CDM Executive Board. CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) Version 03 - in effect as of: 22 December 2006 CONTENTS

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1 Page1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) Version 03 - in effect as of: 22 December 2006 CONTENTS A. General description of the small scale 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 proposed small scale project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring Information Annex 5: Assessment of Biomass Availability 1

2 Page2 Revision history of this document Version Date Description and reason of revision Number January 2003 Initial adoption 02 8 July 2005 The Board agreed to revise the CDM SSC PDD to reflect guidance and clarifications provided by the Board since version 01 of this document. As a consequence, the guidelines for completing CDM SSC PDD have been revised accordingly to version 2. The latest version can be found at < December 2006 The Board agreed to revise the CDM project design document for small-scale activities (CDM-SSC-PDD), taking into account CDM-PDD and CDM-NM. 2

3 Page3 SECTION A. General description of small-scale project activity A.1 Title of the small-scale project activity: Leluasa Biomass Steam Plant in Lahad Datu, Sabah, Malaysia Version 2. 03/03/2008 A.2. Description of the small-scale project activity: This project aims to use biomass, which is a waste product of the Oil Palm milling process, as the fuel for a modern, highly efficient 16 tonnes per hour capacity, up to 16 Barg biomass -fired steam generation system to supply steam to the Leluasa Edible Oils refinery in Sabah, Malaysia. The project activity will be able to reduce emissions by displacing fuel oil, which is currently used to generate up to 16 t/h of steam in a package boiler for the refinery s own use. The energy plant will be sourcing the biomass waste from company-owned and neighbouring palm oil mills via fuel purchase agreements. This biomass is abundantly available in the region and is piled near the mills to decompose or sent back to the plantations to mulch. The palm oil refinery is currently operating a fuel oil fired boiler plant to supply steam for the refining process, burns diesel in engine electricity generators and purchases power from the electricity grid. The project is to replace the amount of steam produced from fuel oil and thus reduce greenhouse gas emissions from the refinery. The biomass energy system is developed and manufactured by Petra Boilers Sdn Bhd, a Malaysian company, which manufactures high efficiency boilers and biomass utilization systems. The boiler is a hydraulically-driven, water cooled reciprocating grate system that burns biomass efficiently. It has an air pre-heater on the flue gas and hydraulic push rod ash discharge from the firing chamber. The boiler meets Malaysian boiler code BG The project leads to technology and knowledge transfer from India ( Thermodyne India ) to Malaysia to facilitate local manufacturing of highly efficient biomass boilers. Being able to provide such technology locally will ensure local employment and reduce the foreign expenditures and currency risk of developing these renewable energy sources in Malaysia. Utilizing biomass energy as the fuel resource in this project is reducing the use of fossil fuel (diesel fuel oil) and increases the use of local renewable resources such as biomass waste. The project will include pollution control systems for the flue gas and proper disposal of ash and wastewater and will comply with the local environmental regulations. The current workforce will be trained to operate the new plant with updated controls and new qualified staff will be employed. The project will lead to economic sustainability, as the fuel source is a sustainable, indigenous resource, which reduces fuel imports and negative impact on the foreign exchange. The project will also have a positive impact on the economic performance of the palm oil refinery, as their energy production will become more reliable and efficient and eliminate the risks of fluctuating oil prices, which will enable more economic and reliable production in general. 3

4 Page4 A.3. Project participants: Name of Party involved (*) ((host) indicates a host Party) Private and/or public entity(ies) project participants (*) (as applicable) Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) Malaysia (host) Canada Leluasa Untung Sdn Bhd (private company) LFGC Corporation (private company) No No (*) In accordance with the CDM modalities and procedures, at the time of making the CDM-PDD public at the stage of validation, a Party involved may or may not have provided its approval. At the time of requesting registration, the approval by the Party(ies) involved is required. A.4. Technical description of the small-scale project activity: The project will replace an oil fired boiler with a biomass boiler. The following table summarizes the technical description of the baseline and CDM project scenario. Baseline and CDM Project Scenarios Characteristics Baseline Scenario Project Scenario Operating Boilers One unit of 16 T/h, 16 Barg steam One unit of 16 T/h, 16 Barg steam Fuel Input Fuel Oil Biomass Mesocarp Fibre, Palm Kernel Shells (PKS ) Electricity Input Plant diesel oil generators, Electricity grid system Same as Baseline A.4.1. Location of the small-scale project activity: The biomass boiler plant is located in the Lahad Datu area, Sabah State. As the plant is located in a designated industrial park approved by the Sabah government, the project blends in with the other operations in the area. The specific location is shown on the map in A

5 Page5 Malaysia Sabah Lahad Datu A A A Host Party(ies): Region/State/Province etc.: City/Town/Community etc: A Details of physical location, including information allowing the unique identification of this small-scale project activity : The project site has the following physical postal addresses; MDLD 5897, Lot 85, Tengah Nipah, Jalan Kastam Baru, Lahad Datu, Sabah, Malaysia Latitude : N Longitude ; E Figure 2 the map of the project location 5

6 Page6 A.4.2. Type and category(ies) and technology/measure of the small-scale project activity: The project is a small scale project activity and is comprised of replacing an existing oil-fired boiler, and complies to the project type: Type I Renewable Energy: Category I C, Thermal energy for the user Recovered biomass from the FFB currently discarded will be collected and transported to the Project, where the biomass will be weighed, then conveyed to the Boiler for fuel. The proposed technology includes new equipment to weigh, separate and use the biomass as fuel. Existing boilers cannot use biomass as fuel due to design limitations in the firing chamber. GHG emission reductions will be realized by displacing steam from oil-fired equipment by biomass combustion boilers for steam production. The energy in the form of steam will be for on-site consumption only. Project Technology The Project will use biomass boiler technology that will allow the plant to be operated solely on biomass fuel. The technology to be used is supplied and the equipment will be commissioned by Petra Boilers Sdn Bhd., a local systems manufacturer in Malaysia. Petra has a Technology Transfer Agreement with Thermodyne India of India, who has supplied biomass boiler systems to different countries, including a number of sites in South East Asia. The system used will have a fuel to steam efficiency of more than 80%, compared to 75% for most existing biomass systems. The history of biomass use in the Palm Oil Industry is that refineries prefer to use fuel oil for boiler fuel due to its higher heating value, and little or no use has been made of biomass for this application, except when utilizing the financial benefits from the CDM Program. The Project will therefore contribute to important technology transfer, and will show the lead for other refiners to follow in using an otherwise waste product and environmental contaminant for producing renewable energy to use in their processes. A.4.3 Estimated amount of emission reductions over the chosen crediting period: Table - Estimated emission reductions from the project Year Annual estimation of emission reductions in tonnes of CO 2 e , , , , , , , ,420 Total estimated reductions (tonnes of CO 2 e) 215,880 Total number of crediting years 7 Annual average over the crediting period 30,840 6

7 Page7 of Estimated reductions (tonnes of CO 2 e) A.4.4. Public funding of the small-scale project activity: There is no public funding in this project. A.4.5. Confirmation that the small-scale project activity is not a debundled component of a large scale project activity: The project activity is not a debundled component of a larger project activity and there is no registered small-scale CDM project activity and the Project proponent will not apply to register another small-scale CDM project activity: With the same project participants; and In the same project category and technology/measure; and Registered within the previous 2 years; and That has a project boundary within 1 km of the project boundary of the proposed small-scale activity at the closest point of a larger project activity. 7

8 Page8 SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the small-scale project activity: Baseline Methodology: As identified in A.4.2, and listed in Appendix B of the Simplified Modalities and Procedures for Small- Scale CDM project activities, the following project type and category are applicable to the Project: - Type I Renewable energy projects Category C Thermal energy for the user Monitoring Methodology: -Type I.C - Thermal energy for the user, The monitoring methodologies are set out in Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities. B.2 Justification of the choice of the project category: For Baseline Methodology: The baseline for the project activity is the GHG emissions from continued use of oil-fired boilers to meet the steam demand of the Leluasa Refinery. Type I.C, version 12 includes the baseline methodology for the thermal energy for the user; i.e., the biomass based steam supply to the extraction plants to displace oil-fired based steam. For Monitoring Methodology: The emission reductions are obtained by avoidance of emissions in the existing fossil fuel based steam boiler plant due to installing a new high efficiency biomass based steam generation plant. CO2 emitted by combustion of biomass waste is considered carbon neutral. The installed boiler capacity will be approximately 11 MWth. This is lower than 45 MWth limit which is noted as the maximum threshold for capacity in Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities. The methane avoidance aspect of the Project does not lead to direct emissions exceeding 15,000 tco 2 e annually (estimated Project emissions are less than 500 tco 2 e/a). Due to these reasons, the project can be considered under the above methodology. The methodology prescribes that the monitoring shall consist of metering the energy supplied to the end user; i.e., the palm oil refinery. A meter will be installed to monitor the amount of steam energy supplied from the biomass boiler plant. The meter readings will be used for the calculations of CO2 emission reductions as stated in the formulas in Section B.4. Different biomass types fed to the boiler will be measured separately and the heat value determined annually for each type of biomass. The annual Project emissions are also to be monitored to confirm the continuing applicability of the small-scale methodology, in that the direct project emissions do not exceed the 15,000 tco 2 e annual limit. 8

9 Page9 Project emissions arise from the use of electricity for the biomass boilers and the transport of biomass from the mills to the refinery, as well as the transport of ash from the boilers to disposal. B.3. Description of the project boundary: Referring to the Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities, project boundary is the physical, geographical site where the fuel combustion affected by the fuel-switching measure occurs and the physical, geographical site where the treatment of biomass takes place. In this case, the project boundary refers to the biomass generation plant itself, and the sites where the biomass is produced, as well as the transport between them and the disposal site for the ash from biomass combustion. There is no guidance in Appendix B on the boundary for the Baseline. Consistent with the approved small-scale methodology, CO 2 emissions from steam generation in fossil fuel-fired plants that are displaced due to the Project activity will be taken into account for the baseline determination. Default values from IPCC guidelines will be used. B.4. Description of baseline and its development: The baseline that will be used in this project falls under the category I.C Thermal energy for the user, version 12 in Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities. It will be for renewable energy that will displace the present use of fuel oil in steam production for the refinery. Selection of baseline scenario for the project activity Leluasa Untung Sdn Bhd identified the following realistic and credible alternatives to the project activity which could be implemented in order to meet the steam and power requirements of Leluasa Untung Sdn Bhd. These plausible alternatives were further analyzed with reference to the implications of implementing the alternatives. The plausible alternatives identified are illustrated below: Alternative 1 Continuation of grid based power supply and fossil-fuel based steam generation unit This alternative involves the fossil-fuel based generation unit to provide the in-house steam requirements while continuing to use the power from the grid. This alternative is in compliance with all the applicable legal and regulatory requirements and may be a part of the baseline. Alternative 2 Installation of lignite based steam and power generation unit This alternative involves setting up a lignite based cogeneration unit to provide the in-house steam and power requirements. This alternative is in compliance with all the applicable legal and regulatory requirements and may be a part of the baseline. However, this alternative would not be a credible and realistic alternative available with Leluasa Untung Sdn Bhd due to non-availability of lignite in the district where the project activity is located. It will face investment barrier as well due to increasing trend in lignite prices caused by world s shortage of lignite. In addition, this boiler system is too small to carry 9

10 Page10 the increased investment of coal port, coal conveyors and the flue gas treatment required. The GHG emissions from this type of installation are high per unit of steam production. Therefore, Alternative 2 may be excluded from further consideration. Alternative 3 Installation of natural gas based steam and power generation unit This alternative involves setting up a natural gas based cogeneration unit to provide the in-house steam and power requirements. This alternative is in compliance with all the applicable legal and regulatory requirements and may be a part of the baseline. However, this alternative would not be a credible and realistic alternative available with Leluasa Untung Sdn Bhd due to non-availability of natural gas in the district where the project activity is located. Therefore, Alternative 3 may be excluded from further consideration. Alternative 4 Installation of the project activity without CDM benefit This alternative involves setting up a biomass based generation unit to provide the in-house steam requirements. This alternative is in compliance with all the applicable legal and regulatory requirements and may be a part of the baseline. However, there are number of investment, technological and common practice related barriers (as elaborated in section B.5) which will prohibit the project proponent to implement this alternative without CDM benefits. Therefore, Alternative 4 is not considered further for arriving at the baseline scenario. From the above analysis, it follows that in absence of the project activity, the project proponent would have opted for fossil fuel based generation (Alternative 1) since this option is most applicable in Malaysia context where natural resources are very limited. Thus in the absence of the project activity, Leluasa Untung Sdn Bhd would meet their process steam demand from a fossil fuel based generation unit and their power requirement from local grid supply. Hence, the Alternative 1 is considered as the baseline for the project activity. For the renewable energy technology, which displaces fuel oil, the baseline will be the amount of fossil fuel used in TJ to produce steam at 15 bar, saturated conditions with an oil-fired boiler ( this is less heat content in the steam than the rated capacity of the boiler of 16 bar ). For the boilers, an efficiency of 85% will be used for the oil -fired boilers. This figure will be used throughout the emission reduction calculations. When the steam demand varies, the amount of fuel used will vary proportionally. To calculate the amount of fuel energy, the energy content of the steam will be divided by the average efficiency of the boilers. 10

11 Page11 Table B.1. Coefficient to be Used in Baseline Calculations No Description Units Value 1 Carbon Emission Factor, CEF tonnes C/TJoil CO2-Carbon Ratio (44/12) CO2 Emissions tonnes CO2/TJoil The calculation formulae for the baseline emissions is provided in Annex 3. The final draft of this baseline section was completed on 25/02/2008. Name of person/entity determining the baseline is given below. Mr.Gerald Hamaliuk LFGC Corporation 200 N. Service Road W., Unit 1, Ste. 410, Oakville, ON, Canada L6M 2Y1 Tel: Fax: gerry@lfgccorp.com LFGC Corporation is the CDM consultant to the Project and is a project participant listed in the Annex 1 of the document. 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 small-scale CDM project activity: The Project activity is a biomass-fuelled steam generation project that provides steam to the refinery. The Project activity qualifies to use the simplified methodologies that cover steam generation systems where the energy output is not exceeding 45 MWthermal. The boiler rating is 16 t/h at 16 barg. This corresponds to approximately 11 MWthermal and is thus lower than the prescribed threshold. Also, the methane avoidance aspect of the Project does not lead to a direct emission exceeding 15,000 tonnes CO 2 e annually. Direct project emissions are calculated to be 472 t/a CO 2 e for full year operation. Thus the simplified baseline and monitoring methodologies can be applied. The GHG emission reductions from the project activity are additional and would not have occurred in the absence of the proposed project activity. According to the attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities (ver. 5) the project participants shall provide an explanation to show that the project activity would not have occurred anyway due to at least one of the following barriers: 11

12 Page12 (a) Investment barrier: a financially more viable alternative to the project activity would have led to higher emissions; (b) Technological barrier: a less technologically advanced alternative to the project activity involves lower risks due to the performance uncertainty or low market share of the new technology adopted for the project activity and so would have led to higher emissions, (c) Barrier due to prevailing practice: prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions; (d) Other barriers: without the projects activity, for another specific reason identified by the project participant, such as institutional barriers or limited information, managerial resources, organizational capacity, financial resources, or capacity to absorb new technologies, emissions would have been higher. In absence of the project activity, the most likely scenario would be that Leluasa would continue to operate the oil-fired boilers and diesel generators and purchase incremental electricity from the local grid. There are limited alternatives to oil firing, as the area does not have access to the natural gas distribution grid, which could have been an alternative that would have reduced the GHG emissions. The barrier analysis below is made as a comparison of the two scenarios: 1) Continuation of current practice: supply from fuel oil 2) Proposed project activity: supply from biomass generation plant (a) Investment barrier: The refinery has an oil -fired package boiler installed, which is still operational. Annual boiler inspections are carried out and show that the boiler is in good maintenance condition and the efficiency levels are acceptable. Also the flue condition was good as all parameters meet the Department of Environment s environmental regulation. Thus the current supply from the boiler plant, self generation and electricity grid meets the requirements of the refinery and is expected to do so in the future years. There is therefore no immediate need to change the current practice. The biomass generation plant involves the installation of new equipment and an investment cost of approximately RM 6 Million for the equipment, installation and commissioning. As the biomass generation projects of this type are relatively new in Malaysia, there is no special finance scheme available and the bank finance must normally be based on the financial performance and collateral of the borrower. The financial risk in the project can be summarized as follows: Price of biomass fuel: Biomass waste is abundantly available in Sabah and the price level is relatively low due to a low demand for biomass. As biomass energy projects are promoted in Malaysia and are a part of the government s energy policy, it is expected that the number of projects will increase in the future and increase the demand for biomass. It is anticipated that most of these projects will be conducted using the CDM Program. This can lead to increased prices for fuel. 12

13 Page13 Operation and maintenance: The technology is new and will require more maintenance than a conventional oil-fired boiler plant. Furthermore, the staff to operate and service the plant must be skilled in biomass generation operation, which is more specialized than conventional boiler operation. (b) Technological barrier: Utilizing EFB and other biomass residues for combustion and energy production is new in Malaysia outside of the oil refining operations. As the technology is not readily available in Malaysia and the capacity to design and manufacture some of the parts does not exist, there is a technology barrier that leads to higher risk and higher costs for the project than in a situation where conventional technologies were to be used. Skepticism about performance and reliability of new biomass boiler technology is one of the factors limiting project development. (c) Barrier due to prevailing practice: The majority of the industrial plants in Malaysia are using fossil fuels to generate steam. The project introduces both new technologies and a new fuel resource which is unfamiliar to the refinery s management and staff. Hence they are not willing to invest or take the risk of such a major change in the energy supply. The refinery will maintain the existing boiler plant as a standby supply in order to secure their energy supply in case the biomass energy plant cannot supply. This underlines that the technology is considered new and barriers exist to its acceptance in Malaysia. (d) Other barriers In-house knowledge of biomass energy technology at Leluasa is limited and, as the technology is new, there are a limited number of technology providers in the Malaysian market. This limits the amount of information there is available for Leluasa when evaluating biomass generation projects. This situation leads to reluctance in venturing into such a project. National policies and circumstances relevant to the baseline Malaysia has a national policy of promoting the use of renewable energy. This policy was announced as a part of the 8th Malaysia Plan in 2001 and the target is to increase the power production from renewable energy sources. So far, the implementation of this policy has been limited as only a few new biomass energy plants have been established and connected to the grid system in Sabah. This Project is in line with the government s policy of fuel diversification and will displace fossil fuel consumption with renewable energy sources such as biomass. At present there is no direct program or regulation limiting the future use of fuel-oil and grid generated electricity. Therefore, there are no national circumstances or policies that would reduce the use of oil and electricity in the baseline. The use of oil-fired boilers is in compliance with all applicable legal and regulatory requirements in Malaysia as long as all the local safety and pollution standards are met. Impact of CDM registration The approval and registration of the CDM project activity will alleviate the identified barriers by diversion of some of the risk in the project to the CDM partner and by providing additional revenue from the sale of emission reductions. The revenue from the CDM Program lifts the Project above the minimum 13

14 Page14 risk adjusted return required to invest in the new equipment and to take the performance risk of the new technology. B.6. Emission reductions: B.6.1. Explanation of methodological choices: The emission reductions can be calculated using the following formula: ERy = BEy PEy Ly Where: ERy: Emissions Reductions (t CO2e) in year y BEy: Emissions in the baseline scenario (t CO2e) in year y PEy: Emissions in the project scenario (t CO2e) in year y Ly: Leakage (t CO2e) in year y Leakage will be addressed using the option of L 1 from Version 12 of the Methodology. The Table below shows the amounts of wastes from processing Oil Palm Fruits to produce crude palm oil. The source is the Malaysian Palm Oil Board reports and data from Sabah is segregated to show the amounts of mesocarp fibre and palm kernel shells available in the region. Sabah is a relatively small state and the palm oil plantations are concentrated about the Lahad Datu, Sandakan and Tawau centers. These centers are within a 150 km radius of Lahad Datu. The state of Sabah is on the island of Borneo, so is isolated from the rest of Malaysia and the opportunity to sell or use the waste materials is limited to the immediate vicinity of the palm oil mills. BIOMASS AVAILABILITY IN THE STATE OF SABAH, MALAYSIA Source: Malaysia Palm Oil Board See detail in Annex 3 for the ER and PE calculations. B.6.2. Data and parameters that are available at validation: Data / Parameter: Average Boiler Efficiency Data unit: % Description: Amount of energy from fuel oil converted into steam Source of data used: Boiler manufacturer s specifications Value applied: 85% 14

15 Page15 Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: The boiler manufacturer specifies an efficiency rating of 82 to 85%. For conservativeness, a rating of 85% will be used. Data / Parameter: Boiler Operation Time Data unit: Hours/year Description: Plant operation is continuous Source of data used: Plant records Value applied: 7920 Justification of the The plants operate continuously except for shutdown periods and maintenance choice of data or requirements for the boilers or the processing equipment. Steam used in the description of operations will be continuously measured by a steam meter. measurement methods and procedures actually applied : Any comment: Data / Parameter: Electricity drawn from grid for the boiler plant Data unit: MWh/yr Description: As above Source of data used: Estimate of additional power required for the biomass boiler vs. the oil-fired boiler. Value applied: 400 Justification of the The electricity used will be metered separately from the rest of the plant. choice of data or description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of Baseline Fuel Consumption TJ/year Energy from oil used for the refinery operations Steam flow, pressure and heat value for saturated steam from International Steam Tables Calculated based on total steam used Total steam used is calculated from the capacity of the boiler and using 7920 hr/a operating time. Actual steam produced and sent to the refinery will be metered. 15

16 Page16 measurement methods and procedures actually applied : Any comment: Data / Parameter: Emission Coefficient of Fuel Displaced Data unit: tco2e/tj Description: Source of data used: IPCC default values Value applied: Justification of the Derivation shown in Table B.1 in this PDD. choice of data or description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Emission coefficient for Grid Data unit: tco 2 e/mwh Description: Amount of CO 2 emitted from power generation Source of data used: IPCC default value from AMS.I.D. Value applied: 0.8 Justification of the The amount of electricity used is small, and the use of the default value makes choice of data or the evaluation more straightforward. description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: Data / Parameter: Data unit: Biomass Fed to Boiler t/a Mesocarp Fibre from local milling operations will be used for fuel. Leluasa estimates of steam required Up to 27,400 t/a Actual biomass usage will be weighed on a weighbridge in the trucks supplying the mesocarp fibre. Energy content of mesocarp fibre is determineded at 3866 kcal/kg and will be determined annually Biomass Fed to Boiler t/a 16

17 Page17 Description: Source of data used: Value applied: Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: Palm Kernel Shell from local milling operations will be used for fuel. Leluasa estimates of steam required Up to 8400 t/a Actual biomass usage will be weighed or calculated. Energy content of palm kernel shells is determined at 4151 kcal/kg and will be determined annually B.6.3 See Annex 3 B.6.4 Ex-ante calculation of emission reductions: 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) Year , ,420 Year , ,840 Year , ,840 Year , ,840 Year , ,840 Year , ,840 Year , ,840 Year , ,420 Total 3, ,184 0 (tonnes of CO 2 e) 215,880 B.7 Application of a 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 ID# 1 Thermal Energy TJ Steam Supplied to the refinery Steam meter with temperature and pressure compensation internally. 17

18 Page18 used: Value of data 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 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 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 Description of measurement methods and procedures to be Varies with production, up to 95,000 t/a estimated. 1. measured 2. Recording frequency : Monthly 3.Proportion of data to be monitored: 100% 4. Archived in electronic form Mandatory under methodology I.C ID#2 Capacity of transport carrier for EFB tonnes As above Record of trucks used for transport 10 tonnes estimated Trucks carrying the biomass will be recorded with the incoming amounts and reconciled with the weight of biomass consumed. ID#3 Electrical Energy kwh Electricity Consumed by the bio-energy plant 400 MWh estimated 1. measured 2. Recording frequency : Monthly 3.Proportion of data to be monitored: 100% 4. Archived in electronic form Meter provided by the electricity company ID#4 Tonnes of biomass Tonnes Biomass consumed by the steam boiler mesocarp fibre and palm kernel shell Between 8400 and 27,400 tonnes estimated 1. measured 2. Recording frequency : Monthly (aggregate) 3.Proportion of data to be monitored: 100% 18

19 Page19 applied: QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be used: Value of data 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 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: 4. Archived in electronic form Mandatory under methodology I.C ID#5 Distance biomass are transported km Distance from source of biomass to the boilers. Measure actual distance to source and invoices to determine volume from each source. 60 km one way estimated Weighed biomass to the boiler will be matched to the invoices from suppliers. Actual weights will be used for the biomass from different sources, then the invoice records will be used to confirm the source and determine the total km the feedstock travels from source to the boiler using the biomass. ID#6 Energy TJ/t Energy Content of Biomass used The total heat from biomass to the boiler will be calculated. If it is less than the amount calculated from steam with the oil-fired boiler efficiency, this value will be used in the ER calculations. 1. measured 2. Recording frequency : Annually 3.Proportion of data to be monitored: 100% 4. Archived in electronic form Measured by Third Party Laboratory B.7.2 See Annex 4. Description of the monitoring plan: B.8 Date of completion of the application of the baseline and monitoring methodology and the name of the responsible person(s)/entity(ies) 19

20 Page20 Mr. Gerald Hamaliuk LFGC Corporation 200 N. Service Rd. W. Unit 1, Ste. 410 Oakville, ON, Canada L6M 2Y1 Tel: Fax: LFGC Corporation is the CDM advisor and project participant to the Project and listed in Annex 1 of this document. Baseline Study completed 27/02/

21 Page21 SECTION C. Duration of the project activity / crediting period C.1 Duration of the project activity: C.1.1. Starting date of the project activity: The project activity started with the project evaluation and signing the ERPA in February, C.1.2. Expected operational lifetime of the project activity: 25 years C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period: 01/07/ years C C Starting date of the first crediting period: Length of the first crediting period: N/A C.2.2. Fixed crediting period: N/A N/A C C Starting date: Length: 21

22 Page22 SECTION D. Environmental impacts D.1. If required by the host Party, documentation on the analysis of the environmental impacts of the project activity: According to the Malaysian Environment regulations, renewable energy projects below 10 MWe are not required to prepare an Environmental Impact Assessment. As the plant is located in a designated industrial park approved by the Sabah government, there will not be any significant impact on neighbours or environment. The project must comply with the environmental regulations of the country and obtain the necessary approvals before commissioning and during operation of the project. The project will apply modern, efficient technologies and the environmental impact will be managed better than in the existing situation, as the biomass waste will be used for energy production with an efficient combustion and emission control. There are therefore no significant environmental impacts of the project activity. The following is the English translation of certificate of written approval issued by Department of Environment. The original document with native language is available during the validation. 22

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26 Page26 D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: An Environmental Impact Study is not necessary for this project. 26

27 Page27 SECTION E. Stakeholders comments E.1. Brief description how comments by local stakeholders have been invited and compiled: The Public Forum was held at Main Training Hall, LUSB Office, Lahad Datu, Sabah, Malaysia on June 28 th, E1.1 Official reports announcing a Public Forum of the project in local newspapers: 1. June14 th, 2007, The Borneo Post, Public Forum for Clean Development Mechanism (CDM) for LELUASA UNTUNG SDN BHD s Biomass Steam Generation Plant Project 2. June21 th, 2007, The Borneo Post, Public Forum for Clean Development Mechanism (CDM) for LELUASA UNTUNG SDN BHD s Biomass Steam Generation Plant Project 3. June 14 th, 2007, Morning Post, Public Forum for Clean Development Mechanism (CDM) for LELUASA UNTUNG SDN BHD s Biomass Steam Generation Plant Project 4. June 21 th, 2007, Morning Post, Public Forum for Clean Development Mechanism (CDM) for LELUASA UNTUNG SDN BHD s Biomass Steam Generation Plant Project 5. June 14 th, 2007, Daily Express, Public Forum for Clean Development Mechanism (CDM) for LELUASA UNTUNG SDN BHD s Biomass Steam Generation Plant Project 6. June21 th, 2007, Daily Express, Public Forum for Clean Development Mechanism (CDM) for LELUASA UNTUNG SDN BHD s Biomass Steam Generation Plant Project E1.2 There were 26 participants at the Public Forum. The attendee list is available at validation. E.2. Summary of the comments received: Question 1 What are the measures in terms of controlling the pollution? Question 2 27

28 Page28 Traditional boilers using fuel does not have any waste but the future biomass boilers will be producing waste, what is the measure to manage these waste? Question 3 How do you deliver the biomass from the mill? Question 4 How about traffic congestions caused by this influx of lorries and trucks? E.3. Report on how due account was taken of any comments received: For Question 1 The use of fossil fuel to be replaced by biomass is one aspect of controlling pollution. The boilers being built are according to local authorities standards and it is with approval from DOE. For Question 2 Yes, the fuel boilers don t generate waste but it produces more harm in terms of pollution compared to the biomass boilers. Biomass boilers produces ash and are not so toxic compared to the piling of EFB. The ash can be disposed back to the earth (for application) and it is minimal in terms of managing this waste. For Question 3 The delivery from the mills will most probably by lorries and if possible from the nearby mills. For Question 4 The initial starting phase, there will be some slight congestion but we have taken measures to widen the pavement for the entrance into Leluasa Untung Refinery and this widening caters for parking for these lorries and the main purpose is to reduce or maybe eliminate parking by the shoulder of the main road. 28

29 Page29 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Leluasa Untung Sdn Bhd Street/P.O.Box: MDLD 5897, Lot 85 Tengah Nipah, Jalan Kastam Batu Building: GSSB Complex City: Lahad Datu State/Region: Sabah Postfix/ZIP: Country: Malaysia Telephone: FAX: hs.lim@klk.com.my URL: Represented by: Title: General Manager Salutation: Mr Last Name: Lim Middle Name: Heng Sai First Name: Department: Production Division Mobile: Direct FAX: Direct tel: Personal Organization: LFGC Corporation Street/P.O.Box: 200 N Service Rd. W Building: Unit 1, Ste. 410 City: Oakville State/Region: Ontario Postfix/ZIP: L6M 2Y1 Country: Canada Telephone: FAX: jboissiere@lfgccorp.com URL: Represented by: Title: Senior Engineer Salutation: Eng. Last Name: Hamaliuk Middle Name: Peter First Name: Gerald 29

30 Page30 Department: Technical Mobile: Direct FAX: Direct tel: Personal 30

31 Page31 Annex 2 INFORMATION REGARDING PUBLIC FUNDING This Project has not and will not receive public funding from Annex 1 countries of any kind. 31

32 Page32 Annex 3 BASELINE INFORMATION BASELINE DATA 1 Average Boiler Efficiency 85 % 2 Boiler Operation Time 7920 hr/year 3 Electricity drawn from grid for the boiler plant 7920 hr/yr Project Emissions from Transport of EFB to the Steam Boilers Subject Km Number of trips Emission Factor tco 2 /km Project Emissions to Project Emissions from Electricity Consumption in Biomass Energy Plant Subject MW Running Hours/year MWh Project Emissions Heat value of the steam is taken from International Steam Tables at 15 Bar, saturated steam, of 2794 KJ/kg. About 20% of the condensate at atmospheric pressure and 95C ( heat value from the same Table is 398 KJ/kg ) is returned, so the heat returned to the boiler plant is 79.6 KJ/kg. Net amount of heat in the steam produced is therefore 2714 KJ/kg or 2714 MJ/tonne. 32

33 Page33 STEP 1 STEP 2 STEP 3 STEP 6 Year A B C* D** E=C*D F G*** H= Fx G I J*** K= I*J Steam Demand Steam Production Baseline Fuel Consumption Emission Coefficient of Fuel Displaced t/h TJ/year TJ/year tco2e/tj Baseline Emissions tco2e/ year Electricity Displaced by Project MWh Emission coefficient for Grid tco2e/m Wh Baseline Emission tco2e/ year Biomass Fed to Boiler t/a Emission coefficient for Biomass Decay tco2e/t Baseline Emissions S= E+H+ K-N-R Total Project Emissions Reductions , , , , , , , , , , , , , , , ,420 tco2e/ year tco2e/ year Total 215,880 *The Baseline Fuel Consumption C(TJ) is obtained by dividing the Steam Production B,(TJ) with an average boiler efficiency of 85%. B is calculated using steam heat value of GJ/t. ** Emission Coefficient of Fuel Displaced (tco2e/tj) is obtained from Table B.1. *** Emission Coefficient of Grid is obtained from default factor for diesel generated power ( 0.8 ). Project Emissions 33

34 Page34 STEP4 STEP 5 Year L M N = L*M O P Q R= O*P*Q Electricity Drawn from Grid Emission Coefficient for Grid Project Emissions Truck loads Emission Coefficient for truck Distance transported Project Emissions MWh tco2e/mwh tco2e/year no./a tco 2 e/km km/load tco 2 e/year , , , , , , , ,

35 Page35 Annex 4 MONITORING PLAN This section details the steps taken to monitor on a regular basis the GHG emission reductions from the Project. The main components covered within the monitoring plan (MP) are: 1. Parameters to be monitored and how the data will be collected 2. The equipment to be used in order to carry out monitoring 3. Operational procedures and quality assurance responsibilities 4. Operational management structure Figure 3 outlines the operational and management structure that Leluasa will implement to monitor emission reductions generated by the project activity. Leluasa will form an operational and management team, which will be responsible for monitoring of all the parameters required. This team composes of a general manager and a group of operators. The operations will be responsible for ensuring that all data is recorded accurately, and that measuring equipment is calibrated. Further, it will be an integral part of his duties to ensure that the plant is run as efficiently as possible. The process supervisors, who are under the supervision of the operations manager, will be trained and assigned for monitoring of different parameters on a timely basis as well as recording and archiving data in an orderly manner. Training will be done with classes and an instruction manual for operators will be organized. Monitoring reports will be forwarded to and reviewed by the operations manager on a monthly basis in order to ensure the Project follows the requirements of the monitoring plan. Data archived will also be verified regularly by the DOE. The performance of the Project will be reviewed and analyzed by the consultant on a regular basis. 35

36 Page36 Operations Manager Process Supervisors Data Archiving Performance Review by Consultant DOE Verification Figure 3 Operational and management structure for monitoring the project activity Monitoring for the Project will begin with the start of operation in December, The monitoring plan details the actions necessary to record all the variables and factors required by the methodology. All data will be archived electronically, and data will be kept for the full crediting period, plus two years. Table 4a: Data to be collected or used to monitor emissions from the project activity, and how this data will be archived Q steam,y Data / Parameter: Data unit: t Description: The amount of steam produced by the new biomass-fuelled boilers Source of data to be Measured used: Value of data 126,700 Description of The amount of steam produced by the biomass boiler will be measured at the measurement methods outlet of the boiler. Steam production will be continuously monitored. and procedures to be applied: QA/QC procedures to The measuring equipment used will be maintained and calibrated according to 36

37 Page37 be applied: Any comment: Data / Parameter: Data unit: Description: Source of data to be used: Value of data Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: the manufacturer s instructions. The data will be crosschecked with the total amount of biomass fired to ensure consistency. Q biomass,y t The amount of biomass combusted in the boilers will be monitored. Measured varies The amount of biomass will be weighed on arrival at the Project facility. The equipment used to measure the weight of the biomass will be maintained and calibrated according to manufacturer s instructions. Monitored amounts can be cross-checked with biomass purchase receipts to ensure consistency. Q ash,y Data / Parameter: Data unit: t Description: The amount of ash produced by the boilers will be monitored. Source of data to be Measured used: Value of data 2,107 Description of The amount of ash will be weighed when leaving the Project facility. measurement methods and procedures to be applied: QA/QC procedures to The equipment used to measure the weight of the ash will be maintained and be applied: calibrated according to manufacturer s instructions. Monitored amounts can be cross-checked with biomass purchase receipts to ensure consistency. Any comment: This figure is used to calculate project emissions. CT biomass,y Data / Parameter: Data unit: t/truck Description: The average capacity of the trucks used to deliver biomass to the Project. Source of data to be Measured used: Value of data 10 Description of The average truck capacity for biomass transportation will be monitored through measurement methods actual sales records between the project proponent and biomass suppliers and procedures to be applied: QA/QC procedures to 37

38 Page38 be applied: Any comment: CT ash,y Data / Parameter: Data unit: t/truck Description: The average capacity of the trucks used to deliver biomass to the Project. Source of data to be Measured used: Value of data 10 Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: The average truck capacity for ash transportation will be monitored through actual invoices from the waste disposal site, or sales records between the project proponent and buyers of ash. Normally, the ash will be transported back to the vicinity of the biomass supply using the same trucks that supply biomass, so would not have any increased emissions, since the trucks return empty. Data / Parameter: Energy RFO,y Data unit: TJ Description: The amount of energy provided by FO in the baseline Source of data to be Calculated used: Value of data 405 Description of measurement methods N/A and procedures to be applied: QA/QC procedures to be applied: Any comment: 38