VALIDATION REPORT. Offis Textile Ltd. Fuel Switch Project in Israel REPORT NO REVISION NO. 02

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1 VALIDATION REPORT Offis Textile Ltd. Fuel Switch Project in Israel REPORT NO REVISION NO. 02

2 VALIDATION REPORT Date of first issue: Project No.: Approved by: Organisational unit: Michael Lehmann Climate Change Services Client: Ecotraders, Ltd Client ref.: Edith Molot/Yiftah Shiri DET NORSKE VERITAS CERTIFICATION AS Veritasveien 1, 1322 HØVIK, Norway Tel: Fax: Org. No: NO MVA Project Name: Offis Textile Ltd. Fuel Switch Country: Israel Methodology: AMS-I.C Version: 12 GHG reducing Measure/Technology: Retrofitting steam boilers to operate on biogas ER estimate: 9243 tco 2 e per year Size Large Scale Small Scale Validation Phases: Desk Review Follow up interviews Resolution of outstanding issues Validation Status Corrective Actions Requested Clarifications Requested Full Approval and submission for registration Rejected In summary, it is DNV s opinion that the Offis Textile Ltd. Fuel Switch project, as described in the PDD dated 30 October 2008, meets all relevant UNFCCC requirements for the CDM and correctly applies the approved baseline and monitoring methodology AMS-I.C version 12. Hence, DNV requests the registration of the Offis Textile Ltd. Fuel Switch project as a CDM project. Report No.: Date of this revision: Rev. No. Key words: Report title: Offis Textile Ltd. Fuel Switch project in Israel Work carried out by: Elfride Covarrubias; Michael Lehmann Work verified by: Kumaraswamy Chandrashekara No distribution without permission from the Client or responsible organisational unit Limited distribution Unrestricted distribution

3 Report No: , rev. 02 Validation Report Abbreviations CAR CDM CEF CER CH 4 CL CO 2 CO 2 e DNV DNA GHG GWP HFO IPCC LFG MP N 2 O NGO ODA PDD UNFCCC Corrective Action Request Clean Development Mechanism Carbon Emission Factor Certified Emission Reduction Methane Clarification request Carbon dioxide Carbon dioxide equivalent Det Norske Veritas Designated National Authority Greenhouse gas(es) Global Warming Potential Heavy Fuel Oil Intergovernmental Panel on Climate Change Landfill gas (biogas) Monitoring Plan Nitrous oxide Non-governmental Organisation Official Development Assistance Project Design Document United Nations Framework Convention on Climate Change Page i

4 Report No: , rev. 02 Validation Report TABLE OF CONTENTS 1 EXECUTIVE SUMMARY VALIDATION OPINION INTRODUCTION Objective Scope 2 3 METHODOLOGY Desk Review of the Project Design Documentation Follow-up Interviews with Project Stakeholders Resolution of Outstanding Issues Internal Quality Control Validation Team 6 4 VALIDATION FINDINGS Participation Requirements Project Design Baseline Determination Additionality Monitoring Estimate of GHG Emissions Environmental Impacts Comments by Local Stakeholders Comments by Parties, Stakeholders and NGOs 16 Appendix A: Validation Protocol Appendix B: Certificates of Competence Page ii

5 Report No: , rev. 02 Validation Report 1 EXECUTIVE SUMMARY VALIDATION OPINION Det Norske Veritas Certification AS (DNV) has performed a validation of the Offis Textile Ltd. Fuel Switch project in Israel. The validation was performed on the basis of UNFCCC criteria for the Clean Development Mechanism and host Party criteria, as well as criteria given to provide for consistent project operations, monitoring and reporting. The review of the project design documentation and the subsequent site visit and follow-up interviews have provided DNV with sufficient evidence to determine the fulfilment of stated criteria. The host Party is Israel and no Annex I Party has yet been identified. Israel, as host Party, fulfils the participation criteria and has approved the project and authorized the project participants. The DNA from Israel confirmed that the project assists in achieving sustainable development. The validation did not reveal any information that indicates that the project can be seen as a diversion of official development assistance (ODA) funding towards Israel. Having an installed generation capacity of 32.05MW thermal, the project is eligible as type I small-scale CDM project activity. The project correctly applies the simplified baseline methodology AMS-I.C. By reducing the factory s combustion of fossil fuels for energy generation, the project results in reductions of CO 2 emission that are real, measurable and give long-term benefits to the mitigation of climate change. It is demonstrated that the project is not a likely baseline scenario. Emission reductions attributable to the project are hence additional to any that would occur in the absence of the project activity. The total emission reductions from the project are estimated to be on the average tco 2 e/year during ten years of the fixed crediting period. The emission reduction forecast has been checked and is deemed likely that the stated amount is achieved given that the underlying assumptions do not change. The monitoring methodology AMS-1.C has been applied correctly. A monitoring manual has been established identifying equipment, procedures, responsibilities and quality control measures in order to assure a correct implementation of the monitoring plan. Local stakeholders comments were invited through a public discussion during the stakeholder meeting conducted specifically for the project activity. Comments by Parties, stakeholders and NGOs have also been invited via the UNFCCC web-site. No comments have been received. In summary, it is DNV s opinion that the project, as described in the project design document dated 30 October 2008, meets all relevant UNFCCC requirements for the CDM, is eligible as category I.C small-scale CDM project activity and correctly applies the approved simplified baseline and monitoring methodology AMS-I.C. Hence, DNV requests the registration of the Offis Textile Ltd. Fuel Switch project as a CDM project activity. Page 1

6 Report No: , rev. 02 Validation Report 2 INTRODUCTION Ecotraders Ltd. has commissioned Det Norske Veritas Certification AS (DNV) to perform a validation of the Offis Textile Ltd. Fuel Switch project in Israel (hereafter called the project ). This report summarises the findings of the validation of the project, performed on the basis of UNFCCC criteria for the CDM, as well as criteria given to provide for consistent project operations, monitoring and reporting. UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and procedures, the simplified modalities and procedures for small-scale CDM project activities and the subsequent decisions by the CDM Executive Board. 2.1 Objective The purpose of a validation is to have an independent third party assess the project design. In particular, the project's baseline, monitoring plan, and the project s compliance with relevant UNFCCC and host Party criteria are validated in order to confirm that the project design, as documented, is sound and reasonable and meets the identified criteria. Validation is a requirement for all CDM projects and is seen as necessary to provide assurance to stakeholders of the quality of the project and its intended generation of certified emission reductions (CERs). 2.2 Scope The validation scope is defined as an independent and objective review of the project design document (PDD). The PDD is reviewed against the criteria stated in Article 12 of the Kyoto Protocol, the CDM modalities and procedures as agreed in the Marrakech Accords, the simplified modalities and procedures for small-scale CDM project activities and the relevant decisions by the CDM Executive Board, including the approved baseline and monitoring methodology AMS-I.C. The validation team has, based on the recommendations in the Validation and Verification Manual employed a risk-based approach, focusing on the identification of significant risks for project implementation and the generation of CERs. The validation is not meant to provide any consulting towards the project participants. However, stated requests for clarifications and/or corrective actions may have provided input for improvement of the project design. Page 2

7 Report No: , rev. 02 Validation Report 3 METHODOLOGY The validation consisted of the following three phases: I a desk review of the project design documents II follow-up interviews with project stakeholders III the resolution of outstanding issues and the issuance of the final validation report and opinion. The following sections outline each step in more detail. 3.1 Desk Review of the Project Design Documentation The following table lists the documentation that was reviewed during the validation: /1/ Offis Textile Ltd. and Ecotraders Ltd., CDM-SSC-PDD for the Offis Textile Ltd. Fuel Switch project Version 08 dated 30 October 2008, Version 07 dated 27 March 2008, Version 06 dated 12 December, 2007 (version published for the 30 days of public consultation process). /2/ Letter of Approval for the small scale project Offis Textile Ltd. Fuel Switch in Israel issued by the Israeli DNA dated 21 November /3/ International Emission Trading Association (IETA) & the World Bank s Prototype Carbon Fund (PCF): Validation and Verification Manual. /4/ CDM Executive Board, AMS-I.C version 12 (Renewable Energy Projects) /5/ Offis Textile Monitoring Manual, revision B dated December 2007 /6/ Offis Textile Business Licence (License Number: /005) valid till December 2007 /7/ Translation of the relevant section of the contract between Gas Dan (Offis Textile) and Dan Regional Association of Towns regarding CDM dated 27 February 2005 DNV commenced the validation of the project in November 2006 and DNV also assessed earlier versions of the PDD. Version 01, dated 1 November 2006, applying AMS.I.C version 8, was received in November Following the decision by the project participants to use another methodology, a new PDD version 04, dated 1 June 2007, applying AMS.III.B, version 10, was assessed. However, after clarifications made by the EB at it s 35 th meeting on the applicability of AMS.III.B, the PDD was in December 2007 again revised to apply AMS- I.C version 12. Therefore, a new PDD version 06, dated 12 December 2007 was submitted, this PDD has been the basis for this validation and 30 days of public consultation process. Finally, a PDD version 07 dated 27 March 2008 was issued and used to finalise this validation report. This PDD version was used for the initial request for registration of the project activity. A PDD Version 08 dated 30 October 2008 was issued in order to integrate corrections requested by the CDM Executive Board following the review of the project activity at its 43 rd meeting. Hence, this validation report has been revised integrating corrections done to the project activity. A 100% as default efficiency for the boiler in the absence of the project Page 3

8 Report No: , rev. 02 Validation Report activity was assume in line with paragraph 13 (c) of AMS-I.C version 12 instead of 90% as previously considered in the project activity. 3.2 Follow-up Interviews with Project Stakeholders Date Name Organization Topic /8/ /16 Ramzi Gabbay Offis Textile Ltd. President /9/ /16 Cohen Ram Offis Textile Ltd. Vice Plan Manager /10/ / /11/ / Edith Molot Adi Dishon EcoTrades Ltd. Project Manager EcoTrades Ltd. CEO CDM Initiative CDM project development Project development info Project development info 3.3 Resolution of Outstanding Issues The objective of this phase of the validation was to resolve any outstanding issues which needed be clarified prior to DNV s positive conclusion on the project design. In order to ensure transparency a validation protocol was customised for the project. The protocol shows in a transparent manner the criteria (requirements), means of verification and the results from validating the identified criteria. The validation protocol serves the following purposes: It organises, details and clarifies the requirements a CDM project is expected to meet; It ensures a transparent validation process where the validator will document how a particular requirement has been validated and the result of the validation. The validation protocol consists of three tables. The different columns in these tables are described in the figure below. The completed validation protocol for the Offis Textile Ltd. Fuel Switch project is enclosed in Appendix A to this report. Findings established during the validation can either be seen as a non-fulfilment of CDM criteria or where a risk to the fulfilment of project objectives is identified. Corrective action requests (CAR) are issued, where: i) mistakes have been made with a direct influence on project results; ii) iii) CDM and/or methodology specific requirements have not been met; or there is a risk that the project would not be accepted as a CDM project or that emission reductions will not be certified. A request for clarification (CL) may be used where additional information is needed to fully clarify an issue. Page 4

9 Report No: , rev. 02 Validation Report Validation Protocol Table 1: Mandatory Requirements for CDM Project Activities Requirement Reference Conclusion The requirements the project must meet. Gives reference to the legislation or agreement where the requirement is found. Validation Protocol Table 2: Requirement checklist This is either acceptable based on evidence provided (), a Corrective Action Request (CAR) of risk or non-compliance with stated requirements or a request for Clarification (CL) where further clarifications are needed. Checklist Question Reference Means of verification (MoV) The various requirements in Table 2 are linked to checklist questions the project should meet. The checklist is organised in different sections, following the logic of the large-scale PDD template, version 03 - in effect as of: 28 July Each section is then further sub-divided. Gives reference to documents where the answer to the checklist question or item is found. Explains how conformance with the checklist question is investigated. Examples of means of verification are document review (DR) or interview (I). N/A means not applicable. Comment The section is used to elaborate and discuss the checklist question and/or the conformance to the question. It is further used to explain the conclusions reached. Draft and/or Final Conclusion This is either acceptable based on evidence provided (), or a corrective action request (CAR) due to noncompliance with the checklist question (See below). A request for clarification (CL) is used when the validation team has identified a need for further clarification. Validation Protocol Table 3: Resolution of Corrective Action and Clarification Requests Draft report clarifications and corrective action requests Ref. to checklist question in table 2 Summary of project owner response Validation conclusion If the conclusions from the draft Validation are either a CAR or a CL, these should be listed in this section. Reference to the checklist question number in Table 2 where the CAR or CL is explained. The responses given by the project participants during the communications with the validation team should be summarised in this section. This section should summarise the validation team s responses and final conclusions. The conclusions should also be included in Table 2, under Final Conclusion. Figure 1 Validation protocol tables Page 5

10 Report No: , rev. 02 Validation Report 3.4 Internal Quality Control The draft validation report including the initial validation findings underwent a technical review before being submitted to the project participants. The final validation report also underwent another technical review before requesting registration of the project activity. The technical review was performed by a technical reviewer qualified in accordance with DNV s qualification scheme for CDM validation and verification. 3.5 Validation Team Role/Qualification Last Name First Name Country Project Manager and Covarrubias Elfride Italy CDM Validator Sector Expert Lehman Michael Norway Technical Reviewer Chandrashekara Kumaraswamy India The qualification of each individual validation team member is detailed in Appendix B to this report. Page 6

11 Report No: , rev. 02 Validation Report 4 VALIDATION FINDINGS The findings of the validation are stated in the following sections. The validation criteria (requirements), the means of verification and the results from validating the identified criteria are documented in more detail in the validation protocol in Appendix A. 4.1 Participation Requirements The projects host Party is Israel and no Annex I Party has yet been identified. Israel fulfils the participation requirements and has ratified the Kyoto Protocol. The project participants are Offis Textile Ltd. (textile factory) and EcoTraders Ltd. (private entity, CDM project manager and consultant). The DNA of Israel has issued a Letter of Approval (LoA) /2/ on 21 November 2006 authorising Offis Textile Ltd and EcoTraders Ltd as project participants, and confirming that the project contributes towards realization of Israel s sustainable development goals. 4.2 Project Design The objective of the proposed small scale project Offis Textile Ltd. Fuel Switch is to reduce the greenhouse gas (GHG) emissions from the Offis Textile factory through the retrofitting of steam and oil boilers, thereby enabling a fuel switch from fossil fuel (HFO) to biogas, i.e. landfill gas (LFG). The LFG is supplied by Gas Dan (responsible for the delivery of the biogas to the textile factory) from the Hiriya landfill located about 2 km from Offis textile premises. The landfill gas recovery taking place the Hiriya landfill is a registered CDM project activity ( Hiriya Landfill Project, UNFCCC registration no. 0147) 1. The project activity envisages retrofitting the main steam boiler and two oil boilers spread over three phases: - steam boiler manufactured by Hamichal with serial number 958 (approx MW thermal 2 ) retrofitted to LFG in June oil boiler manufactured by NESS with Fabrik Nr: 499 (3.5 MW thermal 3 ) retrofitted to LFG in January oil boiler manufactured by NESS with Fabrik Nr: 5041 (with 3.5 MW thermal,) planned to be retrofitted in the first quarter of 2008 subject to LFG availability. The other three existing boilers will remain operational on fossil fuel and mainly serve as back-up boilers (one steam boiler and two oil boilers). 1 The PDD of the Hiriya Landfill Project included the option that landfill gas may be supplied to nearby business and foresees monitoring of the amount of landfill gas combusted in boilers. However, the Hiriya Landfill Project will only claim emission reductions from avoiding methane emissions by combusting landfill gas in boilers, but it will, as stated in the PDD, not claim emission reductions from displacing fossil fuels due to the utilisation of landfill gas in boilers. Hence, there is no double counting of emission reductions resulting from displacing fossil fuels in the project activity. 2 MW = ( 660.9kcal / kg 64.93kcal / kg) / kgsteam*10000kgsteam / hr 0.88efficiency *860kilocalories / kw * kw/mw, where the water temperature is 65C (enthalpy kcal/kg), steam temperature is 170C (steam enthalpy is 660.9). These are the average operating temperatures of the steam boiler at the factory. 3 1 kw = MW Page 7

12 Report No: , rev. 02 Validation Report The main contributions from project activity will be: - Improvement in the quality of air around the factory; - Reduction in particulate emissions resulting from burning of fossil fuel; and - Reduction in global emissions of greenhouse gases resulting from burning of fossil fuel. The DNA of Israel has provided confirmation that the project assists in achieving sustainable development /2/. The expected operational lifetime of the project activity is 15 years. A fixed crediting period of 10 years was chosen, with the starting date on 1 December The start date of the project activity is 27 February 2005 date when the contract to buy the LFG, to be used in Offis Textile factory, was signed. The foreseen emission reductions are estimated to be tco 2 e annually. 4.3 Baseline Determination The project applies the approved methodology AMS-I.C, version 12, Thermal energy for the user with or without electricity. The methodology used is suitable for the project activity considering that the activity switches from the fossil fuel heavy fuel oil (HFO) to biogas (LFG). The project activity fulfils the applicable criteria as the project consists of boilers that have been retrofitted to use LFG instead of HFO. The energy output of each boiler ranges from 3.5 MW thermal to 7.87 MW thermal and the total energy output and installed capacity of the six boilers (the 3 boilers that are retrofitted and the 3 boilers that continue to use HFO) is MW thermal. This is less than 45 MW thermal, which is the limit to consider a project as a small scale CDM project activity under this project activity category. In accordance with AMS-I.C, the simplified baseline is the fuel consumption of the technologies that would have been used in the absence of the project activity times an emission coefficient for the fossil fuel displaced. To determine this baseline, the combined tool to identify the baseline scenario and to demonstrate additionality (ver 2.1) has been used. Four scenarios have been identified and evaluated: Option a - Continuation of current practice (operation of boilers using HFO): The textile factory meets all the environmental standards and regulations of Israel with the exception of SO 2. Per the suggestion of the Ministry of Environment, Offis had the option of a switchover from HFO to diesel to address the SO 2 emissions. Hence, it is deemed that option a is not practical as it does not meet the Israeli air quality standards for SO 2. Option b - Retrofit boilers from HFO to operate on diesel fuel: This option is deemed feasible and also in compliance with the environmental regulations. Option c: Retrofit boilers from HFO to operate on LPG: Use of LPG in boilers is not a common practice in Israel owing to (i) storage problems envisaged due to large quantities as compared to diesel or HFO and (ii) increased and intrinsic safety risks on account of handling and storage of LPG as opposed to diesel or HFO. Hence, for these reasons option c has not been considered further. Option d: Retrofit boilers from HFO to operate on LFG without registering it as a CDM project: Data from the Energy Demand Projections, , demonstrates that industrial energy production in Israel is fossil-fuel based and has historically been dominated by only HFO and diesel. It has also been verified that in Israel, there are only three locations using landfill gas to generate electricity (and all in the landfill premises) and there is no facility Page 8

13 Report No: , rev. 02 Validation Report using landfill gas as a fuel for industrial production, such as the project activity. This has also been confirmed through a letter issued by the Ministry of Environmental protection of the State of Israel on 9 July 2007 as well as through the survey of landfill gas extraction and usage activities in Israel, conducted by EcoTraders (annex 6 in the PDD). Hence, given the prevailing practice in Israel, option d has been ruled out (see also section 4.4 below). Thus, the baseline scenario is deemed to be the operation of boilers on diesel fuel, that is in compliance with Israeli law requirements, although the fuel actually used in the factory is HFO. This baseline is conservative as the use of diesel is less carbon intensive compared to HFO. Following methodology AMS-I.C (paragraph 10); baseline emissions (BEy) from heat/steam displaced by the project activity during year y in tco 2 e are equal to: BE y = HG y EF η CO 2 thermal, BSL Where: HGy is the net quantity of steam/heat supplied by the project activity during the year y in TJ. The net quantity of steam/heat supplied by the combustion of LFG is calculated by deducing the amount of thermal energy generated using fossil fuels from the total amount of thermal energy generated (HG y = HG total,y - HG fossil fuel,y ). EF CO2 : is the CO 2 emission factor per unit of energy of the fuel that would have been used in the baseline plant. The diesel emission factor data from IPCC 2006 was used (74.07tCO 2 /TJ). n th : is the efficiency of the plant using fossil fuel that would have been used in the absence of the project activity, a maximum efficiency of 100% was assumed as default efficiency for the boiler in the absence of the project activity in line with paragraph 13 (c) of AMS-I.C (version 12). Estimations of baseline emissions have been further addressed under section 4.6. The project's switch from fossil to renewable fuel involves the retrofit of the burners inside the main steam and oil boilers. However, this retrofit does not increase production. The boilers have also been certified to have a lifetime of 40 years and the same has been verified by DNV. Hence, the point in time when the existing equipment would need to be replaced in the absence of the project activity is not within the project s crediting period. 4.4 Additionality In February 2005, the factory signed a contract with the Dan Region Association of Towns to purchase the landfill gas from the Hiriya landfill. The contract explicitly makes reference to the CDM and to carbon emission reductions as an expectation of undertaking the switch from HFO to LFG. The contract has been verified by DNV. It is thus sufficiently demonstrated that CDM benefits were considered prior to the decision to proceed with the project activity. The project s additionality has been demonstrated through the existence of the following barriers: Prevailing practice: There is no regulatory requirement in Israel to use renewable fuel or lower carbon-intensive fuel in industries such as Offis textile; Moreover, as described in section 4.3 of this report under options c & d, the project activity is the first example in which LFG is used to produce energy out side of the landfill premises. Page 9

14 Report No: , rev. 02 Validation Report During the validation of the Hiriya Landfill Project, from which the Offis Textile Ltd. Fuel Switch, Israel project sources its LFG, DNV investigated the current practise and the laws and policies related to the utilization of LFG in Israel. This included an interview with the Solid Waste Management Division of the Ministry of Environmental Protection. This investigation confirmed that no LFG is currently used in boilers in Israel in absence of CDM benefits. This has also been confirmed in a letter provided by the Ministry of Environmental Protection dated 9 July 2007 which was considered during the validation of the Hiriya Landfill Project and the Offis Textile Ltd. Fuel Switch, Israel. Uncertainty LFG supply: LFG uncertainties relate mainly to the (a) volume of gas available and (b) gas quality and composition. LFG quantity and quality are heavily dependent on the landfill maintenance and operation of the gas extraction system, which are outside the control of Offis textile management. At the start of the project activity, information on the availability of LFG was through the landfill gas supply model - EPA's LandGEM model that estimated a gas availability of 3,408 m 3 /hour in 2006 to 1,194 m 3 /hour in 2023 (SCS Engineers and Tahal Consulting Engineers Ltd. "Planning and restoration of the Hiriya Site: Stage A Field Surveys, Final Report." p. 84). However, actual landfill gas supply has already proven to be lower than the levels estimated by the survey. Average gas flow between August 2006 and July 2007 has been verified to be approximately 900 m 3 /hour, which is about 30% of the gas flow estimated prior to the implementation of the project activity. Also given the fact that methane content in the landfill gas can vary from 40 to 60 percent and variations of moisture content in the LFG, Offis claim that the variability of landfill gas quality and composition leads to production uncertainty at the factory is deemed acceptable. Thus in comparison to a fuel like diesel, whose quality and quantity is assured, the use of LFG in the project activity is considered to be fraught with risks and uncertainties. Institutional barriers: The project infrastructure has had to acquire many authorisations, including for the purchase of land for the construction of the pipeline (around 3.5 km). In all, fourteen bodies were involved in the process to obtain permits and authorisations, among them being Governmental Bodies, National and Regional Authorities, as well as, Service Providers. In the opinion of DNV, while the institutional barrier is deemed generic and common to such projects, the barriers addressed under prevailing practice and the uncertainties in the quality and quantity of LFG are deemed relevant and therefore the project activity is considered to be additional. 4.5 Monitoring Following the monitoring methodology AMS-I.C, monitoring consists of metering the energy produced by the systems and since also fossil fuels are used the thermal energy metered is adjusted to deduct thermal energy from fossil fuels using the specific fuel consumption and the quantity of fossil fuel consumed Parameters determined ex-ante The following parameters have been determined ex-ante and were validated by DNV: Page 10

15 Report No: , rev. 02 Validation Report Parameter Unit Value Considerations Emission factor for diesel tco 2 /TJ IPCC 2006 data Efficiency of the steam boiler % 100 A maximum efficiency of 100% was assumed Historic annual average fossil fuel consumption (HFO) Tonnes/year 4,616 This value was obtained monitoring historical HFO consumptions from June 2003 to May 2006) Historic energy generation TJ 155 Enthalpy charts, temperature, efficiency and conversion factors, oil characteristics, operating boiler hours, etc were used to get this value, all data and assumptions are available in PDD-Annex 3 Specific fossil fuel consumption of the boiler per TJ generated. Flow rate of the thermal oil in the oil boiler pump Specific density of the thermal oil in the oil boiler pump Specific heat capacity of the thermal oil in the oil boiler pump Amount of landfill gas used to power two boilers Energy generated in the factory s main boiler that have been switched to LFG. Specific fuel consumption of the boiler per TJ generated. Tonnes/TJ 29.7 For ex ante calculation purposes, the amount of HFO consumed in the project is 20% of the historical average annual HFO, L/hr 300,000 Technical specification of boiler kg/l 0.88 Specific oil data Kcal/kg*C 0.56 Specific oil data tonnes 6,261 To determine ex ante calculations 8 months of LFG flow data to the factory were used. Percentage of methane was 51% while 49% was assumed to be Nitrogen TJ 125 Data available for boilers working on LFG was used to estimate this value t/tj 50.1 Data available for boilers working on LFG was used to estimate this value Page 11

16 Report No: , rev. 02 Validation Report Assumptions and calculations to get the above values were done in a transparent way and being conservative as can be seen from PDD-Annex 3 and the Excel spreadsheet. Page 12

17 Report No: , rev. 02 Validation Report Parameters monitored ex-post The following parameters will be monitored ex-post: Parameter Data source Recording frequency Fossil fuel consumption Fuel purchase receipts Monthly Considerations LGF consumption Flow meter monthly Readings done in landfill and transmitted to Offis Methane average fraction of the LFG Steam generation Steam pressure Water temperature Incoming/Outgoing oil temperature Oil boiler operating hours Gas analyser monthly Readings done in landfill and transmitted to Offis Measurement gauge Pressure gauge Temperature gauge Temperature gauge Continuous meter daily daily daily daily daily To be installed after the project registration (steam flow meter) To be installed after the project registration (steam pressure gauge) Daily data will be further elaborated on monthly basis Daily data will be further elaborated on monthly basis Daily data will be further elaborated on monthly basis Steam boiler efficiency Stack test Annually Done by external control Oil boiler efficiency Stack test Annually Done by external control Management system and quality assurance A specific Offis Textile Monitoring Manual has been established in order to define roles and responsibilities of people/functions involved in the project activity. The main chapters of this Monitoring Manual are: Operational procedures, training, emissions and emission reduction calculations, records/forms to be used. In addition, there is a description of other factory management documentation like HFO fuel consumptions procedures, procedures for troubleshooting, procedures for the collection and processing of fossil fuel data, and energy measurement procedures. Calibration and maintenance of equipments will follow internal procedures, records of reading and monitoring data will be kept after 2 years of the crediting period. Page 13

18 Report No: , rev. 02 Validation Report 4.6 Estimate of GHG Emissions Project emissions: As thermal energy generated by fossil fuels in the project activity is deduced from the total amount of thermal energy, metered for the calculation of the baseline emissions, the baseline emissions are based only on the amount of thermal energy generated by renewable fuel that would have been generated by fossil fuel in the baseline. Hence, owing to the use of LFG project emissions are deemed to be zero. Leakage: No leakage is accounted for this project considering that Israeli industry operates largely on HFO or diesel. Considering that the burners that have been replaced would be sold to another party, the purchasing party would be continuing the common practice of operations using HFO or diesel and would not have switched from a less carbon-intensive fuel, such as gas, back to the older practice of HFO or diesel. It is also confirmed that the Offis factory has not sold the burners but has retained the same. Therefore, there is no leakage in this project. Baseline emissions: The baseline scenario is the use of diesel fuel as addressed under section 4.3. Therefore, the emission factor for diesel will be used to calculate baseline emissions. As prescribed by the methodology, the boiler efficiency in the baseline (thermal, BSL) shall be determined ex ante by one of the following methods: a) Highest measured efficiency of a unit with similar specifications; b) Highest of the efficiency values provided by two or more manufacturers for units with similar specifications; c) Maximum efficiency of 100%. Obtion c) was chosen taking into account that neither diesel theoretical or diesel measured manufacturer values were available. Thus the efficiency of 100% has been used in the calculations. The net quantity of steam/heat supplied by the project is determined as follows: In line with the methodology (para 20), the net quantity of steam/heat supplied by the combustion of landfill gas is calculated by deducting the amount of thermal energy generated using fossil fuels from the total amount of thermal energy generated: HGy = HGtotal,y - HGfossil fuel,y HGtotal,y The total amount of steam/heat generated in the project activity in time period y, is the sum of the amount of energy generated by the steam boiler in time period y and the amount of energy generated by the oil boilers in time period y. As the factory has not historically metered steam or heat generation, the ex-ante estimation of HGtotal was carried out as follows: a) the energy generated from steam boiler has been estimated using monitored data and expert input, b) the energy generation from oil boilers is based on monitored data and technical specifications. The ex-post determination of the HGtotal will be based on the measured steam and hot oil output. Historical fossil fuel consumption for 3 years prior to the project implementation (June 2003 to May 2006) has been considered for the ex-ante determination of HGfossil fuel. Moreover, enthalpy graphs (i.e. Weishaupt charts), conversion tables and other expert opinions were used in order to determine the energy produced (like specific density of oil, temperature, boilers working hours, etc.). Page 14

19 Report No: , rev. 02 Validation Report For the ex-post determination of HGfossil fuel the amount of energy generated from fossil fuels is determined by metering the specific fuel consumption and the quantity of fossil fuel consumed. The specific fuel consumption is the fuel consumption per unit of thermal energy generated (Tonnes/TJ). SFC was calculated using estimated data, monitored data and calculations for energy generation and fuel consumption. The ex-ante SFC fossil fuel is equal to 29.7 tonnes/tj. The methodology requires in paragraph 22 that the amount of thermal energy generated using landfill gas (HGy), which is determined as described above and as per paragraph 20 of the methodology, must be compared with the amount of thermal energy generated (identified in the PDD as HGcalc,y) calculated using the specific fuel consumption of landfill gas and the amount of landfill gas used (Please note that the methodology refers to biomass, but in the context of this project landfill gas needs to be considered). The lower of the two values is used to calculate emission reductions. In the project activity, the lower value of the energy generated by the LFG, either HGy or HGcalc,y will be selected for the energy generation (HGy) needed to calculate baseline emissions The percentage methane content of the landfill gas is monitored and this is averaged to provide the landfill gas's methane content. As the composition of the rest of the landfill gas is not monitored, the guidance presented in the "Tool to determine project emissions from flaring gases containing methane" approved by the EB at its 28 th meeting has been used. All the calculations have been presented in the form of Excel spreadsheets and verified by DNV. Emission Reductions: Based on the above considerations the emission reductions are equal to ER y = BE y PE y Thus the estimated emissions reductions are expected to be tonnes of CO 2 e per year. 4.7 Environmental Impacts An environmental impact assessment was not required for the project activity. Nonetheless, project participants have briefly evaluated the environmental aspects. These have been determined to be insignificant and considered acceptable. The activity also foresees positive environmental impacts, like reduction of air pollutants around the factory and reduced use of fossil fuel to produce energy. 4.8 Comments by Local Stakeholders A stakeholder consultation meeting was held on 12 September Local residents, governmental authorities and NGO s representatives attended this meeting. No adverse comments were received and most of stakeholders agree with the benefits associated with the retrofitting of boilers. Page 15

20 Report No: , rev. 02 Validation Report 4.9 Comments by Parties, Stakeholders and NGOs The PDD version 06, dated December 12, 2007 was made publicly available on DNV s climate change website 4 and Parties, stakeholders and NGOs were through the CDM website invited to provide comments during a 30 days period from 15 December 2007 to 13 January No comments were received. Also earlier versions of the PDD, i.e. version 01 dated 1 November 2006, applying AMS.I.C version 8, and PDD version 04, dated 1 June 2007, applying AMS.III.B, version 10, were made publicly available on DNV s climate change website and Parties, stakeholders and NGOs were through the CDM website invited to provide comments during a 30 days period from 15 November 2006 to 14 December 2006 and 23 June 2007 to 22 July 2007, respectively. No comments were received during these periods. 4 Page 16

21 APPENDIX A CDM VALIDATION PROTOCOL

22 Table 1 Mandatory Requirements for Clean Development Mechanism (CDM) Project Activities About Parties Requirement Reference Conclusion 1. The project shall assist Parties included in Annex I in achieving compliance with part of their emission reduction commitment under Art The project shall assist non-annex I Parties in contributing to the ultimate objective of the UNFCCC. 3. The project shall have the written approval of voluntary participation from the designated national authority of each Party involved. 4. The project shall assist non-annex I Parties in achieving sustainable development and shall have obtained confirmation by the host country thereof. 5. In case public funding from Parties included in Annex I is used for the project activity, these Parties shall provide an affirmation that such funding does not result in a diversion of official development assistance and is separate from and is not counted towards the financial obligations of these Parties. Kyoto Protocol Art.12.2 Kyoto Protocol Art Kyoto Protocol Art. 12.5a, CDM Modalities and Procedures 40a Kyoto Protocol Art. 12.2, CDM Modalities and Procedures 40a Decision 17/CP.7, CDM Modalities and Procedures Appendix B, 2 6. Parties participating in the CDM shall designate a national authority for the CDM. CDM Modalities and Procedures The host Party and the participating Annex I Party shall be a Party to the Kyoto Protocol. 8. The participating Annex I Party s assigned amount shall have been calculated and recorded. 9. The participating Annex I Party shall have in place a national system for estimating GHG emissions and a national registry in accordance with Kyoto Protocol Article 5 and 7. About additionality CDM Modalities 30/31a CDM Modalities and Procedures 31b CDM Modalities and Procedures 31b 10. Reduction in GHG emissions shall be additional to any that would occur in the Kyoto Protocol Art. 12.5c, NA NA NA CDM Validation , rev. 02 A-1

23 Requirement Reference Conclusion absence of the project activity, i.e. a CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity. CDM Modalities and Procedures 43 About forecast emission reductions and environmental impacts 11. The emission reductions shall be real, measurable and give long-term benefits related to the mitigation of climate change. For large-scale projects only 12. Documentation on the analysis of the environmental impacts of the project activity, including transboundary impacts, shall be submitted, and, if those impacts are considered significant by the project participants or the Host Party, an environmental impact assessment in accordance with procedures as required by the Host Party shall be carried out. About small-scale project activities (if applicable) 13. The proposed project activity shall meet the eligibility criteria for small scale CDM project activities set out in 6 (c) of the Marrakech Accords and shall not be a debundled component of a larger project activity. 14. The proposed project activity shall confirm to one of the project categories defined for small scale CDM project activities and use the simplified baseline and monitoring methodology for that project category. 15. If required by the host country, an analysis of the environmental impacts of the project activity is carried out and documented. About stakeholder involvement 16. Comments by local stakeholders shall be invited, a summary of these provided and how due account was taken of any comments received. 17. Parties, stakeholders and UNFCCC accredited NGOs shall have been invited to comment on the validation requirements for minimum 30 days, and the project Kyoto Protocol Art. 12.5b CDM Modalities and Procedures 37c Simplified Modalities and Procedures for Small Scale CDM Project Activities 12a,c Simplified Modalities and Procedures for Small Scale CDM Project Activities 22e Simplified Modalities and Procedures for Small Scale CDM Project Activities 22c CDM Modalities and Procedures 37b CDM Modalities and Procedures 40 NA NA CDM Validation , rev. 02 A-2

24 Other Requirement Reference Conclusion design document and comments have been made publicly available. 18. The baseline and monitoring methodology shall be previously approved by the CDM Executive Board. 19. A baseline shall be established on a project-specific basis, in a transparent manner and taking into account relevant national and/or sectoral policies and circumstances. 20. The baseline methodology shall exclude to earn CERs for decreases in activity levels outside the project activity or due to force majeure. 21. The project design document shall be in conformance with the UNFCCC CDM- PDD format. 22. Provisions for monitoring, verification and reporting shall be in accordance with the modalities described in the Marrakech Accords and relevant decisions of the COP/MOP. CDM Modalities and Procedures 37e CDM Modalities and Procedures 45c,d CDM Modalities and Procedures 47 CDM Modalities and Procedures Appendix B, EB Decision CDM Modalities and Procedures 37f CDM Validation , rev. 02 A-3

25 Table 2 Requirements Checklist CHECKLIST QUESTION Ref. MoV* COMMENTS A. General Description of Project Activity The project design is assessed. A.1. Project Boundaries Project Boundaries are the limits and borders defining the GHG emission reduction project. A.1.1. Are the project s spatial boundaries (geographical) clearly defined? A.1.2. Are the project s system boundaries (components and facilities used to mitigate GHGs) clearly defined? DR/I DR/I Yes. The project is located at Offis Textile Ltd., 47 Moshe Sharet St. in the town of Azur in the Dan Region, Israel (6.8 Km south of tel Aviv). The project boundary comprises 6 boilers, three of them (one steam boiler and two oil boilers) retrofitted to operate on renewable energy using landfill gas, while the other three boilers are backup boilers operating on fossil fuel (one steam boiler and two oil boilers). Schedule to change from HFO to diesel to feed backup boilers need to be specified. Draft CL 1 Final A.2. Participation Requirements Referring to Part A, Annex 1 and 2 of the PDD as well as the CDM glossary with respect to the terms Party, Letter of Approval, Authorization and Project Participant. A.2.1. Which Parties and project participants are DR The project is proposed as a unilateral * MoV = Means of Verification, DR= Document Review, I= Interview CDM Validation , rev. 02 A-4

26 CHECKLIST QUESTION Ref. MoV* COMMENTS participating in the project? A.2.2. Have all involved Parties provided a valid and complete letter of approval and have all private/public project participants been authorized by an involved Party? DR project and developed in Israel. The project participants are Offis Textile Ltd, and Ecotraders Ltd. Yes. A Letter of Approval from the Israeli DNA was issued on November 21, Both project participants have been authorised through this letter. Draft Final A.2.3. Do all participating Parties fulfil the participation requirements as follows: - Ratification of the Kyoto Protocol - Voluntary participation - Designated a National Authority DR Yes. Israel has ratified the Kyoto Protocol on 15 March 2004; it fulfils the requirement on voluntary participation and the appointment of a Designated National Authority A.2.4. Potential public funding for the project from Parties in Annex I shall not be a diversion of official development assistance. DR/I No public funding was used to develop this project activity. A.3. Technology to be employed Validation of project technology focuses on the project engineering, choice of technology and competence/ maintenance needs. The validator should ensure that environmentally safe and sound technology and know-how is used. A.3.1. Does the project design engineering reflect DR/I Yes. A refurbishment of the old boilers was * MoV = Means of Verification, DR= Document Review, I= Interview CDM Validation , rev. 02 A-5

27 CHECKLIST QUESTION Ref. MoV* COMMENTS current good practices? A.3.2. Does the project use state of the art technology or would the technology result in a significantly better performance than any commonly used technologies in the host country? A.3.3. Does the project make provisions for meeting training and maintenance needs? DR/I DR done in order to operate with landfill gas instead of fossil fuel (Heavy Fuel Oil). Yes. The use of this technology is practically new in Israel, and currently it is not considered as a common technology. From the environmental point of view, the use of landfill gas (LFG) instead of fossil fuel (HFO) surely will improve the environmental performance of the Offis Textile, and also to the local area. Moreover, the use of landfill gas in boilers will avoid the flaring of the landfill gas within the landfill premises (landfill premise is not included in the project boundary). Yes. Six employees from Offis Textile were trained on technical matters like boiler operations and also on CDM activities, like monitoring, and data collection. These activities were performed at the beginning of 2007, and further annual refresh sessions are foreseen. Internal Operations and Maintenance Procedures were established in order to operate boilers adequately, as well as, relevant parameters for the CDM project activity. Draft Final A.4. Contribution to Sustainable Development * MoV = Means of Verification, DR= Document Review, I= Interview CDM Validation , rev. 02 A-6