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

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1 CDM Executive Board page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006 CONTENTS A. General description of project activity B. Application of a baseline and monitoring methodology C. Duration of the project activity / Crediting period D. Environmental impacts E. Stakeholders comments Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring information

2 CDM Executive Board page 2 SECTION A. General description of project activity A.1. Title of the project activity: 18MW Power Generation Project Based on Waste Heat Recovery of the Clean Type Coke Ovens in Taigu, Shanxi, P.R.China Version: 01 Date: 25/06/2007 A.2. Description of the project activity: The coke plant with modern clean-type/heat-recovery coke ovens in Taigu County, Shanxi Province is owned by China Coal and Coke Jingda Limited. The Jingda Coke Plant will generate waste gas with temperature at 850±50 o C which does not have any calorific value but contains a lot of sensible heat. The proposed project uses the waste heat recovery boilers to collect the sensible heat of the waste gas and generate steam to run the generator for electricity production. The electricity generated by this project will be supplied to the North China Power Grid which is coal dominated. Without the project activity, the waste gas would have been released into the atmosphere without any power generation. The project activity would thus displace the electricity generation with fossil fuels from the North China Power Grid. The proposed project will install four waste heat recovery boilers (4 25t/h) which are connected to coke ovens and three steam turbine generators (3 6MW). The total installed capacity is 18MW with annual net electricity supply at 105,885MWh. The electricity supplied by the project activity will substitute the same quantity of electricity provided by the North China Power Grid which is dominated by fossil fuelfired power plants. The annual emission reductions of the proposed project are estimated to be 104,043tCO 2 e in a 10 year crediting period. The proposed project utilizes the waste heat from clean-type/heat-recovery coke ovens to generate electricity, which will contribute to the sustainable development of the host country in the following aspects: Helping positively in reducing global warming by avoiding the generation of CO 2 which would have been generated if equivalent quantity of electricity would have been taken from the North China Power Grid. Promoting the utilization of the modern clean-type/heat-recovery coke ovens in coke industry, which can realize the clean production and contribute to technological renovation and environmental improvement. Mitigating pollutions caused by SO 2, NO x and TSP s from the local fossil-fuel fired power plants. Avoiding the release of high temperature gas and then reducing the related thermal pollution. Generating occupational opportunities during the construction and operation stages of the project activity. 101 permanent staff will be employed for the operation and maintenance of the project. A.3. Project participants: The project participants are listed in Table A.3-1: Table A.3-1 Project participants

3 CDM Executive Board page 3 Name of Party involved (*)((host) indicates a host Party) People s Republic of China (host) Private and/or public entity(ies) project participants (*) (as applicable) China Coal and Coke Jingda Limited (project owner) Kindly indicate if the Party involved wishes to be considered a project participant (Yes/No) No A.4. Technical description of the project activity: A.4.1. Location of the project activity: P. R. China A Host Party(ies): A Region/State/Province etc.: Shanxi province A City/Town/Community etc: Jinzhong City/ Taigu County /Hui an Village A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): The project site is located inside Jingda Coke Plant. The geographical coordinates of the centre of Jingda Coke Plant are east longitude , and north latitude , 2km away from Houcheng Town, and 5.5km away from downtown of Taigu County. The project site is 5km away from national railway of Nantongpu Line and Taijiao Line, and about 5.1km from 108 national highway. Figure A.4-1 shows the location of the project. FigureA.4-1 The location of the project activity

4 CDM Executive Board page 4 A.4.2. Category(ies) of project activity: Category 1: Energy Industries (renewable/non-renewable sources) A.4.3. Technology to be employed by the project activity: The proposed project will utilize the sensible heat of the waste gas released from the SYR-03 clean-type/ heat recovery coke ovens for power generation. The waste gas emanating from the coke ovens, at the temperature of 850±50 o C, contains mainly nitrogen and carbon dioxide and does not contain any volatiles. Unlike traditional coking procedures, this new clean type coke oven is running under negative pressure, which avoids the spillage of any volatiles generated during the coking process. More importantly, in this coke oven, all the volatiles in the gas produced are completely burned to supply heat for the coking process before they are released to the atmosphere, which results in a stable flue gas without any volatiles. Since 1980s, China has started to study the clean-type/heat recovery coke ovens. The main advantages of this type of coke ovens are clean production, improved coke quality, low unit investment, efficient resources utilization by waste heat recovery and power generation, low air pollution by desulphurization, and no production of waste water with high content of phenol and cyanide. Thus it has great environmental and economic benefit. In the proposed project, waste heat recovery boilers are used to recover the sensible heat of the waste gas to produce steam, and the steam is then used to drive the steam turbine generator for power generation. The waste heat recovery boilers adopted in the proposed project are mid-temperature and mid-pressure type, and the steam turbine is of condensing type. The installed capacity of the generator is 18MW The project activity consists of four waste heat recovery boilers (4 25t/h), three steam turbines (3 6MW) and the associated generators (3 6MW). The technical specifications are as follows: Waste heat recovery boilers Type:Q850-25/3.82, vertical, mid-temperature and mid-pressure, natural circulation Steam output:25t/h Steam pressure:3.82mpa Steam temperature:450 Steam turbines Type:KN Capacity:6MW Steam input pressure:3.43mpa Steam input temperature:435 Steam quantity:29.4t/h Steam output pressure:15.0kpa Rated speed:3000rpm Generators Type:QF-K6-2 Rated Capacity:6MW Rated speed:3000rpm Voltage:10.5KV Power factor: 0.8 Efficiency:96.4%

5 CDM Executive Board page 5 The technology is well established and available in China and the project activity does not involve any technology transfer. A.4.4. Estimated amount of emission reductions over the chosen crediting period: It is expected that the proposed project activities will reduce GHG emissions by 1,040,430tCO 2 e over the fixed 10-year crediting period as shown in Table A.4-1 below: TableA.4-1 The estimated mount of CO 2 emission reductions Years Annual estimation of emission reductions in t CO 2 e 2008(July-December) 52, , , , , , , , , , (January-June) 52,021 Total estimated reductions (t CO 2 e) 1,040,430 Total number of crediting years 10 Annual average over the crediting period of estimated reductions (t CO 2 e) 104,043 A.4.5. Public funding of the project activity: No public funding from parties included in Annex I is involved in the project activity. SECTION B. Application of a baseline and monitoring methodology: B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity: 1. Consolidated baseline and monitoring methodology for waste gas and/or heat and/or pressure for power generation, ACM0004/Version02; 2. Consolidated baseline methodology for grid-connected electricity generation from renewable sources, ACM0002/Version06; 3. Tool for the demonstration and assessment of additionality (Version03). For more information please refer to: B.2. Justification of the choice of the methodology and why it is applicable to the project activity: The methodology ACM0004 applies to project activities that generate electricity from waste heat or the combustion of waste gases in industrial facilities. The methodology ACM0004 applies to electricity generation project activities: That displace electricity generation with fossil fuels in the electricity grid or displace captive

6 CDM Executive Board page 6 electricity generation from fossil fuels; Where no fuel switch is done in the process, where the waste heat or pressure or the waste gas is produced, after the implementation of the project activity. The proposed project activity fulfils all of the application requirements of ACM0004: The proposed project utilizes the waste heat from the coking process with clean-type/heat recovery coke ovens to generate electricity and this electricity will be supplied to the North China Power Grid which is coal dominated. The project activity would thus displace the electricity generation with fossil fuels in the power grid; After the implementation of the proposed project, no fuel switch is done in the production process of the waste heat. Thus it is appropriate to use ACM0004 for this project. The electricity generated by the project activity will displace the electricity from the North China Power Grid, in accordance with the methodology ACM0004, the emission factor should be calculated according to the approved baseline methodology ACM0002. B.3. Description of how the sources and gases included in the project boundary: In accordance with the requirements of ACM0004, the project boundary covers all the equipment from waste gas inlet of waste heat recovery boilers to the power generation equipment, including the waste heat recovery boilers, the electricity generation facilities such as the steam turbines, the generators and other auxiliary equipments plus all the power plants physically connected to the North China Power Grid. The region which is covered by the North China Power Grid includes Beijing, Tianjin, Hebei province, Shandong province, Shanxi province and the Inner-Mongolia autonomous region. For the purpose of calculating project emissions and baseline emissions, the emission sources and gases which are included in the project boundary are listed in Table B.3-1. Baseline Project Activity Table B.3-1 Project emissions and baseline emissions Included/ Source Gas Justification/Explanation excluded CO 2 Included Main emission source Grid electricity CH 4 Excluded Excluded for simplification. This is conservative. generation N 2 O Excluded Excluded for simplification. This is conservative. The proposed project doesn t have on-site fossil On-site fossil fuel CO 2 Excluded fuel consumption consumption due to CH 4 Excluded Excluded for simplification. This is conservative. the project activity N 2 O Excluded Excluded for simplification. This is conservative. B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: According to ACM0004, The baseline scenario alternatives of the project activity should include all possible options that provide or produce electricity for in-house consumption and/or sale to grid and/or other consumers. The project participant shall exclude baseline options that: do not comply with legal and regulatory requirements; or

7 CDM Executive Board page 7 depend on key resources such as fuels, materials or technology that are not available at the project site The possible alternative baseline scenarios which could supply the same quantity of electricity generated by the project activity are identified as follows: (a) The proposed project activity not undertaken as a CDM project activity; (b) Import of equivalent electricity from the grid; (c) New coal/diesel/natural gas/hydro/wind based captive power generation on-site; (d) A mix of options (b) and (c); (e) Other uses of the waste heat. Alternative (a): The proposed project activity not undertaken as a CDM project activity This alternative is in compliance with all applicable legal and regulatory requirements. However, this alternative is not attractive from the financial point of view (as detailed in Section B5 below) that making it practically prohibitive. Hence this option is not a part of the baseline scenarios. Alternative (b): Import of equivalent electricity from the grid In this alternative, the waste gas from the coke ovens would be released to the atmosphere without recovery and utilization of the sensible heat and no electricity will be produced. In other hand, the equivalent in-house power requirements of Jingda Coke Plant will be imported from the North China Power Grid. This alternative is in compliance with all applicable legal and regulatory requirements and will not face the barriers of technology, investment and resource limitation, so it can be a baseline scenario. Alternative(c): New coal/diesel/natural gas/hydro/wind based captive power generation on-site Alternatives such as natural gas/hydro/wind based captive power generation are not realistic due to the non-availability of the related resources. According to the Chinese laws, it is strictly forbidden to build coal fired captive power plants with the capacity of 135MW and below in the area under the coverage of the power grid 1. And the fuel-fired captive power plants with the capacity below 100MW will be strictly controlled 2. A coal/diesel based captive power generation station which supply the same quantity of electricity with the project activity will have a similar installed capacity (18MW). Hence it is not in compliance with the national legal and regulatory requirements. This alternative can be excluded from the baseline scenarios. Alternative (d): A mix of options (b) and (c) This alternative can be excluded from the baseline scenarios because alternative(c) is not a baseline scenario. Alternative (e): Other uses of the waste heat This alternative complies with all legal and regulatory requirements. However, there are no special national or regional policies to compel and promote the recovery and utilization of the waste heat. And furthermore, there are no suitable industrial consumers and requirements on heating system in the project area. The waste heat from Jingda Coke Plant has no other better utilizations. Therefore, this alternative cannot be considered as a baseline scenario. 1 Decision on strictly forbidding the illegal construction of fuel-fired power plant with the capacity 135MW and below, General Office of the State Council, April 15 th The provisional regulation on the construction of small fuel-fired power plants, August 1997.

8 CDM Executive Board page 8 It can be concluded from the above identified alternatives, that Alternative 2:Import of Equivalent electricity from the grid would be the baseline scenario, as it complies with all legal and regulatory requirements and faces no prohibitive barrier and is also most economically attractive. The baseline emissions will be assessed by using ACM0002. B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity (assessment and demonstration of additionality): In accordance with ACM0004, the additionality of this project is to be demonstrated and assessed by the latest version of Tool for the Demonstration and Assessment of Additionality (Version 03) created by CDM Executive Board and available on the UNFCCC website. Step 1. Identification of alternatives to the project activity consistent with current laws and regulations Sub-step 1a. Define alternatives to the project activity; The alternatives to the project activity are as follows: (a) The proposed project activity not undertaken as a CDM project activity; (b) Import of equivalent electricity from the grid; (c) New coal/diesel/natural gas/hydro/wind based captive power generation on-site; (d) A mix of options (b) and (c); (e) Other uses of the waste heat. Sub-step 1b. Enforcement of applicable laws and regulations Alternatives (c) and (d) do not comply with legal and regulatory requirements. All the other three alternatives are in line with applicable laws and regulations and they are already discussed in Section B.4. As the project activity is not the only alternative among those considered by the project owners that is in compliance with all the legal and regulatory requirements, then the proposed CDM project activity passes this step. Step 2. Investment analysis The additionality of the project is going to be established by conducting the step 2: Investment analysis. It is to determine whether the proposed project activity is economically or financially less attractive than other alternatives without the revenues from the sale of certified emission reductions (CERs). To conduct the investment analysis, the following sub-steps will be followed: Sub-step 2a. Determination of the appropriate analysis method The Tools for the Demonstration and Assessment of Additionality recommends three analysis methods, including simple cost analysis (Option I), investment comparison analysis (Option II) and benchmark analysis (Option III). The proposed project activity generates both CDM related income and electricity related income, then option I-the simple cost analysis can not be used. And the investment comparison analysis method (Option II) is only applicable to projects where alternatives should be similar investment projects. The alternative baseline scenario of the project activity is the power supply from the North China Power Grid rather than a new investment project. Therefore Option II can not be used either. Hence the Option III (benchmark analysis) will be used for the investment analysis of this project.

9 CDM Executive Board page 9 Sub-step 2b. Benchmark analysis (Option III) The indicator to be used for financial analysis is the equity Internal Rate of Return (IRR). The benchmark value of equity IRR for coking industry (on equity & after income tax) is chosen to be 13% in accordance with Economical Assessment and Parameters for Construction Project, 3 rd edition, page 204. Sub-step 2c. Calculation and comparison of financial indicators (i). Basic parameters for the calculation of financial indicators A project life time of 21 years was considered. According to the feasibility study of the project and Economical Assessment and Parameters for Construction Project, 3 rd edition, major parameters needed for calculation of IRR are listed in Table B.5-1. The discount rate of the project is taken as the Benchmark value of IRR (13%). The electricity tariff (after sale tax) is Yuan/KWh. Table B.5-1 Major Parameters for the calculation of IRR Installed Capacity 18MW Net electric power supply 105,885MWh/y Static total investment RMB million Yuan Equity RMB million Yuan Long term loan RMB million Yuan Annual operation and maintenance cost RMB million Yuan Electricity tariff (after sale tax) RMB Yuan/kWh Crediting period 10 years(fixed) Expected CERs price US$ 10/tCO 2 e The exchange rate 7.7(Yuan/US$) Benchmark value of IRR 13% (on equity, after income tax) Enterprise income tax 33% Value added (sale)tax 17% Associate charges of sale tax 8% (ii). Calculation and comparison of the equity IRR In accordance with the benchmark analysis (Option III), the project activity is considered financially not attractive if the equity IRR is lower than the benchmark value. Table B.5-2 shows the results of the calculated equity IRR based on the data listed in Table B.5-1. It could be noted that the equity IRR without the CDM revenues is 10.56%, which is lower than the benchmark value (13%). It means that the project is not attractive from a financial point of view. Considering CDM revenues, the equity IRR amounts to 24.00% that is much higher than the benchmark value. Therefore the CDM revenues could enable the project to overcome the investment barrier and make it become feasible. Table B.5-2 Comparison of the project IRR with and without CDM revenues IRR (equity, after income tax) Without CDM revenues 10.56% With CDM revenues 24.00% Benchmark value 13% Sub-step 2d. Sensitivity analysis The sensitivity analysis shall show whether the conclusion regarding the financial attractiveness is robust to reasonable variations of the critical assumptions. For such purpose, four parameters were selected as sensitive factors to check out their effects on equity IRR. 1. Static total investment

10 CDM Executive Board page Annual operation & maintenance cost 3. Annual power supply 4. Electricity tariff The results are shown in Table B.5-3 and Figure B.5-1 below. Table B.5-3 Sensitivity analysis of the project -10.0% -7.5% -5.0% -2.5% 0.0% 2.5% 5.0% 7.5% 10.0% Annual power supply 3.78% 5.49% 7.18% 8.87% 10.56% 12.27% 13.99% 15.74% 17.53% Electricity tariff 3.78% 5.49% 7.18% 8.87% 10.56% 12.27% 13.99% 15.74% 17.53% Annual operation and 13.98% 13.11% 12.26% 11.41% 10.56% maintenance cost 9.72% 8.88% 8.04% 7.21% Static total investment 11.59% 11.32% 11.06% 10.81% 10.56% 10.32% 10.09% 9.87% 9.65% Benchmark IRR 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 18.00% IRR 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% -10.0% -7.5% -5.0% -2.5% 0.0% 2.5% 5.0% 7.5% 10.0% Annual power supply Annual operation and maintenance cost Benchmark IRR Figure B.5-1 Electricity tariff Static total investment Sensitivity analysis of the project As shown in Table B.5-3 and Figure B.5-1, the equity IRR varies to different extent when the above four factors fluctuated within the range from -10% to 10%. The impacts of annual power supply and electricity tariff on the equity IRR are more significant compared with the annual operation and maintenance cost and the static total investment. The equity IRR will be always lower than the benchmark value whatever the static total investment changes. But when the annual operation and maintenance cost decreases by 7.5%, the equity IRR will reach the benchmark value. However, the annual operation and maintenance cost including material cost and labour cost will be increased but not decreased with the high inflation in China at present. It means that the equity IRR will not reach the benchmark value in fact with the variations of the annual operation and maintenance cost. If the annual power supply or the electricity tariff increases by more than 3.7%, the equity IRR begins to reach the benchmark value. However, the

11 CDM Executive Board page 11 scale of the coke plant is fixed by design therefore the waste heat utilized by the project activity is fixed too, so is the annual power supply. And the electricity tariff is determined by the local government department and will remain stable for quite a long period. It can be concluded that the +3.6% variations of either the annual power supply or the electricity tariff can not be realized and hence there is no possibility for the equity IRR to reach the benchmark. All the above analysis shows that it will not be possible to get equity IRR above the benchmark value without the CDM revenues. It is always true that the project activity is not financially attractive without the CDM revenues. It is concluded after the sensitivity analysis that the project activity is unlikely to be financially attractive. Then goes to step 4 (Common practice analysis) according to the Tool for the demonstration and assessment of additionality. Step 4. Common practice analysis Sub-step 4a. Analyze other activities similar to the proposed project activity: Shanxi province is the biggest coke production base in China. But most of the coke plants employ the traditional machinery coke ovens for coke production. And the waste gas from the traditional machinery coke ovens has been discharged directly or flared to the atmosphere. Since the first trial clean-type/heat recovery coke oven was put into operation in Houma city, Shanxi province in the year , it has not been used nationwide because of the higher initial capital investment and immature technology. The recovery of waste heat from the clean-type coke ovens for electricity generation is also not practiced widely in Shanxi province. The following table shows the projects that are similar to the proposed project activity. Table B.5-4 Projects that are similar to the proposed project NO. The project owner Installed capacity Annual electricity supply Remarks (MW) (GWh) 1 Shanxi Sinochem Huanda Industrial Co.Ltd On construction 2 Shanxi Province Gaoping City Sanjia Coking Co.Ltd On construction 3 Shanxi Qinxin Coal & Coke Co.Ltd On construction 4 Shanxi Shouyang Boda Industries Co., Ltd On construction 5 Shanxi Fengda Coking and Chemicals Smelting Co., Ltd On construction 6 Shanxi Gangyuan Coking & Chemicals CO., Ltd On construction 7 Shanxi Mingyuan Coal and Coke Co., Ltd On construction 8 Shanxi Jiexiu City Sanjia Coal & Chemicals Co., Ltd On construction 9 Shanxi Wanguang Coal and Coking Co., Ltd On construction 10 Shanxi Yingxian Coking & Chemicals Co., Ltd On construction 11 Shanxi Shouyang Xingguang Coking & Chemicals Co., Ltd On construction All the above listed projects are being applied as CDM projects because they are also financially infeasible without the CDM revenues. And all of them are under validation now. Sub-step 4b. Discuss any similar options that are occurring: 3 Environmental Impact Assessment of the Coke Plant (500,000 tons/y) of China Coal and Coke Jingda Limited in Taigu, Shanxi Province, the revised version, page 3-17, Second Design Institute of Chemical Industry, April, 2004.

12 CDM Executive Board page 12 The above eleven projects are similar to the proposed project. These projects are not economically feasible without the CDM revenues. All of them are in the process of CDM application. Therefore, the common practice analysis does not oppose but confirm the additionality of the proposed project. Step 5. Impact of registering the project with CDM The successful registration as a CDM project would bring obvious economic benefit to the project owner. The income from selling CERs will improve the equity IRR from % to % and therefore above the benchmark level, help the project to overcome the investment barrier and facilitate the investment decision and finally ensure the successful operation of the project. Therefore the emission reductions of the project activity could be realized. The revenues from the sale of CERs could be used to pay for the training of the workers and recruitment of experts in the related field. It will also contribute to the improvement of the equipment maintenance and make the operation of the project successful. Based on the above steps, it may be satisfactorily concluded that this project activity is not a baseline scenario and is clearly additional. B.6. Emission reductions: B.6.1. Explanation of methodological choices: As per the methodology ACM0004, the project emissions, baseline emissions, leakage emissions and emission reductions are calculated as follows: 1: Determination of project emissions and leakage emissions: In accordance with ACM0004, project emissions are applicable only if auxiliary fuels are fired for generation startup, in emergencies, or to provide additional heat gain before entering the waste heat recovery boiler. This is not the situation of the project activity. Hence the project emission is zero. And no leakage is considered for this project activity according to ACM :Determination of baseline emissions: Baseline emissions are given as: BE electricity,y = EG y EF electricity,y (B.1) Where: EG y is the net quantity of electric power supplied by the project activity during the year y in MWh; EF y is CO 2 baseline emission factor for the electricity displaced due to the project activity during the year y (tco 2 e/mwh). The electricity generated by this project activity will displace the equivalent grid electricity from the North China Power Grid. According to the ACM0004/Version 02, if the baseline scenario is determined to be grid power supply, the Emission Factor for displaced electricity is calculated as in ACM0002/Version 06. The office of National Coordination Committee on Climate Change under the DNA of China-the National Development and Reform Commission, has determined the baseline emission factors of Chinese regional

13 CDM Executive Board page 13 grids in Bulletin on Baseline Emission Factors of the Regional Power Grids of China 4 published on December 15, It has been adopted in this PDD. Please refer to Annex 3 for the details in determining the emission factor of the North China Power Grid. Emission Factor of the North China Power Grid According to ACM0002/Version 06, the baseline emission factor of the North China Power Grid (EF y ) is calculated as a combined margin(cm), consisting of the combination of operating margin(om)and build margin(bm) factors according to the following steps. The calculations are based on China Energy Statistical Yearbook , 2004 and 2005, China Electric Power Yearbook 2002, 2003, 2004 and 2005 and Revised 1996 IPCC Guidelines for national Greenhouse Gas Inventories. Step 1: The calculation of the Operating Margin emission factor (EF OM ) In accordance with ACM0002/Version 06, the Operating Margin (OM) can be calculated based on one of the four methods: (a) Simple OM (b) Simple adjusted OM (c) Dispatch data analysis OM (d) Average OM As per the methodology, the Dispatch Data Analysis OM (c) should be the first methodological choice. However, c is not selected because the dispatch data of the power plants connected to North China Power Grid are not publicly available. The Simple Adjusted OM (b) is not selected because the Load Duration Curve at power plant level of the North China Power Grid is not publicly available too. The simple OM (a) can only be used when low-cost/must run resources constitute less than 50% of total grid generation in average of the five most recent years. The North China Power Grid to which the project is connected is dominated by fuel-fired power generation, the low-cost/must run power resources such as hydro, geothermal, wind, solar, nuclear, and low cost biomass only account for 0.76% in 2004, 0.86% in 2003, 0.89% in 2002, 0.85% in 2001 and 1.13% in 2000, respectively (As per Table A3-1to Table A3-5 in Annex 3), of the total grid generation.therefore it is reasonable to use a -the simple OM method to calculate the OM emission factor of the North China Power Grid. The Average OM (d) is not selected because it can only be used where low cost/must run resources constitute more than 50% of the total grid generation. The Simple OM emission factor (EF OM ) of the North China Power Grid is calculated (ex-ante) as a 3-year generation-weighted average based on the most recent statistics available at the time of PDD submission and will not be modified during the crediting period of the project.. The Simple OM emission factor in year y (EF OM, simple, y ) of the North China Power Grid is calculated as the generation-weighted average emissions per electricity unit (in tco 2 /MWh) of all generating sources serving the grid, excluding low-operating cost and must-run power plants in year y: F i, j, y COEF i, j i, j EF OM, simple, y = GEN (B.2) j j, y Where: F i,j,y is the amount of fuel i consumed (in a mass or volume unit) by relevant power sources j in year y; 4 Bulletin of Determining the Emission Factors of Chinese Power Grid, China National Development and Reform Committee,

14 CDM Executive Board page 14 COEF i,j is the CO 2 emission coefficient of fuel i (tco 2 /mass or volume unit of the fuel), taking into account the carbon content of the fuels used by relevant power sources j and the percent oxidation of fuel in year y; GEN j,y is the electricity (MWh) delivered to the grid by source j; j refers to the power sources delivering electricity to the grid, not including low-operating cost and mustrun power plants, and including imports from other grid. The electricity delivered to the grid by source j GEN j,y is obtained as: GEN j,y = G j,y (1-Self consumption rate j ) (B.3) Where: GEN j,y is the electricity (MWh) delivered to the grid by source j; G j,y is the electricity (MWh) generated by the power sources j; Self-consumption rate j is the electricity consumption rate of the power source j. The CO 2 emission coefficient of fuel i, COEF i is obtained as: COEF i = NCV i EF CO2,i OXID i (B.4) Where: NCV i is the net calorific value per mass or volume unit of the fuel i, country-specific values; OXID i is the oxidation factor of the fuel i, IPCC default values; EF CO2,i is the CO 2 emission factor per unit of energy of the fuel i, IPCC default values. The baseline OM emission factor (EF OM ) is calculated as a 3-year generation-weighted average based on the most recent statistics available on the year 2003, 2003 and EF OM, simple, y GEN y EF OM = y GENTOTAL Where: y is the years 2002, 2003, and 2004; GEN y is the electricity supplied to the Grid in year y; GEN Total is the total electricity supplied to the Grid in three years. (B.5) Based on Table A3-6 to Table A3-14 of Annex 3, the calculated Simple OM Emission Factor of the North China Power Grid is: EF OM = tCO 2 e/mwh Step 2. The calculation of the Build Margin Emission Factor (EF BM ) In accordance with ACM0002/Version 06, the Build Margin emission factor EF BM, y is given as the weighted average emission factor of a sample of power plants m, as follows: F i, m, y COEF i, m i, m EF BM, y = GEN (B.6) m m, y Where: F i,m, y is the amount of fuel i(tce)consumed by plant m in year y; COEF i,m,y is the CO 2 emission coefficient (tco 2 /tce)of fuel i, taking into account the carbon content of the fuels used by plant m and the percent oxidation of the fuel in year y;

15 CDM Executive Board page 15 GEN m,y is the electricity (MWh) delivered to the grid by plant m; m is the sample group of power generation plants consists of either: The five power plants that have been built most recently, or The power plants capacity additions in the electricity system that comprise 20% of the system generation (in MWh) and that have been built most recently. According to ACM0004/Version 02, the Build Margin emission factor EF BM is calculated ex-ante based on the most recent information available on plants already built for sample group m at the time of PDD submission. Given the size of the North China Power Grid and the rate of plant additions to the grid (significantly more than 5 plants per year), the most recent 20% of capacity addition to the generation system is chosen as this would represent a sample group that comprises the larger annual generation. Because data at plant s level of the North China Power Grid are not available, the EB s guidance on deviations is adopted in this calculation. The detailed steps and the related formulas are as follows: Sub-step 1. Calculating the proportion of CO 2 emissions from solid, liquid and gaseous fuels for power generation in the total CO 2 emissions F COEF i, j, y i = COAL, j λ Coal (B.7) F COEF i, j i, j, y i, j, y i = OIL, j COEF i, j i, j λ Oil (B.8) F COEF i, j F i, j, y i, j, y i = GAS, j i, j i, j COEF λ Gas (B.9) F COEF i, j F i, j, y i, j i, j Where: F i,j,y is the amount of fuel i consumed (in a mass or volume unit) by relevant provincial sub-grids j in year y; COEF i,j is the CO 2 emission coefficient of fuel i (tco 2 /mass or volume unit of the fuel), taking into account the carbon content of the fuels used by relevant provincial sub-grids j and the percent oxidation of fuel in year y; COAL,OIL,and GAS refers to all forms of coal, oil and gas. Sub-step 2. Calculating the Emission Factor of fuel-fired power technology EF Fuel fired = Coal EFCoal, Adv + λoil EFOil, Adv + λgas EFGas, Adv λ (B.10) Where: EF Coal,Adv, EF Oil,Adv and EF Gas,Adv represent the related emission factor of the commercially available most advanced coal, oil and gas fired power technology, please refer to Annex 3 for more details. Sub-step 3. Calculating the EF BM of the North China Power Grid CAPFuel fired EFBM = EFFuel fired (B.11) CAP Total

16 CDM Executive Board page 16 Where: CAP Total is the newly increment of total installed capacity; CAP Fuel-fired is the newly increment of fuel-fired installed capacity. Based on the above statements and data, the calculated Build Margin emission factor of the North China Power Grid is: EF BM = tco 2 e/mwh The key information and data can be found in Table A3-15 to Table A3-20 of Annex 3. Step 3. The calculation of the baseline emission factor EF y Finally, the baseline emission factor (EF y ) is calculated as the arithmetic average of operating margin (OM) and build margin (BM), therefore: EF y = 0.5 EF OM EF BM = tco 2 e/mwh (B.12) 3: Estimation of emission reductions: In accordance with the methodology ACM0004/Versin 02 the emission reductions by the project activity are calculated as the difference between the baseline emissions and the project emissions. Since there are no project emissions and leakage emissions in the project activity so the emission reductions are equivalent to the baseline emissions. The ex-ante estimate of emission reductions is 104,043tCO 2 e/y (as per B.6.3 for details). B.6.2. Data and parameters that are available at validation: Data / Parameter: OXID i Data unit: % Description: The oxidation factor of fuel i Source of data used: Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Workbook, Table 1-2 on page1.6 and table 1-4 on page 1.8, chapter 1. Value applied: As per table A3-6, A3-9 and A3-12 of Annex 3 Justification of the choice of data or description of measurement methods IPCC default values are adopted in accordance with ACM0002/Version06. and procedures actually applied : Any comment: Low uncertainty Data / Parameter: NCV i Data unit: GJ/t,km 3 Description: The net calorific value per mass or volume unit of a fuel i Source of data used: China Energy Statistics Yearbook 2005, page 365 Value applied: As per table A3-6, A3-9 and A3-12 of Annex 3 Justification of the choice of data or description of measurement methods Local values should be used in accordance with ACM0002/Version06. and procedures actually applied : Any comment: Low uncertainty

17 CDM Executive Board page 17 Data / Parameter: EF CO2,i Data unit: tc/tj Description: The CO 2 emission factor per unit of energy of the fuel i Source of data used: Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Workbook, Table 1-2 on page1.6 and table 1-4 on page 1.8, chapter 1. Value applied: As per table A3-6, A3-9 and A3-12 of Annex 3 Justification of the choice of data or description of measurement methods If no local values of EF CO2,i are available, the IPCC default values should be used in accordance with ACM0002/Version06. and procedures actually applied : Any comment: Low uncertainty Data / Parameter: F i,j,y Data unit: 10 4 t,10 8 m 3 Description: The amount of fuel i (in a mass or volume unit) consumed by relevant provincial sub-grid j in year y Source of data used: China Energy Statistical Yearbook , 2004,2005 Value applied: As per Table A3-6, A3-9 and A3-12 in Annex 3 Justification of the choice of data or Authoritative national publications description of measurement methods and procedures actually applied : Any comment: Low uncertainty Data / Parameter: GEN j,y Data unit: MWh Description: Electricity delivered to the North China Power Grid by provincial sub-grid j in year y Source of data used: China Electric Power Yearbook 2002, 2003,2004,2005 Value applied: As per Table A3-7, Table A3-10 and Table A3-13 in Annex 3 Justification of the choice of data or Authoritative national publications description of measurement methods and procedures actually applied : Any comment: Low uncertainty Data / Parameter: Eff fuel coal, oil, gas - fired plants, Adv Data unit: % Description: Average power supply efficiency of the commercially available most advanced fuel-fired power plants in China Source of data used: Bulletin on Baseline Emission Factors of the Regional Power Grids of China Value applied: As per Table A3-16 in Annex 3 Justification of the choice of data or Authoritative government bulletin description of measurement methods and procedures actually applied : Any comment: Low uncertainty

18 CDM Executive Board page 18 Data / Parameter: Installed capacity Data unit: MW Description: Installed capacity of provincial sub-grids Source of data used: China Electric Power Yearbook 2002,2003,2005 Value applied: As per Table A3-17 to Table A3-19 in Annex 3 Justification of the choice of data or Authoritative national publications description of measurement methods and procedures actually applied : Any comment: Low uncertainty Data / Parameter: H r Data unit: % Description: Self-consumption rate of the provincial sub-grids of the North China Power Grid Source of data used: China Electric Power Yearbook 2003,2004,2005 Value applied: As per Table A3-7, A3-10, A3-13 in Annex 3 Justification of the choice of data or Authoritative national publications description of measurement methods and procedures actually applied : Any comment: Low uncertainty Data / Parameter: EF y Data unit: tco 2 /MWh Description: CO 2 baseline emission factor for the grid (the North China Power Grid) electricity displaced due to the project activity during the year y Source of data used: Calculated as the arithmetic average of operating margin (OM) and build margin (BM) Value applied: Justification of the choice of data or Calculated by Chinese DNA according to ACM0002/Version 06 description of measurement methods and EB guidance, using publicly available statistic data and procedures actually applied : Any comment: Low uncertainty Data / Parameter: EF OM Data unit: tco 2 /MWh Description: CO 2 operating margin emission factor of the grid Source of data used: Calculated ex-ante as the generation-weighted average emissions per electricity unit of all generating sources serving the system, not including low-operating cost and must-run power plants, as per the Bulletin on Baseline Emission Factors of the Regional Power Grids of China, Value applied: Justification of the choice of data or Calculated by Chinese DNA according to ACM0002/Version 06 description of measurement methods and EB guidance, using publicly available statistic data and procedures actually applied : Any comment: Low uncertainty

19 CDM Executive Board page 19 Data / Parameter: EF BM Data unit: tco 2 /MWh Description: CO 2 build margin emission factor of the grid Source of data used: Calculated ex-ante as the weighted average emission factor of the electricity delivered to the grid by the power plants that comprise 20% capacity additions of the system generation (in MWh)and that have been built most recently, as per the Bulletin on Baseline Emission Factors of the Regional Power Grids of China, Value applied: Justification of the choice of data or Calculated by Chinese DNA according to ACM0002/Version 06 description of measurement methods and EB guidance, using publicly available statistic data and procedures actually applied : Any comment: Low uncertainty B.6.3. Ex-ante calculation of emission reductions: As stated above, the project emission is zero and no leakage is considered so the emission reductions of the project equal to the baseline emissions as presented in formula (B.1) BE electricity,y = EG y EF y. As calculated in B.6.1, the EF y of China North Power Grid is tCO 2 e/mwh and the EG y is the annual electricity supplied by the project activity, the annual operation hour of the project activity is 6500h and the self-consumption rate of the project activity is 9.5% base on the Feasibility Study, therefore it is calculated to be 18MW 6500h ( ) = 105,885MWh/y. The annual emission reductions is ex-ante calculated to be tco 2 e/mwh 105,885MWh/y =104,043 tco 2 e/y B.6.4. Summary of the ex-ante estimation of emission reductions: Year Estimation of project activity emissions (tonnes of CO 2 e) Estimation of baseline emissions (tonnes of CO 2 e) Estimation of leakage (tonnes of CO 2 e) Estimation of overall emission reductions (tonnes of CO 2 e) 2008 (July-Dec.) 0 52, , , , , , , , , , , , , , , , , , , , (Jan.-June) 0 52, ,021 Total (tonnes of CO 2 e) 0 1,040, ,040,430

20 CDM Executive Board page 20 B.7. Application of the monitoring methodology and description of the monitoring plan: B.7.1. Data and parameters monitored: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be used: Value of data applied for the purpose of calculating expected emission reductions in section B.5 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comments EG Gen,y MWh Total electricity generated by the project activity during the year y Electricity meters 117,000 The electricity will be monitored continuously and the daily and monthly records in a paper format will be archived in the power generation station. Monitoring instrument will be subject to a regular maintenance and calibration by qualified entities in accordance with national regulations and standards. Low uncertainty EG Aux,y MWh The auxiliary electricity consumed by the project activity in year y Electricity meters 11,115 The electricity will be monitored continuously and the daily and monthly records in a paper format will be archived in the power generation station. Monitoring instrument will be subject to a regular maintenance and calibration by qualified entities in accordance with national regulations and standards. Low uncertainty EG y MWh Net quantity of electricity supplied by the project activity during the year y By calculation, EG y = EG Gen,y -EG Aux, y 105,885 EG y will be calculated by the measured amount of electricity generated by the project activity(eg Gen,y ) and the measured amount of auxiliary electricity consumed by the project activity(eg Aux,y ) This data is calculated from EG Gen,y and EG Aux,y, therefore the QA/QC procedure applied to EG Gen,y and EG Aux,y also could be applied to EG y. Low uncertainty

21 CDM Executive Board page 21 B.7.2. Description of the monitoring plan: As the project owner, China Coal and Coke Jingda Limited will be responsible for the implementation and will take all the responsibilities of the monitoring plan. The monitoring plan can be modified according to the requirements of DOE in order to make sure that the monitoring will be reliable, transparent and conservative. 1. The purpose of establishing monitoring plan The monitoring plan is established in order to ensure that the real, measurable and long-term GHG emission reductions for the project activity is monitored and reported. A credible, transparent and accurate data estimation, measurement, collection and tracking system will be set up in order to preserve the information needed for the verification of emission reductions. 2. The duration of the monitoring plan The duration of the monitoring plan will be the crediting period of the project activity (10 years). 3. Management operation China Coal and Coke Jingda Limited will establish a CDM project management office with responsibilities for all the project related activities including project management, contact with CDM EB and DOE, implementation of the monitoring plan, record and preservation of the monitoring data, Quality Assurance and Quality Control of the related data, documents and reports as well as management of the financial issues of the project activity. Staff of the CDM project management office includes the Deputy General Manager (responsible person), the CDM manager, the measurement worker, the record keeper and the financial person. Figure B.7-1 outlines the operational and management structure that the project owner will monitor emission reductions. Deputy General Manager China Coal and Coke Jingda Limited CDM manager Measurement Worker Record Keeper Financial Person Figure B.7-1 Operational and management structure of the project activity 4. The data which needs to be monitored The data needed to be measured are as follows: The total electricity generated by the project activity (EG Gen,y ): to be measured by the electricity meters at the exit of the generators; The auxiliary electricity consumed by the project activity (EG Aux,y ): to be measured by the electricity meters on site