BK Energia Itacoatiara Project in Brazil

Transcription

1 VALIDATION OPINION - CREDITING PERIOD RENEWAL BK Energia Itacoatiara Project in Brazil (UNFCCC Registration Ref. No. 0168) REPORT NO REVISION NO. 01

2 Report No: , rev. 01 VALIDATION OPINION - CREDITING PERIOD RENEWAL Date of first issue: Project No.: 28 July 2010 PRJC CCS-BRA Approved by: Organisational unit: Michael Lehmann Climate Change & Environmental Services Client: BK Energia Itacoatiara Ltda. Client ref.: Isaac Barrêto DNV CLIMATE CHANGE SERVICES AS Veritasveien 1, 1322 HØVIK, Norway Tel: Fax: Org. No: NO MVA Project Name: BK Energia Itacoatiara Project Registration Ref No: 0168 Country: Brazil Methodology: AMS-I.D Version: 17 Sectoral scope: 1 Methodology: AMS-III.E Version: 16 Sectoral scope: 13 GHG reducing Measure/Technology: GHG emission reductions from electricity generation from biomass residues ER estimate: tco 2 e over 7 years or tco 2 e/year Size Large Scale Small Scale Validation Phases: Desk Review Follow up interviews Resolution of outstanding issues Validation Status Corrective Actions Requested Clarifications Requested Full Approval and request for renewal Rejected In summary, it is DNV s opinion that the BK Energia Itacoatiara Project in Brazil, as described in the project design document of 23 August 2011 (version 4.6), meets all relevant UNFCCC requirements for the renewal of the crediting period. Hence DNV requests the renewal of the crediting period of the project. Report No.: Subject Group: Environment Indexing terms Report title: Key words BK Energia Itacoatiara Project in Brazil Climate Change Kyoto Protocol Validation Clean Development Mechanism Work carried out by: Luis Filipe Tavares, David Freire da Costa, Lumír Němeček, Andrea Leiroz Work verified by: Felipe Lacerda Antunes, Fernando Sasdelli Date of this revision: Rev. No.: Number of pages: 2 September No distribution without permission from the client or responsible organisational unit free distribution within DNV after 3 years Strictly confidential Unrestricted distribution 2009 Det Norske Veritas AS All rights reserved. This publication or parts thereof may not be reproduced or transmitted in any form or by any means, including photocopying or recording, without the prior written consent of Det Norske Veritas AS. Head Office: Veritasvn. 1, N-1322 HØVIK, Norway Renewal of Crediting Period Report Template, version 04,

3 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 Table of Content Page 1 EXECUTIVE SUMMARY VALIDATION OPINION INTRODUCTION METHODOLOGY Desk review of the project design documentation Follow-up interviews with project stakeholders Resolution of outstanding issues Internal quality control Validation Team 15 4 VALIDATION FINDINGS Participation of project participants Validity of selected baseline and monitoring methodology Applicability of selected baseline and monitoring methodology Validity of baseline Validity of monitoring plan Estimate of GHG emissions 23 Appendix A Validation Protocol Appendix B Curricula vitae of the validation team members Validation opinion for renewal of crediting period Report No , rev. 01 i

4 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 Abbreviations CAR Corrective Action Request CCEE Câmara de Comercialização de Energia Elétrica / Chamber for the Commercialization of Electric Power CDM Clean Development Mechanism CEAM Companhia Energética do Amazonas / Amazonas Energetic Company CEF Carbon Emission Factor CER Certified Emission Reduction(s) CH 4 Methane CO 2 Carbon dioxide CO 2 e Carbon dioxide equivalent DNV Det Norske Veritas DNA Designated National Authority ERU Emission Reduction Units(s) FAR Forward Action Request GHG Greenhouse gas(es) GWP Global Warming Potential INMETRO Instituto Nacional de Metrologia, Normalização e Qualidade Industrial / Metrology National Institute IPCC Intergovernmental Panel on Climate Change MME Brazilian Ministry of Mines and Energy MP Monitoring Plan N 2 O Nitrous oxide NGO Non-governmental Organisation ODA Official Development Assistance ONS National Electric System Operator PDD Project Design Document PROINFA Programa de Incentivo às Fontes Alternativas de Energia Elétrica / Alternative Electricity Sources Incentive Program SWDS Solid Waste Disposal Site UNFCCC United Nations Framework Convention for Climate Change UTE Unidade Termo Elétrica / Thermo Electric Unit VVM Validation and Verification Manual Page 2

5 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev EXECUTIVE SUMMARY VALIDATION OPINION DNV Climate Change Services AS (DNV) has performed an assessment of the request by BK Energia Itacoatiara Ltda. to renew the crediting period of CDM project activity 0168 BK Energia Itacoatiara Project in Brazil. The assessment was performed in accordance with the Procedures for renewal of the crediting period of a registered CDM project activity (version 05) and included an assessment of: (a) An impact of new relevant national and/or sectoral policies and circumstances on the baseline taking into account relevant EB guidance with regard to renewal of the crediting period at the time of requesting renewal of crediting period; (b) The correctness of the application of an approved baseline methodology for the determination of the continued validity of the baseline or its update, and the estimation of emission reductions for the applicable crediting period. The review of the project design documentation and the subsequent follow-up interviews have provided DNV with sufficient evidence to determine the update of the original baseline through an assessment. The project correctly applies the baseline and monitoring methodologies AMS-I.D (version 17) GHG emission reductions from electricity generation from biomass residues and AMS-III.E (version 16) GHG emission reductions from electricity generation from biomass residues. In summary, it is DNV s opinion that the CDM project activity BK Energia Itacoatiara Project in Brazil meets all relevant UNFCCC requirements for the renewal of the crediting period. Hence DNV requests the renewal of the crediting period of the project. Rio de Janeiro and Oslo, 2 September 2011 David Freire da Costa CDM Validator DNV Rio de Janeiro, Brazil Michael Lehmann Director of Servies and Technologies DNV Climate Change Services AS Page 3

6 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev INTRODUCTION BK Energia Itacoatiara Ltda. has commissioned DNV Climate Change Services AS (DNV) to perform an assessment of the continued validity of the baseline for the renewal of the crediting period of the BK Energia Itacoatiara Project, located in the city of Itacoatiara, State of Amazonas, north region of Brazil in order to request the renewal of the projects crediting period. The assessment was performed in accordance with the Procedures for renewal of the crediting period of a registered CDM project activity (version 05) and included an assessment of: (a) An impact of new relevant national and/or sectoral policies and circumstances on the baseline taking into account relevant EB guidance with regard to renewal of the crediting period at the time of requesting renewal of crediting period; (b) The correctness of the application of an approved baseline methodology for the determination of the continued validity of the baseline or its update, and the estimation of emission reductions for the applicable crediting period. This re-validation report summarises the findings of the assessment of the continued validity of the baseline, as well as criteria given to provide for consistent project operations, monitoring and reporting. UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and procedures, the simplified modalities and procedures for small-scale CDM project activities and the subsequent decisions by the CDM Executive Board, in particular the Procedures for renewal of a crediting period of a registered CDM project (version 05) /18/. The BK Energia Itacoatiara Project was registered on 12 May 2006 as a CDM project with a renewable 7 years crediting period starting from 1 November 2002 to 31 October The project activity is a renewable energy project, which consists of the generation of electricity with a 9.0 MW thermoelectric power plant using wood residues from wood processing companies, located in the city of Itacoatiara, State of Amazonas, Brazil. Following the implementation of this project, BK Energia Itacoatiara Ltda. was able to sell electricity (generated by GHG neutral biomass) to the local isolated grid. The project activity also involves the avoidance of methane emissions by avoiding the disposal of the biomass residues from decaying in the open field stockpiles. In the absence of the project, the fresh wood residues (wood chips and sawdust), which are used in the thermoelectric plant, would continue to be decay under anaerobic conditions in the stockpiles, thus emitting methane. The other wood residues (road & forest cleaning) used as biomass were not considered for calculation of methane avoidance, once this biomass was not considered as decay on anaerobic conditions. The project was implemented as described on the PDD and the plant includes a boiler (model 45 V-2-S) manufactured by Equipalcool with a steam capacity of 45 tonnes/h at 42 kgf/cm 2 /34/, a steam turbine manufactured by Dresser-Rand (model ET1HB7, serial number ET-103, installed capacity 9.0 MW ( KVA) at rpm) and a electrical generator manufactured by Toshiba (type TABL RCC, serial number , rated capacity kva at 13.8 kv, 60 Hz), as confirmed through a visual assessment of the equipment s nameplates during the site visit. Page 4

7 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev METHODOLOGY The validation consisted of the following three phases: I a desk review of the project design documents II follow-up interviews with project stakeholders III the resolution of outstanding issues and the issuance of the final validation report and opinion. The following sections outline each step in more detail. 3.1 Desk review of the project design documentation The following table lists the documentation that was reviewed during the assessment: Documentation provided by the project participants /1/ BK Energia Itacoatiara Ltda.: Project Design Document for the BK Energia Itacoatiara Project dated 23 November 2009 (version 1), dated 19 July 2010, dated 25 April 2011 (version 4), 16 July 2011 (version 4.4), 2 August 2011 (version 4.5) and dated 23 August 2011 (version 4.6). /2/ BK Energia Itacoatiara Ltda.: Project Design Document for the first crediting period of BK Energia Itacoatiara Project registered on 12 May /3/ EQAO: Emission reductions calculation spreadsheets: Itacoatiara_Second Period_CERs estimation_ xls, Itacoatiara_Second Period_CERs estimation_ _v.2.xls, BK Energia Itacoatiara_CERs estimation_v4_25apr11.xls, BK Energia Itacoatiara_CERs estimation_v4.4_16jul11.xls and BK Energia Itacoatiara_CERs estimation_v4.5_02sep2011.xls. /4/ Precious Woods Energia: Monthly and daily reports of biomass supplied to BK Energia Itacoatiara Project from January 2007 to December /5/ BK Energia Itacoatiara Ltda. and Manaus Energia S/A or Amazonas Distribuidora de Energia S/A: Daily electricity generation readings report and monthly consolidated energy reports, from January 2007 to December All reports are double-signed by a representative of BK Energia Itacoatiara Ltda. and by a representative of Manaus Energia S/A or by Amazonas Distribuidora de Energia S/A. /6/ BK Energia Itacoatiara Ltda.: Internal procedures: - Internal procedure # 1 for the elaboration of the biomass consumption report, first version issued on 14 February 2008 and latest revised version issued on 1 May 2010; - Internal procedure # 2 for the determination of the humidity content in the biomass, first version issued on 14 February 2008 and latest revised version issued on 1 May 2010; - Internal procedure # 3 for the troubleshooting verification in the biomass scale, issued on 15 December 2006; - Internal procedure # 4 for the energy readings obtained from the power meters, first version issued on 14 February 2008 and latest revised version issued on 1 May 2010; - Internal procedure # 5 for the readings related to the electricity exported to the grid, obtained from the GESTAL (internal supervisory system), issued on 8 January 2007; - Internal procedure # 6 for the troubleshooting verification in the power Page 5

8 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 meters owned by CEAM (Manaus Energia S/A or Amazonas Distribuidora de Energia S/A), issued on 20 January 2008; - Internal procedure # 7 for data backup, first version issued on 11 February 2008 and latest revised version issued on 5 March 2009; - Internal procedure # 8 for the calibration of scales and power meters used in the BK Energia Itacoatiara Project, issued on 5 May 2010; - Internal procedure # 9 for the capacity building and training of employees involved in BK Energia Itacoatiara Project, issued on 26 January 2009; - Internal procedure # 10 for the description and determination of the responsibilities related to the employees involved in BK Energia Itacoatiara Project, first version issued on 22 January 2008 and latest revised version issued on 5 May 2010; - Internal procedure # 11 for the biomass data crosschecking, issued on 1 May 2010; - Internal procedure # 12 for internal audits, first version issued on 12 February 2008 and latest revised version issued on 1 March /7/ BK Energia Itacoatiara Ltda.: Monthly consolidated report of the electricity exported to the MIL Madeireira Itacoatiara Ltda. by BK Energia Itacoatiara Project, obtained from the GESTAL (internal supervisory system), for the period from January 2007 to December /8/ BK Energia Itacoatiara Ltda.: Monthly consolidated report of the electricity generated by BK Energia Itacoatiara Project, obtained from the GESTAL (internal supervisory system), for the period from January 2007 to December /9/ BK Energia Itacoatiara Ltda.: Monthly consolidated report of the electricity exported to the grid by BK Energia Itacoatiara Project, obtained from the GESTAL (internal supervisory system), for the period from January 2007 to December /10/ BK Energia Itacoatiara Ltda.: Monthly consolidated report of the electricity internally consumed by BK Energia Itacoatiara Project, obtained from the GESTAL (internal supervisory system), for the period from January 2009 to December /11/ BK Energia Itacoatiara Ltda.: Monthly consolidated report of the electricity imported by BK Energia Itacoatiara Project from the grid (CEAM), obtained from the GESTAL (internal supervisory system), for the period from January 2009 to December /12/ Precious Woods Energia: Training certificates, issued on 21 March 2009, for the presentation named Forest management, FSC certification and climate change provided by Precious Woods Energia. /13/ Precious Woods Energia and BK Energia Itacoatiara Ltda.: Training certificates, issued on 21 November 2009, for the training named Updating training applicable for boilers operation provided by Precious Woods Energia and BK Energia Itacoatiara Ltda. /14/ BK Energia Itacoatiara Ltda.: Power Purchase Agreement (PPA), signed on 9 March 2001, between Companhia Energética do Amazonas CEAM and BK Energia Participações Ltda. /15/ BK Energia Itacoatiara Ltda.: Environmental control plan, issued in June 2002 Page 6

9 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 by BK Energia Itacoatiara Ltda.. /16/ BK Energia Itacoatiara Ltda.: Purchase receipts of diesel fuel from January to October /17/ EQAO: Grid emission factor calculation spreadsheet Eletrobras Itacoatiara - UTE ITAC PIE HERMASA xlsx Methodologies, tools and other guidance by the CDM Executive Board /18/ CDM Executive Board: Procedures for renewal of the crediting period of a registered CDM project activity, (version 05) and its Annex 1 Tool to assess the validity of the original/current baseline and to update the baseline at the renewal of a crediting period. /19/ CDM Executive Board: Validation and Verification Manual (version 01.2). /20/ CDM Executive Board: Appendix B of the simplified modalities and procedures for small-scale CDM project activities: Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories: AMS-I.D. Grid connected renewable electricity generation for Type I Renewable Energy Projects Activities, version 17 of EB 54. /21/ CDM Executive Board: Appendix B of the simplified modalities and procedures for small-scale CDM project activities: Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories: AMS-III.E Avoidance of methane production from biomass decay through controlled combustion, gasification or mechanical/thermal treatment for Type III Other Projects Activities, version 16 of EB 48. /22/ CDM Executive Board: Appendix B of the simplified modalities and procedures for small-scale CDM project activities: Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories: AMS-I.D Renewable electricity generation for a grid, version 6. /23/ CDM Executive Board: Appendix B of the simplified modalities and procedures for small-scale CDM project activities: Indicative simplified baseline and monitoring methodologies for selected small-scale CDM project activity categories: AMS-III.E Avoidance of methane production from biomass decay through controlled combustion, version 6. /24/ CDM-Executive Board: Tool to determine methane emissions avoided from disposal of waste at a solid waste disposal site (version 5.1.0). /25/ CDM Small Scale Working Group (SC WG): Request for clarification F-CDM- SSCwg ver 01 SSC_521. Applicability of AMS-I.D versus AMS-I.F to a project activity supplying electricity to an isolated system (submitted 15 Feb 11 and posted in the UNFCCC CDM web site on 18 March 2011). For SC WG conclusions, refer to paragraph 38 of the meeting report of the SSC WG 30, which is also available at: /26/ CDM-Executive Board: Tool to calculate the emission factor for an electricity system (version ) /27/ CDM-Executive Board: Clarifications on procedures and documentation which need to be used for the renewal of a crediting period (EB 20, Annex 7) Documentation used by DNV to validate / cross-check the information provided by the project participants /28/ TÜV Industries Service GmbH TÜV SÜD Group: Validation Report BK Page 7

10 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 Energia Itacoatiara Project. TUV Report , Revision N. 5, 15 March /29/ Manaus Energia S/A and Amazonas Distribuidora de Energia S/A: Monthly electricity invoices from January 2009 to December 2009, issued by BK Energia Itacoatiara Ltda. to Manaus Energia S/A (from January 2009 to June 2009) and Amazonas Distribuidora de Energia S/A (from July 2009 to December 2009). The project sold its net electricity produced to the local power utility Eletrobras Amazonas Energia (formally Manaus Energia S.A.). Since 2008 Eletrobras possesses the stock control of Manaus Energia S.A. This information was confirmed by assessing the following webpage: From January 2009 to June 2009 the name of Manaus Energia S.A. is still mentioned in the energy invoices and from July to December 2009 Amazonas Distribuidora de Energia S.A. is mentioned in the invoices. Despite the changes in the corporate name all other information of the company related to the proposed project activity remained the same during the monitored period. /30/ MIL Madeireira Itacoatiara Ltda.: Receipts of biomass purchased from MIL Madeireira Itacoatiara Ltda. by BK Energia Itacoatiara Ltda. from January 2009 to December /31/ Scale calibration certificates: - Scale verification report # , issued on 15 October 2008 by the scale manufacturer Toledo do Brasil Indústria de Balanças Ltda., for the scale model 9270, serial number The referred document provides a positive conclusion about the scale, but no details related to the average error found or the accuracy are mentioned; - Scale verification report # , issued on 31 January 2009 by the scale manufacturer Toledo do Brasil Indústria de Balanças Ltda., for the scale model 9270, serial number The referred document provides a positive conclusion about the scale, but no details related to the average error found or the accuracy are mentioned; - Scale calibration certificate # , issued on 5 April 2009 by Microprecs Euros, for the scale manufactured by Toledo, model 9270, serial number ; Average error found: 0.016% (accuracy = %), which is in accordance to the equipment s precision class of 0.02%. However, the maximum error identified during the calibration test was 0.04% which is beyond the error established by the manufacturer for the referred equipment. In this regard, considering the calibration of the scale 1 was delayed, the maximal error identified during the tests, which is beyond the maximum error as specified by the manufacturer, was deducted until the date in which the scale was calibrated; - Scale calibration certificate # , issued on 6 May 2010 by Microprecs Euros, for the scale manufactured by Toledo, model 9270, serial number Average error found: 0.001% (accuracy = %), which is in accordance to the equipment s precision class of 0.02%. /32/ Eletronorte: Calibration certificates of the power meters: - Certificate N CC , issued on 5 March 2009, for the power meter manufactured by Elo, model 2180 SP, serial number Average error found: 0.037% (accuracy = %), which is in Page 8

11 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 accordance to the precision class of 0.2%; - Certificate N CC , issued on 5 March 2009, for the power meter manufactured by Elo, model 2180 SP, serial number Average error found: 0.094% (accuracy = %), which is in accordance to the precision class of 0.2%. The referred calibration certificates provide a positive conclusion about the accuracy of the power meters. /33/ IPAAM (Instituto de Proteção Ambiental do Estado do Amazonas / Environmental Protection Institute of Amazonas State): Operation License N 355/02-05, issued by IPAAM to BK Energia Itacoatiara Ltda. on 3 February 2009 and valid for 730 days (2 years). Operation License N 355/02-06, issued by IPAAM to BK Energia Itacoatiara Ltda. on 11 April 2011 and valid for 730 days (2 years). The referred Operation Licenses confirm that BK Energia Itacoatiara Project is in compliance with the local applicable environmental laws and regulations. /34/ Equipalcool: Technical specification issued on 16 September 2002 by the biomass boiler s manufacturer, model 45 V-2-S, confirming the work pressure of 42 kgf/cm 2 and the type of fuel to be used (wood residues) in the biomass boiler of BK Energia Itacoatiara Project. /35/ CEAM: Letter provided by CEAM (Companhia Energética do Amazonas / Amazonas Energetic Company) to BK Energia Itacoatiara Ltda., issued on 2 January 2007, confirming that the power meters installed in BK Energia Itacoatiara Project are owned by CEAM and stating that the calibration frequency shall be done once every two years. /36/ Toledo do Brasil Indústria de Balanças Ltda.: Technical specifications of the biomass scale manufacturer, for the scale model 9270 / /37/ INMETRO: Directive #236 dated 22 December 1994 about Precision Class for scales, which is defined by the National Institute of Metrology - INMETRO (from the Portuguese Instituto Nacional de Metrologia, Normalização e Qualidade Industrial). Additional information is available only in Portuguese at: smfbalancas.com.br/calibracao/legislacao.htm+inmetro+directiva Dezembro+1994&cd=1&hl=pt-BR&ct=clnk&gl=br /38/ Folha de S. Paulo: News from one of the main Brazilian newspaper, issued on 10 January 2008: Energy conservation program (Procel) and Renewable sources program (Proinfa) are little more than just ecologically correct window dressing. There is little use from the wind energy potential in Brazilian Northeast region as well as from the energy generation with biomass (sugarcane bagasse) in Brazilian Southeast region, because of lack of regulation and compensating prices. There is a lot to be done. The referred information is available at the following link: /39/ Ministry of Mines and Energy (MME): SIGEL Sistema de Informações Georreferenciadas do Setor Elétrico (Georeferenced Information of the Brazilian Electric System), available at: /40/ IPCC: Revised 2006 IPCC Guidelines for National Greenhouse Gas Inventories. /41/ Ministry of Mines and Energy (MME): Brazilian Energy Balance 2009, available in Portuguese only, at: Page 9

12 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 /42/ Documents related to previous verifications from the first crediting period: - 1 st verification (monitoring period from 1 November 2002 to 30 April 2006: - Verification report, report n , revision 01, issued by DNV on 14 August 2006; - Monitoring report, version 6, issued on 18 July 2006; - 2 nd verification (monitoring period from 1 May 2006 to 31 December 2006: - Verification report, report n , revision 02, issued by DNV on 9 May 2007; - Monitoring report, issued on 8 May 2007; - 3 rd verification (monitoring period from 1 January 2007 to 31 December 2007: - Verification report, report n , version 1, issued by TÜV SÜD on 4 April 2008; - Monitoring report, version 5, issued on 4 April 2008; - 4 th verification (monitoring period from 1 January 2008 to 31 December 2008: - Verification report, report n , version 2, issued by TÜV SÜD on 13 July 2009; - Monitoring report, version 5, issued on 12 July 2009; - 5 th verification (monitoring period from 1 January 2009 to 31 October 2009: - Verification report, not public available until the last issuance of this revalidation report; - Monitoring report, version 1, issued on 19 April 2010; /43/ INMET: Technical literature from the National Institute of Meteorology (Instituto Nacional de Meteorologia INMET). /44/ SEMMA: Letter (reference number 006/2010), issued on 11 January 2010 by the Environmental Municipality Secretary (SEMMA Secretaria Municipal de Meio Ambiente) to Precious Woods Brasil. The letter confirms that the sawmill Mil Madeiras Preciosas is the only consumer of biomass residues and in a range of 50 km there is another company named Hermesa with potential to consume biomass residues for steam generation to be used and its internal industrial process. It is also confirmed that Hermesa buys biomass residues from other suppliers and it doesn t has the necessity to burn or use fossil fuels. It is concluded that there is no lack of biomass residues to be supplied to industries located at Itacoatiara city. /45/ PROINFA: Creation of PROINFA Program (renewable resources program) through the Law # issued on 26 April 2002 and regulated by the Brazilian Decree # issued on 30 March 2004, which states that PROINFA aims for the reduction of greenhouse gases as established by the United Nations Framework Convention on Climate Change (UNFCCC) under Kyoto Protocol, contributing to the sustainable development. Therefore, the program is considered as a Type E- policy and does not need to be considered in accordance to the Clarifications on the consideration of national and/or Sectoral policies and circumstances in baseline scenarios (version 02), Annex 3, EB 22. /46/ CCEE: Publication titled Background of the Brazilian Electric Sector. The referred publication has no version or issuance date available and it was assessed by DNV on 11 May 2011 through the following CCEE website: Page 10

13 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 VgnVCM100000aa01a8c0RCRD In this publication, the following Laws are also mentioned: - Law (1993): which extinguished the equalization of the tariffs that were in effect and created supply contracts between generators and distributors; - Law (1995): that created the Independent Producer of Electric Power and the concept of Free Consumer; - Laws and (dated 15 March 2004) and Decree dated 30 July 2004: the Federal Government set the bases for a new model for the Brazilian Electric Sector. All of these laws, which are still in power, were approved before the project s registration date on 12 May /47/ Amazon State Law n 3219, issued on 28 December 2007: Regulates the environmental licensing process in the Amazonas State. Information assessed on 2 June 2011 through the following link: _lei_estadual_3219_licenciamento_ambiental.pdf /48/ Amazon Institute for environmental Protection - IPAAM (form the Portuguese Instituto de Proteção Ambiental do Amazonas) Normative Ruling n 001/06, issued on 28 December 2006: Regulates the polluting sources classification with regards to the environmental licensing process. Information assessed on 2 June 2011 through the following link: /49/ Environmental Ministry - MMA (from the Portuguese Ministério do Meio Ambiente) Normative Ruling n 6, issued on 15 December 2006: Regulates the consumption of raw material from forestry activities. Information assessed on 2 June 2011 through the following link: 20-%20Instru%C3%A7%C3%A3o%20Normativa% %20rep%20florestal%20e%20consumo%20d.pdf /50/ Brazilian Institute of Environment and Renewable Natural Resources - IBAMA (from the Portuguese Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis) Normative Ruling n 96, dated March 30th, /51/ Eletrobrás Amazonas Energia: original information and raw data from October 2009 to June 2011 regarding the diesel oil consumption and gross power generation of UTE Itacoatiara and UTE Hermasa diesel fuelled thermal power plants in Itacoatiara city Letters of approval /52/ Interminesterial Commission on Global Climate Change (DNA of Brazil): Letter of approval dated 5 April /53/ Federal Office for the Environment FOEN, Climate Unit (DNA of Switzerland, Annex I Party): Letter of approval dated 25 April 2006 and Authorization Letter dated 25 March Follow-up interviews with project stakeholders On 13 May 2010, Mr. David Freire da Costa, qualified as CDM validator according to DNV s internal qualification scheme, has visited the BK Energia Itacoatiara Project located in the city of Itacoatiara, State of Amazonas, north region of Brazil and performed interviews with project stakeholders to confirm selected information and to Page 11

14 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 resolve issues identified in the document review. The following table presents the interviewed people and the main topics of the interview: Date Name Organization Topic /54/ 13 May 2010 /55/ 13 May 2010 /56/ 13 May 2010 Isac Barreto Queiroz Roger Luis de Souza Noronha Ana Paula Veiga Operations Coordinator and Power Plant Manager BK Energia Itacoatiara Ltda. General Coordinator and Operation Supervisor BK Energia Itacoatiara Ltda. Project Manager EQAO - Site Visit - project's facility and main equipments; - Project implementation; - Baseline review, CERs calculations and related issues; - Monitoring plan review, including the assessment of monitoring instruments; - QA/QC, internal records, data management and control; - Environmental Licenses; - Evidences of all information included in the updated PDD; - Validity of the original baseline or its update through the assessment of documental evidences; - Assessment of the impact of new relevant national and/or sectoral policies and circumstances on the baseline. 3.3 Resolution of outstanding issues The objective of this phase of the assessment was to resolve any outstanding issues regarding the continuation of the baseline scenario, which needed be clarified prior to DNV's positive conclusion on the project design. In order to ensure transparency a validation protocol was customised for the project. The protocol shows in a transparent manner the criteria (requirements), means of verification and the results from validating the identified criteria. The validation protocol serves the following purposes: It organises, details and clarifies the requirements a CDM project is expected to meet; It ensures a transparent validation process where the validator will document how a particular requirement has been validated and the result of the validation. The validation protocol consists of four tables. The different columns in these tables are described in the figure below. The completed validation protocol for the project activity BK Energia Itacoatiara Project in Brazil is enclosed in Appendix A to this report. A corrective action request (CAR) is raised if one of the following occurs: (a) The project participants have made mistakes that will influence the ability of the project activity to achieve real, measurable additional emission reductions; (b) The CDM requirements have not been met; (c) There is a risk that emission reductions cannot be monitored or calculated. Page 12

15 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 A clarification request (CL) is raised if information is insufficient or not clear enough to determine whether the applicable CDM requirements have been met. A forward action request (FAR) is raised during validation to highlight issues related to project implementation that require review during the first verification of the project activity. FARs shall not relate to the CDM requirements for registration. Page 13

16 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 Validation Protocol Table 1: Requirement Checklist Checklist question Reference Means of verification (MoV) The various requirements in Table 1 are linked to checklist questions the project should meet. The checklist is organised in different sections, following the logic of the CDM-PDD Gives reference to documents where the answer to the checklist question or item is found. Means of verification (MoV) are document review (DR), interview (I) or any other follow-up actions (e.g., on site visit and telephone or interviews) and cross-checking (CC) with available information relating to projects or technologies similar to the proposed CDM project activity under validation. Assessment by DNV The discussion on how the conclusion is arrived at and the conclusion on the compliance with the checklist question so far. Draft and/or Final Conclusion is used if the information and evidence provided is adequate to demonstrate compliance with CDM requirements. A corrective action request (CAR) is raised when project participants have made mistakes, the CDM requirements have not been met or there is a risk that emission reductions cannot be monitored or calculated. A clarification request (CL) is raised if information is insufficient or not clear enough to determine whether the applicable CDM requirements have been met. A forward action request (FAR) during validation is raised to highlight issues related to project implementation that require review during the first verification of the project activity. Validation Protocol Table 2: Resolution of Corrective Action and Clarification Requests Corrective action and/ or clarification requests Ref. to checklist question in table 2 Response by project participants Validation conclusion The CARs and/ or CLs raised in Table 2 are repeated here. Reference to the checklist question number in Table 2 where the CAR or CL is explained. The responses given by the project participants to address the CARs and/or CLs. The validation team s assessment and final conclusions of the CARs and/or CLs. Validation Protocol Table 3: Forward Action Requests Forward action request The FARs raised in Table 2 are repeated here. Ref. to checklist question in table 2 Reference to the checklist question number in Table 2 where the FAR is explained. Response by project participants Response by project participants on how forward action request will be addressed prior to first verification. Figure 1 Validation protocol tables Page 14

17 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev Internal quality control This validation opinion underwent a technical review performed by a technical reviewer qualified in accordance with DNV s qualification scheme for CDM validation and verification. 3.5 Validation Team Type of involvement Role Last Name First Name Country Team leader Costa David Brazil (Validator) Validator Tavares Luis Filipe Brazil Validator Leiroz Andrea Brazil Expert Němeček Lumír Czech Republic Technical reviewer Antunes Felipe Brazil Lacerda Person with sectoral Sasdelli Fernando Brazil competence assisting technical reviewer Desk review Site visit / Interviews Reporting Supervision f work Technical review TA 1.1 competence TA 13.1 competence The qualification of each individual validation team member is detailed in Appendix B to this report. Page 15

18 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev VALIDATION FINDINGS The findings of the validation are stated in the following sections. The final validation findings relate to the project design as documented and described in the PDD of 23 August 2011 (version 4.6). 4.1 Participation of project participants There is no change with regard to the Parties and project participants participating in the project activity. The project participants described in the PDD are the same as listed on the project view page of the project on the UNFCCC website. 4.2 Validity of selected baseline and monitoring methodology The project was originally registered /2/ based on version 6 of AMS-I.D Renewable electricity generation for a grid /22/ and version 6 of AMS-III.E Avoidance of methane production from biomass decay through controlled combustion /23/. For the renewal of crediting period, the revised CDM-PDD /1/ of 23 August 2011 (version 4.6) correctly applies the latest versions of the methodologies, i.e. version 17 of AMS-I.D. /20/ and version 16 of AMS-III.E /21/. 4.3 Applicability of selected baseline and monitoring methodology The project applies the approved baseline methodologies AMS-I.D. (version 17) Grid connected renewable electricity generation /20/ and AMS-III.E (version 16) Avoidance of methane production from biomass decay through controlled combustion, gasification or mechanical/thermal treatment /21/, in combination with the Tool to determine methane emissions avoided from disposal of waste at a solid waste disposal site (version 5.1.0) /24/. The small scale methodology AMS-I.D. (version 17) is applicable to BK Energia Itacoatiara Project as the project is a grid connected renewable energy generation unit using biomass as fuel that supply electricity to a regional grid. The project activity is a new power plant at a site where there was no renewable energy power plant operating prior to the implementation of the project activity (Greenfield plant). BK Energia Itacoatiara Project is a biomass power plant and no other biomass types than renewable biomass (wood waste/residues) is used in the project plant, as confirmed by visual inspection in the project s facility during the site visit. The installed capacity of the project activity is 9.0 MW, which is within the 15 MW limit specified for type I small scale activities. DNV could confirm the installed capacity during the site visit by checking the equipment s nameplates. The project activity is a biomass power plant for electricity generation only and, therefore, there is no cogeneration system configuration. The small scale methodology AMS-III.E (version 16) is applicable to the BK Energia Itacoatiara Project as: i) In the absence of the project activity wood residues would have been left to decay under anaerobic conditions in stockpiles, as confirmed during the site ii) iii) visit; Due to the project activity, decay of the wastes is prevented through controlled combustion /34/, as verified in the site visit; The annual emission reductions avoided for the methane component are on average tco 2 e of the total tco 2 e (methane + electricity components) /3/, therefore below the tco 2 e limit; Page 16

19 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 iv) All remaining criteria s are not applicable due to the project s characteristics, as confirmed during the site visit. Therefore, DNV concludes that the applicability criteria from the selected baseline and monitoring methodologies AMS-I.D. (version 17) /20/ and AMS-III.E (version 16) /21/ are properly satisfied by BK Energia Itacoatiara Project. The estimated amount of GHG emission reductions from the project is tco 2 e during the second crediting period (7 years) from 1 November 2009 to 31 October 2016, resulting in estimated average annual emission reductions of tco 2 e. 4.4 Validity of baseline DNV confirms that there have been no changes in the relevant national and/or sectoral regulations since the previous crediting period and that the current baseline complies with all relevant mandatory national and/or sectoral policies, which have come into effect since the initial crediting period. The baseline scenario for the methane avoidance component was updated according to the latest version of AMS-III.E (version 16) /21/ criteria and that was checked during the site visit. The power plant environmental license was issued by IPAAM (the local environmental protection agency) on 3 February 2009 (Operation License N 355/02-05), which was valid until 3 February 2011 and on 11 April 2011 (Operation License N 355/02-06), which was valid until 11 April 2013 /33/. The time gap between 3 February 2011 and on 11 April 2011 was due to bureocratic procedures for the license renewal. The referred Operation Licenses confirm that BK Energia Itacoatiara Project is in compliance with the local applicable environmental laws and regulations. The following steps from the Tool to assess the validity of the original/current baseline and to update the baseline at the renewal of a crediting period from the CDM-EB Procedures for renewal of the crediting period of a registered CDM project activity (Version 5) /18/ were applied: Step 1 Assess the validity of the current baseline for the next crediting period Step 1.1 Assess compliance of the current baseline with relevant mandatory national and/or sectoral policies During the site visit on 13 May 2010 DNV confirmed that no relevant mandatory national and/or sectoral policies applicable to the project activity came into effect after the submission of the project activity for validation /38/. Fossil fuel grid power is still available and operational in the region and there are no supply constraints. For the electricity component, DNV confirmed through the assessment of the local legislation /45//46/, information available in newspaper /38/ and through the validation team s experience that there have been no changes in the relevant national and/or sectoral regulations since the initial crediting period. For the methane avoidance component, DNV confirmed through the assessment of the local legislation /47/-/50/ that the current baseline complies with all relevant mandatory national and/or sectoral policies, which have come into effect since the initial crediting period. Step 1.2 Assess the impact of circumstances The original baseline for the methane avoidance component in the absence of the project activity is to simply dispose the biomass residues in stockpiles. The baseline scenario was updated based on the historical data from 2007 to 2009 of biomass combusted in the project activity for power generation /4/ /30/ as being the same amount that would be left for decay in the absence of the project activity. Page 17

20 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 For the electricity generation baseline scenario DNV could confirm during the site visit that the circumstances in Brazil remain the same as the ones valid at project validation time. The project activity remains connected to an isolated grid system, in which only diesel fuelled power plants are operational. Therefore, the city of Itacoatiara in Amazonas State in which the project activity is located is not connected to the Brazilian Interconnected Grid System (SIN). This information was confirmed by DNV through the assessment of the SIGEL Sistema de Informações Georreferenciadas do Setor Elétrico (Georeferenced Information of the Brazilian Electric System) /39/, developed by the Brazilian Ministry of Mines and Energy (MME). Step 1.3 Assess whether the continuation of the use of current baseline equipment(s) is technically possible This step is not applicable as the baseline is not the continuation of the current practice in the sense of the Tool to assess the validity of the original/current baseline and to update the baseline at the renewal of a crediting period contained in the Procedures for renewal of the crediting period of a registered CDM project activity (version 05) /18/. Step 1.4 Assessment of the validity of the data and parameters For the electricity component, the baseline grid emission factor was calculated ex-ante during the first crediting period and the emission factor of 0.8 tco 2 e/mwh was used, based on data available in Table I.D.1 of AMS-I.D. (version 6) /22/ applicable for diesel generating units with a load factor between 25% and 100% and with an installed capacity higher than 200 kw. For the second crediting period, the baseline grid emission factor was updated and calculated ex-post, based on AMS-I.D. (version 17) /20/ requirements. As per the small scale methodology AMS-I.D. (version 17) /20/, the baseline scenario is that the electricity delivered to the grid by the project activity would have otherwise been generated by the operation of grid-connected power plants and by the addition of new generation sources into the grid. This is the case of BK Energia Itacoatiara Project. The baseline emissions are the product of electrical energy baseline (EG BL,y ) expressed in MWh of electricity produced by the renewable generating unit at BK Energia Itacoatiara Project and multiplied by the grid emission factor (EF CO2,grid,y ). Therefore, the following equation is applied: BE y = EG BL,y * EF CO2,grid,y - BE y : is the baseline emissions in year y (t CO 2 ); - EG BL,y : is the quantity of net electricity supplied to the grid as a result of the implementation of the CDM project activity in year y (MWh), and; - EF CO2,grid,y : is the CO 2 emission factor of the grid in year y (t CO 2 /MWh). The emission factor was calculated in a transparent and conservative manner using option (b) of paragraph 12 of the small scale methodology AMS-I.D. (version 17) /20/. Therefore, it was calculated through the weighted average emissions (in t CO 2 /MWh) of the current generation mix. As of today, Itacoatiara city remains as an isolated city from the national grid. The electricity supplied to Itacoatiara city comes from the plant of the project activity ( BK Energia Itacoatiara Project ) and from other two thermo power plants fuelled with diesel oil (UTE Itacoatiara and UTE Hermasa). Therefore, the emission factor of the local electricity system is the weighted average emissions of these two thermal power plants. Page 18

21 VALIDATION OPINION - CREDITING PERIOD RENEWAL Report No: , rev. 01 As per the small scale methodology AMS-I.D. (version 17) /20/, i) the data of the year in which project generation occurs must be used and ii) the calculations shall be based on data from an official source (where available) and made publicly available. Therefore, for (i), the grid emission factor (EF CO2,grid,y ) needs to be monitored and annually updated in order to be applied during the verifications of the 2 nd crediting period. For (ii), the information regarding electricity generation and diesel oil consumption of these power plants was supplied to the project participants by Eletrobrás Amazonas Energia, which is the local power utility. The emission factor was estimated considering data from /17/. However, these data is confidential. Hence, only the resultant carbon emission factor is presented in the PDD /1/. The original information and raw data /51/ as well as the emission factor calculation spreadsheet /17/ have been assessed by DNV and considered accurate and acceptable. All default data used to estimate the emission factor (such as diesel oil density, diesel oil heating value and diesel oil emission factor) is reported in section B.7.1. of the PDD /1/ and this is used to calculate the weighted average emissions of the current generation mix plus data from official sources and default IPCC values. The grid emission factor was correctly and transparently calculated as the weighted average emissions of the current generation mix resulting in an estimated value of tco 2 /MWh. For the methane avoidance component the baseline emissions calculation was updated based on the historical data from 2007 to 2009 of biomass combusted in the project activity for power generation /4//30/ as being the same amount that would be left for decay in the absence of the project activity. There was no such requirement in the earlier version of AMS-III.E (version 6). For the renewal of the crediting period it is thus reasonable to apply data from the period after project implementation, which is also in accordance with the EB s Clarifications on procedures and documentation which need to be used for the renewal of a crediting period /27/ which states that new data available will be used to revise the baseline emissions. For example, if the average of 3 most recent years data was used to determine the baseline emissions for the first crediting period, the baseline shall be updated using the average for the 3 most recent years prior to the start of the subsequent crediting period. As confirmed by DNV, the biomass data used for the calculations is taken from exact records of the last 3 years of the 1st crediting period ( ). This is the most exact data for calculating how much emissions would be generated in the absence of the project activity. Step 2 Update the current baseline and the data and parameters Step 2.1 Update the current baseline For the electricity component, the baseline grid emission factor was updated and calculated ex-post, based on AMS-I.D. (version 17) /20/ requirements as the weighted average emissions of the current generation mix resulting in an estimated value of tco 2 /MWh /17/. For the methane avoidance component, in 1997 IPAAM requested to MIL Madeiras Preciosas to stop burning the biomass residues. Since then, the company had started to store the residues in the stockpiles. This resulted in the accumulation of wood waste and the emission of methane. Additionally, from the implementation of the power plant, the main environmental impacts identified were particulate matter emissions and wastewater management. A multi-cyclone was installed to reduce particulate matter emissions and a wastewater treatment was built to mitigate wastewater impacts. These impacts are also monitored and compared with legal standards. Page 19