CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006 CONTENTS

Transcription

1 CDM Executive Board page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - 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

2 CDM Executive Board page 2 SECTION A. General description of project activity A.1 Title of the project activity: PFC Emission Reduction at PT. Indonesia Asahan Aluminium (INALUM) Kuala Tanjung, Version 3, 12 February 2009 A.2. Description of the project activity: INALUM is the only aluminium smelter facility in Indonesia. It is a joint venture under consortium of the Government of Indonesia and 12 Japanese Investors incorporated in Nippon Asahan Aluminium Co. Ltd. The smelter plant that is located in Kuala Tanjung, 115 kilometers South East of Medan, the capital city of North Sumatera Province. The smelter plant was first operated in 1982 with 510 cells on 3 cell lines. The smelter produces 250,000 tonnes Aluminium in 2006 with electricity consumption of a 14,040 kwh per tonnes of aluminium. The electricity consumption is supplied by 603 MW Siguragura and Tangga hydro power plants in Paritohan, Toba Samosir regency. The smelter plant applies the Center Work Prebaked (CWPB) technology. The smelter generates per fluorinated compounds during its production process as an impact of Anode Effects (AE). The AE is characterized by an abrupt and rapid increase in pot voltage, resulting from an increase in ohmic voltage due to dewetting of anode surfaces and subsequent increased coverage by gas bubbles. The pot voltage during AE may vary depending on anode geometry and cell conditions. The max AE voltage is typically volts for prebaked cells. The dissolved alumina content in bath is typically controlled between 2.0 to 3.5 weight fraction by slight underfeeding and overfeeding of alumina. An AE typically occurs when the bulk concentration of the alumina content dissolved in the bath is too low, <1.5 weight fraction. The objective of this project is to reduce PFC emission by AE mitigation through an installation of a new algorithm in the automatic control system of the smelter. AE will be decreased by means of its duration as well as its frequency. The frequency is targeted to decrease from 0.6 to 0.2 times per cell day. The duration was not targeted to decrease. However after the first months of operating the new process control system the anode effect duration decreased form 3 min to 1.7 min. To achieve this target, the company aims to decrease AE frequency and AE duration by replacing the existing software and hardware from CEGELEC with a new ALCAN ALESA system. This project has been undertaken in the context of Clean Development Mechanism (CDM) of the Kyoto Protocol. The income derived from the sale of carbon credits will allow INALUM to pay for the acquisition and installation of the new hardware and software. The project will significantly decrease the PFC emissions by 2,294,370 tonnes CO 2 -equivalent during the crediting period, from which tonnes of CO 2 equivalent are eligible to claim emission reduction certificates. The project also contributes to sustainable development by several factors. By reducing the total amount of AE s the amount of manual AE kills will be decreased over proportional due to the improved process control system. Less labour will be exposed to the hazardous pot area to terminate AE s. The high temperature and dust concentration in the pot area makes this working place a general health risky area. Also, the project activity creates skilled labour on the latest technology by providing on-job training for smelter operators. During several months a team of specialists implemented the new ALCAN ALESA system in every potline. The exact data of switching from the old to the new technology is outlined in Table 1.

3 CDM Executive Board page 3 Table 1: Switching over dates to new ALESA control system No Date Progress 1 Sept Test & monitoring for Bl.6.1 & 6.2 by using new PCU 2 Oct st commissioning process by switching over for control R-621 from the existing (Cegelec) into new Procom (Alesa) 3 Nov Switching over finished for St. 5 (84 pots, 44 PCU) 4 Nov Switching over finished for St. 6 (86 pots, 44 PCU) All pots of PL-3 5 Nov Switching over for St. 3 Bl. 4.1 & 4.2 (42 pots, 22 PCU) 6 Nov Switching over for St. 4 Bl. 4.3 & 4.4 (43 pots, 22 PCU) 7 Nov Switching over for St. 3 Bl. 3.1 (21 pots, 11 PCU) 8 Nov Switching over for St. 3 Bl. 3.2 (21 pots, 11 PCU) 9 Nov Switching over for St. 4 Bl. 3.3 (21 pots, 11 PCU) 10 Dec Switching over for St. 4 Bl. 3.4 (22 pots, 11 PCU) All pots of PL-2 12 Jan. 21 & Switching over for St. 1 Bl. 2.2 : R222~242 (21 pots, 11 PCU) 13 Jan. 23 & Switching over for St. 2 Bl. 2.3 : R243~263 (21 pots, 11 PCU) 14 Jan. 25 & Switching over for St. 2 Bl. 2.4 : R264~285 (22 pots, 11 PCU) 15 Jan. 29 & Switching over for St. 1 Bl. 1.2 : R122~142 (21 pots, 11 PCU) 16 Jan. 30 & Switching over for St. 2 Bl. 1.3 & 1.4 : R143~185 (43 pots, 22 PCU) 17 Feb Switching over for St. 1 Bl. 1.1 (R112~121) & 2.1 (R212~221) : 20 pots, 10 PCU 18 Feb Switching over for St. 1 Bl. 2.1 (R201~211) : 11 pots, 6 PCU 19 Mar Switching over for St. 1 Bl. 1.1 (R101~111) : 11 pots, 6 PCU A.3. Project participants: Name of Party Involved Private and/or public entity(ies) ((host) indicates a host project participants (as party) applicable) INDONESIA (host) PT. Indonesia Asahan Aluminium (INALUM) SWITZERLAND South Pole Carbon Asset Management Ltd. Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) No No A.4. Technical description of the project activity: A.4.1. Location of the project activity: INDONESIA North Sumatra A A Host Party(ies): Region/State/Province etc.: A City/Town/Community etc: Kuala Tanjung, Batubara regency

4 PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version CDM Executive Board page 4 A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): INALUM s smelter plant is located in Kuala Tanjung, 115 kilometres South East of Medan, capital city of North Sumatra Province, latitude of North and longitude of East Figure 1,2,3: Geographical location of PT.Inalum smelter facility A.4.2. Category(ies) of project activity:

5 CDM Executive Board page 5 The project activity is applicable to Category 9 Metal Production, as per the CDM sectoral scope version 02 Feb 2007 and as per approved methodology AM0030 version 02 dated 30/11/2007, PFC emissions reduction from anode effect mitigation at primary aluminium smelting facilities. A.4.3. Technology to be employed by the project activity: The project aims to minimize the PFC emissions through decreasing the AE frequency and duration by software development and replacing the old hardware with the new one. The old CEGELEC process control system is replaced by the new ALCAN ALESA control system. The technical differences of the two systems are laid out in Table 2. The process control of the new system has several advantages resulting in a decrease of anode effects. The main advantages are outlined in the paragraph below. The ALCAN ALESA system is able to control the anode-cathode distance more accurate due to the regulation of the beam position. The used practice of jacking up and down the anode in progressive moves until the anode effect is terminated could be replaced by a accurate down-movement of the anode position resulting in faster short-circuits between anodes and aluminium waves, terminating the anode effect. The acquisition period improved by a 16 times faster response time for data acquisition, measuring more accurate data. This allows changing the algorithm of the alumina feeding from a linier pattern to a parabolic pattern. The parabolic pattern is able to predict the demand feed more accurate keeping the alumina concentration at an optimum decreasing the possibilities of an AE. Table 2: Comparison of both, existing (Cegelec) technology with the new one (Alcan Alesa) No. ITEM EXISTING (Cegelec) NEW (Alcan Alesa) 1 ARCHITECTURE Semi distributed Distributed 2 HIERARCHY 2 level 3 level (L-0) : RIOU L-1 : Pot Controller L-1 : Pot Controller L-2 : Supervisory Control L-2 : Supervisory Control L-3 : Plan Network 3 HARDWARE 3.1 Analog Input 2 units (V & I) 3 units (V, I, & Beam Transducer) 3.2 Digital units 3.3 Pot Controller Name rtvax Blue Box or PCU-3 Processor Speed 12 MHz 25 Mhz Memory Capacity 4 MB 8.2 MB Data Measurement 1000 msec 60 msec (16 1sec) Pot Controller (Pot handled) 1 station 1~ 2 Pots Input Capacity Keypad & VFT display 3.4 Supervisory computer MicroVAX 3400 HP Integrity rx 2620 Processor Speed 20 MHz 1.6 GHz Name MicroVAX 3400 HP Integrity rx 2620 Processor Speed 20 Mhz 1.6 GHz Memory Capacity 4 (+32) MB 2 x 1 GB Hard disk capacity 1 GB 4 x 36 GB Storage data Tape Tape & CD/DVD Peripheral devices Special Devices General (PC Base) 3.5 Workstation in station - station 3.6 Pot Event Information - Provided in Potroom

6 CDM Executive Board page Potline Information - Provided in SRC Office 3.8 Camera - Provided in SRC areas 3.9 Pot Simulator - Provided in CPU Room 3.10 Datalogger - station 4 SOFTWARE Level Resistance control lower data accuracy Higher data accuracy 4.2 Alumina feed control not powerful pot performance Powerful pot performance 4.3 ACD control - Available 4.4 AET control - Available 4.5 Auto MT operation - Based on Metal height 4.6 AIF3 & BT Control - Available 4.7 Auto Beam Raising - Available 4.8 Alarm system + voice system - Available Level Operating System (OS) VMS 5-4 version Open VMS 8.3 version 4.10 Database Limited (less capacity) Expandable (bigger capacity) 4.11 Interaction w/operator Not user friendly User friendly 4.12 Maintenance S/W Prev Maint Only Prev Maint & trouble shooting 4.13 Data history monitoring 10 pots/ line All pots 5.1 Parameter modification Limited for individual par Optium individual par 5.2 Control; response to pot Lower due to serial connection Higher due to parralel connection 5.3 R & D purpose Not applicable for 2 pots max 5.4 R & D purpose Not applicable Applicable. If comparing the applied technology to other players in the aluminium industry a wider range then just the country boundary has to be chosen. International companies represented globally own most of the smelters. This does not occur in case of Inalum. The Government of Indonesia and several investors own the smelter and therefore do not have direct access to the newest technology. The project activity enables the technology transfer from North to South respectively from ALCAN to Inalum. The installed technology lowers the CF 4 emission factor from 1.13 t CO 2 /t Al to 0.18 t CO 2 /t Al. In 2005 the median of the CF 4 emission factor for all smelters of type CWPB was 0.42 t CO 2 /t Al 1. The installed technology can therefore be considered as good practice. The correct operation of the process control system is assured through overseas and in-house training. Twelve employees of Inalum have been sent to Alesa s office in Zurich, Switzerland, getting trained in understanding the process control system and its operation. The content of the overseas training has been summarised in a report. In several workshops back at the Inalum smelter all employees involved in operating and maintaining the process control system have been educated by the participants of the overseas training. Changing the control system does not come with a change in the environmental conditions in and outside the smelter. During implementation no risks occurred as the installation of a hardware and software system does not contain any safety or health risks. 1 IAI report on the aluminium industry s global perfluorcarbon gsa emissions reduction programme results of the 2005 anode effect survey, 9 May 2007

7 CDM Executive Board page 7 Guaranteed software support and hardware replacement parts are provided during ten years equal the whole crediting period. Minor software problems during this time are likely but can be solved quickly by ALCAN experts. The hardware shouldn t be substituted during this ten years period. A.4.4 Estimated amount of emission reductions over the chosen crediting period: Years Annual estimation of emission reductions in tonnes of CO 2 e Year ,871 Year ,871 Year ,871 Year ,871 Year ,871 Year ,871 Year ,871 Year ,871 Year ,871 Year ,871 Total estimated reductions (tonnes of CO 2 e) 668,711 Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tonnes of CO 2 e) 65,871 A.4.5 Public funding of the project activity: The project is fully financed by INALUM. SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity: The project applied the approved baseline methodology AM0030 Version 02: PFC emission reductions from Anode Effect mitigation at primary aluminum smelting facilities The methodology AM0030 Version 02 draws upon the latest approved version of the tool for the demonstration and assessment of additionality, which is in the case of the project Version 05. B.2 Justification of the choice of the methodology and why it is applicable to the project activity: The justification of the choice of the used methodology AM0030 Version 3 is outlined in Table 3. Table 3: Justification of the choice of the methodology for the INALUM Project Applicability Project proposed by the INALUM Primarily aimed at the avoidance of PFC emissions in INALUM uses a CWPB system. The

8 CDM Executive Board page 8 Aluminium smelting facilities that use CWPB or point feeder systems PFPB. At aluminium smelting facilities that started operations before 31 December 2002 Where at least three years of historical data are available regarding current efficiency, anode effect and Aluminium production of the industrial facility from 31 December 2002 onwards or, in case of project activities with a starting date before 31 December 2005, from 3 years prior to the implementation of the project activity onwards, until the starting date of the project activity. At facilities where the existing number of potlines and cells within the system boundary is not increased during the crediting period. The methodology is only applicable up to the end of the lifetime of existing potlines if this is shorter than the crediting period Where it is demonstrated that, due to historical improvements carried out, the facility achieved an operational stability associated to a PFC emissions level that allows increasing the Aluminium production by simply increasing the electric current in the cells. This can be demonstrated for example by providing results of pilot tests carried out by the company project aims to reduce anode effect and therefore reducing PFC emissions. Other side effects as a slight increase in the productivity are marginal (see Annex 3) INALUM s smelting plant was started to operate at January 1982 (see Annex 3) Historical data available, from April 2004 up to September 2007 (see Annex 3) Yes, number of potlines and cells within the system boundary will not be increased during the crediting periods and the emission reduction generated by the project will be monitored and accredited if the lifetime of the existing potlines ends before the crediting period. The smelter compromises before and after project implementation 3 potlines with 510 pots in total. For the existing layout and number of potlines see Annex 3. As seen in Fig. 2, alumunium production is in line with electricity consumption, means the increase of alumunium production can be achieved by increasing the electricity. The figure shows the correlation between the monthly aluminium production and the monthly electricity consumption from April 2004 until project implementation start (see Annex 3).

9 CDM Executive Board page 9 Aluminium Production (ton) 22,500 22,000 21,500 21,000 20,500 20,000 19,500 19,000 18,500 y = x R 2 = , , , , , , , ,000 Electricity Consumption (MWh) Figure 2: Graph of aluminium production and DC consumption in INALUM B.3. Description of the sources and gases included in the project boundary Referring to AM0030 version 02, the project boundary encompasses physical site of the potlines involved. In the projects case all potlines of the smelter (potline 1, 2 and 3) with a total of 510 pots are involved in the project activity. Table 3. Types of GHGs included in the project boundary under baseline and project activity Source Gas Included? Justification/Explanation CF 4 Yes This methodology is limited to project AE in cells activities aimed primarily at reducing PFC C 2 F 6 Yes emissions through AE mitigation measures. Carbon anode reaction CO 2 No Use of Na 2 CO 3 CO 2 No These additional GHG emissions are not Use of cover gas SF 6 No included in this methodology and can be Baseline CO 2 No properly taken into account using another Internal transport CH 4 No methodology. Project Activity Electricity consumption AE in cells N 2 O CO 2 CH 4 N 2 O CF 4 C 2 F 6 No No No No Yes Yes Carbon anode reaction CO 2 No Use of Na 2 CO 3 CO 2 No Use of cover gas SF 6 No CO 2 No Internal transport CH 4 No N 2 O No Electricity consumption CO 2 No CH 4 No Electricity consumption is typically reduced to some extent but it is not the main objective of this type of project activity. Thus, conservatively they are excluded from further considerations. This methodology is limited to project activities aimed primarily at reducing PFC emissions through AE mitigation measures. These additional GHG emissions are not included in this methodology and can be properly taken into account using another methodology. Electricity consumption is typically reduced to some extent but it is not the main objective of this type of project activity. Thus, conservatively they are excluded from further considerations.

10 CDM Executive Board page 10 N 2 O No B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: Step 1: Identification of baseline scenario candidates According to the methodology, the baseline scenario candidates can be the following: 1. The proposed project activity not undertaken as a CDM project activity. 2. All other plausible and credible anode effect mitigation alternatives to the project activity that deliver outputs with comparable quality, properties, and application areas: Control measures (automatic and manual control system improvements); Quality measures (changing the type of alumina). 3. No implementation of any anode effect mitigation measure. Scenario 1: The proposed project activity not undertaken as a CDM project activity The implementation of the proposed project activity without a CDM project activity is a feasible baseline candidate as it provides the same output with the same quality as the project activity. Inalum looks back on several technical improvements in the past years aiming to maximize production capacity by decreasing energy consumption, to improve operation flexibility by increasing possible operation range of amperage, to decrease anode consumption by improving anode quality and to voluntary lower anode effects as voluntary action as a part of the IAI PFC initiative. All so far implemented technical improvements were financially attractive without CDM and have also been implemented without CDM revenues. The initiative aims on sensitize the smelter owner on finding possibilities for AE mitigation measures that are also financially attractive.the project activity could possibly be implemented without CDM revenues if the additional aluminium production or electricity savings compensate the investment costs. Scenario 2: Other plausible and credible anode effect mitigation alternatives to the project activity that deliver outputs with comparable quality, properties, and application areas INALUM has invested large amounts in upgrading cells, and the investments made at each stage have been associated with clear financial benefits. INALUM founded investments for the modernization of all the potlines. All these investments were focused on the final objective of the aluminium company of increasing aluminium production but also mitigated anode effects. Namely the following upgrades have been implemented: In 1992, PT INALUM Replaced NEC (Japan) with CEGELEC (France) process control resulting in lower the anode effect frequency from 2.5 times per cell day into 2.1 times per cell day In 1997, the originally designed gate mass of 50 kilograms per shot was reduced to 20 kilograms per shot by inserting an additional plate in the gate integrated with a demand feed program. This improvement decreased the the anode effect frequency from 2.1 times per cell day to approximately 1.8 times per cell day. In 2001, the demand feed program was optimized, the metal level decreased and the bath depth increased. The result of this improvement decreased the anode effect frequency from 1.8 times per cell day to 1.0 times per cell day. In 2002, INALUM applied additional improvement to optimize several operation parameters such as: - Optimization MT cycle ( Sept 2004) - Slotted Anode ( Dec 2004)

11 CDM Executive Board page 11 - Taller Anode and stub enlargement (August 2005) - Filtered demand feed (November 2005) - Teeth blade (Jan 2007) The result of this improvement decreased the anode effect frequency from around 1.0 times per cell day into around 0.6 times per cell day. INALUM kept on searching for further aluminium production improvements, which also mitigates anode effect. Only mitigating anode effects was for INALUM not an option as it results in no financial benefit. Manual control system improvements are not considered because these are disregarded by INALUM since some operations are not safe for people involved in them. Changing the type of alumina processed is not an alternative to the project participant as well. Buyers of INALUM s aluminium have very high quality specific requirements. Based on those requirements the purchased alumina has to comply with several quality criterias such as lost of ignition, angle of response, water content, SiO 2 content, Fe 2 O 3 content, Na 2 O content, particle size. Stricter requirements would not mitigate anode effect but rather increase the aluminium quality. Questioned in this case is also the secured supply of such Alumina, as Alumina providers would certainly face difficulties to increase the already high Alumina quality. The only automatic control system improvement, which was not yet affected by aluminium production improvements measures is the improvement of the computer process control system named as scenario 1. Although this improvement results in a significant decrease of anode effect frequency, it only increases the aluminium production slightly and is therefore financially not attractive (see section B.5). Another anode effect mitigation alternative that delivers similar outputs would be to make very large investments so as to initiate a technological change that the aluminium industry itself has not yet carried out anywhere globally. The reason why this has not happened is that this would necessitate a plant to shutdown for a couple of years because of the major modifications required with the consequent loss of production, loss of revenue and loss of market share during the period of shutdown. Also such change in technology cannot be cost efficiency implemented at this point in time. Overall INALUM has already achieved low anode effect frequency and there is no additional incentive to continue improving such anode effects further in order to achieve the projected aluminium production targets. This is due to the potlines can keep stability up to physically maximum of 190kA and some of 200kA, which allows INALUM increase the production without having to mitigate anode effects. The aluminium smelter is operated at 187 ka. The earlier improvements listed above associated with reductions in anode effect frequency were primarily motivated by financial benefits what is now not possible anymore.. INALUM concluded that renewing the computer process control system (scenario 1) is at the current state the only possible mitigation measure as all other alternatives have already been implemented or are not feasible. No other alternative anode effect mitigation measure can be implemented that deliver outputs with comparable quality, properties, and application areas. Scenario 3: No implementation of any anode effect mitigation measure Continuing with the current practice is a possible baseline candidate if the same outputs or services can be provided with comparable quality as the proposed CDM project activity. To provide the same increase of aluminium production as the project activity the current needs to be increased accordingly. Figure 2 shows the technical possibility of increasing the current based on aluminium production rates during peak electricity supply. However, the limiting factor is in this case the electricity supply, which arrives from a company owned hydropower plant. Shortage is covered by grid electricity but implies much higher costs for INALUM. In this case INALUM lowers the production of aluminium, as an increase in aluminium production is financially not attractive.

12 CDM Executive Board page 12 Based on the limited electricity supply for the INALUM smelter scenario 3 is not a feasible baseline scenario. Conclusion From the above analysis it can be concluded that scenario 1 is the only baseline scenario candidate that need to be further analyzed. Step 2: Identification of the baseline scenario As only one possible baseline candidate is identified in Step 1, the candidate is equal to the baseline scenario 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): Due to the large investment and low revenues of a process control system, INALUM tried to find options for additional revenue streams. INALUM tried already several years before project start to get financing assistance by generating CERs. The following list shows the CDM relevant events of INALUM in a chronological order: 1. A letter from the Environmental Agency of North Sumatra has been sent on 29 th September 2003 to all companies including INALUM to reduce GHG emissions and to perform CDM activities related to the company s core business. 2. On 5 th October 2003, INALUM replied and informed the Environmental Agency of North Sumatra that the currently try to study any possible efforts to reduce PFC emission. However, due to sometimes high investment costs for anode effect mitigation measures, INALUM asked for information whether possible PFC reductions would get any financial assistance from selling CERs. 3. INALUM sent out a letter to the Environmental Agency of North Sumatra informing about several accomplished efforts to reduce AE e.g. a replacement of bar blade to teeth blade that resulted in PFC emission reduction on 29 th July The increase in production efficiency and therefore additional revenues has been able to finance the technical improvements. The further reduction of AE appears difficult without revenues from CERs 4. On 16 th January 2006, the Environmental Agency of North Sumatra informed INALUM about the DNA website to help searching any CDM information. 5. Around May 2006, the Environmental Agency of North Sumatera invited INALUM to attend a CDM development seminar (Business contact: CDM as Environmental Solution and Business Opportunity) on 8 th June The National Development Planning Agency sent an invitation to attend a Regional Workshop on CDM Project Development as part of ADB Technical Assistance grant in Padang from 4 th -6 th September 2006 on 28 th August During the board meeting on the 2 nd October 2006 INALUM decided to contract Alcan Alesa Blue Box system and in parallel contract a carbon asset developer to assure the necessary revenues through carbon credits. 8. On January 8 th 2007, contract has been signed between Inalum and Aclan Alesa to replace the hard- and software process control system in order to reduce AE. 9. A letter from CER Indonesia informed about a CDM development (technical) assistance scheme e.g. PIN development from IGES in cooperation with the Department of Environment on 12 th February A letter has been sent to INALUM from CER Indonesia that requested data support such as a feasibility study, emission reduction calculation and technology overview in order to develop

13 CDM Executive Board page 13 a PIN under the CDM development (technical) assistance scheme from IGES on 16 th March INALUM replied to CER Indonesia explaining their wish to cooperate with CER Indonesia on developing a CDM project and ask CER Indonesia to provide a project proposal and agreement on 16 th March CER Indonesia sent out the CDM development project proposal to Inalum on 23 rd March CER Indonesia and South Pole Carbon Asset Management Ltd. sent out an offer for CDM development project cooperation to INALUM on 16 th July The CDM development cooperation agreement is signed between South Pole Carbon Asset Management Ltd, CER Indonesia and INALUM on 30 th August Additionality is demonstrated following the Tool for demonstration and assessment of additionality Version 5. Step 1: Identification of alternatives to the project activity consistent with current laws and regulations Sub-step 1a. Define alternatives to project activity As described in Step 1 of section B.4, the identified alternatives are the following: The proposed project activity not undertaken as a CDM project activity. All other plausible and credible alternatives to the project activity that deliver outputs and/or services with comparable quality, properties and application areas; for example: - Control measures (automatic and manual control system improvements) - Quality measures (changing the type of alumina) Continuation of the current practice As mentioned above, alternative 2 and 3 are not considered as realistic and credible options for INALUM. Thus, alternative 1 should be analyzed to demonstrate the additionality of the project. Sub-step 1b. Consistency with mandatory laws and regulations There are no regulations on PFC emissions within the aluminium industry in Indonesia, so, all the baseline scenario candidates mentioned are neither required nor forbidden by any law or regulation A voluntary agreement exist between the government and industry in some countries such as Australia, New Zealand, Norway or the UK. The host country of the project activity, Indonesia, is not part of this voluntary agreement. For example, under the US EPA s voluntary aluminium industrial partnership, the US aluminium industry achieved by 1998 a 46% reduction in PFCs 2. Step 2: Investment analysis Sub-step 2a. Determine appropriate analysis method This step is to determine whether to apply simple cost analysis, investment comparison analysis, or benchmark analysis (sub-step 2b, Options I, II and III). Option I corresponds to simple cost analysis 2

14 CDM Executive Board page 14 where the scenario generates no financial or economic benefits other than CDM related income, whereas Option II represents investment comparison analysis, and Option III for benchmark. Since the project expects benefits from electricity savings and additional aluminium production, other the CDM related income, option III a benchmark analysis shall be applied to prove additionality of the project. Sub-step 2b. Option III. Apply benchmark analysis The basic parameters for the calculation of the key finance indexes are provided in Table 4 and are based on data available at investment decision. Table 4: Basic finance parameters of the project activity Parameter Value Unit Annual electricity consumption 3,854,892 MWh/yr Annual aluminium production 232,995 t-al/yr Aluminium production cost (non-electricity portion) 10,588,619 Rp./t-Al Aluminium production cost (electricity portion) 829,727 Rp./t-Al Aluminium sales price 18,423,611 Rp./t-Al Electricity purchase rate 93,840 Rp./MWh Corporate income tax rate 30% Exchange rate US$/Rp. Incremental aluminium production 97 t Al/year Additional electricity savings 5977 MWh/yr Process control system cost 5,597,900 US$ Electricity rate escalation (as inflation) 14.55% per year Inflation 14.55% per year Aluminum price escalation 10.55% per year IRR benchmark/discount rate 15.66% per year VAT rate 10.00% Operation period 10 years Average annual emission reductions 65,871 t CO2eq/year The IRR of the total investment of the project activity is provided in Table 5. Table 5: IRR of the total investment With CDM Without CDM IRR (%) 17.49% % From Table 5 we can find that the IRR of the project is negative without CDM revenue. Therefore the project faces obvious financial barriers. CDM revenues can improve the economical attraction of the project significantly. The tool for the demonstration and assessment of additional requires that a sensitivity analysis is

15 CDM Executive Board page 15 conducted to check whether, under reasonable variations in the critical assumptions, the results of the analysis remain unaltered. We have used as critical assumptions: Aluminium price Electricity price Both, aluminium price and electricity price faced significant fluctuations in the past years and therefore need to be assessed to show the additionality of the project also in a best-case scenario. Sensitivity analysis Table 6: IRR by varying sensitive parameters Yearly aluminium price increase (%) 0.00% 5.00% 10.55% 15.00% 20.00% IRR without CDM (%) % % % -8.40% -3.85% Yearly electricity price increase (%) 5.00% 10.00% 14.55% 20.00% 25.00% IRR without CDM (%) % % % % -7.99% All scenarios in the sensitivity analysis show a negative IRR of the project activity without CDM revenues. Therefore, the results of the sensitivity analysis confirm the significant commercial and financial barriers without CDM revenues Step 4: Common Practice Analysis Sub-step 4a: Analyze other activities similar to the proposed project activity It is necessary to consider similar projects in a wider area then just within the country since aluminium smelters are large investments and deal with internationally linked structures such as technology providers, raw material supply and aluminium buyers. A suitable region to apply a common practice analysis would therefore be entire Asia Alcan Alesa installed their Blue Box system worldwide in eleven smelters. Most of them have been installed in Europe and none of them in Asia. The technology provider so far developed two versions of the Blue Box system, which have been installed so far. A third version has been developed, Inalum being the first smelter to implement this new smelter. Alcan Alesa does not have any experience in installing the new new version of the Blue Bos. At the time the technology was presented to the project proponent the third version of Blue Box was still under development. In addition no CWPB smelter exists using the Blue Box process control system. Hence, no smelter uses any version of Blue Box within Asia and no smelter with a CWPB system uses any kind of Blue Box versions globally. Additionally, no smelter uses so far version three of the Blue Box globally. In conclusion it can be said that the implementation of the Blue Box system version three at Inalum is not common practice and sub-step 4b is dropped. Conclusion All steps concluded in the additionality assessment above line out the additionality and the economically and financially unfeasibility of the project. B.6. Emission reductions:

16 CDM Executive Board page 16 Note: In the following parts of the PDD the protocol is used as a reference to the USEPA and IAI Protocol for Measurement of Tetrafluoromethane (CF4) and Hexafluoromethane (C2F6) Emissions from Primary Aluminium Production (May, 2003) B.6.1. Explanation of methodological choices: Baseline emission calculation provided in AM0030 version 03 is based on the IPCC Guidelines and Good Practice Guidelines consist of three general methods corresponding to Tiers. The methodology only allows the use of Tier 3 and if applicable Tier 2. The most accurate method is Tier 3. This method uses measurements to establish a smelter-specific relationship between operating parameters (i.e. frequency and duration of anode effects or anode effect over-voltage and current efficiency) and emission factors of CF4 and C2F6. That smelterspecific relationship can be calculated according to two different methods. The slope method should be used with aggressive fast kill anode effect practices. The over-voltage method should be used with slow, repetitive anode effect kill practices. The established emission factors are then multiplied by the smelter-specific aluminium production (tonnes of aluminium) to estimate the total PFC smelter emissions. The Tier 2 approach uses default values for the technology-specific slope and over-voltage coefficients to establish a smelter-specific relationship between operating parameters (i.e. frequency and duration of anode effects or Anode Effect Over-voltage) and emissions of CF 4 and C 2 F 6. Tier 2 is applicable if it can be proven and documented that 95% of the anode effects are manually terminated while in all other cases, tier 3 is applicable. In INALUM smelter facility, prior to implementation of the project activity, 60% of anode effects are terminated automatically (see Annex 3). Since this is less then the minimum of 95% manual termination requested by AM0030 version 3 to use Tier 2, Tier 3 method is applied to calculate baseline emissions. Within the Tier 3 method the overvoltage method is considered as the most suitable and conservative option to calculate the baseline emissions as the old system killed anode effect with a slow, repetitive practice and the overvoltage method emerges in a lower emission factor when comparing with the derived emission factor based on the slope method. Both emission factors are based on on-site duct measurements before project implementation and. The baseline emission factor will remain constant during the crediting period and therefore is the same for ex-ante and ex-post calculation. The Tier 3 slope method is considered as the most suitable and more conservative approach to calculate project emissions as the new system kills anode effect in a fast aggressive practice and the slope method emerges in a higher emission factor. Project emissions The emission factors for project emissions are calculated according to the slope method. The IPCC default slope coefficient value adjusted by uncertainty is used together with the targeted AEF and AED after project implementation to determine the ex-ante CF 4 emission factor. The ex-ante weight fraction of C 2 F 6 /CF 4 was derived the on-site baseline measurements and is used to determine the exante C 2 F 6 emission factor. The on-site baseline measurements and future on-site project measurements have been and will be conducted according to the protocol. All relevant procedures and calculations regarding the protocol are described in a separate measurement protocol, as this is not a part of the methodology applied for this project acitivity (see Annex 3). The ex-post slope coefficient and C 2 F 6 /CF 4 weight fraction will be defined by conducting on-site measurements every three years or less during the crediting period following the protocol. AEF

17 CDM Executive Board page 17 and AED are measured continuously during the whole project period and will be used for ex-post emission factors calculation. The emission factors are calculated as follows: AE = AEF x AED (1) EF CF4 = Slope x AE (2) EF C2F6 = EF CF4 x F C2F6/CF4 (3) Where: EF CF4 Emission factor of CF 4 (kg CF 4 /t Al) EF C2F6 Emission factor of C 2 F 6 (kg C 2 F 6 /t Al) Slope Slope coefficient (kg PFC/t Al)/(AE-minute/cell.day) AE Anode Effect (min/cell.day) F C2F6/CF4 Weight fraction of C 2 F 6 /CF 4 (-) AEF Anode effect frequency (no.ae/cell.day) AED Anode effect duration (min) Project emissions are determined using the emission factors and the aluminium production value. The aluminium production of the year prior to project implementation is used to calculate the ex-ante project emissions. Based on the actual aluminium production during the crediting period ex-post project emissions will be calculated. The project emissions are calculated as follows: PE = (EF CF4 x GWP CF4 + EF C2F6 x GWP C2F6 ) x P Al / 1000 (4) Where: PE Project emissions (t CO 2 /year) EF CF4 Emission factor of CF 4 after project implementation (kg CF 4 /t Al) EF C2F6 Emission factor of C 2 F 6 after project implementation (kg C 2 F 6 /t Al) GWP CF4 Global Warming Potential of CF 4 (-) GWP C2F6 Global Warming Potential of C 2 F 6 (-) P Al Total aluminium production of the company (t Al/year) Baseline emissions The emission factors for baseline emissions are calculated according to the over-voltage method. The over-voltage coefficient and the weight fraction of C 2 F 6 are based on on-site PFC concentration and duct flow measurements before project implementation following the protocol (see Annex 3). The derived over-voltage coefficient of (kg CF 4 /t Al) / (mv/potday) is then used together with the anode effect overvoltage per pot day (AEO) and the current efficiency (CE) of the past nine month before implementing the new hard- and software calculate the emission factor of CF 4 (EF CF4 ). EF CF4 = OVC x AEO / CE (5) EF C2F6 = EF CF4 x F C2F6/CF4 (6) Where: EF CF4 Emission factor of CF 4 (kg CF 4 /t Al) EF C2F6 Emission factor of C 2 F 6 (kg C 2 F 6 /t Al) OVC Over-voltage coefficient ((kg CF 4 /t Al) /(mv/cell.day)) AEO Anode effect over-voltage (mv/cell.day) CE Current efficiency (%) F C2F6/CF4 Weight fraction of C 2 F 6 /CF 4 (kg C 2 F 6 / kg CF 4 )

18 CDM Executive Board page 18 The emission factors remain constant during the whole crediting period and are then used in the following equations to calculate the baseline emissions per tonne of Aluminium produced: BE t = (EF CF4 x GWP CF4 + EF C2F6 x GWP C2F6 ) / 1000 (7) Where: BE t EF CF4 EF C2F6 Baseline emissions per tonne of aluminium produced (t CO 2 /t Al) Emission factor of CF 4 during baseline (kg CF 4 /t Al) Emission factor of C 2 F 6 during baseline (kg C 2 F 6 /t Al) GWP CF4 Global Warming Potential of CF 4 (-) GWP C2F6 Global Warming Potential of C 2 F 6 (-) It should be determined if INALUM s smelter specific PFC emission pre tonne of Aluminium produced is below or above of the value published in the most recent IAI survey. If the smelter specific value is above the IAI survey value the second should be applied in terms of conservativeness. The most recently published IAI average value of the CWPB technology is 0.56 t CO 2 /t Al 3 and the determined smelter specific value is t CO 2 /t Al for potline 1, 1.29 t CO 2 /t Al for potline 2 and t CO 2 /t Al for potline 3. All smelter specific values are avobe the IAI survey value. Hence, to caclulate the baseline emissions the averge value of the IAI survey is used. The aluminium production of the year prior to project implementation is used to calculate the ex-ante baseline emissions. Based on the actual aluminium production during the crediting period ex-post project emissions will be calculated. The baseline emissions are calculated as follows: If: BE t BE IAI, BE = BE t x P Al If: BE t > BE IAI, BE = BE IAI x P Al Where: BE BE t BE IAI P Al Baseline emissions (t CO 2 /year) Baseline emissions per tonne of aluminium produced (t CO 2 /t Al) Average value of PFC emission per tonne of Aluminium produced according to the most recent published IAI Survey for the CWPB technology (t CO 2 /t Al) Total aluminium production of the company (t Al/year) Emission reduction The estimation of emission reduction from project activity is calculated based on the following equation: ER = BE PE (8) Where: ER BE PE Emission reduction (t CO 2 /year) Baseline emissions (t CO 2 /year) Project emissions (t CO 2 /year) 3 IAI report on the aluminium industry s global perfluorcarbon gsa emissions reduction programme results of the 2005 anode effect survey, 9 May 2007

19 CDM Executive Board page 19 B.6.2. Data and parameters that are available at validation: Data / Parameter: OVC Data unit: (kg CF 4 /t Al) /(mv/cell.day)) Description: Baselineover-voltage coefficient Source of data used: Calculated according to the protocol (see Annex 3) Value applied: Justification of the Following the procedure described in the protocol. choice of data or description of measurement methods and procedures actually applied : Any comment: The parameter is used to determine the baseline emission factor. It is considered as fixed along the 10-year crediting period. Data / Parameter: AEO Data unit: mv/cell.day Description: Historical anode effect over-voltage Source of data used: Log book of the aluminium smelter Value applied: 9.11 Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: The parameter is monitored over the last 9 month prior to project implementation following the requirements of AM0030 Version 3. Equipments used for measurement of anode effect over-voltage are calibrated internally in Inalum s laboratory, while tools/equipments for calibration in the laboratory are calibrated externally in LIPI/PLN/other institutions within national calibration network. Data / Parameter: CE Data unit: % Description: Historical current efficiency Source of data used: Log book of the aluminium smelter Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: The parameter is monitored over the last 9 month prior to project implementation following the requirements of AM0030 Version 3. Equipments used for measurement of current efficiency are calibrated internally in Inalum s laboratory, while tools/equipments for calibration in the laboratory are calibrated externally in LIPI/PLN/other institutions within national calibration network I Data / Parameter: F C2F6/CF4 Data unit: Kg C 2 F 6 / kg CF 4 Description: Historical weight fraction of C 2 F 6 /CF 4 Source of data used: Calculated according to the protocol (see Annex 3) Value applied: Justification of the Following the procedure described in the protocol. choice of data or description of measurement methods

20 CDM Executive Board page 20 and procedures actually applied: Any comment: This is determined prior to project implementation and used to calculate baseline and ex-ante project emissions. The weight fraction to calculate ex-post project emissions will be determined by developing simultaneous measurements of emissions, aluminium production, and anode-effect data once after project implementation and every three years or less, according to the IAI/USEPA Protocol. Data / Parameter: BE IAI Data unit: t CO 2 /t Al Description: Average value of PFC emissions per tonne of Alumunium produced for CWPB technology Source of data used: IAI survey (2006) Value applied: 0.56 t CO 2 /t Al Justification of the Following AM0030 Version 02 choice of data or description of measurement methods and procedures actually applied : Any comment: It is used to determine the baseline emission factor. The value remains fixed along the 10-year crediting period Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: AED Minutes Historical anode effect duration after implementation of the new process control system Log book of the aluminium smelter 1.72 min The value is obtained from the pots, which already have been switched to the new process control system. Equipments used for measurement of anode effect duration are calibrated internally in Inalum s laboratory, while tools/equipments for calibration in the laboratory are calibrated externally in LIPI/PLN/other institutions within national calibration network. This value will be replaced through continuously measured AED during the project period. AEF Number of anode effects per cell.day Historical anode effect frequency after implementation of the new process control system Log book of the aluminium smelter 0.15 no.ae / cell.day The value is obtained from the pots, which already have been switched to the new process control system. Equipments used for measurement of anode effect frequency are calibrated internally in Inalum s laboratory, while tools/equipments for calibration in the laboratory are calibrated externally in LIPI/PLN/other institutions within national calibration network This value will be replaced through continuously measured AEF during the

21 CDM Executive Board page 21 project period. Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: Slope (kg PFC/t Al)/(AE-minute/cell.day) Historical slope coefficient (for ex-ante PE calculation) 2006 IPCC Guidelines for National Greenhouse Gas Inventories (kg PFC/t Al)/(AE-minute/cell.day) plus 6% uncertainty to be conservative -> (kg PFC/t Al)/(AE-minute/cell.day) Following the procedure described in AM0030 Version 03 The default value will be replace by developing simultaneous measurements of emissions, aluminium production, and anode-effect data once after project implementation and every three years or less, according to the IAI/USEPA Protocol. P Al t / year Historical aluminium production Aluminium plant 242,887 t / year (The value is measured in the year before the project implementation) This parameter is monitored continuously and automatically by the smelters operation system following the International Aluminium Institute GHG Protocol (IAI, 2005). This value will be replaced through the actual aluminium produced within the project boundary during the project period. Data / Parameter: GWP CF4 Data unit: - Description: Global Warming Potential of CF 4 Source of data used: Second IPCC Assessment Report Value applied: 6,500 Justification of the Based on value stipulated in Second IPCC Assessment Report choice of data or description of measurement methods and procedures actually applied : Any comment: n.a. Data / Parameter: GWP C2F6 Data unit: - Description: Global Warming Potential of C 2 F 6 Source of data used: IPCC Guidelines Value applied: 9,200 Justification of the Based on value stipulated in Second IPCC Assessment Report

22 CDM Executive Board page 22 choice of data or description of measurement methods and procedures actually applied : Any comment: n.a. B.6.3 Ex-ante calculation of emission reductions: Ex-ante project emissions calculation AE = AEF x AED (9) EF CF4 = Slope x AE (10) EF C2F6 = EF CF4 x F C2F6/CF4 (11) Where: Value Unit Term Definition kg CF 4 /t Al EF CF4 Emission factor of CF kg C 2 F 6 /t Al EF C2F6 Emission factor of C 2 F (kg PFC/t Al)/(AEminute/cell.day) Slope Historical slope coefficient 0.26 min/cell.day AE Historical anode Effect kg C 2 F 6 / kg CF 4 F C2F6/CF4 Weight fraction of C 2 F 6 /CF No.AE/cell.day AEF Historical anode effect frequency after implementation of the new process control system 1.72 minutes AED Historical anode effect duration after implementation of the new process control system PE = (EF CF4 x GWP CF4 + EF C2F6 x GWP C2F6 ) x P Al / 1000 (12) Where: Value Unit Term Definition 70,146 t CO 2 /year PE Project emissions kg CF 4 /t Al EF CF4 Emission factor of CF 4 after project implementation kg C 2 F 6 /t Al EF C2F6 Emission factor of C 2 F 6 after project implementation GWP CF4 Global Warming Potential of CF GWP C2F6 Global Warming Potential of C 2 F 6 242,887 t Al/year P Al Total aluminium production of the company Ex-ante baseline emissions calculation EF CF4 = OVC x AEO / CE (13) EF C2F6 = EF CF4 x F C2F6/CF4 (14) Where: Value Unit Term Definition kg CF 4 /t Al EF CF4 Emission factor of CF kg C 2 F 6 /t Al EF C2F6 Emission factor of C 2 F (kg CF 4 /t Al) /(mv/cell.day) OVC Baseline over-voltage coefficient

23 CDM Executive Board page mv/cell.day AEO Historical anode effect over-voltage % CE Historical current efficiency kg C 2 F 6 / kg CF 4 F C2F6/CF4 Weight fraction of C 2 F 6 /CF 4 BE t = (EF CF4 x GWP CF4 + EF C2F6 x GWP C2F6 ) / 1000 (15) Where: Value Unit Term Definition t CO 2 / t Al BE t Baseline emissions per tonne of aluminium produced kg CF 4 /t Al EF CF4 Emission factor of CF 4 during baseline kg C 2 F 6 /t Al EF C2F6 Emission factor of C 2 F 6 during baseline GWP CF4 Global Warming Potential of CF GWP C2F6 Global Warming Potential of C 2 F 6 Since BE t is higher then the average value of PFC emission per tonne of Aluminium produced (0.56 t CO 2 /t Al) according to the most recent published IAI survey (2006) for the CWPB technology, the IAI default value BE IAI needs to be used for calculating the baseline emissions being conservative. BE IAI remains fixed over the 10-year crediting period. BE = BE IAI x P Al (16) Where: Value Unit Term Definition 136,017 t CO 2 /year BE Baseline emissions 0.56 t CO 2 /t Al BE IAI Average value of PFC emission per tonnee of Aluminium produced according to the most recent published IAI survey for the CWPB technology 242,887 t Al/year P Al Total aluminium production of the company Emission reduction calculation ER = BE PE (17) Where: Value Unit Term Definition 65,871 t CO 2 /year ER Emissions reduction 136,017 t CO 2 /year BE Baseline emissions 70,146 t CO 2 /year PE Project emissions B.6.4 Summary of the ex-ante estimation of emission reductions: Table 7: Ex-ante estimation of emission reduction due to the project activity within INALUM Year Estimation of project activity emissions (tones of CO2e) Estimation of baseline emissions (tonnes of CO 2 e) Estimation of leakage (tonnes of CO 2 e) Estimation of overall emission reduction (tonnes of CO 2 e)

24 CDM Executive Board page 24 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Year , ,017-65,871 Total (tonnes of CO 2 e) 701,455 1,360, ,711 B.7 Application of the monitoring methodology and description of the monitoring plan: B.7.1 Data and parameters monitored: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: AED minutes Anode Effect Duration Aluminium Plant Value applied in section B.5, see section B.5 This parameter is monitored continuously and automatically by the smelters operation system following the International Aluminium Institute GHG Protocol (IAI, 2005) Equipments used for measurement of anode effect duration are calibrated internally in Inalum s laboratory, while tools/equipments for calibration in the laboratory are calibrated externally in LIPI/PLN/other institutions within national calibration network N.A. AEF Number of anode effects per cell.day Anode Effect Frequency Aluminium plant Value applied in section B.5, see section B.5 This parameter is monitored daily and automatically by the smelters operation system following the International Aluminium Institute GHG Protocol (IAI, 2005) Equipments used for measurement of anode effect frequency are calibrated internally in Inalum s laboratory, while tools/equipments for calibration in the laboratory are calibrated externally in LIPI/PLN/other institutions within national calibration network N.A

25 CDM Executive Board page 25 Data / Parameter: F C2F6/CF4 Data unit: Kg C 2 F 6 / kg CF 4 Description: Weight fraction of C 2 F 6 /CF 4 Source of data to be used: Calculated according to the protocol Value of data applied for the Value applied in section B.5, see section B.5 purpose of calculating expected emission reductions in section B.5 Description of measurement The monitoring of the relevant parameters and the calculation to methods and procedures to be determine F C2F6/CF4 is done every 3 years or less, according to the applied: protocol. See Annex 4 for the calculation method. The monitoring is done following the protocol. QA/QC procedures to be In accordance with the procedure described in the protocol. applied: Any comment: The determined weight fraction will be used to determine the expost project emissions only. Ex-post baseline emission calculations are not affected by a newly determined weight fraction as the baseline emission factors are fixed over the 10-year project period. Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: Slope (kg PFC/t Al) / (AE-minute/cell.day)) Slope coefficient for ex-post PE Calculated according to the protocol Value applied in section B.5, see section B.5 The monitoring of the relevant parameters and the calculation to determine Slope is done every 3 years or less, according to the protocol. See Annex 4 for the calculation method. The monitoring is done following the protocol. In accordance with the procedure described in the protocol. N.A P Al t / year Aluminium production within the project boundary Aluminium plant Value applied in section B.5, see section B.5 Following the USEPA and IAI Protocol for Measurement of Tetrafluoromethane (CF4) and Hexafluoromethane (C2F6) Emissions from Primary Aluminum Production. This parameter is monitored monthly Equipments used for measurement of alumunium production are calibrated internally in Inalum s laboratory, while tools/equipments for calibration in the laboratory are calibrated externally in LIPI/PLN/other institutions within national calibration network N.A

26 CDM Executive Board page 26 B.7.2 Description of the monitoring plan: Inalum has set up a CDM team which consist of staffs of several units such as SRC (smelter reduction and casting), ISE (safety and environment), and SQA (quality assurance). This team will managed all data and information related to the CDM project. Data monitored needs to be divided into two categories: 1. Data collected routinely by the staff of PT.INALUM (continuously) 2. Data obtained by means of project specific measurements (at least every three years or if an event occur listed in the protocol ) 1. Data collected routinely by the staff of PT.INALUM Current Voltage Aluminium production The new software system will automatically document those parameters. These information are then analyzed and summarized in daily, monthly, and annual basis (see Annex 4). Other relevant data such as AED, AEF or AEO are calculated from the measured data automatically through the process control system. 2. Data obtained by means of project specific measurements Slope coefficient. The slope coefficient relevant values are monitored and the slope coefficient is calculated according to the protocol (see Annex 4) C 2 F 6 /CF 4 weight fraction. The C 2 F 6 /CF 4 weight fraction relevant values are monitored and the C 2 F 6 /CF 4 weight fraction is calculated according to the protocol (see Annex 4) INALUM conducts project specific measurements every three years or earlier if a change occurs in the control algorithm, changes occur in the distribution of duration of anode effects or substantial changes occur in the bath chemistry (see Annex 4). The slope coefficient and C 2 F 6 /CF 4 weight fraction are used together with AED, AEF in equation one (1), two (2) and three (3) to determine the ex-post project emission factors. The calculated emission factors are then used together with the yearly aluminium production in equation seven (4) to establish the ex-post project emissions. The baseline emissions need to be recalculated using the actual yearly aluminium production during the project crediting period instead of the yearly aluminium production in the year before the project implementation (as used in section B.6). 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) This baseline study was prepared in 29/02/2008 by INALUM and South Pole Carbon Asset Management Ltd., in cooperation with Carbon Environmental Research (CER) Indonesia. Responsible persons were Mr. Patrick Horka from South Pole Carbon Asset Management Ltd.. South Pole Carbon Asset Management Ltd. is an entity listed in an Annex 1 country.

27 CDM Executive Board page 27 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: 01/11/2007 C.1.2. Expected operational lifetime of the project activity: To be completed C.2 Choice of the crediting period and related information: The project activity will use a fixed crediting period. C.2.1. Renewable crediting period N.A N.A. C C Starting date of the first crediting period: Length of the first crediting period: C.2.2. Fixed crediting period: 01/07/2009 C Starting date: C Length: The length of the fixed crediting period will be ten (10) years. SECTION D. Environmental impacts D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: The Environmental Impact Assessment (EIA) of the INALUM was done in 12/05/2000 as required by the regulation. The EIA document was approved by the Environmental section of Ministry of Industry and Trade in 27/06/2000 through SK No.1532/UKPL/SDW-3/V/2000. There is no obligation for INALUM to redo EIA due to the implementation of the project. 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:

28 CDM Executive Board page 28 There is no negative environmental impact of the project activities expected in this project. SECTION E. Stakeholders comments E.1. Brief description how comments by local stakeholders have been invited and compiled: The stakeholder process started in the year 2003 internally informing the top management level about the potential of using CDM to reduce AE. Following the decision made by the board of INALUM using CDM to achieve the target of lowering AEF to 0.05 times/pot per day by the year 2010, the stakeholder process continued to inform all levels of employees within INALUM and further on the Environmental Management Agency who encouraged INALUM to implement a CDM project. The final stakeholder consultation was done on 15/01/2008 at the smelter plant of INALUM by inviting all entities having a working relationship with INALUM, namely: 1. North Sumatera Province s Environmental Management Agency (Bapedalda) 2. North Sumatera Province s Agency for Energy and Mineral Resources 3. North Sumatera Province s Industry and Trade Agency 4. Centre for Environmental Studies of Sumatera Utara University (PPLH Universitas Sumatera Utara) 5. Representatives of community surrounding the INALUM. E.2. Summary of the comments received: Stakeholders support the implementation of the CDM project, as it will contribute to a sustainable development in the region with lowering the yearly amount of greenhouse gas emitted by the smelter facility. Surrounding communities however asked for more background information on CDM related issues such as climate change and global warming. Some concerns also raised regarding the proper management of water. E.3. Report on how due account was taken of any comments received: INALUM will conduct activities to disseminate information on climate change and global warming related issues on behalf of their corporate social responsibility program (CSR). With regard to water quality management, Inalum has conducted several activities aiming to maintain water quality in its surrounding, i.e. by applying wastewater treatment and water purification. In addition, Inalum also planned to plant trees along the riverbank.

29 CDM Executive Board page 29 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: P.T. Inalum Street/P.O.Box: PO BOX 1 Building: City: Kuala Tanjung State/Region: North Sumatra Province Postfix/ZIP: Country: Indonesia Telephone: FAX: harmon@inalum.co.id URL: Represented by: Harmon Yunaz Title: CDM Project Manager Salutation: Mr. Last Name: Yunaz Middle Name: First Name: Harmon Department: Mobile: Direct FAX: Direct tel: ext Personal Organization: South Pole Carbon Asset Management Ltd. Street/P.O.Box: Technoparkstrasse 1 Building: City: Zurich State/Region: Postfix/ZIP: 8005 Country: Switzerland Telephone: FAX: r.heuberger@southpolecarbon.com URL: Represented by: Renat Heuberger Title: Managing Partner Salutation: Mr. Last Name: Heuberger Middle Name: First Name: Renat Department: - Mobile: Direct FAX: Direct tel: Personal

30 CDM Executive Board page 30 Annex 2 INFORMATION REGARDING PUBLIC FUNDING No fund from public national or international sources were used in any aspect of the proposed project

31 CDM Executive Board page 31 Annex 3 BASELINE INFORMATION Using the methodology, the overvoltage coefficient and the C 2 F 6 /CF 4 fraction for the baseline need to be calculated according to the protocol. This PDD only includes information following and requested by AM0030 Version 3. All other information can be found in a separate on-site baseline measurement report written by a PFC measurement expert who also conducted the measurements and in a separate protocol file. All the calculations and methods to determine the overvoltage coefficient (baseline scenario), slope coefficient (after project implementation) and the C 2 F 6 /CF 4 fraction are outlined in the protocol file based on the measurement report. A document list compromises all relevant files needed for justifying and clarification purposes

32 CDM Executive Board page 32 Annex 4 MONITORING INFORMATION Using the methodology the slope coefficient for the ex-post project need to be calculated according to the protocol. Also measurements, accuracy of the validation and the quality control follows the protocol. ACM0030 version 3 describes the procedure and equations for calculating project and baseline emissions from monitored data. For the specific project, the methodology is applied through a separate spreadsheet model

33 CDM Executive Board PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03 page 33