing of FFB in Sabah was in 2005 was 24,993,135 tonnes FFB36. The official statistic does not provide a breakdown on districts therefore the breakdown has to be calculated. Table B.19 shows the number of palm oil mills and their aggregated approved capacity for districts in Sabah in 200537. The total approved capacity in 2005 was slightly lower (22,466,600 t FFB) than the actual processed amount of FFB. This is quite normal that the Malaysian Palm Oil Board (MPOB) approved capacity may be marginally lower than the actual processing. Table B.19: Palm oil processing in Sabah in 2005 District

No. District No. of palm

oil mills Approved

capacity t FFB/year

Estimated production t FFB/year

Is it part of East Sabah? (Yes/No)

1 Kinabatangan 26 4,578,000 5,092,830

2 Kunak 8 1,358,000 1,510,717 Yes

3 Semporna 3 512,000 569,578 Yes

4 Labuk/Sugut 16 3,063,800 3,408,347

5 Lahad Datu 25 6,440,000 7,164,226 Yes

6 Pantai Barat 1 96,000 106,796

7 Pendalaman 1 216,000 240,291

8 Sandakan 13 2,628,000 2,923,538

9 Tawau 10 2,070,800 2,303,677 Yes

10 Keningau 2 1,264,000 1,406,146

11 Tenum 1 96,000 106,796

12 Beaufort 1 144,000 160,194

Total 107 22,466,600 24,993,135

Total FFB processed in East Sabah

11,548,198

In the TableB.19, the actual amount of FFB processed has been distributed on the districts based on the approved capacity. The project is located in District No.2 i.e. Kunak. District No.3 i.e. Semporna, District No.5 i.e. Lahad Datu and District No. 9 i.e. Tawau had been chosen in the analysis as these districts are directly bordering District No.2 i.e. Kunak ). This means that areas within 100-200 km from the project activity

36 MPOB 2006: Malaysian Oil Palm Statistics 2005 p. 39 37 Chow Mee Chin, 2006: An Assessment Of Potential And Availability Of Palm Biomass For Bioconversion To Bioethanol. Table 8, page 19. Downloaded from www.eib.org.my


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site are included. (See map in Annex 7). Based on the Table B.19, the total amount of FFB processed in Districts No. 2, 3, 5 and 9 which are relevant to this analysis is estimated at 11,548,198 ton. There are no official statistics on the production and use of EFB, so the total available amount of EFB has to be calculated. This is done based on the common assumption that 23 % of the FFB processed will be EFB. Further it is assumed that the annual increase in FFB processed in Sabah will be 3.5% p.a.38. Based on the FFB projection and the percentage of EFB in FFB, the annual supply of EFB can be calculated. The demand for EFB is estimated through the number of potential CDM projects in the region. The CDM projects considered are derived from the UNEP “CDM-pipeline”39. The CDM Pipeline contains a list of all CDM projects that have either been uploaded for Global Stakeholder Process under validation or has been submitted for registration at the UNFCCC. The list is updated monthly and provides thus a good overview of the projects under development. The list of projects located in the relevant part of Sabah and their corresponding data on consumption of EFB have been identified and obtained from the related PDDs. The list is likely to overestimate the amount of EFB consumption, as some of the projects in Table B.20 may not be implemented due to non registration as CDM project activities or other unforeseen circumstances. In addition, save and except for consumption by CDM projects activities, there is not any known use for EFB in the region. Table B.20 sets out the balance between the available amount of EFB and consumption in East Sabah for 2008 – assuming that all CDM project activities will use their required amount of EFB in that year. This is a very conservative assumption as some of the projects will not be fully operational from 1 January 2008. Table B.20: EFB in East Sabah – Production and consumption Details t

Total processed FFB in East Sabah (Projection for 2008)

12,801,429

Total EFB 23 % of FFB (23% x 12,801,429) 2,944,329 less: EFB consumption Kunak Bio Energy Project 92,015 Kunak Jaya Bio Energy Project 109,067 Eko Pulp and Paper – Pulp production plant 180,000 Polar Vertix – Bio energy plant 10,126 Lahad Datu Edible Oils Sdn Bhd – Bio energy plant 122,500 Felda Sahabat – Bio energy plant 246,000

38 Anders Evald et al 2005: Renewable Energy Resources (in Malaysia) Recalculated based in table 2.2 p 10 39 CDM pipeline – downloaded from www.cdmpipeline.org 12/01/2008


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Golden Hope – Merotai – Composting project 99,360 Timura Samling POM – Composting project 48,000 Leluasa Edible Oil Refinery – Biomass steam plant 40,000 Asia POM – Composting project 104,480 Takon POM – Composting project 78,080 Total EFB consumption 1,129,628 Excess of EFB 1,814,701 Percentage of excess 61.6%

Table B.20 conservatively affirms that there is approximately 62 % of unconsumed EFB in the region after deducting all the volume consumed by the CDM projects activities set out in Table B.20. This percentage exceeded the 25% unconsumed EFB benchmark required as the criteria to rule out leakage. Furthermore, there is still excess EFB to accommodate other minor uses such as mulching without changing the conclusion.

B.6.2. Data and parameters that are available at validation: ID No. A Data / Parameter: GWPCH4

Data unit: t CO2e/t CH4

Description: Global Warming Potential (GWP) of methane, valid for the relevant commitment period

Source of data: Decisions under UNFCCC and the Kyoto Protocol (a value of 21 is to be applied for the first commitment period of the Kyoto Protocol)

Value applied: 21 Justification of the choice of data or description of measurement methods and procedures actually applied :

21 for the first commitment period. This value shall be updated according to any future COP or MOP decision.

Any comment: ID No. B Data / Parameter: NCVi,

Data unit: GJ/t Description: Weighted average Net caloric value of fossil fuel, is this project, diesel and MFO

used in the base line Source of data used: National Energy Balance Malaysia, 2005 Value applied: NCVdiesel = 42.4960

NCVMFO = 41.4996 Justification of the choice of data or description of measurement methods

The net-emissions from fossil fuel are expected to be relatively small. The uncertainty incurred by using default values will thus be minimal and not justify spending resources on measurements


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and procedures actually applied : Any comment: ID No. C Data / Parameter: Φ Data unit: - Description: Model correction factor to account for model uncertainties Value applied: 0.9 Justification of the choice of data or description of measurement methods and procedures actually applied :

Any comment: Oonk et el.(1994) have validated several landfill gas models based on 17 realized landfill gas projects. The mean relative error of multi-phase models was assessed to be 18%. Given the uncertainties associated with the model and in order to estimate emission reduction in a conservative manner, a discount of 10% is applied to the model results.

ID No. D Data / Parameter: OX Data unit: - Description: Oxidation factor (reflecting the amount of methane from SWDS that is oxidized

in the soil or other material covering the waste) Source of data used: Tool to determine methane emissions avoided from dumping waste at a solid

waste disposal site“; (version 2) Value applied: 0 Justification of the choice of data or description of measurement methods and procedures actually applied :

The dumpsite is not managed and thus not covered with oxidizing material

Any comment: ID No. E Data / Parameter: F – Fraction of methane in landfill gas Data unit: Fraction Description: Fraction of methane in the SWDS gas (volume fraction) Source of data used: IPCC 2006 Guidelines for National Greenhouse Gas Inventories Value applied: 0.5 Justification of the choice of data or description of measurement methods and procedures actually

The value is used as this is prescribed in the “Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site“; (version 2)


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applied : Any comment: This factor reflects the fact that some degradable organic carbon does not degrade

or degrades very slowly under anaerobic conditions. A default value of 0.5 is recommended by IPCC.

ID No. F Data / Parameter: DOCf Data unit: Fraction Description: Fraction of degradable organic carbon (DOC) that can decompose. Source of data used: IPCC 2006 Guideline for National Greenhouse Gas Inventories. Value applied: 0.5 Justification of the choice of data or description of measurement methods and procedures actually applied :

The value is used as this is prescribed in the “Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site“; (version 2)

Any comment:

ID No. G

Data / Parameter: MCF

Data unit: Fraction Description: Methane Correction Factor Source of data used: IPCC Value applied: 0.8 Justification of the choice of data or description of measurement methods and procedures actually applied :

Default value for unmanaged landfills of more than 5 meters depth. The landfills used for EFB in East Sabah are more than 5 meters depth.

Any comment: The methane correction factor (MCF) accounts for the fact that unmanaged SWDS produce less methane from a given amount of waste than managed SWDS, because a larger fraction of waste decomposes aerobically in the top layers of unmanaged SWDS

ID No. H

Data / Parameter: DOCj per cent of degradable organic carbon (by weight) in the waste type j

Data unit: Fraction Description: Weight fraction of the organic carbon that is degradable. The fraction is used in

the calculation of the avoided methane emissions from burning of the biomass. Source of data used: IPCC 2006 Guidelines for National Greenhouse Gas Inventories (adapted from


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Volume 5, Tables 2.4 and 2.5) Value applied: 0.5 Justification of the choice of data or description of measurement methods and procedures actually applied :

The value dry weight for wood waste is used as this is prescribed in the “Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site“; (version 2)

Any comment:

ID No. I Data / Parameter: f – Fraction of methane captured and flared Data unit: Fraction Description: Fraction of methane captured at the SWDS and flared, combusted or used in

another manner Source of data used: Tool to determine methane emissions avoided from dumping waste at a solid

waste disposal site“; (version 2) Value applied: 0 Justification of the choice of data or description of measurement methods and procedures actually applied :

The landfill sites where the EFB had been dumped are unmanaged and there is no capture and flaring of methane

Any comment: ID No. J Data / Parameter: EFCH4,BF Data unit: Kg/TJ Description: Source of data used: IPCC 2006 Value applied: 41.1 kg methane/TJ (calculated as the original 30 kg methane/TJ *

conservativeness factor of 1.37) Justification of the choice of data or description of measurement methods and procedures actually applied :

The methane emission is relatively uncertain, and thus a high conservativeness factor is used in calculating the annual emissions. Despite this, the emissions are very low compared to the total amount of CERs generated in the project (less than 1%) and it is not deemed necessary to measure the amount.

Any comment: ID No. K Data / Parameter: EF CO2,FF,i Data unit: Kg CO2/litre Description: CO2 Emission factor for fossil fuel type I, in the case, diesel Source of data used: IPCC 2006 Guidelines (Volume 2, Table 2.2) Value applied: 74 kg CO2/GJ Justification of the The emission coefficient of diesel is calculated from standard values and


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choice of data or description of measurement methods and procedures actually applied :

therefore there is no need to make measurement of it at the site. The value is used in the calculation of the emission coefficient of diesel: COEFi,y = NCVi,y x EFCO2i,y x ρdiesel = 2.7kg CO2/litre

Where

• NCVi,y = Net Calorific Value of diesel = 42.496 GJ/ton 40 • EFCO2i,y = Emission Factor for diesel = 74kg/GJ41 • ρdiesel = Density of diesel = 0.849 kg/l42

Any comment:

ID No. L Data / Parameter: EFCO2,BL,heat,I CO2 Emission factor for Medium fuel Oil Data unit: Kg CO2/GJ MFO Description: The emission of CO2 from burning of one GJ of MFO Source of data used: IPCC 2006 Guidelines (Volume 2, Table 2.2) Value applied: 78 kg CO2/GJ Justification of the choice of data or description of measurement methods and procedures actually applied :

The emission factor for MFO is a standard value and therefore there is no need to make measurement of it at the site.

Any comment:

ID No. M Data / Parameter: EFgrid,y Data unit: kg CO2/kWh Description: The average Operational Margin is allowed to be used as baseline for the

emissions from the power grid as the project is less than 15 MW Source of data used: Study by the Malaysian Energy Centre (Pusat Tenaga Malaysia) Value applied: 0.8 kg CO2/kWh Justification of the choice of data or description of measurement methods and procedures actually applied :

The data was collected from the best available source – the local utility company

Any comment: The base years for the calculation are 2002-0443, for which the latest statistics are available. Information in the report has been obtained from SESB

40 Taken from PTM Report on National Energy Balance 2005 41 Taken from IPCC 2006 Guidelines (Volume 2, Table 2.2) 42 Taken from IPCC 2006 Guidelines (Volume 2, Table 2.2)


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ID No. N Data / Parameter: εboiler

Data unit: Description: Average net energy efficiency of heat generation in the boiler that would generate

heat in the absence of the project activity

Source of data: Manufacturers data for the installed Value applied: 80%

Justification of the choice of data or description of measurement methods and procedures actually applied :

The biomass boiler used for steam production at the project site is expected to have the same efficiency as the boiler that would have been used in the baseline. This is a conservative assumption as the biomass boiler installed could have a higher efficiency than would have been the case without the CDM project.

Any comment:

ID No. O Data / Parameter: AVDY

Data unit: Km Description: Average round trip distance (from and to) between project site and waste water

treatment facility in Kunak Bio Energy Project. Source of data: Direct measurement of distance between the project site and treatment facility. Value applied: 60

Justification of the choice of data or description of measurement methods and procedures actually applied :

The waste water generated from fuel preparatory system in Kunak Jaya Bio Energy Project is transported to Kunak Palm Oil Mill where the waste water will be treated in a biogas plant. The distance between the two mills is 30km. It is not expected that the waste water will be transported anywhere else.

Any comment: B.6.3. Ex-ante calculation of emission reductions:

The calculations of emission reductions include the following components: ERy = ERheat, y + ERelectricity, y + BEbiomass, y − PEy − Ly Where:

43 PTM is in process of updating the report for 2005 and 2006, but it is still not available (as of 17. December 2007). No substantial changes have happened in the East Sabah grid in the two years. (personal communication with En Azman, PTM)


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ERy = Emissions reductions of the project activity during the year y in tons of CO2, ERelectricity,y = Emission reductions due to displacement of electricity during the year y in tons

of CO2 ERheat,y = Emission reductions due to displacement of heat during the year y in tons of

CO2, BEbiomass,y = Baseline emissions due to natural decay or burning of anthropogenic sources of

biomass during the year y in tons of CO2 equivalents, PEy = Project emissions during the year y in tons of CO2, and Ly = Leakage emissions during the year y in tons of CO2. Of these Ly are estimated to be zero. ERheat,y is zero as the baseline is that the steam would be produced in a biomass fired boiler. ERelectricity,y are calculated from the expected annual supply of electricity to the grid and the grid emission factor. The electricity delivered (Max 9 MW) to the refinery and kernel crushing plant can be up to 72,000 MWh with a grid emission factor of 0.8 t CO2/MWh. This leads to a maximum emission reduction from power production of 57,600 t CO2 per year. For the further use in the calculations a lower load factor of 6570 hours is used as a conservative estimate of the actual production. This leads to estimated emission reductions of 47,304 t CO2 per year. The actual supply of power delivered to the end user will be measured and reported in the monitoring report and used in calculating the actual amount of emission reductions achieved. BEbiomass,y is calculated by using the first order decay model. The main parameters in the model are fixed as:

F = Fraction of methane in the SWDS gas (volume fraction) (default 0.5)

DOCj = Per cent of degradable organic carbon (by weight) in the waste type j

DOCf = Fraction of DOC that can decompose (IPCC default 0.5)

MCF = Methane Correction Factor (unmanaged dumpsite of more than 5 meters depth: 0.8)

Aj,x = Amount of organic waste type j land filled in the year x

k j = Decay rate for the waste type j

Conservativeness factor: 0.9


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Table B.21: A summary of the parameters for EFB

Aj,x Amount of organic waste – dry weight

DOCj Per cent of degradable organic carbon

k j Decay rate

MCF methane correction factor

EFB 43,627 0.50 0.035 0.8

Table B.22: Computation of the avoided methane emissions from EFB

Avoided methane estimate

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Deposited year 1 4,201 4,057 3,917 3,783 3,653 3,527 3,406 Deposited year 2 4,201 4,057 3,917 3,783 3,653 3,527 Deposited year 3 4,201 4,057 3,917 3,783 3,653 Deposited year 4 4,201 4,057 3,917 3,783 Deposited year 5 4,201 4,057 3,917 Deposited year 6 4,201 4,057 Deposited year 7 4,201 Avoided methane 4,201 8,258 12,175 15,958 19,611 23,138 26,544 Conservativeness adjusted 3,781 7,433 10,958 14, 363 17,650 20,824 23,889

Project emissions

The emissions of methane from the burning of biomass are calculated as 1,062 t CO2/year. This is based on a use of 1,230 TJ of energy for the power plant and an emission factor of 41.1 kg methane/TJ (including a conservativeness factor).

Emissions from the use of diesel and MFO as back up fuel are calculated be to 4,440 t CO2/year using expectations from the Kunak Jaya Bio Energy Project. The use of MFO and diesel will be monitored and the actual project emissions will be reported in the monitoring report and used for the calculation of emission reductions. The transport of biomass fuel to the site of the project activity has been calculated as 1,213 t CO2/year based on an average distance to the palm oil mills supplying the fuel of 60 Km, 20 ton trucks and an average fuel use of 0.39 litre diesel per km. The transport of waste water from the fuel preparatory system to off-site treatment facility in Kunak Palm Oil Mill is calculated as 69 t CO2/year based on average distance to Kunak of 60 km, 32 ton trucks and an average fuel use of 0.39 litre diesel per km. Power for the preparation of fuel is 22kWh/ton EFB and with the expected amount of EFB that leads to an estimate of a power consumption of 2,379 MWh. With an emission factor for electricity of 0.8 kg/kWh and grid losses of 20% that becomes 2,284 t CO2/year.


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B.6.4. Summary of the ex-ante estimation of emission reductions: Table B.23; Summary of the ex ante estimation of the emission reductions

Year Total Baseline Emissions, EBL

(t CO2e)

Total Project Emissions, EPA

(t CO2e)

Total Leakage Emissions, ELE

(t CO2e)

Emissions Reduction, ER (t

CO2e) Year 1 51,085 9,067 0 42.018 Year 2 54,736 9,067 0 45,669 Year 3 58,262 9,067 0 49,195 Year 4 61,666 9,067 0 52,599 Year 5 64,954 9,067 0 55,887 Year 6 68,128 9,067 0 59,061 Year 7 71,193 9,067 0 62,126

TOTAL 430,024 63,469 0 366,555

Average 61,432 9,067 0 52,365

B.7. Application of the monitoring methodology and description of the monitoring plan:

B.7.1. Data and parameters monitored: ID No. 01 Data / Parameter: BFk,y Data unit: Tonnes dry weight biomass/year Description: The types of biomass combusted at Kunak Jaya Bio Energy Project are EFB,

PKS, PKC and mesocarp fibre. Source of data to be used:

Measurements at the weighing bridge of the palm oil refinery.

Value applied: Wet weight Moisture content Dry weight EFB 109,067 0.60 43,627 Mesocarp fibre 57,841 0.37 36,440 PKC 9,867 0.10 8,881 PKS 25,051 0.12 22,045

This is the expected biomass amount need of the power station to run 6570 operating hours per year.

Description of measurement methods and procedures to be applied:

.The biomass waste products from palm oil mills will be weighed upon arrival at the power plant. Incoming data from the weigh bridge are handled electronically in the account system of the palm oil mill. The measured amount (wet weight) should be adjusted for the moisture content


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to determine the quantity of dry biomass. QA/QC procedures to be applied:

Cross check the measurements with an annual energy balance that is based on purchased quantities and stock changes.

Any comment: The amount of biomass can be cross checked with the electricity produced– by using values for energy content of the biomass and the efficiency of the boiler.

ID No. 02 Data / Parameter: BFT,k,y Data unit: Tonnes dry weight biomass/year. Description: The amount of biomass fuel used in the boiler that is transported to the project

site. This is used to calculate the amount of project emissions from the transport of biomass fuel. The types of biomass imported for Kunak Jaya Bio Energy Project are EFB, mesocarp fibre and PKS. PKC is a by-product from the kernel crushing plant and is produced on site and thus not transported.

Source of data to be used:

Measurements at the weighing bridge of the palm oil refinery.

Value applied: Wet weight Moisture content Dry weight

EFB 109,067 0.60 43,627 Mesocarp fibre 57,841 0.37 36,440 PKS 25,051 0.12 22,045

This is the expected biomass amount need of the power station to run 6570 operating hours per year.


The biomass waste products from palm oil mills will be weighed upon arrival at the power plant. Incoming data from the weigh bridge are handled electronically in the account system of the palm oil mill. The measured amount (wet weight) should be adjusted for the moisture content to determine the quantity of dry biomass.

QA/QC procedures to be applied:

Cross check the measurements with an annual energy balance that is based on purchased quantities and stock changes.

Any comment: The amount of biomass can be cross checked with the electricity produced– by using values for energy content of the biomass and the efficiency of the boiler. Since all biomass fuels except palm kernel cake are imported, this is expected to be same as the total combusted amount of biomass above.

ID No. 03 Data / Parameter: Moisture content of the biomass residues Data unit: % Water content. Description: Moisture content of each biomass residue type k. Source of data to be used:

On-site measurements.

Value of data applied for the purpose of calculating expected emission reductions in section B.5

Biomass Moisture Content % EFB 60% PKS 12%


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PKC 10% Mesocarp fibre 37%

Generic values have been used at this point - for EFB, it is taken from the experience of Kunak Palm Oil Mill.


Measurements are undertaken for representative samples of the incoming biomass waste, mean values calculated at least annually.


Comparison with other measurements and with default values from literature.

Any comment: ID No. 04 Data / Parameter: AVD Y

Data unit: Km. Description: Average round trip distance (from and to) between biomass fuel supply sites and

the project sites. Source of data: The distance to each biomass supplier is checked through measuring.

Invoices from the different biomass suppliers are used to give the amount of biomass from each supplier.

Value applied: 120. Description of measurement methods and procedures actually applied :

The average distance can then be calculated as the weighted average of distance to the mills. The sampling will be continuous.

QA/QC procedures: Check consistency of distance records provided by the truckers by comparing recorded distances with other information from other sources (e.g. maps).

Any comment: ID No. 05 Data / Parameter: TL y

Data unit: Tons. Description: Average load of the trucks used for the transportation of biomass. Source of data: Data from the weighing of incoming trucks are used to calculate the average

weight of the truck loads arriving at the plant. Value applied: 20. Description of measurement methods and procedures actually applied :

Determined by averaging the weights of each truck carrying biomass to the project plant. Continuously, aggregated annually.

QA/QC procedures: Check consistency of the number of truck trips with the quantity of biomass combusted, e.g. by the relation with previous years.

Any comment:


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ID No. 06 Data / Parameter: TL Y,waste water

Data unit: Tons. Description: Average load of the trucks used for the transportation of waste water generated

from fuel preparatory system to off-site treatment facility in Kunak Palm Oil Mill.

Source of data: Data from the weighing of outgoing trucks are used to calculate the average weight of the truck loads leaving at the plant.

Value applied: 32. Description of measurement methods and procedures actually applied :

Determined by averaging the weights of each truck carrying waste water to the off site biogas plant at the Kunak Palm Oil Mill. Continuously, aggregated annually.

QA/QC procedures: Check consistency of the number of truck trips with the quantity of EFB combusted, e.g. by the relation with previous years.

Any comment: ID No. 07 Data / Parameter: EFkm,CO2,y

Data unit: tCO2/km. Description: Average CO2 emission factor for the trucks during the year y. Source of data: Sample measurement of the fuel type, fuel consumption and distance travelled

for all truck types will be conducted. CO2 emissions from fuel consumption shall be calculated based on methodology. For NCV and EFCO2, reliable national default values or IPCC default value values can be used.

Value applied: 0.001053. Description of measurement methods and procedures actually applied :

Annual monitoring.

QA/QC procedures: The results will be cross-checked with emission factors referred to in the literature.

Any comment: ID No. 08 Data / Parameter: FFproject plant,i,y (As per ACM 0006 ver 06 )

or FCi,,j,y (As per “Tool to calculate project or leakage CO2 emissions from fossil fuel combustion” ) Both data have the same definition.

Data unit: Litre of MFO and diesel/year. Description: Fossil fuel, mainly diesel and MFO is used as backup and start up fuel. Source of data to be used:

Measuring of the volume of fossil fuel used in the biomass power plant through establishing of a flow meter at the places of use.

Value applied :


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i = MFO (litres) i = diesel (litres) j = start up fuel for biomass steam boiler

N/A 480

j = start up fuel for biomass power boiler

N/A 240

j = back up fuel for biomass steam boiler

900,000 N/A

j = generator set for backup for power production

N/A 599,280

Total amount of fuel type used

900,000 600,000

The numbers used is expected to be conservative and converted to tonnes based on density of diesel and MFO.


Measurements will be continuous based on the flow of fuel from the storage tank to the places of use.


Cross check with the annual energy balance of the biomass power plant and with the invoices for purchased fossil fuel.

Any comment: This should include fossil fuel co-fired in the project plant but not any other fuel consumption at the project site that is attributable to the project activity (e.g. for mechanical preparation of the biomass residue).

ID No. 09 Data / Parameter: FFproject site, i,y

Data unit: Litre MFO and diesel/year. Description: Quantity of MFO and diesel combusted at the project site for other purposes

that are attributable to the project activity during the year y. Source of data to be used:

Measuring the difference in volume of actual fossil fuel purchased and used in the biomass power plant through establishing of a flow meter at the places of use.

Value applied : 0 Description of measurement methods and procedures to be applied:

Measurements will be continuous based on the flow of fuel from the storage tank at the places of use and actual fuel purchased.


Cross check with the annual energy balance of the biomass power plant and with the invoices for purchased fossil fuel.

Any comment: This should not include fossil fuel co-fired in the project plant but any other fuel consumption at the project site that is attributable to the project activity.


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ID No. 10 Data / Parameter: EGproject plant,y Data unit: MWh/year. Description: The sale of electricity to the Refinery. Source of data to be used:

Direct measurement.

Value applied : The estimated sale to the industries is 59,130 MWh reflecting 6,570 full load hours use of the 9 MW (net) biomass plant.


The measurement will be a power meter continuously measuring the transport of electricity. The project owner will appoint the energy plant manager to record the kWh supply of electricity monthly. The readings will follow the same periods as the billing period in the agreement under which electricity is supplied to the industries, meaning that the readings will be for each calendar month.


The project owner and the Refinery will jointly read the main metering equipment at the interconnection point within five business days after the end of each calendar month.

Any comment: The data for power sales are part of a commercial agreement with the power company and will thus be cross checked by the parties to the Power Purchase Agreement (PPA).

ID No. 11 Data / Parameter: Qproject plant,y

Data unit: GJ Description: Quantity of the steam generated for the Refinery. Source of data: On-site measurement. Value applied: 465,156 GJ. Description of measurement methods and procedures actually applied :

Continuously.

QA/QC procedures: Check consistency of the net heat generation by cross-checked with receipts from sales (if available) and the energy balance for the plant

Any comment:

ID No. 12 Data / Parameter: NCVk,

Data unit: GJ/ton of biomass residue Description: Net caloric value of biomass fuel used, in this case, EFB, PKS, PKC and

mesocarp fibre. Source of data: Measurements. Value applied:

Biomass NCV (Wet) MJ/kg

Moisture content (%)

Recalculated dry NCV (MJ/kg)


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EFB 17 60% 5.3 PKS 20 12% 17.3 PKC 18 10% 16 Mesocarp fibre 19 37% 11.1

Description of measurement methods and procedures actually applied :

Measurements shall be carried out at reputed laboratories and according to relevant international standards. Measure the NCV based on dry biomass. Measurements done at least every six months, taking at least three samples for each measurement.

QA/QC procedures: Check the consistency of the measurements by comparing the measurement results with measurements from previous years, relevant data sources (e.g. values in the literature, values used in the national GHG inventory) and default values by the IPCC. If the measurement results differ significantly from previous measurements or other relevant data sources, conduct additional measurements. Ensure that the NCV is determined on the basis of dry biomass.

Any comment:

ID No. 13 Data / Parameter: - Data unit: Tons Description: Quantity of EFB that are utilized (used for energy generation) in the defined

geographical region. Source of data: Survey or statistics. Value applied: 1,129,628 Description of measurement methods and procedures actually applied :

Annually collection of data from small scale renewable energy projects and CDM projects using EFB as fuel or feedstock in the districts of Lahad Datu, Kunak, Tawau and Semporna. If possible data on amount of used EFB is collected directly. Where only power production data are available estimates of the fuel use are calculated by default values from PDDs or generic information. See Annex 7 for details.

QA/QC procedures: Comparison with earlier data. Any comment: Element in evaluation of the leakage based on approach L2. ID No. 14 Data / Parameter: - Data unit: Tons Description: Quantity of available biomass residues type k in the region. Source of data: Calculations are based on annual production statistics from MPOB on state level

recalculated to cover the districts of Lahad Datu, Kunak, Tawau and Semporna. Value applied: 2,944,329. Description of measurement methods and procedures actually applied :

Annually calculations of the amounts of EFB is based on the default relation between FFB and EFB of 23 %. See Annex 7 for details.

QA/QC procedures: Comparison with earlier data. Any comment: Element in evaluation of the leakage based on approach L2.


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ID No. 15 Data / Parameter: ECpj,y Data unit: MWh. Description: On-site electricity consumption for the biomass fuel preparatory system. Source of data to be used:

Direct measurement.

Value applied : 2,379 MWh (The estimated use of electricity for biomass fuel preparatory system based on 22 kWh/ton EFB).


The measurement will be a power meter continuously measuring the transport of electricity. The project owner will appoint the energy plant manager to record the kWh electricity used in the fuel preparatory system monthly. The readings will be for each calendar month.


The measurements of the use of electricity for fuel preparation will be compared with the measurements of total production and sale to the refinery. It was also be checked against specific consumption per unit of fuel prepared in previous years.

Any comment:

ID No. 16 Data / Parameter: kj - Decay constant for the EFB Data unit: Dimensionless. Description: The rate of decay of the EFB is an important parameter in calculating the

avoided methane emissions from the dumping of the EFB in the baseline scenario. Credible data from field conditions does not exist.


“Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site“; (version 2).

Value applied: 0.035


The methods for measuring the decay constant will be decided in collaboration with the scientific institution engaged for the purpose.


The QA/QC procedure for the field test will be determined in collaboration with the scientific institution.

Any comment: The decay constant will be measured before the first monitoring report will be submitted and the new value will be used for the ex post calculation of the avoided methane emissions in stead of the default value used in the ex ante calculations.


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ID No. 17 Data / Parameter: Wj,x Data unit: Tons Description: Total Amount of Organic Waste type j, EFB prevented from disposal in a Solid

Waste Disposal Site in the year x. Source of data to be used:

Amount of EFB used as fuel in the project site would have been disposed in a landfill.


109,067 t / yr of EFB (wet weight) converted into 43,627 t dry weight.


The biomass waste products from Kunak Palm Oil Mills will be weighed upon arrival at the power plant. Incoming data from the weigh bridge are handled electronically in the account system of the palm oil mill. The measured amount (wet weight) should be adjusted for the moisture content to determine the quantity of dry biomass.


Since the data for the amount of biomass is part of a commercial transaction the best effort will be done to establish the correct amount.

Any comment: The amount of biomass can be cross checked with the electricity produced– by using values for energy content of the biomass and the efficiency of the boiler.

ID No. 18 Data / Parameter: TDLy Data unit: - Description: Average technical transmission and distribution losses in the grid in the year y,

for the voltage level at which electricity is obtained from the grid at the project site.


For the calculation the default value from the “Tool to calculate project emissions from electricity consumption (version 1)” has been used.


0.2


If the annual “Statistics of electricity supply industry in Malaysia, Malaysian Energy Commission” shows lower values for losses in SESB area than 20% then the actual value will be used. The above mentioned statistics include both commercial and technical losses. Therefore the values from this source will be conservative.


Comparison with previous years data.

Any comment:


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ID No. 19 Data / Parameter: Vww,y

Data unit: Tons / year Description: Quantity of waste water generated from the fuel preparatory system in the year

y. Source of data: Data from the weighing of outgoing trucks are used to calculate the average

waste water generated from the fuel preparatory system. Value applied: 34,902. Description of measurement methods and procedures actually applied :

Determined by averaging the weights of each truck carrying the waste water from project site to off site biogas plant at Kunak Palm Oil Mill.

QA/QC procedures: Check consistency of the number of truck trips with the quantity of EFB processed in the fuel preparatory system.

Any comment: Table B.24: Data prescribed in the monitoring plan of the ACM0006 but not relevant for this project activity . Data / Parameter

Description Source Remarks

Bo,ww tCH4/tCOD

Methane Generation Potential of the waste water

ACM0006 (version 06)

This parameter is not monitored as the waste water generated from treatment of biomass is collected in a tanker and sent to offsite treatment facility for generation of biogas. The biogas plant is being registered as a CDM project and all emissions from the plant will be calculated in relation to that project.

MCF,ww -

Methane Correction Factor for the waste water


This parameter is not monitored as the waste water generated from treatment of biomass is collected in a tanker and sent to offsite treatment facility for generation of biogas. The biogas plant is being registered as a CDM project and all emissions from the plant will be calculated in relation to that project.

EGtotal,y MWh/yr

Net quantity of electricity generated in all power plants as the project site, generated from firing the same type(s) of biomass


This parameter is not applicable as there is only one power plant generating electricity at the project site.


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Data / Parameter

Description Source Remarks

residue as in the project plant.

Qtotal,y GJ

Net quantity of heat generated in all cogeneration plants at the project site, generated from firing the same type(s) of biomass residue as in the project plant.


This parameter is not applicable as there is only one cogeneration power plant generating heat at the project site.

EFburning,CH4k,y

tCH4/GJ CH4 emission factor for uncontrolled burning f the biomass residue type k


This parameter is not monitored as there is no uncontrolled burning of biomass.

pn,j,x -

Weight fraction of the waste type j in the sample n collected during the year x

Tool to determine methane emission from dumping waste at a solid waste disposal site

This parameter is not monitored as there is only one type of biomass waste, EFB, prevented from disposal.

EFCO2,LE CO2 emission factor of the most carbon intensive fuel used in the country


Monitoring of this parameter is only applicable if the leakage effect cannot be ruled out using L1, L2 and L3. Option L2 is used to rule out the leakage effect, please refer to Annex 7 in PDD, the supply of EFB is in excess of 25%.

Ny

Number of truck trips for the transportation of biomass.


This parameter is not monitored as TLy (Average load of truck ) is monitored instead.

Ny, waste water

Number of truck trips for waste water transportation


This parameter is not monitored as TLy (Average load of the trucks used for the transportation of waste water ) is monitored instead.

B.7.2. Description of the monitoring plan:

This monitoring plan will set out a number of monitoring tasks in order to ensure that all aspects of projected greenhouse gas (GHG) emission reductions for the proposed project are controlled and reported. This requires an on going monitoring of the project to ensure performance according to its design and that claimed Certified Emission Reductions (CERs) are actually achieved. The monitoring plan of the proposed project is a guidance document that provides the set of procedures for preparing key project indicators, tracking and monitoring the impacts of the proposed project. The monitoring plan will be used throughout the defined crediting period for the project to determine and


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provide documentation of GHG emission impacts from the project activity. This monitoring plan fulfils the requirement set out by the Kyoto Protocol that emission reductions projects under the CDM have real, measurable and long-term benefits and that the reductions in emissions are additional to any that would occur in the absence of the certified project activity. Key definitions The monitoring plan will use the following definitions of monitoring and verification. Monitoring: The systematic surveillance of the project’s performance by measuring and recording of performance-related indicators relevant in the context of GHG emission reductions. Verification: The periodic ex-post auditing of monitoring results, the assessment of achieved emission reductions and of the project’s continued conformance with all relevant project criteria by a selected DOE. The monitoring plan provides the requirements and instructions for:

1. Establishing and maintaining the appropriate monitoring systems for electricity generated by the project;

2. Quality control of the measurements; 3. Procedures for the periodic calculation of GHG emission reductions; 4. Assigning monitoring responsibilities to personnel; 5. Data storage and filing system; 6. Preparing for the requirements of an independent, third party auditor or verifier.

The process engineer is in charge of the implementation of this monitoring plan and summarizing the results. The Plant Manager of the Kunak Jaya Bio Energy Project will check the results to ensure the quality and accuracy of the data monitored .The monthly summary will be prepared by the Plant Manager and calculate the emission reductions of the project activity and develop reports with the support from their CDM consultant. Responsibilities of key persons of the project activity Kunak Jaya Bio Energy Project .

1. Power & Utility Plant Manager

Overall management of the implementation of the monitoring plan and quality control of data and records. To calculate emission reductions based on monthly summary.

To check the results of all data monitored and to ensure the quality and accuracy of the data monitored.

2. Power & Utility Engineer

Overall in charge of implementation of the monitoring plan and summarizing the results.

3. Fuel Preparation Supervisor

To ensure the data of the biomass residues collection and transportation will be recorded by the weighbridge attendant of Kunak Jaya Bio Energy Project, and stored in the power plant. The summary of biomass consumption by the Kunak Jaya Bio Energy Project will be calculated by the supervisor monthly.

4. Maintenance Supervisor


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Overall in charge of recording any down time and maintenance work in the Kunak Jaya Bio Energy Project.

5. Electrical Supervisor

In charge of the monitoring of electricity meters and calibration, fossil fuel consumption within the power plant (If any is used as back up) including boilers and fuel preparatory machines

6. Accounts and Admin Executive

Cross checking the monitoring records with receipt and procurement records.

The figure below outlines the operational and management structure that TSH-Wilmar will implement to monitor emission reductions and any leakage effects generated by the project activity. Monitoring reports will be forwarded to and reviewed by the general manager on a monthly basis in order to ensure the Kunak Jaya Bio Energy Project follows the requirements of the monitoring plan. ____________________________________________________________________________________

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Power & Utility

P&U Manager

P&U Engineer

Utility Supervisors

Fuel Preparation Supervisor

Electrical Supervisor

Maintenance Supervisor

Plant

Assistant Operator

Utility

General Workers

Drivers

Fuel Preparation Operator

E&I

E&I Wireman

Maintenance Foreman

Fitter

Clerk

Figure B.4: Organisation Chart of Power & Utility Department in Kunak Jaya Bio Energy Project.


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Table B.25: Monitoring plan by parameter and person In-charge

ID No.

DATA / PARAMETERS

UNIT MONITORING BY

QA/QC CROSS CHECK

BY

COMMENT

1 BFk,y

Amount of biomass used in the Kunak Jaya Bio Energy Project.

Tons Plant Supervisor

Plant Engineer

Fuel purchase receipts need to be attached, if available.

2 BFT,k,y Quantity of biomass used as fuel in the Kunak Jaya Bio Energy Project that is imported..


Plant Engineer

Fuel purchase receipts need to be attached, if available.

3 Moisture content of the biomass residues.

% water content

Plant Supervisor

Plant Engineer

Compare lab measurements against default values from literature.

4 AVDy

Average round trip distance (from and to).

km Plant Supervisor

Plant Manager

Check consistency of distance records provided by the trucks by comparing recorded distances with other information from other sources.

5 TLy

Average truck load of the trucks used for transportation of biomass.

tons Plant Supervisor

Plant Manager

Check the consistency of the truck loads with the quantity of biomass combusted.

6 TLy, Average truck load of the trucks used for transportation of waste water from the fuel preparatory system.

tons Plant Supervisor

Plant Manager

Check the consistency of the truck loads with the quantity of EFB processed in the fuel preparatory system.

7 EFkm,CO2,y

Average CO2 emission factor for the trucks.

tCO2/km Plant Engineer

Plant Manager

Calculated based on IPCC default values.

8 FFproject plant,i,y

Quantity of fossil fuel combusted in the biomass residue fired power plant

t/year Plant Supervisor

Plant Engineer

Including fossil fuels co-fired in the project plant.


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ID No.

DATA / PARAMETERS

UNIT MONITORING BY

QA/QC CROSS CHECK

BY

COMMENT

during the year y. 9 FFproject site

Quantity of fossil fuel combusted at the project site for other purpose that are attributed to the project activity.

t/year Plant Supervisor

Plant Engineer

To cross check with total fossil fuel purchased and used in the project plant.

10 EGproject plant,y

Net quantity of electricity generated in the project plant during the year y.

MWh/yr Plant Engineer

Plant Manager

Compare with receipts of electricity sales (if available) and the quantity of fuels fired.

11 Qproject plant,y

Net quantity of heat generated from firing biomass in the project plant.

GJ Plant Engineer

Plant Manager

Check consistency of the net heat generation by cross-checked with receipts from sales (if available) and the quantity of the fuels.

12 NCVk

Net caloric value of biomass residue type k, EFB, PKS , PKC and mesocarp fibre

GJ/ton Plant Engineer

Plant Manager

Compare the measured data with previous years data, values used in national GHG inventory, and IPCC default value.

13 Quantity of biomass residue that is utilized in the defined geographical region.

tons Plant Manager

General Manager

Need information from survey or statistics for rule out leakage.

14 Quantity of available biomass residues in the region.

tons Plant Manager

General Manager

Survey or statistics data.

15 ECpj,y

Power consumption for project use.

MWh/yr Plant Engineer

Plant Manager

Compare to total production and with receipts of electricity sales to the refinery and kernel crushing plant (if available) and the quantity of fuels fired.

16 kj Decay rate for the waste type j.

Plant Manager

General Manager

The value for wood waste is used as EFB seems to be closest to wood waste in relation to the decay properties. The value will


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ID No.

DATA / PARAMETERS

UNIT MONITORING BY

QA/QC CROSS CHECK

BY

COMMENT

be measured and reported as part of the ex post calculation of the avoided methane emission.

17 Wj,x Total amount of, EFB prevented from disposal in a solid waste disposal Site in the year x.


Plant Manager

Cross check total amount of biomass used in the biomass power plant against electricity production.

18 TDL,y Average technical transmission and distribution losses in the grid.

Plant manager

General Manager

Comparison with previous year data and available literature from local statistics survey.

19 Vww,y Quantity of waste water generated from the fuel preparatory system.

Tons Plant supervisor

Plant Manager

To cross check with amount on EFB processed in the fuel preparatory system.

2. Calibration of meters & metering 2.1 Electricity output meter An agreement should be signed between the project proponent and the Refinery that defines the metering arrangements and the required quality control procedures to ensure accuracy. The accuracy of the ammeter will be 0.2s. The metering equipment will be properly calibrated and checked annually for accuracy according to electrical meter specification guide. The project proponent will prepare backup procedures to deal with any errors occurred to the meters. In case of any errors happens, the electricity generated by the project activity shall be determined by the project proponent and the Refinery jointly. Calibration is carried out by the project proponent with the records being provided to the Refinery, and these records will be maintained by the project proponent. 2.2 Biomass residues consumption The project proponent will conduct an energy balance analysis to verify the amounts of biomass residues, purchased at biomass procurement department of the power plant and combusted by the boilers. If significant difference among the three sources identified, the project proponent will conduct further


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check the original records to find out reasons and correct. If the significant difference cannot be resolved, the most conservative value of biomass utilized by the project activity will be applied as monitoring results. 3. Monitoring 3.1 Electricity generated Electricity generated by the project activity will be monitored through metering equipment at the substation continuously .The data can also be monitored and recorded at the on-site control center using a computer system. The meter reading will be readily accessible. Calibration tests records will be maintained for verification. 3.2 Availability of biomass residues The project proponent will provide evidence concerning with the availability of biomass residues resource in East Sabah. This will be obtained from official information yearly. If it is not available, the data will be calculated or estimated based on a survey conducted by project proponent yearly. 3.3 Biomass residues consumption of the Kunak Jaya Bio Energy Project The quality and type of biomass residues burned by the Kunak Jaya Bio Energy Project will be monitored during the operation of the project activity, including all the necessary parameters of the biomass residues to be monitored according to Section B.7 of this PDD. All relevant records will be maintained for verification. 3.4 Fossil fuel consumption by the boiler Fossil fuel consumption by the boiler during the start up or other emergency purpose will be recorded and monitored during the operation period of the project activity continuously. All relevant records will be maintained for verification. 3.5 Transportation of biomass residues The project proponent will structure a recording and monitoring system within the biomass residues supply that is supplied from other places. The quantity and type of biomass, transportation vehicle and transportation distance from origin of biomass residue will be recorded by company staffs at the sites continuously. The receipts and records regarding with biomass purchase by the project activity will be documented and summarized for verification. The transportation of the biomass from the origin to the Kunak Jaya Bio Energy Project will be monitored and documented by the project proponent to determine the fossil fuel consumption by the biomass transportation activity. The transportation records will be documented and maintained for verification. 3.6 Leakage Amount of biomass types consumed and quantity of biomass types that is available in surplus in East Sabah that is defined in Project Boundary will be monitored to check the leakage effect brought by the operation of the project activity. This will be obtained from official information, such as MPOB statistics and survey defined within Project Boundary that supply biomass residues to the project activity. If any leakage occurs during the crediting period, the project proponent will determine the parameters in terms of leakage effects according the definition in the PDD with the support from local government entity.


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4. Quality assurance and quality control The quality assurance and quality control procedures for recording, maintaining and archiving data shall be improved as part of this CDM project activity. This is an on-going process that will be ensured through the CDM in terms of the need for verification of the emissions on an annual basis according to this PDD. 5. Data management system This provides information on record keeping of the data collected during monitoring. Record keeping is the most important exercise in relation to the monitoring process. Without accurate and efficient record keeping, project emission reductions cannot be verified. Below follows an outline of how project related records would be managed:- 1. Overall responsibility for monitoring of GHG emissions reduction will rest with the CDM

responsible person of the project activity. Procedures for tracking information from the primary source to the end-data calculations in paper document format will be continuously enhanced.

2. It is the responsibility of the project proponent to provide additional necessary data and information

for validation and verification requirements of respective DOE. 3. Physical documentation such as paper-based maps, diagrams and environmental assessment will be

collated in a central place, together with this monitoring plan. All paper-based information will be stored by the project proponent and kept at least one copy.

6. Verification and monitoring results The verification of monitoring results of the project activity is a mandatory process required for all CDM projects. The main objective of the verification is to independently verify that the project activity has achieved the emission reductions as reported and projected in the PDD. It is expected that the verification will be done annually. Data archived will also be verified regularly by the DOE. The performance of the Kunak Jaya Bio Energy Project will be reviewed and analyzed by the consultant on a regular basis. B.8. Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies) The baseline study and monitoring plan was completed 25 February 2008 and has been developed by: Soeren Varming (Managing Director) SV Carbon Sdn. Bhd. 609 Block E, Phileo Damansara 46350 Petaling Jaya Malaysia Email: [email protected] Phone: +601 9262 7970


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SECTION C. Duration of the project activity / crediting period C.1. Duration of the project activity: C.1.1. Starting date of the project activity:

The project activity started construction in August 2006.

C.1.2. Expected operational lifetime of the project activity:

The expected operational lifetime of the project is 21 years, which is equal to the electricity purchase agreement entered with the electricity distribution company.

C.2. Choice of the crediting period and related information: C.2.1. Renewable crediting period C.2.1.1. Starting date of the first crediting period:

01/07/2008 orThe crediting period will only start after the project is registered C.2.1.2. Length of the first crediting period:

7 years C.2.2. Fixed crediting period: C.2.2.1. Starting date:

Not applicable C.2.2.2. Length:

Not applicable SECTION D. Environmental impacts D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts:

According to the Malaysian regulations, renewable energy projects are not required to prepare an Environmental Impact Assessment (EIA). This has been confirmed by the Malaysian Department of Environment. Thus, no EIA has been prepared.

The project activity must comply with the environmental regulations of the country and obtain the necessary approvals before commissioning and during operation of the project.


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The project activity will apply modern, efficient technologies and the environmental impact will be managed better than in the existing situation, as the biomass waste will be used for energy production to the highest possible extent, which includes efficient combustion of the biomass.

D.2. If environmental 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 undertaken in accordance with the procedures as required by the host Party:

Environmental sustainability

The project activity will have a positive impact on the environment as it will reduce power production on fossil fuels and lead to an increased sustainability in the power generation sector. Furthermore, the power plant will be equipped with high-efficient technologies that reduce the fuel consumption per unit output and increase the combustion efficiency. Pollution control equipment will be installed in order to ensure minimum emissions of particulates etc. from the plant.

The project activity will lead to reduced disposal and indiscriminate incineration of waste by surrounding palm oil mills and increase the self-sufficiency of the power supply.

Social sustainability

The project activity will require more skilled staff than the existing plant. The workforce will be trained to operate the new plant and new qualified staff will be employed.

Economic sustainability

The project activity will lead to economic sustainability as the fuel source is a sustainable, indigenous resource, which reduces fuel imports and negative impact on foreign exchange. The project activity will also have a positive impact on the economic performance of the Refinery as its energy production will become more reliable and efficient, leading to a more reliable refined palm oil production in general.

SECTION E. Stakeholders’ comments E.1. Brief description how comments by local stakeholders have been invited and compiled: A stakeholder's meeting was held on the 19th December 2007 involving management and staff of TSH-Wilmar and 7 external stakeholders. They represented local residents, a village head, planters, Head of Kunak District Office, a representative of Kunak Forestry Office and a politician. Invitation letters with a description of the project were sent out two weeks earlier to a total of 29 people with and a follow up was done to confirm attendance. The stakeholder meeting was held at 9.30am at the premises of TSH-Wilmar premises in Kunak Jaya, Sabah. The following is a list of the attendees:


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Department/Organisation Representatives

Kunak District Forestry Office 1

Villagers 2

Planter 2

Kunak District Office 1

Politician 1

TOTAL 7

Written invitations for the stakeholder meeting were hand delivered to local residents. Local authorities including the Department of Environment and non-governmental organisation (NGO) were mailed and faxed.


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E.2. Summary of the comments received: Presentation Ms. Bhavna Khandhar first introduced participants to CDM as one of the mechanisms to address the reduction of greenhouse gas emissions. Mr. Boyd Linjungan explained on the project activity to the participants that the project activity was intended to generate 10 MW electricity and which will then be supplied to the Refinery. The energy will not be sold to SESB. They project activity expect to consumed approximately 112,000 tonnes of biomass waste. The participants were further informed that the project activity is schedule to be operational in September 2007. The benefits of the project activity were also explained in detail from the environmental, social and economic aspects. Summary of the comments received The following issues were raised by the participants. They were addressed by Mr. Boyd Linjungan. Questions were mainly posed on the environmental impact of the project and the traffic congestion in Kunak Jaya.

From Question Response

1. Kunak District Office

I notice that there are not many villagers that attended this stakeholder meeting today. My suggestion is that you should invite all villagers to explain about this CDM project so that they understand that it will not affect their health. After listening to your explanation, I am convinced that CDM will benefit our villagers.

We invited the head and representatives of Kampung Jaya Baru, Kampung Kunak Laut and Kampung Kunak Jaya. Unfortunately, no representatives from Kampung Jaya Baru and Kampung Kunak Laut attended.

I suggest you should have an open day to invite all villagers around this area to explain the CDM project.

We agree with this suggestion and will discuss with management for a possibility of having an open day to invite all villagers. This way, more villagers will be involved and will understand about the benefit of this project.

2. Politician This area has traffic problems. The traffic problem is caused because there are other palm oil mills that are using the same route. Have you considered having an alternate route from Kunak Jaya to Sabah Port?

We have discussed this issue with Works Department. According to Works Department, an alternative route is possible but that will not solve the traffic at Kampung Kunak Jaya junction. After discussion with Works Department, they have recently expanded the road which helps the traffic flow. We are ready to help and will follow up with Works Department implement an alternative


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route.

I am concern about the speed limit of lorries and tanks. What has TSH-Wilmar done to prevent accidents?

We have advised the responsible parties to ensure that tank drivers do not exceed the speed limit. We managed to get Works Department to put safety signs in place at necessary road sides to ensure heavy vehicle drivers stay alert and drive slowly at Kunak Jaya road. All of our tank drivers are trained to be alert and drive more carefully on the road. We have also sent out memos to all transporters to ensure their speed limit is within 20-30 km/hour while driving on Kunak Jaya road.

I notice that there are many lorries that drive close to each other. Could you please ensure that they keep their distance when driving? I notice that they always drive in convoy.

Driving in convoy is part of their safety plan. This is done in the case of any breakdowns lorry drivers are able to help each other. We will put this forward for lorry drivers to keep their distance when driving. We have discussed road safety issue during a meeting with Works Department. Works Department will draw double lines on the road so that there will be no more overtaking allowed on Kunak Jaya road.

When burning biomass in the boiler, will there be any smoke or dust emitted?

If EFB is too wet, the smoke is usually thick due to incomplete burning. We have changed our fuel composition from 80-90% EFB to 70% EFB to solve this problem. A multi-cyclone is installed in our boilers to reduce particles emitted to the environment to 0.4m3. In addition to that, we do sampling every 6 months and send samples to Department of Environment. We also send our smoke density chart to the Department of Environment every month. We have installed a smoke density recorder with an alarm. Alarm will set off if smoke density is above specification. We have also installed a CCTV to look at our chimney. This CCTV monitors the smoke emitted 24 hours to make sure it is okay.


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3. TSH-Wilmar staff

Ramli added that there used to be very loud noise because employees were not experienced with the operation. There is a silencer installed and if an operation is not normal and noisy, the silencer is used to control the noise. Plant operators are now trained and experienced with the operation.

Management is doing what they can to plan the traffic. The plant is planned to operate at a much higher capacity that it is currently operating. The plant has the capacity to service 300 vehicles during full operation but currently we are only servicing 30% of it. Management believes that Kunak will develop as it is blessed with a port.

The meeting was adjourned at 11.10am and participants were informed that they could also submit questions on the project to TSH-Wilmar within a week. General observation Participants did not raise any objections to the project activity but wanted assurances about the traffic issue. E.3. Report on how due account was taken of any comments received: Since there were no objections, there was no need to change the project activity or the project implementation. On the traffic problem, the company has set aside an area within the complex where the trucks can be parked while waiting to unload the biomass. This will ensure that the heavy vehicles do not obstruct traffic or pose threats to the pedestrians. Participants were satisfied with this measure.


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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: TSH-Wilmar (BF) Sdn. Bhd. (TSH-Wilmar) Street/P.O.Box: No.8, Jalan Semantan Building: Level 12, Menara TSH City: Kuala Lumpur State/Region: Wilayah Persekutuan Postfix/ZIP: 50490 Country: Malaysia Telephone: +603-20840888 FAX: +603-20840808 E-Mail: [email protected] URL: www.tsh.com.my Represented by: Mr. Lim Fook Hin Title: Director Salutation: Mr. Last Name: Lim Middle Name: First Name: Fook Hin Department: Finance Mobile: +6019-3206354 Direct FAX: +603-20840808 Direct tel: +603-20840803 Personal E-Mail:


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Organization: Energi Midt Handel A/S Street/P.O.Box: Søndergade 27 Building: City: Brædstrup State/Region: Postfix/ZIP: DK - 8740 Country: Denmark Telephone: + 45 7658 1120 FAX: + 45 7658 1124 E-Mail: URL: www.energimidt.dk Represented by: Title: Head of Trading Salutation: Mr. Last Name: Griem Middle Name: First Name: John Department: Trading Mobile: + 45 3092 4019 Direct FAX: + 457658 1111 Direct tel: + 45 7658 1121 Personal E-Mail: [email protected]


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Annex 2

INFORMATION REGARDING PUBLIC FUNDING

No public funding was involved.

Annex 3

BASELINE INFORMATION

See calculations in section B6.

Annex 4

MONITORING INFORMATION

See the monitoring plan in section B7.


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Annex 5 CALCULATION OF HEATING VALUES OF BIOMASS FUEL AND F UEL NEEDS FOR THE

PLANT

Most biomass wastes have similar heating value when measured as dry matter. Values are typically in the order of 17-20 MJ/kg depending on the chemical properties of the specific waste type. (Danida 2005, own measurements) The variation of the experienced heating value can mostly be explained by the difference in moisture content of waste. The moisture content will vary with the origin of the waste and on different forms of storage and treatment the waste will undergo before it is used as fuel. An analysis of gross calorific value has been carried out for EFB from the nearby Kunak Palm Oil Mill – see Annex 6. The gross calorific value was measured to 4,137 kcal/kg. The conversion is 1000 kcal = 4.19 MJ so the analysis result can be converted to 17 MJ/kg. This value is used in the following to calculate the Net Calorific Value (NCV) of EFB. The actual heating value can be calculated as dry matter heating value minus the energy needed to evaporate the water content. The evaporation energy is 2.45 MJ/kg (Danida 2005). As example can be used EFB with a measured heating value of 17 MJ/kg and an experienced moisture content of 60%. The actual heating value can be calculated as (Fraction of dry matter (1-moisure content) x heating value of dry matter – moisture content x evaporation energy of water) 0.4 x17 – 2.45 x0.6 = 5.3 MJ/kg Based on this procedure the heating value has been recalculated for the moisture content experienced for the Kunak Palm Oil Mill. The moisture content can be different between different palm oil mills depending on specific treatment in the mill and the handling of the waste products. In the Kunak Palm Oil Mill the moisture content and the corresponding calculated heating value is shown in the table. The heating value calculated as described above, with dry heating value of EFB of 17 MJ/kg (measured), 20 MJ/kg for PKS and 19 MJ/kg for mesocarp fibre. The slightly higher heating value for the two latter is based on their lower ash content than the EFB. PKC has 18 MJ/kg. Table A.5.1: Heating values of biomass EFB PKS Mesocarp

fibre PKC

Dry matter heating value MJ/kg 17 20 19 18 Moisture content 60% 12% 37% 10% In situ heating value MJ/kg 5.3 17.3 11.1 16

After the EFB has arrived to the power station it will be shredded and dried to a moisture content of around 50% to improve the fuel quality. This leads to a heating value around 7.3 MJ/kg. For calculation of the amount of EFB that would have been landfilled it is the “raw” EFB that is relevant however.


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Calculation of energy requirement of the Kunak Jaya Bio Energy Project There are two boilers in the Kunak Jaya Bio Energy Project. A 45 barg boiler to produce steam for the power production and a 20 barg boiler for process steam. Table A.5.2: Energy requirement of Kunak Jaya Bio Energy Project For power 45 barg Steam capacity 52 Ton/hour Full load hours 6,570 Hours/year Annual steam production 341,640 Ton/year Steam energy 2.88 GJ/t steam Energy year 983,923 GJ/year Boiler efficiency 0.80 % Fuel use/year 1,229,904 GJ/year

For steam 20 barg Steam capacity 30 Ton/hour Full load hours 6,570 Hours/year Annual steam 197,100 Ton/year Steam energy 2.36 GJ/t steam Energy year 465,156 GJ/year Boiler efficiency 0.8 % Fuel use/year 581,445 GJ/year

The total need for biomass fuels will this be 1,229,904 + 581,445 = 1,811,349 GJ/year. Based on a fuel mix of 54/12/5/29 of EFB/PKS/PKC/mesocarp fibre the projected fuel consumption per year will be as below Table A.5.3 : Projected fuel consumption for Kunak Jaya Bio Energy Project NCV Unit Fuel mix MT (wet) MT (dry) EFB 5.3 GJ/tons 54% 109,067 43,627 PKS 17 GJ/tons 12% 25,051 22,045 PKC 18 GJ/tons 5% 9,867 8,881 Mesocarp fibre 11.1 GJ/tons 29% 57,841 36,440 Total 201,826 110,993


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Annex 6

MEASUREMENT OF HEATING VALUE FOR EFB


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Annex 7 DETAILS OF LEAKAGE ASSESSMENT FOR PALM OIL WASTE IN EASTERN SABAH

Methodology

The leakage assessment is based on approach L2 where a 25% excess of the biomass waste has to be demonstrated. First the total amount of available biomass waste in the relevant part of Sabah – the Eastern part – will be calculated based on the total FFB processing capacity. The expected growth in FFB production will be taken into account for the future availability of biomass waste. To estimate demand for EFB the requirement for biomass waste by CDM projects under development will be calculated. Total amount of palm oil waste in East Sabah

The total processing of FFB in Sabah was in 2005 was 24,993,135 tonnes FFB44. The official statistic does not provide a breakdown on districts therefore the breakdown has to be calculated. Table A 7.1 shows the number of palm oil mills and their aggregated approved capacity for districts in Sabah in 200545. The total approved capacity in 2005 was slightly lower (22,466,600 t FFB) than the actual processed amount of FFB. This is quite normal that the MPOB approved capacity may be marginally lower than the actual processing. Table A.7.1: Palm oil processing in Sabah in 2005 District

No. District No. of palm

oil mills Approved

capacity t FFB/year



1 Kinabatangan 26 4,578,000 5,092,830

2 Kunak 8 1,358,000 1,510,717 Yes

3 Semporna 3 512,000 569,578 Yes

4 Labuk/Sugut 16 3,063,800 3,408,347

5 Lahad Datu 25 6,440,000 7,164,226 Yes

6 Pantai Barat 1 96,000 106,796

7 Pendalaman 1 216,000 240,291

8 Sandakan 13 2,628,000 2,923,538

9 Tawau 10 2,070,800 2,303,677 Yes

10 Keningau 2 1,264,000 1,406,146

44 MPOB 2006: Malaysian Oil Palm Statistics 2005 p. 39 45 Chow Mee Chin, 2006: An Assessment Of Potential And Availability Of Palm Biomass For Bioconversion To Bioethanol. Table 8, page 19. Downloaded from www.eib.org.my


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District No.

District No. of palm oil mills

Approved capacity

t FFB/year



11 Tenum 1 96,000 106,796

12 Beaufort 1 144,000 160,194

Total 107 22,466,600 24,993,135

Total FFB processed in East Sabah

11,548,198

In the Table A.7.1, the actual amount of FFB processed has been distributed on the districts based on the approved capacity. The project is located in District No.2 i.e Kunak. District No.3 i.e. Semporna, District No.5 i.e. Lahad Datu and District No. 9 i.e. Tawau had been chosen in the analysis as these districts are directly bordering District No.2 i.e. Kunak ). This means that areas within 100-200 km from the project activity site are included. (See map in Annex 7). Based on the Table A7.1, the total amount of FFB processed in Districts No. 2, 3, 5 and 9 which are relevant to this analysis is estimated at 11,548,198 ton. There are no official statistics on the production and use of EFB, so the total available amount of EFB has to be calculated. This is done based on the common assumption that 23 % of the FFB processed will be EFB. Further it is assumed that the annual increase in FFB processed in Sabah will be 3.5% p.a.46. Based on the FFB projection and the percentage of EFB in FFB, the annual supply of EFB can be calculated. The demand for EFB is estimated through the number of potential CDM projects in the region. The CDM projects considered are derived from the UNEP “CDM-pipeline”47. The CDM Pipeline contains a list of all CDM projects that have either been uploaded for Global Stakeholder Process under validation or has been submitted for registration at the UNFCCC. The list is updated monthly and provides thus a good overview of the projects under development. The list of projects located in the relevant part of Sabah and their corresponding data on consumption of EFB have been identified and obtained from the related PDDs. The list is likely to overestimate the amount of EFB consumption, as some of the projects in Table A7.2 may not be implemented due to non registration as CDM project activities or other unforeseen circumstances. In addition, save and except for consumption by CDM projects activities, there is not any known use for EFB in the region. Table A7.2 sets out the balance between the available amount of EFB and consumption in East Sabah for 2008 – assuming that all CDM project activities will use their required amount of EFB in that year. This is a very conservative assumption as some of the projects will not be fully operational from 1 January 2008.

46 Anders Evald et al 2005: Renewable Energy Resources (in Malaysia) Recalculated based in table 2.2 p 10 47 CDM pipeline – downloaded from www.cdmpipeline.org 12/01/2008


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Table A.7.2: EFB in East Sabah – Production and consumption Details t

Total processed FFB in East Sabah (Projection for 2008)

12,801,429

Total EFB 23 % of FFB (23% x 12,801,429) 2,944,329 less: EFB consumption Kunak Bio Energy Project 92,015 Kunak Jaya Bio Energy Plant 109,067 Eko Pulp and Paper – Pulp production plant 180,000 Polar Vertix – Bio energy plant 10,126 Lahad Datu Edible Oils Sdn Bhd – Bio energy plant 122,500 Felda Sahabat – Bio Energy Plant 246,000 Golden Hope – Merotai – Composting project 99,360 Timura Samling POM – Composting project 48,000 Leluasa Edible Oil Refinery – Biomass steam plant 40,000 Asia POM – Composting project 104,480 Takon POM – Composting project 78,080 Total EFB consumption 1,129,628 Excess of EFB 1,814,701 Percentage of excess 61.6%

Table A7.2 conservatively affirms that there is approximately 62 % of unconsumed EFB in the region after deducting all the volume consumed by the CDM projects activities set out in Table B.20. This percentage exceeded the 25% unconsumed EFB benchmark required as the criteria to rule out leakage. Furthermore, there is still excess EFB to accommodate other minor uses such as mulching without changing the conclusion.


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First no. indicates district (Refer Table A.7.3 for name of district) Second no. indicates no. of mills in the district (2005) Source: Chow Mee Chin, 2006: An Assessment Of Potential And Availability Of Palm Biomass For Bioconversion To Bioethanol. Downloaded from www.eib.org.my


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Annex 8 COST-BENEFIT ANALYSIS OF USING EFB FOR MULCHING

EFB has a low content of nutrients and can in principle be used as fertiliser in palm plantations. The table below gives an estimate of the nutrient content in kg/ton fresh EFB Table A.8.1: Nutrient content of EFB Nutrient Nitrogen (N) Phosphorous

(P) Potassium

(K) Magnesium

(Mg) Calcium

(Ca) Percentage of dry matter

0.44 0.144 2.24 0.36 0.36

The table is based on a paper from MPOB48 and the fertiliser value of EFB (as of December 2002) is calculated to be between 5.39 RM/ton to MYR11.47 /ton (depending on the variation in the nutrient content in the EFB). The average value is MYR8.43 /ton. The use of EFB for mulching would not allow the full replacement of inorganic fertiliser. It is thus necessary to supplement with inorganic fertiliser. The MPOB49 paper gives the following breakdown of costs: Table A.8.2: Comparison of normal fertiliser use with EFB Normal estate fertilizer use EFB + supplement MYR/ha MYR/ha Fertiliser cost 355.20 126.80 EFB cost @ MYR 5/ton - 185.00 Application cost 35.00 196.50 Total cost 390.20 508.30

The paper only finds it attractive to use EFB for mulching if a 15% increase in yield can be included in the calculation, but the paper also cautions: “ In reality, it is very much doubtful whether it is possible to achieve an even distribution of EFB in the field consistently. Besides that, the EFB generated by the mill can only cover a small area of the plantation due to the high transport cost involved in making it available to all the palms. During high crop periods, the tendency is to give priority to the FFB rather than the EFB with the result that EFB evacuation and not mulching gets the priority. These are points to ponder when undue importance is given to the benefits of EFB mulching”. In another paper on effects of mechanisation of palm oil mills the cost of distributing EFB to the fields has been calculated for the year 199950 to between 6 MYR/ton and MYR11.55 /ton giving an average cost of MYR8.78 /ton.

48 Ravi Menon et al 2003: Empty Fruit Bunches Evaluation: Mulch in Plantation vs. Fuel for Electricity Generation. Palm Oil Industry Economic Journal Volume 3(2). Table 4 and Table 5 49 Ravi Menon et al 2003: Same paper as above – from table 10


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The same paper concludes on mulching: “ In view of rising cost in application and the difficulty to fully mechanise the field operation EPA51 has embarked on composting” In the calculation of the cost and benefits of mulching in the comparison of alternatives the average saving in fertiliser (in 2002 prices) reported by Ravi Menon et al has been used. As cost of distribution the cost from Teo Leng (in 1999 prices) has been used. In order to compare the costs the prices has been recalculated to 2007 prices using the actual inflation rate in Malaysia52. Table A.8.3: Annual inflation rate in Malaysia Year 2000 2001 2002 2003 2004 2005 2006 2007 Inflation 1.6% 1.4% 1.8% 1.2% 1.4% 3.0% 3.6% 2.5%

Based on the use of the updating on the values to 2007 the cost and benefits of numbers per ton of EFB are as follows Distribution costs of per ton EFB: MYR10.33 /ton Saving in fertiliser per ton EFB: MYR 9.46 /ton

50 Teo Leng 2002: Mechanisation in oil palm plantations: Achievement and challenges. Malaysian Soil Science and Technology Volume 11(2) 51 EPA Management is a plantation company that manages 28 estates in the state of Johor 52 Bank Negara Malaysia Annual Report


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Annex 9 ILLUSTRATION OF TECHNICAL BARRIERS IN EFB COMBUSTIO N

Combustion of fuels in boilers take into account the fuel calorific values, the fuel ash content, fuel size and moisture content. A complete combustion will in theory produce only water vapour, carbon dioxide and other by-products such as nitrous oxides and non combustible minerals such as silica, potassium, calcium, etc in the form of ash. In a properly designed boiler that is run in a stable manner, the by-products of combustion will be removed through the front de-ashing system (for heavier material such as silica and such minerals). Lighter material or “fly-ash” will be removed through capture in the cleaning/scrubbing systems such as cyclones, electrostatic precipitators or filter bags. However, when the fuel has high moisture content (as is the case for EFB) liquid phases of the resultant ash can precipitate on boiler parts, then clinker and slag can form. Clinker Low viscosity ash is molten and will readily coalesce to form a large molten mass or cause the agglomeration of bed particles on the boiler grate. This is called clinker. Unlike pulverised fuel fired boilers, stoker fired boilers have a longer residence time, which favours the formation of clinker. Similarly, higher moisture content of the fuels will delay combustion and create composites of unburnt materials and ash. As the molten mass is cooling, mineral phases can crystallise out of the melt, which is the catalyst for the formation of hard clinkers. In contrast, a high viscosity, 'dry' ash does not coalesce readily, thus restricting the formation of clinkers. Slag When a molten ash particle, transported by updrafts collides into the furnace wall, a slag deposit is formed. Alternatively, if the heat transfer surface is covered with a molten sticky slag layer then it is highly probable that 'dry' ash particle will also adhere to the surface. A sintered deposit can also form when particles at high temperature impact on heat transfer surfaces. Sintering is a complicated process, encompassing a variety of phenomena that take place when a powder is transformed into a compact material. Slag formation in biomass boilers are prevalent due to the presence of “low melting point” salts that formed as a result of combustion. This is due to the presence of alkali-earth elements K, Ca, Mg and Na which are organically bound to carbon structures. Their products of combustion are largely composed of potassium, sulphates and chlorides which have a relatively low melting point, causing deposits on cooler boiler surfaces. Composition


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Analyses of the deposits had been carried out and the major components are: Silicon 43% Potassium 22% Calcium 8% Aluminium 6% Chloride 4% Sulphur 4% Magnesium 4% Others 9% Following are photos are from Kunak Bio Energy Project to illustrate the technical barriers encountered by similar biomass energy projects.

Picture 01 – Shows the secondary air nozzles were surrounded by ash and clinkers.

Protection plate

Affected area

Secondary air nozzle



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Picture 02 – Shows the wall tubes around the fuel feeding chute area were covered by clinkers deposit

on the surface of the tubes, seeing the secondary air nozzle was almost covered by the clinkers.



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Picture 03: Slagging in superheater


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Picture 04: Clinker in the boiler


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Annex 10:

WEIGHTED AVERAGE COST OF CAPITAL CALCULATION

Risk Free Rate 4.59%

US MRP Market Risk Premium 4.91%

+ Unlevered Equity Risk Premium 6.19% + Levered Cost of Equity 7.24% x Country Risk Premium

13.81% + BRI 1.28% 1.17

Unlevered Equity Risk Premium Equity Contribution 7.24%

10.08%Leverage Premium x Leverage

1.98% x 36.97%

1-Tax 74.00%

WACC 11.42% Equity % of Capital Leverage

73.01% 36.97%

+ Risk Free Rate 4.59%

Cost of Debt AT + Debt Risk Premium 4.97% 2.14%

Debt Contribution 1.34% x 1-Tax

74.00%

Debt % of Capital Leverage 26.99% 36.97%

Kunak Jaya _Final_ - 14_4_08

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