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: Waste Heat Recovery and Utilisation for Power Generation Project of Digang Conch Cement Company Limited Version th November, 2006 A.2. Description of the project activity: The Project Activity is a waste heat recovery and utilization for power generation project located at the cement plant of Digang Conch Cement Company Limited at Digang Town of Fanchang County of Anhui Province. Digang Conch Cement Company Limited is subordinate to Anhui Conch Cement Group Company Limited The main objectives of the Project Activity are to develop the auxiliary waste heat power generation project of two 2500t/d clinker production lines and one 5000t/d clinker production line that have been built and to meet the electrical supply needs of Digang Conch Cement Company Limited and to reduce greenhouse gas emissions through the recovery and use of waste heat from the rotating kiln of the clinker production lines. The scale of construction of the project is kw and the project proposes to build four heat recovery boilers with one set of mixed-pressure admission condensing turbine-generator unit. The annual design power generation of the set of turbine-generator unit above amounts to 142,000 MWh and yearly power supply to cement production facilities is 132,060 MWh. The Project Activity supports the circular economy ideas as outlined most recently at a conference organized by the Chinese government, 1 and increases energy supply from clean energy sources and improves energy security at a time of energy shortage in the eastern provinces of China, 2 and will meet China s sustainable development needs. The Project Activity will reduce greenhouse gas emissions (CO 2 ) versus the baseline scenario, which is the continued supply from the regional power grid to meet the demand for power of the cement. Additionally the Project Activity will: significantly reduce harmful emissions (including SOx, NOx and floating particles), and thus improve the local environment lead to a reduction in the temperature of the vented hot air from about 380 C to 90 C and also reduce the volume of water that is consumed by the humidifying pump in the cooling towers and thereby save water resources in this area. lead to an increase in local staff employed by about 19 persons. 1 Source: China Daily Front Page, September 29 th 2004, where Minister Ma Kai, head of NDRC, is quoted. 2 There have been many articles on energy shortage in China including this latest one in the China Daily outlining how the supply - demand balance is expected to be reached again by 2006 after massive build out of predominantly coal fired power stations -

3 CDM Executive Board page 3 A.3. Project participants: Please list project participants and Party(ies) involved and provide contact information in Annex 1. Information shall be in indicated using the following tabular format. 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) Host Country: People s Anhui Conch Cement Republic of China (host) Company limited No Switzerland Cargill International SA No United Kingdom of Great Britain and Northern Ireland CAMCO International Limited 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. Note: When the PDD is filled in support of a proposed new methodology (form CDM-NM), at least the host Party(ies) and any known project participant (e.g. those proposing a new methodology) shall be identified. A.4. Technical description of the project activity: A.4.1. Location of the project activity: A Host Party(ies): The Host country is the People s Republic of China. A Region/State/Province etc.: The Project Activity is located in Anhui Province. A City/Town/Community etc: The cement plant is located at Digang Town of Fanchang County of Anhui Province. A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): The Project Activity is located at the cement plant of Digang Conch Cement Company Limited at Fanchang County of Anhui Province. The project s exact geographical coordinates are east longitude and north latitude is

4 CDM Executive Board page 4 Figure 1 shows the location of Anhui Province. Figure 2 shows the location of Digang Conch Cement Company Limited in Anhui Province. Figure 1. Map of Anhui Province Figure 2. Map of Anhui Province Showing Project Location Di Gang

5 CDM Executive Board page 5 A.4.2. Category(ies) of project activity: The project activity is relevant to sectoral scope 1 Energy. A.4.3. Technology to be employed by the project activity: The Project Activity makes use of advanced Kawasaki heat recovery technology and the power generation of clinker per ton amounts to 38.5 kwh, which comes up to the advanced international standard with the clear superiority of high efficiency of heat recovery and good effect of energy conservation. The project will not impact on the existing production process of cement. The main process of the Project Activity can be seen in Figure 3. Figure 3 The major process of the Project Activity

6 CDM Executive Board page 6 Preheater outlet (existing) Dust gas PH boiler1 (newly added) Kiln-tail electro static precipitator Kiln-tail fan (existing) Steam Steam turbine 3 Generator 4 Main step-down substation (existing) Hot water Steam Hot water Working Condenser (newly added) water treatment plant (newly added) Feedwat er Low-pressure flash Tank (newly added) Cooling tower (newly Used for boiler feedwater circulation Grate cooler outlet (existing) Dust gas AQC boiler2 (newly added) Kiln-head electro static precipitator On the basis of existing clinker production lines, the project will make feedwater recover the heat energy of low-temperature waste heat exhausted by cement clinker production lines through their own PH heat recovery boilers and AQC heat recovery boilers, to covert it into superheated steam, and then steam will be fed into steam turbine through the steam pipe, the heat energy will be converted into kinetic energy in steam turbine to enable turbine rotor to rotate at high speed, and then will be converted into mechanical energy to drive the generator to rotate, and final product electric energy will be generated. The exhaust steam of steam turbine condensed in the condenser will be fed into the boiler through boosting the pressure by the pump and then will be recirculated to the system. The waste gas that has participated in the heat exchange will enter the electro static precipitator of existing waste gas treatment system separately through the kiln-head and kiln-tail fans of the existing clinker production lines and then will be vented into atmosphere after the dust is removed. The model numbers and performance characteristics of the main equipment relating to the project can be seen in the table below (Table 1). Table 1. Major Equipment Employed by the Project Activity

7 CDM Executive Board page 7 Name of major equipment (Phase I) Model, specification and performance PH boiler Model: KAWASAKIBLW forced circulation boiler The most working pressure (boiler drum): 12.0 bara AQC boiler Model:KAWASAKIBLW natural circulation boiler The most working pressure (boiler drum): 12.0 bara Steam turbine Model: mixed-pressure admission condensing and auxiliaries Rated fan-out: (generator fan-out): 18500kW Generator Model: totally-enclosed self-cooling 3-phase AC synchronous generator Capacitance: 21765kVA Quantity (set) Point on Figure 3 Manufacturer KAWASAKI HEAVY INDUSTRIES, LTD Jiang Su Nantong Wanda Boiler Co. Ltd. Nan Jing Steam Turbine Co. Ltd. Nan Jing Steam Turbine Co. Ltd. A.4.4. Estimated amount of emission reductions over the chosen crediting period: The chosen crediting period for the Project Activity is 10 years. The staring date of the crediting period for the project is April 1st, During the crediting period, estimation of emission reductions of the project would be shown in the table below. Table 2 Estimation of emission reductions of the project Please indicate the chosen crediting period and provide the total estimation of emission reductions as well as annual estimates for the chosen crediting period. Information on the emission reductions shall be indicated using the following tabular format. Years 2007(Apr. Dec.) 76, , , , , , , , , , (Jan.- Mar.) 33,453 Total estimated reductions 1,094,840 (tonnes of CO 2 e) Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tonnes of CO 2 e) 109,484 A.4.5. Public funding of the project activity: Annual estimation of emission reductions in tonnes of CO 2 e

8 CDM Executive Board page 8 There is no public funding of the Project Activity

9 CDM Executive Board page 9 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: This Project Activity uses the approved consolidated baseline methodology ACM0004 (Version 2) titled Consolidated baseline methodology for waste gas and /or heat and/or pressure for power generation. This methodology also refers to ACM0002 (Version 6) Consolidated baseline methodology for gridconnected electricity generation from renewable sources and the latest version of EB (Version 2) Tool for the demonstration and assessment of additionality. B.2. Justification of the choice of the methodology and why it is applicable to the project activity: The methodology ACM0004 applies to this Project Activity and the reasons are shown below: 1. This Project Activity is a waste heat power generation project of the cement plant of Digang Conch Cement Company Limited through the recovery and use of waste heat from the rotating kiln of the cement clinker production line. 2. Electricity generated from the Project Activity with heat recovery directly displaces power imported from the ECPN with fossil fuels. 3. Clinker production requires a predetermined blend of raw materials (limestone and coal) to produce a tonne of clinker, the balance of these raw materials cannot be adjusted and therefore the coal requirement per tonne of clinker produced does not change. That means the quantity of coal used to produce clinker will not increase after the implementation of the project activity. B.3. Description of how the sources and gases included in the project boundary: The grid that the project joins up with is the ECPN. Therefore the Project Boundary is defined as the rotating kiln generating the waste heat of the project, heat recovery boilers (PH boiler and AQC boiler), waste heat generator unit and its auxiliary facilities and all power plants which join up with the ECPN. Table 3 The emission sources and gases included in the project boundary Baseline Source Gas Included or Justification /Explanation not? Grid electricity CO 2 Yes Main emission source generation CH 4 No According to the methodology, excluded for the simplification of calculation in accordance with conservative principle.

10 CDM Executive Board page 10 Project Activity N 2 O No According to the methodology, excluded for the simplification of calculation in accordance with conservative principle. On-site fossil fuel CO 2 Yes Main emission source consumption due CH 4 No Excluded for the simplification of to the project calculation. activity N 2 O No Excluded for the simplification of calculation. B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: According to the methodology ACM0004, for the Project Activity the possible baseline scenario alternatives would be as follows:. 1. The proposed project activity not undertaken as a CDM project activity 2. Import of equivalent electricity from the ECPN; 3. Equivalent power supply from the existing or new captive plant on-site; 4. Other uses of the waste heat; 5. Equivalent power from captive plant and the grid; As to the option 4, there are no other potential demands for additional waste heat. The cement plant at which the project activity is located is rather far from the city, and it is not technically and economically feasible to supply the waste heat to the city. Therefore the waste heat could not be used for civil use and other industrial uses except for power generation. So the option 4 is not an acceptable baseline scenario alternative. As to option 1, the additionality analysis in B.5. will show specifically that the project will face many barriers if the project is not undertaken as a CDM project, so option 1 cannot be the baseline scenario. As to options 3 and 5, without existing captive power plant on-site, the cement plant requires the installation of a new coal fired power plant onsite to meet its demand. This would require the installation of a 18.5MW boiler. Coal fired power plants of less than 50MW cannot be constructed under Chinese national regulations. 3 Therefore small scale generation to the cement plant cannot be considered as an option for Anhui Conch Group. Chinese government provides the preferential policy to encourage that captive power plant can be adopted using other energy sources (such as diesel, natural gas, hydro, wind etc.) except coal. There are no local resources above, and so options 3 and 5 are not the feasible baseline scenario alternatives. Therefore, without the Project Activity, the power supplied by the project would certainly be supplied by the ECPN and newly added power plants in the future. So option 2 is considered to be the baseline scenario of the Project Activity. 3 The notice of National Development and Reform Committee Office on closures of small scale thermal power generation units transmitted by State Council Office, issued by State Council Office in 1999 with issued No.44.

11 CDM Executive Board page 11 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): According to the methodology ACM0004, the Tool for the demonstration and assessment of additionality is applied to demonstrate the additionality of the project activity versus the baseline scenario. Step 0. Preliminary Screening based on the starting date of the project activity. The Project Participants are proposing a start date for the crediting period which is the date of the completion of registration of the Project Activity and therefore this step is applicable. Step 1. Identification of alternatives to the project activity consistent with current laws and regulations. Sub-step 1a The definition of the alternatives chosen by the project activity The methodology ACM 0004 lists the possible baseline scenario alternatives: 1) The proposed project activity not undertaken as a CDM project activity; 2) The continuation of the current situation, namely, the continuation of waste heat emitted and the relevant power supplied by the ECPN; 3) The construction of a coal fired captive power plant with equivalent capacitance, and under this situation, the surplus heat energy emitted into atmosphere; 4) Other uses of waste heat; 5) A mix of 2) and 3). For the project, option 4 is not a feasible alternative because the cement plant at which the project is located is far away from the city and the project is not possible to be used for civil uses and other industrial uses. Therefore option 4 is excluded to be the possible baseline scenario alternative. Therefore, options 1,2,3 and 5 are considered to be the baseline scenario alternatives of the project activity. Sub-step 1b Forcible execution of the applicable laws and regulations. Scenario 1) The proposed project activity not undertaken as a CDM project activity This scenario is consistent with prevailing laws and regulations. In addition, according to the state industrial policies, the enterprises by utilisation of waste heat, waste pressure, and urban landfill for power generation and heat generation as well as low calorie fuel, and with installed a unit capacity below 500kw can be allowed to be grid connection if it meet the requirement of grid connection (The notice on further development of multipurpose use of resource issued by the State Council in 1996 with issued No.36). And also power generation plant with a unit capacity below 12MW (including 12MW) by comprehensive use of resources are not used in peak load regulation (The Notice on preparing important and big projects as well as leading example projects for power-saving, water-saving of and comprehensive use of resources as well as existing power plant with desulfurizing equipment issued by National the General Office of Development and Reform Commission (No ). In terms of notice, the government very emphasizes on support to improvement in technology of power-saving for those high power consumption sectors such as steel sector, nonferrous metal sector, petrochemical sector,

12 CDM Executive Board page 12 chemical sector, constructing material sector etc. It is obvious that utilisation of waste heat for power generation in cement plant is listed among sectors mentioned above, which it is highly supported and encouraged by state polices and regulations. Scenario 2) The continuation of waste heat emitted and the relevant power supplied by the ECPN; The ECPN is one of the six regional grids of China and according to the regulations and policies of power market of China, and the ECPN will have to guarantee power to meet the demand of the growing industrial and commercial sectors of the region. Meanwhile, hot air emission is the common practice of the cement enterprises currently, and it is not against the requirements of the current laws and regulations of China. Options 3 and 5 A coal fired captive power plant developed to supply whole or part of power and the continuation of the emission of waste heat. Coal fired power plants of less than 50MW cannot be constructed under Chinese national regulations 8. Indeed power plants of less than 200MW will not generally gain approval by the authorities. Moreover the Nation has an official programme of closures of small scale thermal power generation units and the announcement of the National Development and Reform Committee (No ) points out the first list of closures of small scale thermal power generation units. Therefore small scale generation to the cement plant cannot be considered as an option for Anhui Conch Group,which hopes to contribute to the improvement of the district environment through some encouragement measures on environmental protect including the CDM projects and their own devotion. Therefore options 3 and 5 are excluded to be baseline scenario alternatives. To sum up, only options 1 and 2 are the feasible baseline scenario alternatives of the project activity and the project activity is not the only alternative and the step is applicable because of the project undertaken as the CDM. Step 2. Investment Analysis Sub-step 2a Identify suitable analysis method This project will use sub-step 2b of the additionality tool; application of investment analysis for the project. The Tool 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 financial and economic benefits through the sales of electricity as well as the revenues from the CDM and therefore the simple cost analysis is not appropriate. The investment comparison analysis (Option II) is applicable when other investment options are available, in this case the comparison is for Conch to invest its capital in additional clinker production capacity that provides Conch with proven returns. The benchmark analysis (Option III) is chosen when there is no comparative investment an d therefore in this case it is not appropriate. Sub-step 2b Option II. Apply investment comparison analysis

13 CDM Executive Board page 13 Scenario 1) Scenario 2) In scenario 1 Conch would continue to purchase power from the ECPN and would use their free capital to invest in their core business (new clinker production lines). As such the anticipated IRR for a new investment in the cement sector is used for this scenario. It can be shown from recent investments in 2005 that a typical investment for Conch in new clinker production lines would achieve a project IRR greater than 20% 4. For scenario 1 therefore it is assumed that Conch would continue to purchase power from the grid and invest its capital in new clinker production lines achieving a return of over 20%. The investment returns of this scenario have been calculated on the basis of money saved on the power from the grid displaced from the Project Activity. Sub-step 2c. The calculation and comparison of the financial indicator From the feasibility study report of the project, the basic parameters for the investment analysis are shown below: Installed capacity: 18.5 MW Annual output: 132,060 MWh Project lifetime: 15 years Total investment: RMB million Tariff: RMB 0.33/KWh Crediting period: 10years The project IRR is 14.53% after tax. It is therefore clear that the project activity cannot provide the same level of return as investment in its core business; clinker production. This is significantly lower than the 20% or higher expected from these investments and as such this is not attractive to the Conch group. Moreover, the project has inherent technology risks that arise due to lack of experience in China and at the project site. Sub-step 2d. Sensitivity analysis The sensitivity analysis is used to show that the financial attractiveness is robust to reasonable variations in the critical assumptions. For a waste heat power project the critical factor is the money saved from not purchasing grid electricity and this is dependent upon the tariff and the power generation of the plant. Sensitivities have been tested from -10% to +10% and the results are presented below in Table 4 below. Table 4 Sensitivity analysis table of the project IRR 4 P94. The Typical Investment IRR of 4000t/d Clinker Production Line of Beiliu Conch Cement Plant is 20.28%. Oct P55. The Investment IRR of t/d Clinker Production Line of Xuan Cheng Conch Cement Plant is 18.18%. Aug

14 CDM Executive Board page 14 Variable -10% -5% 0 +5% +10% Tariff Power Generation It can be seen from Table 4 that the project is most sensitive to power tariff. The analysis also shows that within a 10% sensitivity the project will not achieve the financial returns comparable to an investment in clinker production. The tariff has the most direct impact on the economic evaluation indictors (IRR etc.) as the product price of the project activity. When the Tariff decreases 10%, the IRR goes down 29% and is 10.38%, which is obviously lower than that in Scenario 1. The power generation also has a marked effect on the project IRR. When the power generation decreases 10%, the project IRR will come down 21% to 11.43%, which is obviously lower than that in Scenario 1. However, the power generation of the project will be influenced directly by the clinker output and equipment operating hours. The calculation of the IRR above is on the basis of the ideal situation (equipment operating without fault yearly, operating staff working skilfully and cement production normally). According to the experience of the similar projects, the annual average runtime of the project equipment will be difficult to overrun 6000 hours at least for the first few years of the project activity. Meanwhile, because the project relies on the cement production as stated above and it is impossible for the project to increase coal input to increase power output, power generation will only be determined by the clinker production. Should demand for cement fall or even stop increasing in the way that it has been then the overcapacity in the sector will become evident and the competition will have a major impact on the profitability of the clinker production and even more so on the economics of the Project Activity. The analysis show that without further incentivisation, in this case from the CDM, Conch Group would not to invest in the project and would continue to purchase power from the ECPN and would use their free capital to invest in their core business, cement production. The investment analysis above is insufficient to prove that proposed CDM project with financial additionality, and so is the third step barrier analysis. Step 3 Barrier analysis According to Tool for the demonstration and assessment of additionality, if step3, barrier analysis is to be used, whether the proposed project activity faces the following barriers should be identified: (a) Preventing this kind of proposed projects from universal implementation; and (b) Not preventing at least one alternative from execution. Sub-step 3a Identify those barriers that will prevent this kind of proposed projects from universal implementation: Many barriers exist in the project activity and are difficult to be implemented, which include:

15 CDM Executive Board page 15 (1) Technology barriers a) Maintenance of compatible local equipment and parts supply facilities The key equipment of this project, PH heat recovery boiler and AQC heat recovery boiler, which applies the way of introducing the foreign technology and manufacturing and equipment procurement in China. Among them, PH heat recovery boiler introduces the general design and key parts of the Japanese company Kawasaki Heavy Industries Ltd, and the rest units are manufactured and all operating spare parts are manufactured and purchased in China. AQC heat recovery boiler only introduces the technology with the blueprint provided by the foreign party and is manufactured domestically. Although at present there are the similar waste heat recovery projects in China, all of which are provided technology and the complete set of equipment from abroad or the design and the equipment are provided by domestic enterprises. However, for this project the core parts of the project are designed overseas and the equipment manufacture and the component procurement are provided by domestic enterprises actually. In order for this to be compatible with the imported equipment much of this is being manufactured exclusively for the Digang waste heat recovery project and is not of standard design. It means that equipment manufactured specially and the components procured may not come to the requirement of foreign design, and may fail. It has increased the operating risk of the project and may be vital. b) The risk brought by the special transformation of the project equipment The project activity carries on the transformation at two points of the design to the well equipped equipment. (1) For the grate cooler, the tuyere of the AQC boiler is transformed and an additional extract opening is set up on the grate cooler to lead the air through settling chamber to be divided into two groups, one group entering the AQC boiler and the other group as the heat source of the powdered coal preparation system, emitted into atmosphere after the dust processing in the coal mill. (2) The inner heating surface of the PH boiler is changed to be the snake-shaped fluorescent tube. The transformation is special for a common heat recovery boiler and there is a risk in the design itself. In addition, the manufacture and installation of the new equipment will also bring risks. c) Equipment operation barriers Firstly, the major equipment of the Project Activity the heat recovery boiler, is easy to be adhered and worn out by the dust in the exhaust gas of high temperature and it thereby causes heat efficiency of the equipment to decrease and even lose effectiveness. In the Project Activity, the dust content of preheater exhaust gas of the heat recovery boiler is g/ Nm 3 and the dust is of stickiness in high temperature. Under the condition of high temperature, the dust in the exhaust gas is easily concentrated on the surface of the heat exchanger of the heat recovery boiler, and after a while a great deal of dust will be accumulated on the surface of the heat exchanger, which causes the heat resistance to increase and heat transfer surface to be worn out and reduces the efficiency of heat transfer and influences the efficiency of power generation of the project. Secondly, the equipment of power generation will have great effect on the efficiency of power generation of the project. Compared with the foreign advanced equipment, the domestic equipment of power generation has some faults, such as low efficiency of power generation and the air leakage of the boiler and so on. The equipment of power generation chosen by the project is manufactured domestically, and

16 CDM Executive Board page 16 the project owners therefore have to face the technology barriers brought by the installation of the domestic equipment. Finally, project owners lack of the experience of the operation of heat recovery for power generation, which makes the operation of the project become more difficult. d) Lack of qualified staff for the operation and maintenance of the equipment Because there is no precedent of applying the foreign design and domestic manufacture in this industry of China, qualified staff for the operation and maintenance of the equipment lacked. Staff for operating and maintaining the equipment need a long-term skill training. The extensive requirement for staff training has meant an increase both to the cost of the project as well as a serious effect on the implementation time and the efficiency of the project at its early period, which cause the economic benefits decreased greatly at the early period of the project. The Conch Group has to consider this kind of risk. (2) Investment barriers Additional costs are not included or foreseen in the feasibility study. After additional costs are added to the total project costs, the investment costs are set out in the table below. Table 4 Additional costs of the project Total Investment Costs (million RMB): Additional Costs (million RMB): 1. Duty VAT Freight Connection to boiler Electrical upgrade Safety & Security Inspection Cooling water pipeline After sales service Non-standard equipment 0.41 Total Additional Costs (million RMB) Revised Total Investment Costs(million RMB) It can be seen from the table above that the total investment of the project is about 163 million RMB, which is the enormous investment for the Conch Group. The company s portfolio of investments has solely been in the field of cement and has not been in the procurement of technology to generate power. It is rather difficult for the Conch Group how to raise 163 million RMB needed by the project. In addition to the equity financing of the project, seeking bank loans is the main method for the Conch Group to develop project financing. The evidence shows that the cement sector has expanded rapidly during the past years. By 2005, China s cement production capability has reached billion tons but the current cement production maintains billion tons, so there is an over capacity of cement factories in China. Due to the risks stated above in the cement sector, banks has begun to limit loans in the cement sector

17 CDM Executive Board page 17 And as stated above, the project will face a series of existing technology barriers and risks and it is hard for the project to obtain the loans. Meanwhile, the newly additional costs of the project amount to 27,200,000 RMB, accounting for 16.64% of the total investment of the project which increase the cost of the project greatly. This makes the project unable to obtain bank loans. In addition, without the international financial market involved in the project, the project can not obtain the international financing. Without the bank loans and the international financing, the project cannot be implemented only depending on the equity financing of the project owners. Without the support of international financing (so is the fact ), the project activity would be postponed or abandoned due to the problem of raising funds, but the CDM can help the Conch Group to obtain additional benefits and develop financing channels and will help counteract the high early investment of the project and decrease the economic pressure of the operation of power plants obviously in the crediting period and then increase the rate of return and improve the economic indictor of the project and thereby enhance the ability of the project against the risks and make the Conch Group have more possibility to obtain financing on loan. (3) Common Practice Currently although there are the similar waste-heat recovery projects, the technology and compatible equipment are provided by abroad or the design and equipment are provide by China (details in Table 5). The form of most equipment manufactured and procured domestically and the technology introduced from abroad does not turn up in the projects implemented. Sub-step3b Illuminate that the identified barriers will not prevent at least one alternative from implementation (except the proposed project activity): Sub-step 3a shows that the smooth implementation of the project faces many prohibitive barriers. The barriers mentioned above will not impact on the continuation of current practice of Scenario 2(continuation of the procurement of the equivalent power from the ECPN). The project owner (the Conch Group) undertakes many risks in the process of the project, but CDM can help make up these risks through the project revenue. This step is applicable. Step 4 Comment Practice Analysis Sub-step 4a The analysis of the project similar to the proposed Project Activity In Anhui Province, from research and discussions with the technical experts 5 (from designers, manufacturers and the EPC companies) heat recovery boilers and turbines fitted to large cement works of similar size to the Project Activity have been identified and are listed in Table 5 together with any facilitating circumstances. The first project in the list was undertaken at the Ningguo site entirely with Japanese technology (this project was grant financed by the Japanese Government). Table 5. Other similar projects at similar sized cement plants and facilitating circumstances in the Anhui Province 5 In the investigation in the heat recovery project for power generation of Taishan Cement Plant, Taishan CDM project is the first waste heat recovery project for cement plant.

18 CDM Executive Board page 18 Project Name Public Source /reference Anhui Ningguo Cement Plant (4000 t/d) /LY31/ htm Facilitating circumstances Japanese NEDO granted Equipment Sub-step 4b Discuss any similar options that are occurring: The list above represents only a very small fraction of the possible plants that could make use of the waste heat recover system being proposed by the six cement factories in Anhui Province. In addition, the equipment is donated from abroad or designed and manufactured domestically. The form of the most equipment manufactured and procured domestically and the technology introduced from abroad does not turn up in the projects implemented. Step 5 Impact of CDM Registration Clearly the CDM revenue represents a significant stream of revenue for the Project assuming a conservative CER value of 7 per tonne and comparing it against avoided electricity purchases. For the cement plant, provided that the CDM revenue is part of the grossing revenue of the project, this potential benefit directly increases the investment return of the Project Activity and compensates for its increased cost and increased risks. It has already assisted the Project Owners to decide to proceed with the Project rather than continue to buy power from the regional power network. The increasing stream of revenue brought by the CDM revenue can help project owners properly maintain the new equipment and train the employees how to operate the new equipment and have enough savings to purchase power from the grid when the outage occurs. This is rather important for the first few years of the project (at that time CDM benefits have been obtained), because the problems of the operation have been solved generally in the later years of the crediting period. As stated earlier the only other projects to have been implemented that have adopted advanced Japanese technology have been entirely grant financed. These projects were intended as demonstration of the technology, but given that the investments occurred from 1998 and that there has been no subsequent investment from the private sector since this time, it is clear that without additional finance the sector will not adopt this advanced technology. The CDM therefore fills the funding gap that has become evident from the lack of take up of this technology. B.6. Emission reductions: B.6.1. Explanation of methodological choices: Calculate the emissions reductions of the Project Activity versus the baseline as per the Approved Consolidated Baseline Methodology ACM0004. Step 1: Project Emissions, PEy 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. Project Emissions are given as:

19 CDM Executive Board page 19 where: 44 PE OXID y = Qi NCVi EFi i 12 i (1) PEy : Project emissions in year y (tco 2 ) Qi : Mass or volume unit of fuel i consumed (t or m 3 ) NCVi : Net calorific value per mass or volume unit of fuel i (TJ/t or m 3 ) EFi : Carbon emissions factor per unit of energy of the fuel i (tc/tj) OXIDi : Oxidation factor of the fuel i (%) According to the feasibility study report, this project activity will not need auxiliary fuels to provide additional heat. Therefore, project emission (PEy) is zero. Step 2: Baseline Emissions, BEy Baseline emissions are given as: BE electricity, y = EGy EFelectricity, y (2) Where: EGy Net quantity of electricity supplied to the manufacturing facility by the project during the year y in MWh, and EFy CO 2 baseline emission factor for the electricity displaced due to the project activity during the year y (tco 2 /MWh). The baseline Scenario of this project activity is import of electricity from the grid (the option 2 calculating baseline emission factors in the methodology), and with the requirements of the methodology, the emission factor for displaced electricity is calculated according to the ACM0002 methodology. Determination of Operating Margin and Build Margin (OM & BM) EF (tco 2 /MWh) = (EF OM + EF BM ) / 2 (4) The Operating Margin emission factor (EF OMy ) is the generation-weighted average emissions per electricity unit of all generating sources serving the system, excluding zero or low-operating cost and must run power plants. It is calculated ex ante using a 3-year average, based on the most recent statistics at the time of PDD submission and is calculated using the following equation: EF OM = y=1,2,3 (Gen y / G y=1,2,3 ) * EF OMy (5) Where: Gen y is the total power generation, including imports, on the East china Power Network in year y EF OMy is the operating margin for the East China Power Network, including imports, in year y EF OM (tco 2 /MWh) = (1-I CCPN ) * Simple OM ECPN + I CCPN * Average OM CCPN (6)

20 CDM Executive Board page 20 Where: I CCPN is the percentage imports from the Central China Power Network to the East China Power Network Simple OM ECPN is the Simple Operating Margin of the East China Power Network Average OM ccpn + is the Average Operating Margin of the Central China Power Network Simple OM (ECPN) = (F SCE * CEF SCE ) / 1000 (7) Where: F SCE (t SCE /GWh) is the annual total fuel consumption for power generated on the East China Power Network expressed in tonnes of Standard Coal Equivalent 6 per unit of generated power; CEF SCE (tco 2 /t SCE ) is CO 2 emission factor for fuel used for power generation in the East China Power Network expressed per unit of Standard Coal Equivalent. Average OM CCPN = (F SCE * CEF SCE ) / 1000 * Gen total /Gen thermal Where: F SCE (t SCE /GWh) is the annual total fuel consumption for power generated on the Central China Power Network expressed in tonnes of Standard Coal Equivalent per unit of generated power; CEF SCE (tco 2 /t SCE ) is CO 2 emission factor for fuel used for power generation in the Central China Power Network expressed per unit of Standard Coal Equivalent. Gen total is the total generation on the Central China Power Network Gen thermal is the thermal generation on the Central China Power Network The CO 2 emission factor for Standard Coal CEF is calculated as: CEF SCE (tco 2 /t SCE ) = NCV SCE * (CC i * OXID i * 44/12) * 1/1000 (8) Where: NCV SCE (GJ/t SCE ) is the net calorific value of Standard Coal as obtained from the General Code for Comprehensive Energy Consumption Calculation (Chinese National Standard GB ); CC i (tc/tj) is the average carbon content for fuel i 7 used to generate power in the East China Power Network derived from IPCC default values for fuel carbon contents 8 ; OXID i is national standard fuel oxidation factor for coal 9 in China; and 44/12 is the carbon conversion factor from tonnes of C to tonnes of CO 2. 6 China typically converts all its energy statistics into metric tons of standard coal equivalent (t SCE ). One ton of standard coal equivalent provides between GJ/t SCE (low calorific value) and GJ/t SCE (high calorific value). Reference available online at 7 In the East China Power Network excluding the low-cost, must run sources, the principal fuel used to generate power is coal. A small amount of oil is also used. However, CO 2 emissions from oil comprise of less than 2.5% of total CO 2 emissions from thermal power plants on the ECPN so for the purposes of this calculation it is assumed that coal is the only fuel used. 8 Table 1-2; Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories : Workbook 9 Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories : Workbook (Table 1-4)

21 CDM Executive Board page 21 The Build Margin is the weighted average emission factor of the 20% most recent power plants built 10. The Build Margin emission factor is derived from the following equation: EF BM (tco 2 /MWh) = [ i, (EF i, * W i )] (9) Where: W i is the split according to fuel type of new capacity (%) amongst the 20% most recent plants built; and EF i, are the emissions factors of new plants of fuel type i included in the 20% most recent additions to the ECPN. The determination of the emission factor of new plants of fuel type i is calculated according to the best available technology targets for China, rather than to the average of operating power plants. The plants emissions factor of new plants is calculated according to the following equation: EF i (tco 2 /MWh) = (F BAT * CEF SCE ) / 1000 (10) Where: F BAT (t SCE /GWh) is the Chinese 2020 target for fuel consumption efficiency for Best Available Technology expressed in tonnes of Standard Coal Equivalent 11 per unit of generated power; CEF SCE (tco 2 /t SCE ) is CO 2 emission factor for fuel used for power generation in the East China Power Network expressed in tonnes of Standard Coal Equivalent. The CO 2 emission factor for Standard Coal is calculated as per the Operating Margin. The tables in Annex 3 show the results from the application of these equations and provide a further explanation of how these are derived and applied. The balance of electricity imports to and exports from the East China Power Network compared to the overall generation on the grid is such that a correction to the grid emission factor is considered unnecessary and is therefore omitted from the monitoring protocol. Step 3: Leakage Units Equation or Source Operating Margin emissions factor tco 2 /MWh Build Margin emissions factor tco 2 /MWh Baseline emissions factor tco 2 /MWh ( =OM*0.5+BM*0.5 ) Since the published data for China is reported as aggregated data rather than by each individual generating unit, the capacity to be included in the Build Margin is identified by direct comparison of two reporting years where the difference between the two years is approximately 20% of the most recent year. The following equation is being used to determine the reference year: % Recent Capacity Additions = [(C C n)/ C 2004]* 100 Where: C2004 is the capacity in 2004; and C n is the capacity in the reference year n. 11 BAT: China's target efficiency for 2010 (

22 CDM Executive Board page 22 According to the methodology no leakage is considered. Step 4: Emission Reduction Since the project emissions and leakage of the project are both zero, the emission reduction of the Project Activity is the baseline emission of the project. ER y = BE electricity,y B.6.2. Data and parameters that are available at validation: Data / Parameter: CO 2 emission factor for the ECPN (EF) Data unit: tco 2 / MWh Calculated ex ante as a weighted sum of emission factors of Operating Margin and Build Margin (see Annex 3). The emission factor is fixed throughout the crediting period. Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 / MWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) 12. and procedures actually applied : Any comment: - Data / Parameter: Operating Margin Emission Factor (EF OM ) Data unit: tco 2 / MWh Calculated ex ante as F SCE multiplied by the CEF SCE using 3-year average data Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 / MWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and procedures actually applied : Any comment: - Data / Parameter: Build Margin Emission Factor (EF BM ) Data unit: tco 2 / MWh Calculated ex ante as weighted average emission factor of the 20% most recent power plants built Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 / MWh Justification of the choice of data or description of Emission factor calculated according to the methodology presented in ACM0002: Consolidated baseline methodology for grid-connected electricity generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, 12

23 CDM Executive Board page 23 measurement methods and procedures actually applied : Any comment: - 19 May 2006) and DNV letter to the CDM Executive Board; Request for Guidance: Application of AM0005 and AMS-I-D in China dated 07/10/2005 Data / Parameter: Total fuel consumption per unit of generated power (F SCE ) Data unit: t SCE /GWh Total fuel consumption for power generated on the ECPN(expressed in Standard Coal Equivalent) per unit of generated power Source of data used: China Electric Power Yearbooks Value applied: 320 t SCE /GWh Justification of the Average of figure for 2002, 2003 and 2004 used according to the methodology choice of data or in ACM0002. description of measurement methods and procedures actually applied : Any comment: - Data / Parameter: CO 2 emission factor (CEF SCE ) Data unit: tco 2 /t SCE CO 2 emission factor for fuel used for power generation on the ECPN expressed per unit of Standard Coal Equivalent Source of data used: Own calculation Value applied: tco 2 /t SCE Justification of the Calculated as the product of the fuel calorific value (NCV SCE ) and the carbon choice of data or content for fuel i (CC i ) description of measurement methods and procedures actually applied : Any comment: - Data / Parameter: Net Calorific Value of Standard Coal (NCV SCE ) Data unit: GJ/t SCE Calorific Value of Standard Coal as obtained from the general code for Comprehensive Energy Consumption Calculation Source of data used: Chinese National Standard GB Value applied: 29.3 GJ/t SCE Justification of the All data for coal and fossil fuels in the Electric Power Yearbooks are reported choice of data or in standard coal equivalents. This allows for standardisation and aggregation description of in the sector and as such the NCV for SCE must be used for consistency. measurement methods and procedures actually applied : Any comment: - Data / Parameter: Carbon Content for fuel i (CC i ) Data unit: tc/tj

24 CDM Executive Board page 24 Average carbon content for fuel used to generate power in the ECPN Source of data used: Page 1.23 Table IPCC Guidelines for National Greenhouse Gas Inventories Value applied: 25.8 tc/tj Justification of the Carbon content of fuels by power station, by region or nationally is not choice of data or available in China. As such IPCC default values must be used and considered description of the best approximation for China. measurement methods and procedures actually applied : Any comment: - Data / Parameter: Oxidation factor for fuel i (OXID i ) Data unit: - National standard fuel oxidation factor for coal in China Source of data used: Page 1.23 Table IPCC Guidelines for National Greenhouse Gas Inventories Value applied: 100% Justification of the Oxidation factors by fuel by power station, by region or nationally is not choice of data or available in China. As such IPCC default values must be used and considered description of the best approximation for China. measurement methods and procedures actually applied : Any comment: - Data / Parameter: Split of capacity (W i ) Data unit: % Split according to fuel type of new capacity (%) amongst the 20% most recent plants on the ECPN Source of data used: China Electric Power Yearbook Value applied: 6.40% (hydro), 93.54% (coal), 0.00% (nuclear), 0.05% (wind) Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and procedures actually applied : Any comment: - Data / Parameter: Emissions factor for fuel i (EF i ) Data unit: tco 2 / MWh Emissions factors of new plants of fuel type i included in the 20% most recent additions to the ECPN calculated according to the best available technology targets as F BAT *CEF SCE Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 /MWh Justification of the choice of data or Emission factor calculated according to the methodology presented in ACM0002: Consolidated baseline methodology for grid-connected electricity

25 CDM Executive Board page 25 description of measurement methods and procedures actually applied : Any comment: - generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, 19 May 2006) and DNV letter to the CDM Executive Board; Request for Guidance: Application of AM0005 and AMS-I-D in China dated 07/10/2005 Data / Parameter: Fuel consumption per unit of generated power (F BAT ) Data unit: t SCE /GWh China national target for fuel consumption efficiency for Best Available Technology expressed in tonnes of Standard Coal Equivalent Source of data used: Value applied: 320 t SCE /GWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and DNV letter to the CDM Executive Board; Request for and procedures actually Guidance: Application of AM0005 and AMS-I-D in China dated 07/10/2005 applied : Any comment: - Data / Parameter: CO 2 emission factor for the ECPN (EF) Data unit: tco 2 / MWh Calculated ex ante as a weighted sum of emission factors of Operating Margin and Build Margin (see Annex 3). The emission factor is fixed throughout the crediting period. Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 / MWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) 13. and procedures actually applied : Any comment: - Data / Parameter: Operating Margin Emission Factor (EF OM ) Data unit: tco 2 / MWh Calculated ex ante as F SCE multiplied by the CEF SCE using 3-year average data Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 / MWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and procedures actually applied : Any comment:

26 CDM Executive Board page 26 Data / Parameter: Build Margin Emission Factor (EF BM ) Data unit: tco 2 / MWh Calculated ex ante as weighted average emission factor of the 20% most recent power plants built Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 / MWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and DNV letter to the CDM Executive Board; Request for and procedures actually Guidance: Application of AM0005 and AMS-I-D in China dated 07/10/2005 applied : Any comment: - Data / Parameter: Total fuel consumption per unit of generated power (F SCE ) Data unit: t SCE /GWh Total fuel consumption for power generated on the ECPN(expressed in Standard Coal Equivalent) per unit of generated power Source of data used: China Electric Power Yearbooks Value applied: 320 t SCE /GWh Justification of the Average of figure for 2002, 2003 and 2004 used according to the methodology choice of data or in ACM0002. description of measurement methods and procedures actually applied : Any comment: - Data / Parameter: CO 2 emission factor (CEF SCE ) Data unit: tco 2 /t SCE CO 2 emission factor for fuel used for power generation on the ECPN expressed per unit of Standard Coal Equivalent Source of data used: Own calculation Value applied: tco 2 /t SCE Justification of the Calculated as the product of the fuel calorific value (NCV SCE ) and the carbon choice of data or content for fuel i (CC i ) description of measurement methods and procedures actually applied : Any comment: - Data / Parameter: Net Calorific Value of Standard Coal (NCV SCE ) Data unit: GJ/t SCE Calorific Value of Standard Coal as obtained from the general code for Comprehensive Energy Consumption Calculation Source of data used: Chinese National Standard GB Value applied: 29.3 GJ/t SCE

27 CDM Executive Board page 27 Justification of the choice of data or description of measurement methods and procedures actually applied : Any comment: - All data for coal and fossil fuels in the Electric Power Yearbooks are reported in standard coal equivalents. This allows for standardisation and aggregation in the sector and as such the NCV for SCE must be used for consistency. Data / Parameter: Carbon Content for fuel i (CC i ) Data unit: tc/tj Average carbon content for fuel used to generate power in the ECPN Source of data used: Page 1.23 Table IPCC Guidelines for National Greenhouse Gas Inventories Value applied: 25.8 tc/tj Justification of the Carbon content of fuels by power station, by region or nationally is not choice of data or available in China. As such IPCC default values must be used and considered description of the best approximation for China. measurement methods and procedures actually applied : Any comment: - Data / Parameter: Oxidation factor for fuel i (OXID i ) Data unit: - National standard fuel oxidation factor for coal in China Source of data used: Page 1.23 Table IPCC Guidelines for National Greenhouse Gas Inventories Value applied: 100% Justification of the Oxidation factors by fuel by power station, by region or nationally is not choice of data or available in China. As such IPCC default values must be used and considered description of the best approximation for China. measurement methods and procedures actually applied : Any comment: - Data / Parameter: Split of capacity (W i ) Data unit: % Split according to fuel type of new capacity (%) amongst the 20% most recent plants on the ECPN Source of data used: China Electric Power Yearbook Value applied: 6.40% (hydro), 93.54% (coal), 0.00% (nuclear), 0.05% (wind) Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and procedures actually applied : Any comment: -

28 CDM Executive Board page 28 Data / Parameter: Emissions factor for fuel i (EF i ) Data unit: tco 2 / MWh Emissions factors of new plants of fuel type i included in the 20% most recent additions to the ECPN calculated according to the best available technology targets as F BAT *CEF SCE Source of data used: Own calculation based on data supplied in the China Electric Power Yearbook Value applied: tco 2 /MWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and DNV letter to the CDM Executive Board; Request for and procedures actually Guidance: Application of AM0005 and AMS-I-D in China dated 07/10/2005 applied : Any comment: - Data / Parameter: Fuel consumption per unit of generated power (F BAT ) Data unit: t SCE /GWh China national target for fuel consumption efficiency for Best Available Technology expressed in tonnes of Standard Coal Equivalent Source of data used: Value applied: 320 t SCE /GWh Justification of the Emission factor calculated according to the methodology presented in choice of data or ACM0002: Consolidated baseline methodology for grid-connected electricity description of generation from renewable sources (ACM0002/ Version 06, Sectoral Scope: 1, measurement methods 19 May 2006) and DNV letter to the CDM Executive Board; Request for and procedures actually Guidance: Application of AM0005 and AMS-I-D in China dated 07/10/2005 applied : Any comment: - B.6.3. Ex-ante calculation of emission reductions: According to B.6.1, the emission reduction of the Project Activity is the baseline emission of the project, namely: ER y = BE electricity,y =EG y *EF electricity,y Baseline emission factor EF y is determined in advance which is tco 2 /MWh. The yearly net power supply of the project amounts to 132,060 MWh according to the feasibility report of the project. Therefore the yearly emission reductions of the project will be estimated to be 109,484 tco 2 e. B.6.4. Summary of the ex-ante estimation of emission reductions: Year Estimation of project activity emissions Estimation of baseline emissions Estimation of leakage (tonnes of CO 2 e) Estimation of overall emission reductions

29 CDM Executive Board page 29 (tonnes of CO 2 e) (tonnes of CO 2 e) (tonnes of CO 2 e) 2007(Apr. Dec.) 0 76, , , , , , , , , , , , , , , , , , , , (Jan.- Mar.) 0 33, ,453 Total (tonnes of CO 2 e) 0 1,094, ,094,840 B.7. Application of the monitoring methodology and description of the monitoring plan: B.7.1. Data and parameters monitored: Q i Data / Parameter: Data unit: Ton or m 3 Auxiliary fuel used by the project activity Source of data to be used: measurement Value of data applied for the 0 purpose of calculating expected emission reductions in section B.5 Description of measurement The current capacity of auxiliary fuel will be monitored continuously methods and procedures to be Through the flowmeter installed at the auxiliary fuel entrance of the gas applied: turbine and the flowmeter at the preheating assistance pipe of heat QA/QC procedures to be applied: Any comment: recovery boiler Flowmeter will use the meter in accordance with the national and industrial standard and will be adjusted regularly according to the regulations of industrial common practice. Data / Parameter: Data unit: 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: EG GEN MWh/yr overall generation on-line monitoring Total power generation will be monitored continuously by the digital control system of the power plant and will be collected and archived by the CDM monitoring working group every month

30 CDM Executive Board page 30 QA/QC procedures to be applied: Any comment: Data / Parameter: Data unit: 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: Measuring instrument will be installed and adjusted according to the requirement of the power company and the technical supervision department EG AUX MWh/yr Auxiliary power On-line monitoring Power consumption of the cement plant of the project will be monitored continuously by the digital control system of the power plant and will be collected and archived by the CDM monitoring working group every month Measuring instrument will be installed and adjusted according to the requirement of the power company and the technical supervision department Data / Parameter: EG y Data unit: MWh/yr power supplied to the cement plant Source of data to be used: Calculation value(eg GEN EG AUX ) 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: The net power supply of the project equals to the total power generation from the project gained by monitoring minus the power consumption of the cement of the project obtained by monitoring and the calculation result will be collected according to the measure and be recorded and archived every month by the CDM monitoring working group. No B.7.2. Description of the monitoring plan: The figure below outlines the operational and management structure that the project operator will implement for the CDM Project Activity and to monitor emissions reductions and any leakage effects, generated by the project activity. Figure 4. Operational and Management Structure for Monitoring the Project Activity

31 CDM Executive Board page 31 Monitoring Management Quality responsibility Technical responsibility Commercial responsibility Responsibility for quality supervision Responsibility for data collection There are three key types of information that must be monitored according to the new proposed monitoring methodology Baseline methodology for greenhouse gas reductions through waste heat recovery and utilization for power generation at cement plants : 1) Measurable/calculated information that is collected once prior to validation of the Project Design Document 2) Documented evidences of various sorts that are collected once prior to validation of the Project Design Document 3) Information that must be monitored ex-post, notably: i. The total generation output from the Project ActivityEG GEN ; the electricity consumed in power plant EG AUX ;and the electricity supplied to the cement plants from the project activity EG y. ii. Qi is mass or volume unit of auxiliary fuels required to provide additional heat gain before entering the Waste Heat Recovery Boiler, NCVi is net calorific value per mass or volume unit of fuel i, and EFi is carbon emissions factor per unit of energy of the fuel i, therefore, the project emissions, PEy can be calculated based on these data. For items 1 and 2 above, copies of these values/documents will be included in the Project s Monitoring and Verification Plan, which the validator and verifier can check annually. For item 3 above, an outline of the specific ex-post monitoring plan for the Project is now described. Monitoring EG GEN,EG AUX,EG y The internal meters are maintained and recorded on a monthly basis by the cement plant. The meter readings can be checked against electrical sales records from the cement plant. The meters are calibrated according to the related internal procedures and by qualified staff from the local power grid company. Meter inspections are carried out with all parties to the meter reading being present to witness the reading. The net meters are the property of the East China Power Network and are maintained by them according to national calibration and maintenance procedures. Monitoring Qi,NCVi,EFi The cement plant is continuously monitoring Qi, mass or volume unit of auxiliary fuels during the crediting period of the project activity, meanwhile is randomly testing NCVi, and net calorific value per