Report No: QT-EC R2 08/567

Transcription

1 VALIDATION REPORT SUZHOU QIZI MOUNTAIN LANDFILL GAS RECOVERY PROJECT Report No: QT-EC R2 08/567 TÜV NORD CERT GmbH JI/CDM Certification Program Langemarckstrasse Essen, Germany Phone: Fax: Date:

2 P-No.: QT-EC R2 08/567 Project No.: Report No: QT-EC R2 08/567 Approved by: Mr. Eric Krupp Client: South Pole Carbon Asset Management Ltd. Summary/Opinion: Organisational unit: Client ref.: Mr. Renat Heuberger The South Pole Carbon Asset Management Ltd. has commissioned the (CP) to validate the project: Suzhou Qizi Mountain Landfill Gas Recovery Project with regard to the relevant requirements of the Gold Standard for Gold Standard VER project activities, as well as criteria for consistent project operations, monitoring and reporting. The project activity exports the electricity, produced with a landfill gas utilization plant to the East China Power Grid. The project intends to reduce GHG emissions to the extent of equivalent electricity generated by fossil fuels based power plants of the grid. A risk based approach has been followed to perform this validation. In the course of the pre-validation, 11 Corrective Action Requests (CARs) and 4 Clarification Requests (CRs) were raised and successfully closed. The review of the project design documentation and additional documents related to baseline and monitoring methodology; the subsequent background investigation, follow-up interviews and review of comments by parties, stakeholders and NGOs have provided TÜV NORD JI/CDM CP with sufficient evidence to validate the fulfilment of the stated criteria. In detail the conclusions can be summarised as follows: - The project is in line with all relevant host country criteria (China) and all relevant GS requirements for VER. - The sustainable development is suffiently justified and referenced. - The project additionality is sufficiently justified in the PDD. - The monitoring plan is transparent and adequate. - The calculation of the project emission reductions is carried out in a transparent and conservative manner, so that the calculated emission reductions of 822,338 tco 2 e is most likely to be achieved within the 7 years 1 st crediting period (April March 2014). The conclusions of this report show, that the project, as it was described in the project documentation, is in line with all criteria applicable for the validation. Report No.: Subject Group: QT-EC R2 08/567 Environment Report title: Suzhou Qizi Mountain Landfill Gas Recovery Project Work carried out by: Mr. Li Yong Jun Ms. Yanwei Chen Work verified by: Mr. Eric Krupp Date of this revision: Rev. No.: Number of pages: Indexing terms Climate change CDM Validation Kyoto Protocol No distribution without permission from the Client or responsible organisational unit Limited distribution Unrestricted distribution Page 2 of 109

3 P-No.: QT-EC R2 08/567 Abbreviations BAU CA CAR CDM CER CH4 CO 2 CO 2 e CP CR DNA EIA GHG GS HCA IRR ISC MSC LFG LoA MP NCV ODA PDD PP QC/QA SD UNFCCC VER VO VVM Business as usual Corrective Action / Clarification Action Corrective Action Request Clean Development Mechanism Certified Emission Reduction Methane Carbon dioxide Carbon dioxide equivalent Certification Program Clarification Request Designated National Authority Environmental Impact Assessment Greenhouse gas(es) Gold Standard Host Country Approval Internal Rate of Returns Initial Stakeholder Consultation Main Stakeholder Consultation Landfill Gas Letter of Approval Monitoring Plan Net Calorific Value Official Development Assistance Project Design Document Project Proponent Quality control/quality assurance Sustainable Development United Nations Framework Convention on Climate Change Verified Emission Reduction Voluntary Offset Validation Verification Manual Page 3 of 109

4 P-No.: QT-EC R2 08/567 Table of Contents Page 1 INTRODUCTION Objective Scope GHG Project Description Project Scope Project Parties Project Entities Project location Technical project description 9 2 VALIDATION TEAM METHODOLOGY Validation Protocol Review of Documents Follow-up Interviews Resolution of Clarification and Corrective Action Requests Initial and Public Stakeholder Comments ising the report 15 4 VALIDATION FINDINGS Participation Requirements/ Host Country Check Project type eligibility screen Project design Baseline Additionality Crediting Period Monitoring Plan Calculation of GHG Emissions Sustainable Development Environmental Impacts Comments by Local Stakeholders Pre-feasibility assessment 26 5 COMMENTS BY PARTIES, STAKEHOLDERS AND NGOS VALIDATION OPINION REFERENCES...32 Page 4 of 109

5 P-No.: QT-EC R2 08/567 ANNEX: VALIDATION PROTOCOL...37 CERTIFICATES Page 5 of 109

6 P-No.: QT-EC R2 08/567 1 INTRODUCTION South Pole Carbon Asset Management Ltd. has commissioned the TÜV NORD JI/CDM Certification Program (CP) to validate the project: Suzhou Qizi Mountain Landfill Gas Recovery Project with regard to the relevant requirements for Gold Standard VER project activities. 1.1 Objective The purpose of this validation is to have an independent third party assess the project design. In particular the project's baseline, the monitoring plan (MP) and the project s compliance with - the requirements of the Gold Standard for Voluntary Offset Projects, - relevant decisions and requirements by the UNFCCC - other relevant rules, including the host country (China) legislation and sustainability development criteria are validated in order to confirm that the project design as documented is sound and reasonable and meets the stated requirements and identified criteria. Validation is seen as necessary to provide assurance to stakeholders on the quality of the project and its intended generation of voluntary emission reductions (VERs). 1.2 Scope The validation scope is given as an independent and objective review of the project design, the project s baseline study and monitoring plan (based on ACM0001/ Version 8: Consolidated baseline and monitoring methodology for landfill gas project activities ) which are included in the PDD and other relevant supporting documents. The items covered in the validation are described below: Gold Standard & Host Country Criteria - Gold Standards requirements, as stated in the Gold Standard Validation and Verification Manual for Voluntary Offset Projects (June 2007) and following documents - Host country requirements / criteria VER Project Description - Project design - Project boundaries Page 6 of 109

7 P-No.: QT-EC R2 08/567 - Predicted VER project GHG emissions Project Baseline - Baseline methodology - Baseline GHG emissions Monitoring Plan - Monitoring methodology - Indicators/data to be monitored and reported - Responsibilities Background investigation and follow up interviews Stakeholder consultation - Initial stakeholder consultation as per GS - Review of comments validation reporting with CARs & CRs, if any validation reporting. The information included in the PDD and the supporting documents were reviewed against the requirements and criteria mentioned above. The TÜV NORD JI/CDM CP has, based on the recommendations in the Validation and Verification Manual /VVM/,/GS- VVM/, employed a risk-based approach in the validation, focusing on the identification of significant risks for project implementation, sustainability criteria and the generation of VERs. The validation is based on the information made available to TÜV NORD JI/CDM CP and on the contract conditions. TÜV NORD JI/CDM CP can not be held liable by any entities for making its validation opinion based on any false or misleading information supplied to it during the course of validation. The validation is not meant to provide any consulting to the project participant. However, stated requests for clarifications and/or corrective actions may provide input for improvement of the project design. 1.3 GHG Project Description Project Scope The considered GHG project can be classified as a VER project in the sector given in Table 1-1 (according to List of Sectoral Scopes of UNFCCC). Table 1-1: Project Scope(s) No. Project Scope 1 Energy industries (renewable - / non-renewable sources) Page 7 of 109

8 P-No.: QT-EC R2 08/567 Under the GS the project qualifies under type A.1 renewable energy, A landfill gas Project Parties China and Switzerland are the two parties involved in the project activity. Both of them are not considered as project participants Project Entities The following entities are involved in the developing of the project: Project Participant 1 Everbright Evnironment and Energy (Suzhou) Landfill Gas to Energy Co., Ltd. Qizi Mountain, Mudu County, Wuzhong District, Suzhou City Suzhou Jiangsu Province P. R. China Contact person: Mr. Zhang Yunyue Chairman Tel No: Fax No: Project Participant 2 Contact Person: South Pole Carbon Asset Management Ltd. Technoparkstr. 1 Zurich Zurich Switzerland, 8005 Mr. Renat Heuberger Tel No: Fax No: r.heuberger@southpolecarbon.com Project location The proposed project is implemented at Qizi Mountain, Mudu County, Wuzhong District, Suzhou City, Jiangshu Province, P.R.China. The unique identification is provided in table 1-2. Page 8 of 109

9 P-No.: QT-EC R2 08/567 Table 1-2: Project Location Host Country Region: Project location address: Coordinates Latitude: Longitude: P. R. China Jiangsu Province Qizi Mountain, Mudu County, Wuzhong District, Suzhou City N E Technical project description The proposed project activity is a landfill gas to power project on Qizi Mountain, Mudu County, Wuzhong District, Suzhou City, Jiangsu Province, P. R. China. The project consists of 2 stage, each has 2 electricity generating units with a capacity of 1.25MW. Thus the total installed capacity of the project is 5MW. Electricity from the project is delivered to East China Power Grid (ECPG). The total estimated annual emission reductions are 117,477 tco 2 e per year during the 1 st 7 years crediting period. The key parameters for the Project are given in table 1-3: Table 1-3: Key parameters of the proposed VER project activity after full implementation Engines Type: TBG620V16K Manufacturer: Deutz Power Systems GmhH & Co. KG Quantity: 4 Rated Power per unit: 1294 kw Technical description: Modern stationary 4-stroke Otto gas engine with lean-mix conbustion; 16 cylinder V-engine Generators Type: DIG 120 i/4 Manufacturer: AVK Deutschland GmbH & Co. KG Quantity: 4 Rated Capacity: 1250 kw Technical description: Rotary current internal pole synchronous generator. Three phase, brushless, self-exciting, self regulating The electricity generated will be jointly connected to East China Power Grid through Suzhou City Power Grid. The estimated emission reduction (April 2007 April 2014) is 822,338 tco 2e. Page 9 of 109

10 P-No.: QT-EC R2 08/567 2 VALIDATION TEAM The Validation Team is led by - Yong Jun Li, TUV NORD Shanghai, China. Mr. Li, Dipl. In Environment Technology, is a TÜV-CERT Lead auditor for ISO 9001/14001 and OHSAS Currently he is In-charge-CDM Services for TÜV NORD China operation. He is an appointed assessor for JI/CDM certification program of TÜV NORD CERT GmbH and participated already in several CDM project validation. For this validation he was assisted by: - Yan Wei Chen, TUV NORD Shanghai, China. Ms. Chen, Beng. In Environment Engineering and MSc. In Air Pollution Management & Control, is an appointed JI/CDM Expert in the JI/CDM Certification Program of TÜV NORD. The validation report is verified by: - Eric Krupp. He is an expert in the field of environmental approval procedures as well as national and international Emission Trading. He worked in different projects in the framework of the German allocation procedure and the verification of the annual CO2 emission reports. Mr. Krupp is an appointed JI/CDM senior assessor and the deputy of TÜV NORD JI/CDM certification program. 3 METHODOLOGY The validation of the project was carried out from June 08 to December 08. It was divided into two phases: the pre-validation and the validation phase. The prevalidation consisted of the following three phases: A desk review of the PDD (incl. annexes) and supporting documents with the use of a customised validation protocol according to the Validation and Verification Manual /VVM/, /GS-VVM/ ; Back ground investigation and follow-up interviews with personnel of the project proponent, the consultant, legal authorities and other stakeholders; Reporting of validation findings taking into account the public comments received on TUV NORD website. The draft validation report includes Corrective action and Clarification Requests (CAR and CR) identified in the course of this validation. A Corrective Action Request is established if mistakes have been made in assumptions or the project documentation which directly will influence the project results, the requirements deemed relevant for validation of the project with certain characteristics have not been met or Page 10 of 109

11 P-No.: QT-EC R2 08/567 there is a risk that the project would not be registered by the UNFCCC or that emission reductions cannot be verified and certified. A Clarification Request is issued where information is insufficient, unclear or not transparent enough to establish whether a requirement is met. The final validation started after issuance of proposed corrective action (CA) of these CAR and CR by the project proponent. The validator has assessed the proposed CA with a positive result and after the closure of these CAR and CR the project proponent has issued the final version of the PDD. On the basis of this the final validation report and opinion were issued. 3.1 Validation Protocol In order to ensure consideration of all relevant assessment criteria, a validation protocol was used. The protocol shows, in a transparent manner, criteria and requirements, means of verification and the results from pre-validating the identified criteria. The validation protocol serves the following purposes: - It organises, details and clarifies the requirements that a CDM resp. VER GS project is expected to meet; - It ensures a transparent validation process where the independent entity will document how a particular requirement has been validated and the result of the determination. The validation protocol consists of three tables: Table 1 (Requirement Checklist); Table 2 (Gold Standard Specific Checklist) and Table 3 (Resolution of Corrective Action and Clarification Request). The completed validation protocol is enclosed in the annex to this report, identifying 11 Corrective Action Requests and 4 Clarification Requests. Page 11 of 109

12 P-No.: QT-EC R2 08/567 Validation Protocol Table 1 and 2: Requirement checklist Checklist Question Reference Means of verification (MoV) Comment and/or Conclusion The various requirements in Table 1 are linked to checklist questions the project should meet. The checklist is organised in seven different sections. Each section is then further sub-divided. The lowest level constitutes a checklist question. 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. 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. This is either acceptable based on evidence provided (), or a Corrective Action Request (CAR) due to non-compliance with the checklist question (See below). Clarification is used when the validation team has identified a need for further clarification. Validation Protocol Table 3: Resolution of Corrective Action and Clarification Requests 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 Corrective Action Request or a Clarification Request, these should be listed in this section. Reference to the checklist question number in Table 2 where the Corrective Action Request or Clarification Request is explained. The responses given by the Client or other 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 Conclusion. Figure 1: Validation protocol tables Page 12 of 109

13 P-No.: QT-EC R2 08/ Review of Documents The draft PDD submitted by South Pole Carbon Asset Management Ltd. in June 2008 and supporting background documents related to the project design and baseline were reviewed. Furthermore, the validation team used additional documentation by third parties like host party legislation, technical reports referring to the project design or to the basic conditions and technical data. The documents that were considered during the validation process are given in chapter 7 of this report. They are listed as follows: Documents provided by the project proponent (Table 7-1) Background investigation and assessment documents (Table 7-2) Websites used (Table 7-3). In order to ensure the transparency of the decision making process, the reference codes listed in tables 7-1 to 7-3 are used in the validation protocol and as far applicable in the report itself. 3.3 Follow-up Interviews On 2 nd and 3 rd June 2008, the TÜV NORD JI/CDM CP performed on-site interviews and subsequently telephone interviews with the project owner, project developer, plant operating personnel and stakeholder to confirm selected information and to resolve issues identified in the document review. The key interviewee and main topics of the interviews are summarised in Table 3-1. Table 3-1 Interviewed persons and interview topics Interviewed Persons / Entities Project proponent representatives /IM01/ Interview topics - Chronological description of the project activity - Technical details of the project realisation and Project Design Report - Approval procedures and status - Quality management system - Monitoring and measurement equipment - Crediting period and its starting date - Project activity starting date - Power purchase agreement with grid - Sustainable development benefits because of project - Analysis of local stakeholder consultation Page 13 of 109

14 P-No.: QT-EC R2 08/567 Interviewed Persons / Entities Interview topics - Operational data technical specification - Training & competency of the staff members w.r.t project management, monitoring and reporting Project consultant representatives /IM02/ Local Stakeholders /IM03/ - Editorial aspects of PDD - Methodology selection aspects - Baseline study, leakage and additionality - Details of emission reduction calculation - Job opportunities - Stakeholder process - Concerns related to the projects 3.4 Resolution of Clarification and Corrective Action Requests In order to remedy any mistakes, problems or any other outstanding issues which needed to be clarified for positive conclusion on the project design, CARs and CRs were raised. In this validation report 11 CARs and 4 CRs are raised. The CARs / CRs are documented in Annex and addressed in section Initial and Public Stakeholder Comments Initial Stakeholder Consultation meeting of locals have been carried out on 10 th of April 2008 in Qizi Mountain. Other stakeholder such as GS and NGOs were consulted via . The comments received by the stakeholders have been summarized in the initial stakeholder consultation report which was made publicly available. All comments received (fulfilled questionnaires) have been checked by the validator. There is no negative feedback from the initial stakeholder consultation. Main stakeholder consultation meeting of locals have been carried out on 15 th October 2008 in Qizi Mountain. Other stakeholder such as GS and NGOs were consulted via . The comments received by the stakeholders have been summarized in the main stakeholder consultation report which was made publicly available. All comments received (fulfilled questionnaires) have been checked by the validator. There is no negative feedback from the main stakeholder consultation. Page 14 of 109

15 P-No.: QT-EC R2 08/567 PDD and other relevant documents were also published on southpole website for 2 month. No comments were received. 3.6 ising the report The draft validation report was submitted to the project proponents. After reviewing the revised and resubmitted project documentation; resolving the CRs & CARs raised and outstanding concerns TÜV NORD JI/CDM CP issues this final validation report and opinion. Page 15 of 109

16 P-No.: QT-EC R2 08/567 4 VALIDATION FINDINGS In the following protocol the findings from the desk review of the draft PDD, visits, interviews and supporting documents are summarised. The results are shown in table 4-1: Table 4-1: Summary of CAR and CR issued Validation topic 1) No. of CAR No. of CR General description of project activity (A) - Project boundaries - Participation requirements - Technology to be employed - Contribution to sustainable development Project baseline (B) - Baseline Methodology - Baseline scenario determination - Additionality determination - Calculation of GHG emission reductions Project emissions Baseline emissions Leakage - Emission reductions - Monitoring Methodology - Monitoring of Project emissions Baseline emissions Leakage Sustainable development indicators / environmental impacts - Project management planning Duration of the Project / Crediting Period (C) 1 - Environmental impacts (D) - - Stakeholder Comments (E) - - Project Eligibility (A) - - SUM ) The letters in brackets refer to the validation protocol For an in depth evaluation of all validation items it should be referred to the validation protocol (Annex). Annex also includes all CARs and CRs (Table 3). Page 16 of 109

17 P-No.: QT-EC R2 08/ Participation Requirements/ Host Country Check Since this project activity is under the GS VER scheme a letter of approval is not a prerequisite for the registration. China has not a quantitative target for emission reductions under the Kyoto Protocol; hence the country is eligible for voluntary offset projects. 4.2 Project type eligibility screen The project activity is a landfill gas to power project. Under the GS it is eligible under type A.1 renewable energy, A Landfill gas. The project qualifies as a large scale project activity and meets the criteria of emission reductions above the limit of 60,000 t CO 2e per year. Socio-economic and environmental impacts as specified in Appendix C of the GS Validation & Verification Manual for CDM Projects have been assessed in an appropriate manner within the framework of the EIA /EIA/. Accordingly the project type is eligible for the Gold Standard. Per GS rules, for LFG-to-Energy projects, a minimal utilization threshold for methane usage of 65% averaged over one year should be met, which means 65% of collected methane should be utilized. This project intends to comply with the rule because it only involves in electricity generation and zero leakage would be ensured. Nevertheless during the validation the CR A3 has been raised and successfully closed. Please refer table 3 for further information. 4.3 Project design The objective of this 5000 kw landfill gas to power project is to reduce GHG emissions by destroying methane which would otherwise be vented into atmosphere and by replacing electricity of the East China Power Grid which predominantly uses fossil fuels. The project activity is estimated to reduce GHG emissions equivalent to 114,383 tco 2 e annually during the 1 st 7 year crediting period. The proposed GS VER project has two stages, with the same technology and components, but different start date. Both the two stages are based on the same landfill and share the same gas collection system. Each stage has 2 electricity-generating units, comprised of engine, generator, etc. The capacity of each unit is 1.25MW. The total installed capacity of the project is 5MW. The technology used in the project activity is environmentally safe and sound. The feasibility of technology has been approved by the local municipality /AP//AEIA/. In the course of the project validation, the following - CAR A1 and CR A1, regarding the project design and the correct completion of the PDD - were raised and successfully closed out. Page 17 of 109

18 P-No.: QT-EC R2 08/567 For an in depth evaluation of all validation items it should be referred to the validation protocol (Annex). Annex also includes all CARs and CRs (Table 3). 4.4 Baseline The selected baseline methodology is in line with the approved baseline methodology ACM0001 Consolidated baseline and monitoring methodology for landfill gas project activity (Version 08). As prescribed in the baseline methodology, since the project does not involve in thermal energy generation, the baseline emission consists of emission from destroying of CH4 and the displacement of electricity produced by power plants connected to the grid. The calculation of amount of methane that would have been destroyed/combusted during the year, in tonnes of methane (tch4) in project scenario is according to Tool to determine methane emissions avoided from disposal of waste at a solid waste disposal site. The emission reduction brought by displacement of grid electricity will be calculated as the kwh produced/ displaced by the project multiplied by an emission coefficient of the grid (measured in kg CO2e/kWh). In this project, the grid emission coefficient of East China Power Grid is calculated by combined margin method consisting of the combination of operating margin (OM) and build margin (BM) according to the procedures prescribed in the Tool to calculate the emission factor for an electricity system (version 1). OM and BM are determined ex-ante and thus remain fixed throughout the crediting period. The required data for baseline emission coefficient are sourced from latest published data of Chinese DNA /GEF/. The ER y of the project activity during the crediting period is the difference between the baseline emission (BE y ), project emission (PE y ) and leakage (L y ). Baseline emission: BE y = ( MD + project, y MDBL, y ) GWPCH 4 + ELLFG, y * CEFelec, BL, y ETLFG, y * CEF ther, BL, y MD project,y and MD BL,y calculation: MD project,y =BE CH4,SWDS,y /GWP CH4 BECH4,SWDS,y is calculated as per the Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site. y -k j (y-x) BECH4,SWDS,y = ϕ *(1- f) *GWPCH4 *(1- OX) *16/12* F* DOCf * MCF W * DOC *e (1 x = 1 j j,k j e Degassing efficiency is considered during calculation. MD MD AF BL, y = project, y * k j ) Page 18 of 109

19 P-No.: QT-EC R2 08/567 Zero is applied for AF after considering prevailing practices in China. CEF elec,bl,,y calculation: The grid emission coefficient of East China Power Grid is calculated by combined margin method consisting of the combination of operating margin (OM) and build margin (BM) according to the procedures prescribed in the Tool to calculate the emission factor for an electricity system (version 1). China DNA had calculated OM and BM for each sub-grid and published the results /GEF/. OM and BM are determined ex-ante and thus remain fixed throughout the crediting period. This approach does not call for reviewing the grid emission co-efficient every year. All the required data for baseline emission coefficient are sourced from China Energy Statistical Yearbook, China Electric Power Yearbook, and 2006 IPCC Guidelines for National Greenhouse Gas Inventories. The EF OM,y is calculated to be tco 2e /MWh. The EF BM,y is calculated as tco 2e /MWh. In accordance with the Tool to calculate the emission factor for an electricity system, weight factors of w OM = w BM = 0.5 have been used and the resultant grid emission factor (EF y or CEF elec,bl,y ) works out as tco 2e /MWh. The validation team is convinced of the result of the emission coefficient calculation. It is deemed to be adequate, transparent and conservative. The annual electricity delivered to the grid varies with year, since total amount of landfill gas generated is not constant. Altogether the project activity reduces emissions of 822,338 tco 2e during the 7 year 1 st crediting period. Nevertheless during the validation the CAR B1, CAR B6 and CR B1 have been raised and successfully closed. Please refer table 3 for further information. Page 19 of 109

20 P-No.: QT-EC R2 08/ Additionality Public announcement check Early in 2005, before the start of the project activity, the project owner seriously considered CDM /CDM/ to reduce investment risk and went on the application process. In October 2006 it signed CDM development contract with a CDM developer. /CDM-2/ The PP confirmed oral and in writing /CDM-3/ that during the one year gap before the Everbright group finally made decision to go for CDM several CER buyers and CDM consultants contacted the Everbright Group regarding this potential CDM project. Furthermore the PP confirmed that considering the long period required for contracts to go through the parent company in Hongkong and also with the confidence of the CDM market, the Everbright Group started the process of project implementation and CDM related work in parallel /CDM-3/. However, due to the fact that Everbright Group is a Hongkong listed Company and China DNA did not have a policy to deal with Hongkong Listed Company at that time, the project owner failed to get LoA and got stuck in CDM process. On April 6 th 2007, the Board meeting decided to turn to seek for Voluntary Offset Revenue and develop the project as a VER project It has been checked and validated that the project has not been announced for implementation without seeking carbon finance. Nevertheless during the validation CAR B5 has been raised and successfully closed. Please refer table 3 for further information. Additionality Tool Check Additionality of the project activity has been demonstrated in the PDD according to the currently available version of the UNFCCC Tool for demonstration and assessment of additionality (version 5) /TA/ as per the GS requirement for VER project activities. The individual arguments to justify the additionality were summarised in the table below. This table also includes the assessment of the GS validation team. Step Argument PP Assessment of the GS validation team 1 1a Step 1. Identification of alternatives to the project activity consistent with current laws and regulations Define alternatives to the project activity: The project plausible alternatives have been arrived as: 1. Atmospheric release of the landfill gas; equivalent amount of electricity is supplied from East The alternatives given in the step 1a can be considered as plausible and credible for the PP. Scenarios 1 and 2 are plausible alternatives. step passed step not passed not applicable Page 20 of 109

21 P-No.: QT-EC R2 08/567 Step Argument PP Assessment of the GS validation team 1b China Power Grid 2. Proposed project activity not undertaken as a VER project activity Consistency with mandatory laws and regulations: The alternatives described above comply with all applicable legal and regulatory requirements. Both alternatives are in line with the national laws and regulations. 2 Step 2. Investment analysis Determine appropriate analysis method 2a Benchmark analysis is chosen as the appropriate analysis method 2b Option III. Benchmark Analysis 8% is chosen as the benchmark of project IRR according to The Economic Assessment Method and Parameters for Construction Projects (version 03). Calculation and comparison of financial indicators Benchmark analysis is appropriate analysis method. According to The Economic Assessment Method and Parameters for Construction Projects (version 03), project IRR benchmark for waste incineration sector is 8%. The project owner s main area is waste incineration. There is no benchmark for landfill gas utilization. The choice of project IRR benchmark 8% is appropriate. step passed step not passed not applicable 2c The project IRR of both two stages are below benchmark, indicating that the project activity without VER revenue is not financially attractive. If considering the two stages together, the IRR with VER revenue is above benchmark. Sensitivity analysis The calculation and comparison of financial indicators is assessed as credible and conservative. Sensitivity Analysis by varying ± 10 % of three critical parameters (Total 2d investment, O&M cost and sales revenue) confirms that the proposed project activity is unlikely to be finically attractive. 3 Step 3. Barrier Analysis The sensitivity analysis is assessed as credible. Page 21 of 109

22 P-No.: QT-EC R2 08/567 Step Argument PP Assessment of the GS validation team 3a Investment Barrier Landfill gas collection and utilization faces investment barrier because landfills are operated by local governments and by far most local governments are lack of financial resources and technical abilities to do landfill gas collection and utilization. Technological Barrier LFG techniques in China are not so advanced and most LFG equipments are from abroad, resulting technological barrier. Prevailing Practice Barriers According to statistics, the landfill gas collection and utilization in China are still at a less developed stage and is not the prevailing practice. In the barrier analysis investment barriers as well as technological and prevailing practice barriers have been identified. Argument not justified Argument not convincing Argument justified but not decisive Argument justified / significant step passed step not passed not applicable 3b The identified barriers would obviously not have prevented alternative 1. 4 Step 4. Common practice analysis 4a and 4b 4 LFG projects are identified. 3 are registered as CDM projects and the remaining one is a demonstration project with GEF support. Argument not justified Argument not convincing Argument justified but not decisive Argument justified / significant Conclusion that the project is not common practice is assessed as appropriate. step passed step not passed not applicable step passed step not passed not applicable Assessment of the validation team project is additional project is not additional The additionality provided in the PDD is well substantiated with references and documents (please refer table 7-1). Investment analysis shows that the project is not financially attractive without carbon finance. The project activity, as a LFG collection and utilization project, also faces investment barrier, technology barrier and prevailing practice barrier. The common practice analysis shows the proposed project activity is not common practice. There are only 4 LFG collection and utilization project which are in operation or under construction in Jiangsu Province. 3 of them are registered CDM projects while 1 has GEF fund support. Page 22 of 109

23 P-No.: QT-EC R2 08/567 The provided evidences and references have been approved by the validation team to arrive at the conclusion that the revenues from the emission reductions are essential to reduce the investment risks to a level that private investment can be done for this project. Nevertheless during the validation CAR B2, CAR B3 and CAR B4 have been raised and successfully closed. Please refer table 3 for further information. ODA Additionality Screen No ODA funds were used to finance the project activity. This was also confirmed by the project developer and was assessed with the business plan /ODA/. Nevertheless during the validation the CR A2 has been raised and successfully closed. Please refer table 3 for further information. Conservative approach Conservative parameters values are used during estimating CH4 destroyed using the methodology tool Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site Version 04. Degassing efficiency is considered. Grid emission factor has been determined according to Tool to calculate the emissions factor for an electricity system Version 01, using the same approach as published by China DNA /GEF/. TÜV NORD JI/CDM CP confirms that the baseline scenario has been established in a conservative manner and is in compliance with the applied version 8 of the methodology ACM0001 /ACM0001/ and relevant methodology tools /TEF//EME/. Nevertheless during the validation CAR B6 has been raised and successfully closed. Please refer table 3 for further information. Technology transfer and / or knowledge innovation Sufficient evidence has been provided to TÜV NORD JI/CDM CP that there are benefits for the project activity due to technology transfer as well as knowledge innovation. Benefits results from - The technology transfer (partially) from Germany and other countries to the host country; - showing an innovative way in landfill gas utilization; - training of the local staff of the plant and overseas training opportunity for local officials. CAR A2 was raised during the validation process regarding the technology transfer and training opportunities and successfully closed. Page 23 of 109

24 P-No.: QT-EC R2 08/ Crediting Period The starting date of the project as mentioned in the PDD under Section C.1.1. is November The intended 1 st crediting period of the project is 7 years, starting from 1 st April 2007 or from the day two years prior to the date of registration of the GS VER project activity, whichever is later. The starting date of the project activity as mentioned in the PDD under Section C.1 and verified by the validation team is November 2005, the start of construction for stage I. The project life time is 18 years, indicated in the Section C.1.2 of the PDD was verified by the validation team. However, CAR C1 has been raised during validation and was successfully closed, please refer table 3 for details. 4.7 Monitoring Plan The project applies the monitoring methodology ACM0001: Consolidated baseline and monitoring methodology for landfill gas project activities Version 08. The project category is landfill gas in category A as per the GS eligible project types. The project methodology consists of monitoring the electricity generation, electricity internal consumption, amount of landfill gas used for electricity generation, temperature, pressure, methane fraction of the landfill gas, operation hour of power plant, laws and regulations regarding to waste management system in China, the ratio between the LFG collected and the LFG used within the engines on average each year, as well as some key SD indicators. The procedure for calibration, accuracy and maintenance of monitoring equipment are clearly mentioned as per QA/QC procedure of PDD. Five SD indicators will be monitored as indicated in section D of the PDD which have been identified as crucial for the sustainable development. They are related to the air quality, employment, etc. Nevertheless CAR B7 and CAR B8 were raised related to the monitoring plan and tables in the PDD and were successfully closed. Please refer to Table 3 of Validation Protocol for Corrective Action Request (CARs). 4.8 Calculation of GHG Emissions Methodologies for calculating emission reductions are documented. The project intends to reduce carbon dioxide (CO 2 ) emissions by generating electricity from a Page 24 of 109

25 P-No.: QT-EC R2 08/567 landfill gas collection and utilization project, which would be exported to East China Power Grid of China. Project emission: The project emission is zero. Leakage: Leakage can be ignored according to the methodology. The emission reduction calculation was reviewed by the validation team. All underlying data/ values are transparent presented and assessed to be adequate. Nevertheless CAR B6 has been raised related to the monitoring plan and tables in the PDD and were successfully closed. Please refer to Table 3 of Validation Protocol for Corrective Action Request (CARs). 4.9 Sustainable Development The sustainable development indicators relevant for the project activity have been assessed using the Gold Standard Sustainable Development (SD) assessment matrix. The scoring is reproducible and the justification considers existing information like results from the environmental impact assessment and the local stakeholder consultation in a sufficient manner /EIA//SCD/. All considered changes are relative to the baseline situation. In the consultation the scoring of the SD matrix has been discussed in detail with local stakeholders. The results of this consultation confirm the positive impacts of the project in terms of sustainable development. The total score is +9. There is no sub-total score that is negative and none of the indicators have a negative score. Comprehensive information has been provided to TÜV NORD JI/CDM CP suitable to evidence the data and statements. Crucial indicators have been identified and included in the monitoring plan. Nevertheless CAR A2 has been raised related to the monitoring plan and tables in the PDD and were successfully closed. Please refer to Table 3 of Validation Protocol for Corrective Action Request (CARs) Environmental Impacts The environmental impact assessment is mandatory in China. It was carried out in 2005 and was approved on 3 rd January 2006 /EIA/. The EIA has been checked by the validation team inter alia w. r. t. the specific aspects of the appendix C of the GS. As per communication between the Gold Standard and Southpole this procedure could be accepted. Environmental and social-economic impacts were discussed in detail. Page 25 of 109

26 P-No.: QT-EC R2 08/567 The validation team concluded that the project activity will cause only positive impacts in terms of sustainable development and no negative impacts in terms of the environment Comments by Local Stakeholders Initial Stakeholder Consultation meeting of locals have been carried out on 10 th of April 2008 in Qizi Mountain. Other stakeholder such as GS and NGOs were consulted via . The comments received by the stakeholders have been summarized in the initial stakeholder consultation report which was made publicly available. No negative comments received for the project activity. Main stakeholder consultation meeting of locals have been carried out on 15 th October 2008 in Qizi Mountain. Other stakeholder such as GS and NGOs were consulted via . The comments received by the stakeholders have been summarized in the main stakeholder consultation report which was made publicly available. PDD and other relevant documents were also published on Southpole website for 2 month. No comments were received. All comments received (fulfilled questionnaires, etc.) have been checked by the validator Pre-feasibility assessment Table 4-12: Summary of responses to requests formulated in the GS pre-feasibility assessment GS pre-feasibility assessment Response by the project owner / TÜV NORD JI/CDM CP 1. Eligibility Per GS rules, for LFG-to-Energy projects, a minimal utilization threshold for methane usage of 65% averaged over one year has been set. This point should be brought up in section A of the PDD, in relation to project eligibility. 2. Clarification of Additionality ODA: In order for the DOE to validate this point in a satisfactory manner, please ensure that the documents mentioned on This point has been brought up in section A of the PDD Relevant document has been provided by project owner. Page 26 of 109

27 P-No.: QT-EC R2 08/567 page 18 of the PDD are indeed provided to the DOE. 3. Sustainable Development Assessment matrix - Per GS requirements, please provide a reference for each justification paragraph, regardless of the score. A reference can be any academic or non- academic document such as a feasibility study or government report, website, local expert opinion, written confirmation from plant operations officer, EIA, etc. Please ensure that the DOE will have access to these references. Access to energy services: Please provide further justification and a reference to support a score of +2. Does this include reliable, affordable and clean energy services, especially to the poor and in rural areas? If this project is simply adding new capacity to the grid, perhaps a score of +1 is more suitable. Technological self-reliance: Please provide a proper reference to justify the score of +2, and how this project will/is encouraging similar practices, otherwise consider changing the score to Stakeholder consultation Please explain in more detail how the plant owner invited local policy makers, journalists from local media, local residents near plant site, future power consumers, and representatives of plant staff. It seems that they were invited orally, however this is not fully understood to be the case in the ISC report. Please provide further details on the process used for phone calls and please define exactly what is meant by a visiting invitation. Please provide an English summary of the responses to the questionnaires. Although no negative comments were brought up, it is not clear what items were of particular concern. A summary would therefore be helpful. The reference for each justification has been provided. A score of +1 has been accepted A score of +1 has been accepted The initial stakeholder consultation report has been revised according to the above comments. The initial stakeholder consultation report has been revised according to the above comments. - For the second round of consultation, The second round of consultation was Page 27 of 109

28 P-No.: QT-EC R2 08/567 please ensure GS supporter NGOs and local NGOs are invited for comments as was done during the first round. A site- visit with all relevant stakeholders, including those who took part to the previous consultation(s), is strongly recommended and would be a good opportunity for collecting opinions, discussing the nontechnical summary and the matrix, and for taking photographs. - GS strongly suggests that South Pole Carbon provide a report after the second round of stakeholder consultation has occurred in order to facilitate a more efficient DOE validation. Stakeholder comments must be reported upon and action taken to resolve issues presented in a written and interpretable manner so as to provide a paper trail that underpins a decision by the validator. - Please note that stakeholder comments do not necessarily refer only to negative comments. Positive or neutral comments should also be recorded and summarized in the report. Please ensure that the next round of stakeholder consultation includes a summary of all written and oral stakeholder comments as well as the project developer argumentation on whether or not those comments are taken into account and the respective changes to the project design, if any (for example, comments may affect the monitoring plan in terms of which indicators are chosen to be monitored). 5. Monitoring Per GS rules, for LFG-to-Energy projects, a minimal utilization threshold for methane usage of 65% averaged over one year has been set. The monitoring plan must therefore be extended to provide for a transparent assessment of this condition, and the methodology how it is monitored must be described. held according to the above comments. It has been added up in section D.3 monitoring plan. All sensitive or critical indicators that were They have been added up in section Page 28 of 109

29 P-No.: QT-EC R2 08/567 marked with an asterisk (*) in the SD Matrix should be included in the monitoring plan, and preferrably in table format. From the PDD one gets the impression that only two of these identified indicators will be monitored (employment numbers and quality). Please make clear how and when the other indentified indicators (i.e. air quality regarding H2S and NH3, access to energy services, human and institutional capacity, and balance of payments) will be monitored. Please include as well any other indicators brought up in the second-round consultation that are considered crucial in terms of a positive contribution to sustainable development, or that are considered sensitive by the stakeholders. According to GS requirements (VER manual page 28), potential mitigation and/or compensation measures from the EIA should be included in the monitoring plan. Please therefore amend the monitoring plan to include those measures listed in the EIA English summary, on page 54 of the PDD for which the effect can be evaluated in the years following the construction and, if applicable, all along the crediting period, (i.e. noise impact and impact on aquatic environment). 6. Other Please amend table B.5 (the one on page 14 of the PDD; there are two B.5 tables in the PDD, in fact) to include information of the 4th unit. D.2. The second round of consultation was held according to the above comments. They have been added up in section D.3. The revision has been done. Page 29 of 109

30 P-No.: QT-EC R2 08/567 5 COMMENTS BY PARTIES, STAKEHOLDERS AND NGOS According to the GS Validation and Verification manual /GS-VVM/ for large scale projects two stakeholder consultations are required. Please refer section 4.11 for the initial stakeholder consultation and main stakeholder consultation. PDD and other relevant documents were also published on Southpole website for 2 month. No comments were received. Page 30 of 109

31 P-No.: QT-EC R2 08/567 6 VALIDATION OPINION The South Pole Carbon Asset Management Ltd. has commissioned the TÜV NORD JI/CDM Certification Program (CP) to validate the project: Suzhou Qizi Mountain Landfill Gas Recovery Project with regard to the relevant requirements of the Gold Standard for Gold Standard VER project activities, as well as criteria for consistent project operations, monitoring and reporting. The project activity exports the electricity, produced with a landfill gas collection and utilization project to the East China Power Grid in China. The project intends to reduce GHG emissions to the extent of equivalent electricity generated by fossil fuels based power plants of the grid. A risk based approach has been followed to perform this validation. In the course of the pre-validation, 11 Corrective Action Requests (CARs) and 4 Clarification Requests (CRs) were raised and successfully closed. The review of the project design documentation and additional documents related to baseline and monitoring methodology; the subsequent background investigation, follow-up interviews and review of comments by parties, stakeholders and NGOs have provided TÜV NORD JI/CDM CP with sufficient evidence to validate the fulfilment of the stated criteria. In detail the conclusions can be summarised as follows: - The project is in line with all relevant host country criteria (China) and all relevant GS requirements for VER. - The sustainable development is suffiently justified and referenced. - The project additionality is sufficiently justified in the PDD. - The monitoring plan is transparent and adequate. - The calculation of the project emission reductions is carried out in a transparent and conservative manner, so that the calculated emission reductions of 822,338 tco 2 e is most likely to be achieved within the 7 years of 1 st crediting period (April March 2014). The conclusions of this report show, that the project, as it was described in the project documentation, is in line with all criteria applicable for the validation. Essen, Essen, Li Yong Jun Validation Team Leader Eric Krupp Senior Assessor Page 31 of 109

32 P-No.: QT-EC R2 08/567 7 REFERENCES Table 7-1: Reference /AEIA/ /AP/ Documents provided by the project proponent Document 1. approval of EIA, for 1 st stage, issued by Jiangsu Province Environment Protection Office, SuHuanBianGuan[2006]37, ; 2. approval of EIA, for 2 nd stage, issued by Jiangsu Province Environment Protection Office, SuHuanBiaoFu[2008]91, approval of the project, for 1 st stage, issued by Jiangsu Province Development and Reform Commission, SuFaGaiTouZiFa[2006[417], ; 2. approval of the project, for 2 nd stage, Jiangsu Province Economic and Trading Commission, SuJingMaoHuanZi[2008]418, ; 3. FSR assessment opinion of the 2 nd stage, /CAA/ Check and Accept approval for the 1 st stage, issued by Suzhou City Environment Protection Bureau, SuHuanYan[2008]99, /CDM/ /DPC CDM related documents: 1. CDM Board Meeting decisions, and ; 2. CDM development contract, Declaration from Everbright Group regarding CDM consideration and the situation between CDM board meeting decision in 2005 and CDM development contract in 2006, Device purchasing contracts /EIA/ 1. EIA of the 1st stage, ; 2. EIA of the 2nd stage, /ER/ /ETE/ /FFA/ ER calculation spreadsheet Electricity Tariff evidence: Document from Jiangsu Province Price Bureau, SuJiaGong[2007]47, financial accounts for the 1 st stage /FSR/ 1. Project Application Report (FSR) for 1 st stage, March Feasibility Study Report, for 2 nd stage, May 2008 /GS/ 1. Suzhou Qizishan LFG Project Non-tech description, ; Page 32 of 109

33 P-No.: QT-EC R2 08/567 Reference Document 2. Suzhou Qizishan LFG Project Environmental Impacts Non-tech description, ; 3. Suzhou Qizishan LFG Contribution in Sustainable D and EI Description in FSR. Stage 1, ; 4. Suzhou Qizishan LFG Contribution in Sustainable D and EI Description in FSR. Stage 2, ; 5. Suzhou Qizishan LFG GS checklist /IRR/ /ODA/ /PCD/ /PFA/ IRR calculation spreadsheet ODA proof: Statement from Everbright Group Power Connection Diagram 1. Project Design Document entitled: Suzhou Qizi Mountain Landfill Gas Recovery Project, Version 1.0, dated (draft) 2. Project Design Document entitled: Suzhou Qizi Mountain Landfill Gas Recovery Project, Version 2.0, dated (final) Suzhou Qizi Mountain Landfill Gas Recovery Project, China pre-feasibility assessment by Gold Standard /PPS/ Power Purchase and Sales Contract for the 1 st stage, August 2006 /PSL/ /SCD/ Project site layout Stakeholder consultation documents: 1. Suzhou LFG initial local stakeholder consultation meeting report; 2. Suzhou LFG main local stakeholder consultation meeting report 3. Questionnaires Table 7-2: Reference /ACM0001/ /CPM/ /EEP/ Background investigation and assessment documents Document Consolidated baseline and monitoring methodology for landfill gas project activities (Version 08) TÜV Nord JI / CDM CP Manual (incl. CP procedures and forms) Economical assessment and parameters for construction project, 3rd edition Page 33 of 109

34 P-No.: QT-EC R2 08/567 Reference /EME/ /GEF/ Document Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site Version 04 Official data sources for Grid Emission Factor (ECPG Grid) published by the Chinese DNA in 2008 /GSDM/ The Gold Standard Developers Manual, Version 5, dated May 2006 /GSPDD/ /GS-VVM/ /IPCC-GP/ /IPCC-RM/ Gold Standard Project Design for Gold Standard Voluntary Offset Projects (GS-VER-PDD) with explanation to fulfilment. The Gold Standard Validation and Verification Manual for Voluntary Offset Projects, dated June 2007 IPCC Good Practice Guidance & Uncertainty Management in National Greenhouse Gas Inventories, 2000 Revised 2006 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual /KP/ Kyoto Protocol (1997) /MA/ Decision 17/CP. 7 (Marrakesh Accords & Annex to decision 17/CP.7) /TA/ Tool for the demonstration and assessment of additionality (Ver 5.2) /TEF/ Tool to calculate the emission factor for an electricity system (Version 1.1) /TWL/ Technical code for municipal solid waste sanitary landfill issued in 2004 (CJJ ) /VVM/ IETA, PCF Validation and Verification Manual (V.4) Table 7-3: Websites used Reference Link Organisation /southpole/ South Pole Carbon Asset Management Ltd. /gs/ The Gold Standard /ipcc/ IPCC publications Page 34 of 109

35 P-No.: QT-EC R2 08/567 Reference Link Organisation /unfccc/ UNFCCC Tabelle 7-4: List of interviewed persons Reference MoI 1 Name Organisation / Function /IM01/ V Mr. Ms. /IM01/ V Mr. Ms. /IM01/ V Mr. Ms. /IM01/ V Mr. Ms Zhang Ming Everbright Evnironment and Energy (Suzhou) Landfill Gas to Energy Co., Ltd. / General Manager Chen Yang Everbright Evnironment and Energy (Suzhou) Landfill Gas to Energy Co., Ltd. /Engineer for Technology Research and Development Shen Jianming Everbright Evnironment and Energy (Suzhou) Landfill Gas to Energy Co., Ltd. / Chen Kejin Everbright Evnironment and Energy (Suzhou) Landfill Gas to Energy Co., Ltd. / Finance Director /IM02/ V Mr. Ms. /IM02/ V Mr. Ms /IM02/ V Mr. Ms /IM03/ V Mr. Ms Wang Liangliang Lin Yi Duan Zhijie Zhang Yanping South Pole Carbon Asset Management Ltd. / Project Manager South Pole Carbon Asset Management Ltd. / Project Manager South Pole Carbon Asset Management Ltd. / Assistant Project Manager Suzhou City Civil and Public Facility Bureau / Vice Director /IM03/ V Mr. Ms /IM03/ V Mr. Ms Chen Xi Suzhou City Wuzhong District Development and Reform Commission Li Shengping Suzhou City Wuzhong District Environment Protection Bureau 1) Means of Interview: (Telephone, , Visit) Page 35 of 109

36 P-No.: QT-EC R2 08/567 ANNEX Validation Protocol Page 36 of 109

37 ANNEX: VALIDATION PROTOCOL Table 1: 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 4.1.4), (B.3.) DR Yes. The project locates on Qizi Mountain, Mudu County, Wuzhong District, Suzhou City, Jiangsu Province, P. R. China. However, Location of project is should detailed, geographical coordination need refer to second. CR A1 A.1.2. Are the project s system boundaries (components (A 4.1.4) /DPC/ DR The description of project technology should be provided more in details in Section A, e.g. justification about the transfer of technology and project boundary should be sufficient; it should be made clear what components 1 st stage and 2 nd stage of the project comprise CAR A1 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-37

38 CHECKLIST QUESTION Ref. MoV* COMMENTS and facilities used to mitigate GHGs) clearly defined? respectively and if there is relationship (in terms of landfill usage, interaction, etc. ) between the two.stages. 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 participating in the project? (A.3.), (Annex 1), DR, I As the project activity is a VER project, no parties or host country approvals are necessary. The project participants are Everbright Environment and Energy (Suzhou) Landfill Gas to Energy Co., Ltd, and South Pole Carbon Asset Management Ltd. A.2.2. Have all DR, Not applicable. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-38

39 CHECKLIST QUESTION Ref. MoV* COMMENTS involved Parties provided a valid and complete letter of approval and have all private/public project participants been authorized by an involved Party? A.2.3. Do all participating Parties fulfil the participation requirements as follows: Ratification of the Kyoto Protocol Voluntary participati (A.3.) /GS/ /unfccc/ I DR China as well as Switzerland have ratified the Kyoto Protocol. However, China has no emission reductions commitments so far and for Gold Standard VER projects an approval of the host Party s DNA is not required. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-39

40 CHECKLIST QUESTION Ref. MoV* COMMENTS A.2.4. on Designated a National Authority Potential public funding for the project from Parties in Annex I shall not be a diversion of official development assistance. /ODA/ DR, I Clarification is requested whether or not ODA was considered/granted within the business plan. The explanation shall be substantiated by written confirmation of the project developer. CR A2 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-40

41 CHECKLIST QUESTION Ref. MoV* COMMENTS 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 current good practices? (A.4.4.) /DPC/ DR, I Yes, the project encompasses the installation of 4 * 1.25 MW engine units which combust landfill gas to generate electricity. The emission reductions result due to destroy of CH4 in landfill gas and the displacement of the grid based power. However, the description of project technology should be provided more in details in Section A. Refer to CAR A1. CAR A1 A.3.2. Does the project use state of the (A.4.2.) /DPC/ DR Also, the justification of the project category should be demonstrated acc. to G.S. VVM in PDD section A.4.3. The project use advanced technology with most equipments imported from Germany. CR A3 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-41

42 CHECKLIST QUESTION Ref. MoV* COMMENTS 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? (A.2.) DR, I Yes, the project makes provisions for meeting training and maintenance needs. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-42

43 CHECKLIST QUESTION Ref. MoV* COMMENTS A.4. Contribution to Sustainable Development The project s contribution to sustainable development is assessed. A.4.1. Has the host country confirmed that the project assists it in achieving sustainable development? DR Not applicable. A.4.2. Will the project create other environmenta l or social benefits than GHG emission reductions? (A.2.) DR The view of the project participants on the contribution of the project activity towards sustainable development is briefly described in section A.2. Besides GHG emission reduction, the project activity also help bridging the gap between power demand and supply, reduce air pollution brought be fossil fuel power plants, promoting advanced technology in LFG utilization, creating job opportunities, etc. However, the documented evidences for the S.D. assessment CAR A2 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-43

44 CHECKLIST QUESTION Ref. MoV* COMMENTS Small scale project activity Is it assessed whether the project qualifies as smallscale CDM project activity A.4.3. Does the project qualify as a small scale CDM project activity as defined in paragraph 6 (c) of decision 17/CP.7 on the modalities and procedures for the CDM? A.4.4. Is the small scale project activity not a debundled component of (A.4.2, A.4.3 A.4.4.1) /ACM0001./ /GS/ /IM01/ /IM02/ DR DR, I should be submitted and clearly referred to in PDD section A2 Not applicable, since the project qualifies as a large scale GS VER project, with annual CO2e reduction more than 15,000 tonnes CO2e per year. Not applicable. N/A N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-44

45 CHECKLIST QUESTION Ref. MoV* COMMENTS a larger project activity? A.5. General Topics A.5.1. Has the PDD been duly filled? DR Please refer to the CARs/CRs. Not Yet A.5.2. Has all necessary information been made available to the validator? B. Project Baseline The validation of the project baseline establishes whether the selected baseline methodology is appropriate and whether the selected baseline represents a likely baseline scenario. DR, I Several documents which are necessary to provide a final assessment of the proposed project activity are pending. Kindly refer to Table 7-1. Not Yet * MoV = Means of Verification, DR= Document Review, I= Interview Page A-45

46 CHECKLIST QUESTION Ref. MoV* COMMENTS B.1. Baseline Methodology It is assessed whether the project applies an appropriate baseline methodology. B.1.1. Does the project apply an approved methodology and the correct version thereof? (B.1) /ACM0001./ DR The project applies the approved large scale methodology ACM0001 Version 8. B.1.2. Are the applicability criteria in the baseline methodology all fulfilled? (B.1.1), /ACM0001/ DR The project activity uses landfill gas as a renewable energy source and is connected to the East China Power Grid. It is a newly built project. As the total capacity is 5 MW and the total estimated ERs do exceed 15,000 tco 2eq annually it can be categorised as a large scale project as per the UNFCCC and the GS requirements as well. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-46

47 CHECKLIST QUESTION Ref. MoV* COMMENTS B.2. Baseline Scenario Determination The choice of the baseline scenario will be validated with focus on whether the baseline is a likely scenario, and whether the methodology to define the baseline scenario has been followed in a complete and transparent manner. B.2.1. What is the baseline scenario? (B.2.) /ACM0001/ DR The baseline scenario is atmospheric release of the landfill gas and equivalent amount of electricity supplied from East China Power Grid. However, the baseline scenario identify steps was not exactly following methodology. Also, data source of the information used to exclude alternatives should be referenced. STEP 1 : Identification of alternative scenarios For landfill gas: Besides baseline, 1 other alternative is considered: LFG1: The project activity, capture of landfill gas and its flaring and use, undertaken without being registered as a VER project activity. CAR B1 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-47

48 CHECKLIST QUESTION Ref. MoV* COMMENTS For electricity generation: 5 other alternatives are considered. P2 and P3 are eliminated because the project activity generates electricity only. P4 is eliminated because the capacity of the project is too small to be legally allowed a fossil fuel fired power plant. P5 is eliminated because renewable energy resource not rich in local area and renewable energy utilization projects not financially attractive. STEP 2: Identify the fuel for the baseline choice of energy source taking into account the national and/or sectoral policies as applicable. Please refer to CAR B1. STEP 3: Step 2 of the latest approved version of the Tool for demonstration and assessment of additionality shall be used to assess which of these alternatives should be excluded from further consideration. Combination of LFG1 and P1 has lower IRR than the benchmark, thus is financially unattractive. STEP 4: If more than one credible and plausible alternative scenario remain, the alternative with the lowest baseline emissions shall be considered as the most likely baseline scenario. Only one combination of alternatives remains: LFG2 and P6. Thus * MoV = Means of Verification, DR= Document Review, I= Interview Page A-48

49 CHECKLIST QUESTION Ref. MoV* COMMENTS B.2.2. What other alternative scenarios have been considered and why is the selected scenario the most likely one? (B.3.) /ACM0001/ DR, I they are the baseline scenario. Please refer to B.2.1 CAR B1 B.2.3. Has the baseline scenario been determined according to the methodology? (B.3.), /ACM0001/ DR Yes, the baseline scenario is in line with the methodology. However, CAR B1 needs to be closed. CAR B1 B.2.4. Has the baseline scenario been determined using conservative (B.3.), /ACM0001/ DR Please refer to B.2.1 CAR B1 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-49

50 CHECKLIST QUESTION Ref. MoV* COMMENTS assumptions where possible? B.2.5. Does the baseline scenario sufficiently take into account relevant national and/or sectoral policies, macroeconomic trends and political aspirations? B.2.6. Is the baseline scenario determination compatible with the available data and are all literature and sources (B.3.), /ACM0001/ (E.4.) /ACM0001/ DR Please refer to B.2.1 CAR B1 DR Please refer to B.2.1 CAR B1 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-50

51 CHECKLIST QUESTION Ref. MoV* COMMENTS clearly referenced? B.2.7. Have the major risks to the baseline been identified? B.3. Additionality Determination The assessment of additionality will be validated with focus on whether the project itself is not a likely baseline scenario. B.3.1. Is the project additionality assessed according to the methodology? (B.4.) (B.3.), /ACM0001/ /TA/ /FSR/ /IRR/ /FFA/ /ETE/ /DPC/ DR No major risks were identified and are not to be expected. DR Yes, the additionality is justified according to the step-wise approach as per the latest tool for the demonstration and assessment of additionality (Ver. 4). However, the latest version of additionality tool (Version 5.2) should be used. STEP 1 : Identification of alternative scenarios Sub-step 1a. Define alternatives to the project activity: CAR B2 LFG1, LFG2, P1 and P6 are plausible alternatives. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-51

52 CHECKLIST QUESTION Ref. MoV* COMMENTS Sub-step 1b. Consistency with mandatory laws and regulations: It is demonstrated that despite attempts to mandate the flaring and treatment of landfill gas, they are not widely enforced and the common practice in China remains venting LFG. LFG1, LFG2, P1 and P6 are all consistent with laws and regulations. STEP 2: Investment analysis. Sub-step2a: Determine appropriate analysis method: Benchmark analysis is selected as analysis method. Sub-step2b: Option III - Apply benchmark analysis: IRR is chosen as financial indicator. To be conservative, equity IRR 8% is selected as benchmark, according to Economic Assessment Method and Parameters for Construction Project Version 03. Sub-step2c: Calculation and comparison of financial indicators: The key parameters used in IRR calculation are listed. For each stage, the project IRR without CDM revenue is lower than 8%, the benchmark project IRR for waste incineration industry, which is the main business area of the project owner, according to Economical Assessment and Parameters for Construction Project, CAR B3 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-52

53 CHECKLIST QUESTION Ref. MoV* COMMENTS the third edition. However, there are some issues with IRR calculation: -data source of parameters used in IRR calculation should be provided -approach of some calculation, eg. the calculation of operation and maintenance costs,is not transparent. Formula as well as the parameters applied should be provided. -installed capacity of 2 nd stage is 5000 kw as in IRR calculation sheet, which is inconsistent with PDD and on-site information. Sub-step 2d. Sensitivity analysis Total static investment, annual O&M cost, and revenue, are identified as sensitivity analysis parameters. It is illustrated that when any of the three parameters decrease or increase by 10%, the IRR still stays below benchmark. However, the analysis of possibilities of key paramenters variety should be justified reinforced. STEP 3: Barrier analysis Investment barrier, technology barrier and prevailing practice barrier are used to demonstrate additionality of the project. STEP 4: Common practice analysis Common practice analysis source should be clear refered in PDD, CR B1 CAR B4 CAR B5 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-53

54 CHECKLIST QUESTION Ref. MoV* COMMENTS the boundary/scope should be identified. Carbon Revenue consideration: Key event time table of the 2 stages are in B.3. B.3.2. Are all assumptions stated in a transparent and conservative manner? B.3.3. Is sufficient evidence provided to support the relevance of the arguments made? (B.3.) /ACM0001/ /TA/ /FSR/ /IRR/ /FFA/ /ETE/ /DPC (B.3.) /ACM0001/ /TA/ /FSR/ /IRR/ /FFA/ /ETE/ /DPC However, evidence of the construction start date for the 2 stages should be provided. As indicated in PDD, the project owner decided to implement the project activity as CDM project in an early stage. Evidence should be submitted. DR Refer to CARs/CRs above Not Yet DR, I Several documents should be provided to assess the argumentation. Please refer Table 7-1 Not Yet * MoV = Means of Verification, DR= Document Review, I= Interview Page A-54

55 CHECKLIST QUESTION Ref. MoV* COMMENTS B.3.4. If the starting date of the project activity is before the date of validation, has sufficient evidence been provided that the incentive from the CDM was seriously considered in the decision to proceed with the project activity? (B.3.) /CDM/ DR, I The starting date of the project activity is before the date of validation. However CAR B4 needs to be closed out first. CAR B5 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-55

56 CHECKLIST QUESTION Ref. MoV* COMMENTS B.4. Calculation of GHG Emission Reductions Project emissions It is assessed whether the project emissions are stated according to the methodology and whether the argumentation for the choice of default factors and values where applicable is justified. B.4.1. Are the calculations documented according to the approved methodology and in a complete and transparent manner? B.4.2. Have conservative assumptions (E.4.) /ACM0001/ (B.6.) DR Project emission is considered as zero, because there is no fossil fuel consumption on site and the on-site electricity use is small (already considered in calculation of baseline emission) DR Refer B.4.1 N/A N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-56

57 CHECKLIST QUESTION Ref. MoV* COMMENTS B.4.3. been used when calculating the project emissions Are uncertainties in the project emission estimates properly addressed? (B.6.) DR Refer B.4.1 N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-57

58 CHECKLIST QUESTION Ref. MoV* COMMENTS B.5. Calculation of GHG Emission Reductions Baseline emissions It is assessed whether the baseline emissions are stated according to the methodology and whether the argumentation for the choice of default factors and values where applicable is justified. B.5.1. Are the calculations documented according to the approved methodology and in a complete and transparent manner? (E.4.) /ACM0001/ /IPCC/ /EME/ /GEF/ /TEF/ DR The calculations and formulae provided in section E.4. are in accordance to ACM0001 and Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site Version 04. In compliance with the methodology, since the project does not involve in thermal energy generation, the baseline emission consists of emission from destroying of CH4 and the displacement of electricity produced by power plants connected to the grid. BE y = ( MD project, y MDBL, y ) GWPCH 4 + ELLFG, y * CEFelec, BL, y + ETLFG, * MoV = Means of Verification, DR= Document Review, I= Interview Page A-58

59 CHECKLIST QUESTION Ref. MoV* COMMENTS MDBL, y = MD project, y * AF MD project,y =BE CH4,SWDS,y /GWP CH4 The calculation of BE CH4,SWDS,y, the amount of methane that would have been destroyed/combusted during the year, in tonnes of methane (tch4) in project scenario is according to Tool to determine methane emissions avoided from disposal of waste at a solid waste disposal site. CEF elec,bl,y is determined as combined margin according to Tool to calculate the emissions factor for an electricity system (version 01) However, there are some issues with emission reduction calculation: -determination of AF should be provided. -the calculation of MDproject,y is not according to methodology. Justification of collection rate needs to be provided. - Basis to determine Kj and DOCj needs to be provided. -It is indicated in PDD that project emission is zero, which is incorrect. Revision is necessary. -the annual electricity generation is based on rated capacity of 4 generators, without considering possible generator shut down due to decreased gas amount. Justification is needed. -latest ECPG emission factor data should be applied. CAR B6 B.5.2. Have conservative assumptions been used (E.4.) /EME/ /GEF/ /TEF/ DR Please refer section B.5.2 CAR B6 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-59

60 CHECKLIST QUESTION Ref. MoV* COMMENTS B.5.3. when calculating the baseline emissions Are uncertainties in the baseline emission estimates properly addressed? B.6. Calculation of GHG Emission Reductions Leakage It is assessed whether leakage emissions are stated according to the methodology and whether the argumentation for the choice of default factors and values where applicable is justified. (E.4.) /EME/ /GEF/ /TEF/ DR No uncertainties are expected in estimating the baseline emissions. B.6.1. Are the DR, Not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-60

61 CHECKLIST QUESTION Ref. MoV* COMMENTS leakage calculations documented according to the approved methodology and in a complete and transparent manner? (E.2.) /ACM0001/ I B.6.2. Have conservative assumptions been used when calculating the leakage emissions? (B.6.) /ACM0001/ DR Not applicable since leakage is not considered. N/A B.6.3. Are uncertainties in the leakage emission estimates properly addressed? (B.6.) /ACM0001/ DR Not applicable since leakage is not considered. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-61

62 CHECKLIST QUESTION Ref. MoV* COMMENTS B.7. Emission Reductions The emission reductions shall be real, measurable and give long-term benefits related to the mitigation of climate change. B.7.1. Are the emission reductions real, measurable and give long-term benefits related to the mitigation of climate change. (E.5) DR The CARs/CRs given in section B have to be closed satisfactorily before forming an opinion. Not yet * MoV = Means of Verification, DR= Document Review, I= Interview Page A-62

63 CHECKLIST QUESTION Ref. MoV* COMMENTS B.8. Monitoring Methodology It is assessed whether the project applies an appropriate baseline methodology. B.8.1. Is the monitoring plan documented according to the approved methodology and in a complete and transparent manner? (D.2) DR The methodology applied is ACM0001. According to the methodology Consolidated baseline and monitoring methodology for landfill gas project activities. The parameters to be monitored are listed in D.2.2. However there are some issues with monitored parameters: 1) Monitoring for regulations for LPG project activities should be listed in section D. 2) auxiliary electricity consumption should be defined. 3) Not applicable parameters should be deleted. 4) The SD indicators as defined in PDD section A.2 should listed. 5) QA/QC procedures as well as the monitoring method should be defined clearly. Also, monitoring system should be more sufficient, i.e. location, accuracy, backup meter etc. should be clear presented in figure of section D. CAR B7 CAR B8 B.8.2. Will all monitored (D.2.) DR Yes, the data will be archived two years after the end of the crediting period. This is indicated in D.3. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-63

64 CHECKLIST QUESTION Ref. MoV* COMMENTS data required for verification and issuance be kept for two years after the end of the crediting period or the last issuance of CERs, for this project activity, whichever occurs later? B.9. Monitoring of Project Emissions It is established whether the monitoring plan provides for reliable and complete project emission data over time. B.9.1. Does the DR As project emissions are zero, this is not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-64

65 CHECKLIST QUESTION Ref. MoV* COMMENTS monitoring plan provide for the collection and archiving of all relevant data necessary for estimation or measuring the greenhouse gas emissions within the project boundary during the crediting period? (D.2.) B.9.2. Are the choices of project GHG indicators reasonable and conservative? (D.2.) DR As project emissions are zero, this is not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-65

66 CHECKLIST QUESTION Ref. MoV* COMMENTS B.9.3. Is the measuremen t method clearly stated for each GHG value to be monitored and deemed appropriate? B.9.4. Is the measuremen t equipment described and deemed appropriate? B.9.5. Is the measuremen t accuracy addressed and deemed appropriate? Are procedures in place on how to deal with erroneous (D.2.) (D.2.) (D.2.) DR As project emissions are zero, this is not applicable. N/A DR As project emissions are zero, this is not applicable. N/A DR As project emissions are zero, this is not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-66

67 CHECKLIST QUESTION Ref. MoV* COMMENTS measuremen ts? B.9.6. Is the measuremen t interval identified and deemed appropriate? B.9.7. Is the registration, monitoring, measuremen t and reporting procedure defined? (D.2.) (D.2.) DR As project emissions are zero, this is not applicable. N/A DR As project emissions are zero, this is not applicable. N/A B.9.8. Are procedures identified for maintenance of monitoring equipment and installations? Are the calibration (D.2.) DR As project emissions are zero, this is not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-67

68 CHECKLIST QUESTION Ref. MoV* COMMENTS intervals being observed? B.9.9. Are procedures identified for day-to-day records handling (including what records to keep, storage area of records and how to process performance documentatio n) (D.2.) DR As project emissions are zero, this is not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-68

69 CHECKLIST QUESTION Ref. MoV* COMMENTS B.10. Monitoring of Baseline Emissions It is established whether the monitoring plan provides for reliable and complete baseline emission data over time. B Does the monitoring plan provide for the collection and archiving of all relevant data necessary for determining baseline emissions during the crediting period? (D.2.) DR No, please refer CAR B7 and CAR B6. CAR B7 CAR B6 B Are choices the of (D/E) DR Yes, the only considered GHG is CO 2. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-69

70 CHECKLIST QUESTION Ref. MoV* COMMENTS baseline GHG indicators reasonable and conservative? B Is the measuremen t method clearly stated for each baseline indicator to be monitored and also deemed appropriate? B Is the measuremen t equipment described and deemed appropriate? B Is the measuremen (D) DR No, kindly refer to CAR B7 and CAR B8 CAR B7 & B8 (D.) DR No, kindly refer to CAR B7 and CAR B8 CAR B7 & B8 (D) DR No, kindly refer to CAR B7 and CAR B8 CAR B7 & B8 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-70

71 CHECKLIST QUESTION Ref. MoV* COMMENTS t accuracy addressed and deemed appropriate? Are procedures in place on how to deal with erroneous measuremen ts? B Is the measuremen t interval for baseline data identified and deemed appropriate? B Is the registration, monitoring, measuremen t and reporting procedure defined? (D.) DR No, kindly refer to CAR B7 and CAR B8 CAR B7 & B8 (D.) DR No, kindly refer to CAR B7 and CAR B8 CAR B7 & B8 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-71

72 CHECKLIST QUESTION Ref. MoV* COMMENTS B Are (D) DR No, kindly refer to CAR B7 and CAR B8 CAR B7 procedures & B8 identified for maintenance of monitoring equipment and installations? Are the calibration intervals being observed? B Are procedures identified for day-to-day records handling (including what records to keep, storage area of records and how to process performance documentatio (B.7.) DR No, kindly refer to CAR B7 and CAR B8 CAR B7 & B8 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-72

73 CHECKLIST QUESTION Ref. MoV* COMMENTS n) B.11. Monitoring of Leakage It is assessed whether the monitoring plan provides for reliable and complete leakage data over time. B Does the monitoring plan provide for the collection and archiving of all relevant data necessary for determining leakage? B Are the choices of project leakage indicators (B.7.) (B.7.) DR As leakage is not to be considered, monitoring is not necessary. N/A DR See comment above. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-73

74 CHECKLIST QUESTION Ref. MoV* COMMENTS reasonable and conservative? B Is the measuremen t method clearly stated for each leakage value to be monitored and deemed appropriate? (B.7.) DR See comment above. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-74

75 CHECKLIST QUESTION Ref. MoV* COMMENTS B.12. Monitoring of Sustainable Development Indicators/ Environmental Impacts It is assessed whether choices of indicators are reasonable and complete to monitor sustainable performance over time. B Is the monitoring of sustainable development indicators/ environmenta l impacts warranted by legislation in the host country? (D.) DR No, the monitoring of sustainability indicators is not necessary according to Chinese legislation. B Does the monitoring (D.) DR No, please refer to CAR B7. CAR B7 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-75

76 CHECKLIST QUESTION Ref. MoV* COMMENTS plan provide for the collection and archiving of relevant data concerning environmenta l, social and economic impacts? B Are the sustainable development indicators in line with stated national priorities in the Host Country? (D.) DR No, please refer to CAR B7. CAR B7 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-76

77 CHECKLIST QUESTION Ref. MoV* COMMENTS B.13. Project Management Planning It is checked that project implementation is properly prepared for and that critical arrangements are addressed. B Is the authority and responsibility of overall project management clearly described? (D) DR Yes, the authority and responsibility of project management is described in D.3. Mr. Yunyue Zhang takes overall responsibility of project management. Mr. Kai Wu takes responsibility of the monitoring. South Pole Carbon Asset Management Co., Ltd. takes responsibility of report review and overall assistance. B Are procedures identified for training of monitoring personnel? (D) DR Clarification is requested if training is required over the crediting period to ensure accuracy of the monitored data. A short description should be included in section D.4. as additional part of the monitoring plan. The training plans and attendance registries should be provided. CR B1 B Are procedures (D.) DR; i No emergencies are envisaged leading to higher GHG emissions. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-77

78 CHECKLIST QUESTION Ref. MoV* COMMENTS identified for emergency preparednes s for cases where emergencies can cause unintended emissions? B Are procedures identified for review of reported results/data? (D) DR, I Yes, collected data will be archived and cross-checked. B Are procedures identified for corrective actions in order to provide for more accurate future monitoring and reporting? (D.) DR Refer to CAR B7. CAR B7 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-78

79 CHECKLIST QUESTION Ref. MoV* COMMENTS C. Duration of the Project/ Crediting Period It is assessed whether the temporary boundaries of the project are clearly defined. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-79

80 CHECKLIST QUESTION Ref. MoV* COMMENTS C.1. Are the project s starting date and operational lifetime clearly defined and evidenced? (C.1.) DR The starting date of the project activity is diverted into 2 different stages including 4 units. However revision of section C is necessary, since according to B.3., the construction of 1st stage is November The project lifetime is expected to be 18 years. CAR C1 C.2. Is the start of the crediting period clearly defined and reasonable? (C.2.) DR The project is requesting retroactive registration. The starting of crediting period is 2007/1/1. D. Environmental Impacts Documentation on the analysis of the environmental impacts will be assessed, and if deemed significant, an EIA should be provided to the validator. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-80

81 CHECKLIST QUESTION Ref. MoV* COMMENTS D.1. Has an analysis of the environmenta l impacts of the project activity been sufficiently described? (D.1.) /EIA/ /AEIA/ /CAA/ DR Yes, several topics of the EIA are summarized in section D.1. of the PDD. The effects of the project activity are addressed appropriately and are assessed as not significant. D.2. Are there any Host Party requirements for an Environment al Impact Assessment (EIA), and if yes, is an EIA approved? (D.1.) /EIA/ /IM03/ /AEIA/ /CAA/ DR I Yes, an environmental impact assessment is stipulated by the host party. The EIA was approved by the District Environmental Agency on 15 th January D.3. Will the project create any adverse environmenta l effects? (D.1.) /EIA/ /AEIA/ /CAA/ DR It is indicated in the EIA that the project will bring just minor and temporary negative impacts on the environment during construction. These will be solved through applying environment protecting measures as explained in section D.1 of the PDD. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-81

82 CHECKLIST QUESTION Ref. MoV* COMMENTS DR No transboundary effects are expected. D.4. Are (D.1.) transboundar /EIA/ y /AEIA/ environmenta /CAA/ l impacts considered in the analysis? D.5. D.6. Have identified environmenta l impacts been addressed in the project design? Does the project comply with environmenta l legislation in the host country? (D.1.) /EIA/ /AEIA/ /CAA/ (D.1.) DR Yes, in section D.1. several environmental impacts are addressed, e. g. impacts on water, air, noise, etc. DR Yes, the project activity is approved by the Chinese government. For Small- scale projects D.7. Does host Not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-82

83 CHECKLIST QUESTION Ref. MoV* COMMENTS D.8. D.9. D.10. country legislation require an analysis of the environmenta l impacts of the project activity? Does the project comply with environmenta l legislation in the host country? Will the project create any adverse environmenta l effects? Have environmenta l impacts been identified and addressed in the PDD? Not applicable. N/A Not applicable. N/A Not applicable. N/A * MoV = Means of Verification, DR= Document Review, I= Interview Page A-83

84 CHECKLIST QUESTION Ref. MoV* COMMENTS E. Stakeholder Comments The validator should ensure that stakeholder comments have been invited with appropriate media and that due account has been taken of any comments received. E.1. E.2. Have relevant stakeholders been consulted? Have appropriate media been used to invite comments by local stakeholders? (G.1.) /SCD/ /GS/ /southpole/ (G.1.) /SCD/ /GS/ /southpole/ DR DR, I 2 initial stakeholder consultation meetings have been conducted on 10 th April 2008(initial stakeholder consultation) and 15 th October 2008 (main stakeholder consultation) respectively. Local residents, plant employees, government officials, etc. attended the meetings. GS and NGO were invited through s. Local residents, plant employees, government official were invited through visits and notices. E.3. If a stakeholder consultation The Chinese regulation doesn t include requirements for stakeholder consultation processes. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-84

85 CHECKLIST QUESTION Ref. MoV* COMMENTS process is required by regulations/la ws in the host country, has the stakeholder consultation process been carried out in accordance with such regulations/la ws? E.4. Is a summary of the stakeholder comments received provided? (G.2.), /SCD/ DR A summary of the comments received is provided in the PDD and reports. Additional an initial stakeholder consultation report is publicly available by southpole. E.5. Has due account been taken of any stakeholder comments received? (G.3.) /SCD/ As the comments were generally positive no actions has been taken. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-85

86 Table 2: Gold Standard requirement checklist for VER projects CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD Ref. MoV* COMMENTS A. Project Eligibility Screen The project type is assessed A.1.1. Is the Project activity a renewable energy or End use energy efficiency improvement project? (A.4.3) DR Yes, the project is a landfill power generation plant, hence it is a eligible project type for the GS VER. A.1.2. Has the host country a quantitative reduction target under the Kyoto Protocol? (A.4.1) DR The host country is China, which has no quantitative reduction target under the Kyoto protocol. A.1.3. Which size has the project per definition of the GS VER requirements (Micro-, Small-, Large Scale)? (A.4.2) DR The projects emission reductions are more than 15 kt CO 2e per year. Thus the project fulfils the requirements of Large-Scale definition. A.1.4. Is the project activity a bundle and are all project activities that are part of this bundle eligible under GS? (A.4.2) DR No, the project activity is not a bundle. B. Additionality Screen Public Announcement Check B.1.1. Has the project, in its current design, previously been publicly announced to go ahead without the VER, prior to any payment being need for the implementation of the project? (A.4.4) DR No, the project was not publicly announced to implement it without the carbon financing. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-86

87 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD Ref. MoV* COMMENTS B.1.2. If the project is a Micro Scale project, is a written statement included, that the project has not been announced for implementation without seeking carbon finance during the last 3 years? (A.4.4) DR Not applicable, the project is not a micro scale project. Additionality tool Check B.1.3. Is the Tool for the demonstration and assessment of additionality of the UNFCCC used in its currently available version? (B) DR Yes, the additionality tool is used However, the latest version of additionality tool (Version 5.2) should be used. CAR B2 B.1.4. Is the tool used in it s totally and are the additionilty documents satisfactorily? (B) DR please refer to CAR B2-B5. CAR B2-B5 B.1.5. Are the main arguments reasonable and evidenced? (B) DR please refer to CAR B2-B5. CAR B2-B5 B.1.6. Are all references up-to date and reliable? (B) DR Please refer to CAR B2-B5. CAR B2-B5 B.1.7. Is the project activity compared to the normal practice in the region? (B) DR Yes, the project is compared to common practice in the region. However, common practice analysis source should be clear refered in PDD, the boundary/scope should be identified. CAR B4 B.1.8. Are all assumptions (quantitative or qualitative) used to demonstrate the additionality conservative? (B) DR Please refer to CAR B2-B5. CAR B2-B5 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-87

88 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD ODA Additionality check Ref. MoV* COMMENTS B.1.9. Is a clear and transparent financing plan submitted which allows an assessment of whether the project financing includes ODA? Clarification is requested whether or not ODA was considered/granted within the business plan. The explanation shall be substantiated by written confirmation of the project developer. CR A2 B Is ODA used for the project activity and if yes is the funding eligible for the GS? Conservative Approach Check Clarification is requested whether or not ODA was considered/granted within the business plan. The explanation shall be substantiated by written confirmation of the project developer. CR A2 B Is the baseline methodology described and the choice of the baseline scenario substantiated? (B) DR The project applies the large scale methodology ACM0001 Version 8. However, CAR B1 needs to be closed first. CAR B1 B Are there any legally binding regulatory instruments? B Are evidences provided to assess whether the project activity is not considered as normal practice? (B) (B) B Is leakage to be considered? (B, E.2) B Is the most convincing and conservative baseline scenario selected? DR No, in China there is no actually legally binding regulatory instrument to implement LFG plants. DR Refer to CAR B4. DR According to the methodology ACM0001 leakage is not to be considered. DR Yes. However, CAR B1 needs to be closed first. CAR B4 CAR B1 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-88

89 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD Technology Transfer and/or Technology Innovation Check Ref. MoV* COMMENTS (B) B Will there be any transfer or knowledge innovation of technology in the host country of project implementation and are the benefits of the transfer substantiated? (A.2) DR Yes, there is technology transfer. Many devices are imported from Germany. C. Sustainable Development Screen The project s contribution to sustainable development is assessed C.1. Assessment 1. Sustainable Development C.1.1. Does the project activity clearly demonstrate benefits in terms of SD, based on Local / global environment sustainability Social sustainability and development Economic and technological development? (A.2) DR Yes, in section A.2 the benefits of local, global, social economical and technological development are described. The project helps improve local quality through destroying landfill gas which used to be released into atmosphere. It is conducted to new investment. It gives the opportunity to local people to find higher qualified long-term jobs and generates income for them. The project also promotes the implementation of advanced landfill gas utilization technologies in China. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-89

90 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD Ref. MoV* COMMENTS However, The documented evidences for the S.D. assessment should be submitted and clearly referred to in PDD section A2 CAR A2 C.1.2. Are all statements in the SD Assessment Matrix based on existing sources and referenced? (A.2) DR The documented evidences for the S.D. assessment should be submitted and clearly referred to in PDD section CAR A2 C.1.3. Is the scoring transparent and verifiable? (A.2) DR Please refer C.1.2 CAR A2 C.1.4. Are all SD indicators discussed during stakeholder consultation? (A.2) DR Yes, during the initial stakeholder consultation the SD Matrix had been discussed. This could be assessed with the provided questionnaires. C.1.5. Are all points considered relative to the baseline scenario? (A.2) DR Yes, the points are considered relative to the baseline scenario. The project activity has more positive impacts comparing to the baseline scenario. C.1.6. Scoring requirements: Have all components a non-negative sub-total score? Is the total score positive? Has one indicator a score of -1? (A.2) DR The scoring of the SD matrix fulfilled the requirements of GS VER projects. No negative scoring is expected. The total score is positive. Nevertheless, the documented evidences for the S.D. assessment should be submitted and clearly referred to in PDD section CAR A2 Are all indicators scoring -1 subjected to the EIA? C.1.7. In case of significant negative impacts of the DR Since no significant negative impacts are * MoV = Means of Verification, DR= Document Review, I= Interview Page A-90

91 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD project, are the identified points included in the monitoring plan? Ref. MoV* COMMENTS (A.2, D) considered, the monitoring of such is not necessary. C.2. Environmental Impact assessment The project s contribution to sustainable development shall be assessed in the sustainability matrix in section K. C.2.1. Does the Project Proponent conforms with (local, regional, national) requirements concerning EIAs? (F) DR Yes the EIAs of both the two stages have been approved by authority. C.2.2. Is an EIA carried out by the PP? (F) DR Yes, regarding the national law EIA for each stage has been conducted. C.2.3. Is it clearly demonstrated whether an EIA is required or not (demonstrated with the EIA Pre-Screen Checklist)? (F) DR Not applicable, since the EIA is required by the host country. N/A C.2.4. Is each question with regard to every significant impact identified fully documented? Not applicable, since the EIA is required by the host country. N/A C.2.5. If no EIA has been carried out, could it be assessed whether Environmental impacts or the project are included in the PDD? (F) DR Not applicable, since the EIA is required by the host country. N/A Any SD indicator is scored -1? Stakeholders identified any significant social or environmental impacts? * MoV = Means of Verification, DR= Document Review, I= Interview Page A-91

92 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD Ref. MoV* COMMENTS C.2.6. In cases where SD indicators are scored -1 or stakeholders identify impacts, is a mitigation plan developed? (F) DR Since no negative scoring is identified, no mitigation plan must be developed. C.2.7. If a full EIA has carried out, is the documentation submitted to the validator and are all GS criteria fulfilled? (F) DR Yes, the EIAs of two stages have been submitted to the validators. C.2.8. In case of significant negative impacts of the project, are the identified points included in the monitoring plan? (D) DR Since no significant negative impacts are considered, it is not necessary to include an environmental monitoring in the PDD. C.3. Public consultation Procedures C.3.1. Was an initial stakeholder consultation conducted with invitation of local policy makers, directly impacted people, NGOs (that have endorsed the GS), the GS? (G) DR Yes, an initial stakeholder consultation procedure was conducted in April 2008 The locals and local policy makers were invited. Local NGOs have had the possibility to give comments during a separate consultation. C.3.2. Have comments been actively invited and was the publication adequate publicities? (G) DR Yes, the comments have been actively invited during the stakeholder meeting. The invitation to the meeting has been done orally or via . C.3.3. Is the range of stakeholders selected appropriate? (G) DR The range of stakeholders covers local residents, plant employees, local policy makes, GS and NGOs. This is selected appropriate. C.3.4. Were all stakeholders asked to address environmental and social impacts? DR Yes. And the feedbacks are included in initial stakeholder consultation report and * MoV = Means of Verification, DR= Document Review, I= Interview Page A-92

93 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD Ref. MoV* COMMENTS (G) questionnaires. C.3.5. Does the initial stakeholder report include a clear description of the invitation and the meeting? (G) DR Yes. The initial stakeholder report contains relevant information. All written comments received? An argumentation whether or not a comment is taken into account? C.3.6. Was a main stakeholder consultation conducted? (G) DR Yes, the main stakeholder consultation was conducted in October C.3.7. Is the main stakeholder procedure clearly described and are all arguments whether or not comments are taken into account demonstrated? (G) DR Yes, the main stakeholder procedure is clearly described. The feedbacks are all positive. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-93

94 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD D. Monitoring requirements and Monitoring Plan Ref. MoV* COMMENTS D.1. SD Indicators and EIA D.1.1. Are all indicators of the SD Matrix and the EIA, which are critical for a positive contribution Clearly identified Marked with an asterix in the matrix Added to the monitoring plan? (D) DR Yes, all indicators of the SD matrix and the EIA which are critical, are clearly identified and marked. However, they should also be included in monitoring plan. Please refer to CAR B7. CAR B7 D.1.2. Are the data to be used for monitoring actually available? (D) DR Please refer CAR B7 D.2. Public Consultation D.1.3. Are all indicators of importance Clearly identified (D) DR Yes, the employment quantity, air quality, etc. are identified as crucial. Marked with an asterix Included in the monitoring plan? However, they should also be included in monitoring plan. Please refer to CAR B7. CAR B7 D.3. measures Potential mitigation/compensation Are possible mitigation measures discussed and planned for all indicators scored -1? (D) DR No indicator is scored negative. D.3.2 Is a mitigation plan developed? DR Not necessary since EIA, stakeholder * MoV = Means of Verification, DR= Document Review, I= Interview Page A-94

95 CHECKLIST QUESTIONS IN RESPECT TO MAJOR Aspects of Project Eligibility, Additionality and SD Ref. MoV* COMMENTS (D) consultation and SD matrix have not identified impacts /. D.3.3 Are compensation measures implemented for all negative impacts where mitigation is not feasible and could these compensations assessed as sufficient? (D) DR Not applicable, refer comment above. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-95

96 Table 3: Resolution of Corrective Action and Clarification Requests report clarification requests and corrective action requests by validation team CAR A1 The description of project technology should be provided more in details in Section A, e.g. justification about the transfer of technology and project boundary should be sufficient; it should be made clear what components 1 st stage and 2 stage comprise respectively and if there is relationship (in terms of landfill usage, interaction, etc. ) between the two stages. CAR A2 The documented evidences for the S.D. assessment should be submitted and clearly referred to in PDD section A2 CAR B1 The baseline scenario identify steps was not followed methodology. Also, data source of the information used to exclude alternatives should be referenced. CAR B2 The latest version of additionality tool (Version 5.2) should be used. CAR B3 there are some issues with IRR calculation: -data source of parameters used in IRR calculation should be provided -approach of some calculation, eg. the calculation of operation and maintenance costs,is not transparent. Formula as well as the parameters applied should be Ref. To checklist question in table 2 Summary of project owner response A.1.2 The description of project technology has been provided more in detail in A.2. It has been made clear what components stage 1 and stage 2 comprise respectively and if there is relationship (in terms of landfill usage, interaction, etc. ) between the two stages A.4.2. The documented evidences for the S.D. assessment have been submitted and clearly refered in PDD section A2 B.2.1 The baseline scenario identify steps have been revised acc. To methodology. Data source of the information used to exclude alternatives has been referenced. B.3.1. Latest version of additionality tool has been used. B.3.1 -Data source of parameters used in IRR calculation has been provided in Excel file -The calculation of operation and maintenance costs and Formula has been provided in Excel file. -Installed capacity of 2nd stage has Validation team conclusion * MoV = Means of Verification, DR= Document Review, I= Interview Page A-96

97 report clarification requests and corrective action requests by validation team provided. -installed capacity of 2 nd stage is 5000 kw as in IRR calculation sheet, which is inconsistent with PDD and on-site information. Ref. To checklist question in table 2 Summary of project owner response been corrected Validation team conclusion CAR B4 Common practice analysis source should be clear refered in PDD, the boundary/scope should be identified. CAR B5 Evidence of the construction start date for the 2 stages should be provided. As indicated in PDD, the project owner decided to implement the project activity as CDM project in an early stage. Evidence should be submitted. CAR B6 There are some issues with emission reduction calculation: -determination of AF should be provided. -the calculation of MDproject,y is not according to methodology. Justification of collection rate needs to be provided. - Basis to determine Kj and DOCj needs to be provided. -It is indicated in PDD that project emission is zero, which is incorrect. Revision is necessary. -the annual electricity generation is based on rated capacity of 4 generators, without considering possible generator shut down due to decreased gas amount. Justification is needed. -latest ECPG emission factor data should be applied. B.3.1 B.3.1 B.5.1 Common practice analysis source has been referred in PDD, the boundary/scope has been identified. Board Decision related to carbon trade has been provided. Evidence of the construction start date for the 2 stages may not be necessary to be provided, due to the submission of Board Decision -Determination of AF has been provided. -Collection rate has been deleted. Annual waste usage has been revised in ex-ante calculation. - Basis to determine Kj and DOCj has been provided in tables. (page 62&63) - Explanation of project emission has been provided in E.5. -The annual electricity generation is based on rated capacity of 4 generators, without considering possible generator shut down due to decreased gas amount. Justification * MoV = Means of Verification, DR= Document Review, I= Interview Page A-97

98 report clarification requests and corrective action requests by validation team CAR B7 There are some issues with monitored parameters: 1) Monitoring for regulations for LPG project activities should be listed in section D. 2) auxiliary electricity consumption should be defined. 3) Not applicable parameters should be deleted. 4) The SD indicators as defined in PDD section A.2 should listed. 5) QA/QC procedures as well as the monitoring method should be defined clearly. CAR B8 Monitoring system should be more sufficient, i.e. location, accuracy, backup meter etc. should be clear presented in figure of section D. CAR C1 Revision of section C is necessary, since according to B.3., the construction of 1st stage is November B.8.1 Ref. To checklist question in table 2 Summary of project owner response has been done. Project emission is still zero. Because the electricity consumption has been considered in EL LFG, y and there is no flare in the proposed project. 1) Monitoring for regulations for LPG project activities has been listed in section D.(page 38) 2) auxiliary electricity consumption has been defined. (page 35&43) 3) Not applicable parameters have been deleted. 4) The SD indicators as defined in PDD section A.2 have been listed in table form. (page 39) 5) QA/QC procedures as well as the monitoring method have been defined clearly. B.8.1 Monitoring system has been described more sufficiently. Location, accuracy, backup meter have been clear presented in figure of section D. C.1 Section C has been revised accordingly. Validation team conclusion CR A1 A.1.1 Geographical coordination has been * MoV = Means of Verification, DR= Document Review, I= Interview Page A-98

99 report clarification requests and corrective action requests by validation team Location of project is should detailed, geographical coordination need refer to second. CR A2 Clarification is requested whether or not ODA was considered/granted within the business plan. The explanation shall be substantiated by written confirmation of the project developer. CR A3 The justification of the project category should be demonstrated acc. to G.S. VVM in PDD section A.4.3. CR B1 The analysis of possibilities of key paramenters variety should be justified reinforced. Ref. To checklist question in table 2 Summary of project owner response revised to second. A.2.4 Relevant document has been provided by project owner. A.3.1 Project category has been demonstrated according to G.S. VVM. B.3.1 The analysis of variation possibilities of key paramenters have been further justified. Validation team conclusion * MoV = Means of Verification, DR= Document Review, I= Interview Page A-99

100 Table 4-1: Validation Table for Assessment of Financial Parameters, 1 st phase Parameter Annual electricity generation Value applied Varying with years Unit MWh Source of Information (please indicate document and page) IRR/ER calculation spreadsheet Reference /IRR/ /ER/ /FSR/ Correctness of value applied DOE ASSESSMENT Appropriateness of information Comment source This value is calculated from engine demand of CH4 (CH4 consumption per generator)and amount of collected CH4. When amount of collected CH4 is more than engine demand, electricity generation is at rated power of generator. When amount of collected CH4 is less than engine demand, electricity generation is capped with the CH4 ratio. Engine demand of CH4 is derived from FSR. Amount of collected CH4 is calculated through Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site. Total Investment static 3, RMB Feasibility Study Report/ page 40 /FSR/ /FFA/ Please refer to the IRR/ER spreadsheets for electricity generation data. The value of total static investment is from Feasibility Study Report. Since the 1 st phase has finished construction, a financial account was done. According to the financial accounts for the 1 st phase, the actual total Investment of the 1 st phase is *10 4 RMB, which is higher than the value applied. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-100

101 Parameter Electricity tariff (VAT Incl.) Value applied Unit RMB/ kwh Source of Information (please indicate document and page) Electricity Evidence Tariff Reference /FSR/ /ETE/ Correctness of value applied Appropriateness of information source DOE ASSESSMENT Comment Thus the total static investment applied is evaluated to be credible and conservative. Besides, total static investment, the project also has fluid capital of 47.5*10 4 RMB. The value is from latest electricity tariff of the project /ETE/, which is RMB/kWh. The tariff in approved Feasibility Study Report is RMB/kWh including VAT. Thus electricity tariff (VAT Incl.) RMB/kWh is valid and conservative. The annual O&M consists of maintenance cost, heavy repair, payroll and welfare, land usage, administration fee, and other fee. Annual O&M costs RMB Feasibility Study Report /page 42, 43 /FSR/ The maintenance cost includes: Generator: 0.07 RMB/kwh * designed electricity generation (15,840,000 kwh) = 1,108,800 RMB. Pump and pipeline: 630,000 RMB. Landfill site: 270,000 RMB. Other equipments: 521,000 RMB. Heavy repair fee is 450,000 RMB. Payroll is: employee number (15) * average annual salary (55,000 RMB) =825,000 RMB. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-101

102 Parameter Value applied Unit Source of Information (please indicate document and page) Reference Correctness of value applied Appropriateness of information source DOE ASSESSMENT Comment Welfare is 44% of payroll. Land usage fee is 270,000 RMB. Administration fee is 35% of payroll and welfare, calculated to be 420,000 RMB. Other fee is 250,000 RMB. Value added tax (VAT) of electricity City maintenance & construction tax plus surtax for education expenses 17 % Feasibility Study Report/ page % National policy /FSR/ Thus the total O&M cost is calculated as *10 4 RMB. The above estimations are done by qualified design institute and is assessed as credible and conservative. The value is derived from the document No.[1994]004, issued by the National Financial Ministry and National Revenue Ministry, which was also confirmed in document [1998]843 and [2006]47 issued by National Revenue Ministry. For this project, the VAT in and VAT out counterbalances each other, so VAT itself is not considered in IRR calculation. This is also conservative approach. City maintenance & construction tax is 7 % of VAT while Surtax for education expenses is 3% of VAT, which are derived from the document Project financial evaluation method and parameter Ver.03, issued by National Development and * MoV = Means of Verification, DR= Document Review, I= Interview Page A-102

103 Parameter Value applied Unit Income tax rate 24 % Depreciation residue 5 % Installed capacity 2.5 MW Project Lifetime 18 year Source of Information (please indicate document and page) Feasibility Study Report/ page 41 Feasibility Study Report/ page 41 Feasibility Study Report Feasibility Study Report/ page 41 Reference /FSR/ /FSR/ /FSR/ Correctness of value applied Appropriateness of information source DOE ASSESSMENT Comment Reform Committee and National Construction Ministry in July The value is derived from Feasibility Study report. The depreciation residue value is 5%. The value is from FSR and is incompliance with national regulation. The capacity is from Feasibility Study Report, and is proved by on-site validation. /FSR/ The value is from Feasibility Study Report. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-103

104 Table 4-2: Validation Table for Assessment of Financial Parameters, 2 nd phase Parameter Annual electricity generation Value applied Varying with years Unit MWh Source of Information (please indicate document and page) IRR/ER calculation spreadsheet Reference /IRR/ /ER/ /FSR/ Correctness of value applied Appropriateness of information source DOE ASSESSMENT Comment This value is calculated from engine demand of CH4 (CH4 consumption per generator) and amount of collected CH4. When amount of collected CH4 is more than engine demand, electricity generation is at rated power of generator. When amount of collected CH4 is less than engine demand, electricity generation is capped with the CH4 ratio. Engine demand of CH4 is derived from FSR. Amount of collected CH4 is calculated through Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site. Annual hot water production 3 Feasibility Study 61,970 m Report/ page 8 /FSR/ /IRR/ Please refer to the IRR/ER spreadsheets for electricity generation data. This value is from Feasibility Study Report. It is the estimation of hot water production in normal year, when electricity generation is MWh. Since in whole crediting period the annual electricity generation is below MWh (see IRR sheet), m 3 as annual hot water production is assessed as conservative. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-104

105 Parameter Value applied Total Investment 3,555 Electricity tariff (VAT Incl.) Hot water tariff(vat Incl.) Annual O&M costs Unit 10 4 RMB RMB/k Wh Source of Information (please indicate document and page) Feasibility Study Report/ page 46 Feasibility Study Report/ page 47 Electricity Tariff Evidence 3 Feasibility Study 12 RMB/m Report/ page RMB Feasibility Study Report /page 42, 43 Reference /FSR/ /FSR/ /ETE/ /FSR/ /FSR/ Correctness of value applied DOE ASSESSMENT Appropriateness of information Comment source The value of total investment is from Feasibility Study Report. It comprises of static investment 3508*10 4 RMB and fluid capital 46.93*10 4 RMB. According to the financial accounts for the 1 st phase, the actual total Investment of the 1 st phase is * 10 4 RMB. Since the 2 nd phase has the same electricity generation capacity as the 1 st phase, but it also comprises of heat recovery device, this increase of investment is reasonable. Thus the total static investment applied is evaluated to be credible and conservative. The tariff is derived from approved Feasibility Study Report. It is the available data at the time of investment decision. It is also cross-checked through latest electricity tariff of the project /ETE/, which is RMB/kWh, Based on the information above, electricity tariff (VAT Incl.) RMB/kWh is valid and conservative. This value is from FSR and assessed as credible. The annual O&M consists of maintenance cost, heavy repair, and other fee. The maintenance cost includes: Pump and Pipeline: 800,000 RMB * MoV = Means of Verification, DR= Document Review, I= Interview Page A-105

106 Parameter Value applied Unit Source of Information (please indicate document and page) Reference Correctness of value applied Appropriateness of information source DOE ASSESSMENT Comment Landfill Site: 350,000 RMB Water Usage: 342,400 RMB Equipments: 2,090,800 RMB. Heavy repair fee is 750,000 RMB. Other fee includes payroll, welfare, landfill usage, administration fee, etc. Other fee is 2,708,000 RMB. Thus the annual O & M is calculated to be *10 4 RMB. Value added tax (VAT) of electricity Value added tax (VAT) of hot water City maintenance & construction tax plus surtax for education expenses 17 % Feasibility Study Report/ page % Feasibility Study Report/ page % National policy /FSR/ /FSR/ The above estimations are done by qualified design institute and is assessed as credible and conservative. The value is derived from the document No.[1994]004, issued by the National Financial Ministry and National Revenue Ministry, which was also confirmed in document [1998]843 and [2006]47 issued by National Revenue Ministry. For this project, the VAT in and VAT out counterbalances each other, so VAT itself is not considered in IRR calculation. This is also conservative approach. City maintenance & construction tax is 7 % of VAT while Surtax for education expenses is 3% of VAT, which are derived from the document Project financial * MoV = Means of Verification, DR= Document Review, I= Interview Page A-106

107 Parameter Value applied Unit Income tax rate 24 % Depreciation residue 5 % Installed capacity 2.5 MW Project Lifetime 18 year Source of Information (please indicate document and page) Feasibility Study Report/ page 41 Feasibility Study Report/ page 47 Feasibility Study Report Feasibility Study Report/ page 53 Reference /FSR/ /FSR/ /FSR/ /FSR/ Correctness of value applied DOE ASSESSMENT Appropriateness of information Comment source evaluation method and parameter Ver.03, issued by National Development and Reform Committee and National Construction Ministry in July The value is derived from Feasibility Study report. The depreciation residue value is 5%. The value is from FSR and is incompliance with national regulation. The capacity is from Feasibility Study Report, and is proved by on-site validation. Feasibility Study Report of the 2 nd phase actually indicates 16 yr. for conservativeness and also to be consistent with 1 st phase, whose FSR indicates 18 yr, 18yr is used. This is assessed as credible and conservative. * MoV = Means of Verification, DR= Document Review, I= Interview Page A-107

108 CERTIFICATES * MoV = Means of Verification, DR= Document Review, I= Interview Page A-108

109 * MoV = Means of Verification, DR= Document Review, I= Interview Page A-109