CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 02 - in effect as of: 1 July 2004) CONTENTS

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1 CDM Executive Board page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 02 - in effect as of: 1 July 2004) CONTENTS A. General description of project activity B. Application of a baseline methodology C. Duration of the project activity / Crediting period D. Application of a monitoring methodology and plan E. Estimation of GHG emissions by sources F. Environmental impacts G. 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 plan Appendix 1: Project Site Location Map Appendix 2: List of power generation units that supply electricity to Punjab Grid Appendix 3: Details of Project Emission calculations Appendix 4: Executive Summary of EIA Study Appendix 5: Stake-holder meeting details

2 CDM Executive Board page 2 SECTION A. General description of project activity A.1 Title of the project activity: >> 24 MW installed capacity biomass based renewable electricity generation and consumption by Gujarat Ambuja Cements Limited at its facility in Rupnagar district (Ropar), Punjab, India. A.2. Description of the project activity: >> The project activity involves grid-connected biomass based power generation, and includes development, design, engineering, procurement, finance, construction, operation and maintenance of a 24 MW (2 * 12 MW) installed capacity biomass (rice husk) based captive electric generating station. The project activity will provide electricity, primarily to Gujarat Ambuja Cements Limited s (GACL) facility at Rupnagar district (Ropar), with part of the electricity wheeled to another GACL unit at Bhatinda, also in Punjab state. The project is currently operational; the first steam turbine generator (STG) was commissioned in November 2004 and the second STG was commissioned in February The funds for the project have been committed by GACL in its CAPEX budget for The project activity has already obtained Host Government Approval from the Government of India. The project activity meets several sustainable development objectives (direct and indirect) such as: CO 2 abatement and reduction of GHG emissions through development of renewable technology in India; in the absence of the project activity, the use of coal in conventional type of power generation would be caused a larger scale of emissions, besides the emissions from uncontrolled burning of biomass used in the project activity. Reduce average emission (such as oxides of sulphur and nitrogen, particulate matter, etc.), effluent generation and average solid waste generation on account of use coal for electricity generation in the conventional way (in absence of project activity). Conserve natural resources such as coal (due to its reduced use in the project activity). Avoids environmental impacts on land, water and air due to reduction in usage and storage requirements of coal. Improve micro-economic efficiency of the local power sector through innovative use of a lesser GHG intensive fuel (rice husk) in the project activity. Develop the local economy and create employment, particularly in rural areas, which is a priority concern for the Government of India. The project activity provides jobs for the rural population. Increase income security of vulnerable sections of the society through redistribution of benefits on account of the economic activities associated with the project. A.3. Project participants: >> The project activity has been implemented by GACL, which is a private entity in India, and as such its head office shall be the lead and nodal entity for all communication with CDM EB and Secretariat. The Rupnagar distrist (Ropar) and Bhatinda units of GACL are the participants in the project activity. The details of CER allocation to these units shall be furnished at the time of Project Design Document (PDD) registration, if required. GACL, with a total installed capacity of 12.5 Million Tonnes Per Annum (MTPA), is a leading manufacturer of cement in India. GACL s manufacturing sites are spread across India with 4 MTPA unit

3 CDM Executive Board page 3 located in Gujarat, 3 MTPA in Punjab & Himachal Pradesh, 1.5 MTPA in Rajasthan, 2 MTPA in Chattisgarh &West Bengal and 2 MTPA in Maharashtra. PricewaterhouseCoopers Private Limited (PwC) is assisting GACL in developing the PDD and has defended it in the Host Government Approval. PwC will also defend GACL during validation of this project activity. PwC, formed by the global merger of Price Waterhouse and Coopers & Lybrand in 1998, is the world s largest financial and professional services organisation with 125,000 people in 142 countries and 867 offices worldwide. Annex 1 party to the project activity will be identified before project registration, if required. The contact information on project participants has been provided in Annex 1. A.4. >> Technical description of the project activity: A.4.1. Location of the project activity: >> India >> Punjab A A Host Party(ies): Region/State/Province etc.: A >> Rupnagar District (Ropar) City/Town/Community etc: A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): >> The project activity is proposed at the GACL s cement unit at village Daburji, PO Lodhimajra, Rupnagar District (Ropar) of the state of Punjab in India. The unit is approximately 55 km from Chandigarh and is on the Ropar Manali highway near Guru Gobind Singh Super Thermal Power Station. The project location is shown in Appendix 1. A.4.2. Category(ies) of project activity: >> The project activity related to category number 1 called Energy industries (renewable - / nonrenewable sources) as per List of Sectoral Scopes in the CDM-ACCR-06. A.4.3. Technology to be employed by the project activity: >> The captive power plant (CPP) technology employed for the project activity comprises two numbers of AFBC boilers each generating 50 T/hr of steam at 66 kg /m 2 pressure and 505 ± 5 C, and two number STGs of 15 MW capacity whose capacity will be governed at 2 x 12 MW, to suit the power load requirement and availability of steam at 2 x 50 tph (100 tph in all). The major plant and equipment proposed include: Steam turbine-generator sets (2 x 12 MW). Steam generators (2 x 50 tph AFBC boilers using rice husk and coal as fuels).

4 CDM Executive Board page 4 Fuel handling systems for rice husk and coal. Ash handling systems for both bottom ash and fly ash for both fuels. Water treatment systems for both cooling water cycle and power cycle. Cooling tower. Electrostatic precipitator (2 nos.). Boiler feed pumps. Effluent treatment plant. Biomass (rice husk) to be used in the project shall be the primary fuel. This will be collected from an area with 150 km radius around the project site. Coal from indigenous/ imported sources shall be used to meet balance fuel requirements. As per survey conducted, rice husk will normally be available from December to March/ April. Hence, the power plant will be operated with rice husk for six months only (by storing up for a month or two). During the remaining months in a year, coal will be used. The annual rice husk requirement for both boilers shall be 100,000 tonnes i.e. approximately 550 ton/day (with average gross calorific value of 3,150 kcal/kg) and the coal requirement shall be around 75,000 tonnes i.e. approximately 400 tonnes/day (with average gross calorific value of 4,400 kcal/kg). The voltage at the alternator terminal shall be 6.6 KV. Power generated at 6.6 KV shall be connected to 6.6 KV switchgear panel located at the main plant substation building. In the existing system, power from the PSEB grid is connected in our 132 KV switchyard. In case applicable, the PSEB grid voltage shall be further stepped down to 6.6 KV through 132/6.6 KV step down transformers to be located in the switchyard. This 6.6 KV voltage shall be interconnected with 6.6 KV switchgear panel. The paralleling of generated power with the PSEB grid system at 6.6 KV level shall be accomplished in the 6.6 KV switchgear panel. A.4.4. Brief explanation of how the anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed CDM project activity, including why the emission reductions would not occur in the absence of the proposed project activity, taking into account national and/or sectoral policies and circumstances: >> In India, coal has been a preferred fuel for power generation; even the (draft) National Electricity Policy of 2004 asserts that coal would necessarily continue to remain the major fuel and use of gas as a fuel for generation would depend upon its availability at reasonable prices. Hence, in keeping with the guidelines of the Executive Board 1 on national and/or sectoral policies and circumstances, the baseline scenario considers the operating plants using coal, gas, etc., in the Punjab grid. It may be noted here that the operating plants that contribute electricity to the Punjab grid are dominated by coal based power plants. The project activity contributes towards meeting the objective of Government of India and Government of Punjab of 10% of incremental capacity from renewable sources, and also towards mitigating the supply deficit in Punjab. In the absence of the project activity, the GACL facility was meeting its electricity requirements by purchasing electricity from the Punjab State Electricity Board (PSEB) grid, which has several fossil fuel based generating stations connected to it. On account of the project activity, the electricity that was purchased from the grid has been replaced to the extent of electricity generated by this power project. 1 EB 16 Report, Annex 3.

5 CDM Executive Board page 5 Since the project activity shall be operated for about 6 months on rice husk (a renewable biomass) which has a net zero emission per unit of electricity generated and for the balance 6 months on coal, the average CO 2 emission is lower than the CO 2 intensity of the electricity purchased from the grid. Hence, the anthropogenic emission of GHG has been reduced to the extent of electricity purchase avoided/ replaced from the PSEB grid. A Estimated amount of emission reductions over the chosen crediting period: >> The estimated amount of emission reductions over the chosen 10-year crediting period is 429,453 tco 2. A.4.5. Public funding of the project activity: >> The total project cost works out to INR 750 million. The project is proposed to be financed through internal accruals and term loans from Financial Institutions of India. The proponent proposes to identify potential participants from Annex I countries in due course and it is as yet not known if any public funding shall be sought. In case public funding is sought, the proponent shall duly ensure that no official development assistance (ODA) is involved. SECTION B. Application of a baseline methodology B.1. Title and reference of the approved baseline methodology applied to the project activity: >> The baseline methodology applied to the project activity is based on approved baseline methodology AM0004 (Grid-connected Biomass Power Generation that avoids Uncontrolled Burning of Biomass). B.1.1. Justification of the choice of the methodology and why it is applicable to the project activity: >> GACL proposes to expand its cement grinding capacity at Rupnagar district (Ropar) to 2.5 MTPA (million tons per annum) from the current 1.5 MTPA, with provision for further expansion to 3.5 MTPA. To meet consequent increase in power requirement as also the current/ existing power requirements at its Rupnagar district (Ropar) and Bhatinda grinding units, GACL has installed the 24 MW power plant. The baseline methodology (AM0004) is applicable to this project activity due to the following considerations: In the absence of the project activity, the rice husk (excess) would have been openly burned (for disposal purpose) by the generators of these husks at source, or would have been dumped for a long period of time causing these to decay, resulting in the release of GHGs. GACL has conducted a survey at the planning stage of this project activity to identify the feasibility/ availability of rice husks for use in power generation. It was identified that over an area with radius 150 km around the project site location, excess of rice husk is available with no competitive use. Such excess biomass is normally disposed off through uncontrolled burning or dumped. As mentioned earlier, the above survey indicated that there is an adequate and abundant supply of rice husk (during the harvesting season) around the project area to allow use in power generation up to about 6 months 2 in a year. Such biomass (rice husk) is not used normally for any economically beneficial activities in the area. Such rice husks are dispersed across the region, and need to be 2 The actual harvesting season when harvesting occurs and rice husk becomes available is only about 4 months, but due to availability of excess material, stock can be built up to run the power plant for at least 6 months.

6 CDM Executive Board page 6 collected and transported to project site for use. The power project is too small compared to proposed new additions to the grid. There are two 500 MW coal based power plants proposed in the state, and are expected to come on stream only after November The GACL power plant is only 2.4% size compared to these planned additions, and is not expected to impact such new construction. The PSEB grid to which the power plant is connected has a supply deficit, and no suppressed demand. To this effect, it may be noted that at the planning stage of the project activity, the supply deficit was about 2.3% in Punjab state (period April August, as on 2003). This deficit situation is expected to worsen since on an average, in India, the electricity to GDP elasticity ratio is 1.5, and at an expected national GDP growth of 6%, the demand for electricity is expected to increase at 9%. This national average increase is also assumed to be applicable to Punjab causing and increase in the demand by 9%, though no new capacity is under commissioning in the State of Punjab (there has been no new capacity additions in Punjab since November 2000). PSEB s installed capacity during was 5,701 MW against a requirement in connected load requirement of 17,198 MW. Due to the small size of the power project compared to the size of the grid in Punjab state and the demand for power (as mentioned earlier), the project activity is expected to have negligible impact on the average grid emission factor. The operating margin in Punjab state has a 10 MW rice straw based power plant which is not operational; the next higher operating plants are 2 nos 420 MW each coal based operational projects with carbon emission factor of 1,085 tco 2 /GWh. This is higher than the grid average carbon emission factor. Thus the grid average operating margin is lower than the most likely operating margin candidate. B.2. Description of how the methodology is applied in the context of the project activity: >> Within the scope of the adopted baseline methodology, additionality has been demonstrated by crossing certain barriers as per the following steps, which are organised below as per the CDM Meth panel guidelines 3 as explained in the new baseline methodology adopted for this project activity. Steps for Additionality Demonstration of crossing Barriers Check Step 0: Preliminary screening based on the starting date of the project activity. Conclusion Has construction of the project already started? If yes, is there verifiable evidence to justify that CDM was seriously considered at the start of the project? Yes. The placement of order for main plant and equipment has been completed in May 2003, and major construction activities have been completed. The project is expected to deliver CERs from February GACL management has taken a decision to go ahead with the project, after considering CDM benefits under Kyoto Protocol. There is documentary evidence to such decision that The project activity has crossed step 0 of additionality demonstration, and hence this assessment can move to step 1. 3 Annex 1: Tool for the demonstration and assessment of additionality.

7 CDM Executive Board page 7 Steps for Additionality Check Demonstration of crossing Barriers could be verified by the validator. Conclusion Step 1. Identification of alternatives to the project activity consistent with current laws and regulations Step 1a: Define alternatives to the project activity. Step 1b: Enforcement of applicable laws and regulations. In the absence of the project activity, GACL would have gone ahead with either of the following two alternatives: used coal as fuel for power generation, as this is a cheaper and prevalent alternative; or have purchased power from the PSEB grid. There is no legal requirement or framework to obligate the use of rice husk as fuel for power generation. It may be noted that the Indian Electricity Act of 2003 does not restrict or empower any authority to restrict the fuel choice for power generation. In addition, the draft National Electricity Policy (revised in August 2004) asserts coal would necessarily continue to remain the major fuel. The applicable environmental regulations do not restrict the choice of fuel for generation units located anywhere in India. Also there is no legal requirement on the choice of a particular technology for power generation. The project activity has crossed sub-step 1a of additionality demonstration, and hence this assessment can move to step 1b. The project activity has crossed sub-step 1b of additionality demonstration, and hence this assessment can move to either 2 (investment analysis) or step 3 (barrier analysis). In this PDD, both steps 2 (investment analysis) and step 3 (barrier analysis) have been used for further additionality assessment. Step 2. Investment analysis: Determine Financial attractiveness of the project activity excluding consideration of revenue from sale of CER Step 2(a): Determine appropriate analysis method Step 2(b): Document the costs associated with the CDM project activity and demonstrate that the activity produces no economic benefits other than CDM related income This CDM project activity generates only CDM related income, and hence a simple cost analysis (Option I) has been used here. An additional investment (in comparison to coal based CPP) to the extent of Rs. 17 million has been spent on boiler sizing and creating storage for rice husk. Due to this additional expenditure there is no additional benefit except for CDM revenue. Hence, the project activity is not attractive without the CDM revenue. The IRR for the project calculated at the time of preparation of the detailed project report was 17%, while that calculated during April 2005 is 13%. The The project activity has crossed sub-step 2(a) and can move to sub-step 2(b). The project activity has caused step 2 and can move to step 4.

8 CDM Executive Board page 8 Steps for Additionality Check Step 3. Barrier analysis Step 3(a): Identify barriers that would prevent the implementation of type of the proposed project activity Step 3(b): Show that the identified barriers would not prevent the implementation of at least one of the alternatives Demonstration of crossing Barriers CER revenue boosts the IRR by only 1% compared to 12% for WACC (weighted average cost of capital). Investment barriers, other than the economic/ financial barriers: The project activity has to provide for additional investments amounting to INR 17 million on account of separate fuel handling systems for coal and rice husk as also ash handling systems for both fuels whereas opting for coal alone would have obviated the need for separate fuel handling systems. Similarly, the adoption of AFBC boiler entailed a net higher capital cost of 5% as compared to conventional stoker fired boilers. Finally, the principal variable cost is cost of generation i.e. cost of fuel, the collection and transportation costs of rice husk being Rs /kCal while costs for purchasing coal is Rs /kCal (as per calculations made by GACL). Thus, opting for coal alone could have resulted in lower capital investment and lower generation cost. Secondly, the choice of stoker fired boiler or other conventional boiler would have resulted in decreased capital investment. But these would have resulted in higher GHG emissions. Thus the project activity overcomes investment barrier. Technological barriers: The total installed capacity of biomass based power plants in India is 0.43% and in Punjab is 0.31%. The experience and state of technology development is also limited to that extent as compared to coal based power plants. The project activity overcomes barriers and risks on account of performance uncertainty and low market share of the technology. Barriers due to prevailing practice: The rice husk (biomass), though, generated in abundant quantities during a particular season, are dispersed in the project area. There has been no initiative in the past to collect these materials and use for power generation. Conclusion The project activity has crossed both substeps 3a 3b of additionality demonstration, and hence this assessment can move to step 4.

9 CDM Executive Board page 9 Steps for Additionality Check Demonstration of crossing Barriers Also, an analysis of the generation mix indicates that biomass based power contributes only 0.3% to the total energy generation in the state when the total potential for biomass based power in the state is 132 MW installed capacity in the region alone. This in itself is indicative of the fact that setting up biomass based power projects is not a prevalent practice, hence is barrier, which the Sponsor has overcome in setting up the project. Documents, where relevant, in support of the above, are available, and can be reviewed by the project validator. None of the three barriers would be applicable to the project alternatives identified under step 1(a). Conclusion Step 4: Common practice analysis Step 4a: Analyze other activities similar to the proposed project activity Step 4b: Discuss any other similar options that are occurring Step 5: Impact of CDM registration Based on available information published by the Ministry of Non-Conventional Energy Sources (MNES), there is very low utilization of biomass as sources for power generation in India, though there is abundance of agro-residues that can be used for power generation. Hence, there is insignificant prevalence of similar activities comparable with the project activity. If this project activity obtains CDM registration, it could trigger one or more of the following impacts: Use of GHG intensive fuels such as coal or purchase of power from the PSEB grid will be avoided, which will avoid associated anthropogenic emissions. The CER revenue could compensate the additional investments required on the project activity. Would encourage development of interest in similar projects activities and wide-spread implementation, by new players. The project activity has crossed step 4 of additionality demonstration, and hence this assessment can move to step 5. Based on the additionality analysis, it is clear that the project has demonstrated that it is not a business as usual case and is additional to the baseline scenario.

10 CDM Executive Board page 10 B.3. 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: >> In the absence of the project activity, the biomass (rice husks) would have been openly burnt or stored indefinitely releasing GHGs. At the same time, GACL would have purchased additional power that would have been produced by other power generators in the operating margin in the Punjab grid using GHG intensive fuels. The project activity avoids both the situations thereby reducing the emissions. B.4. Description of how the definition of the project boundary related to the baseline methodology selected is applied to the project activity: >> The control group for the baseline is the PSEB grid and the project activity proposes to displace electricity from PSEB grid. Hence, all operations, activities and physical sites and facilities involved in net displacement of grid electricity are included in the project boundary. The control principle would require only the facilities included in the project activity be considered within the project boundary since these would be under the management control of the GACL. On the contrary, the one-step upstream and one-step downstream principle, requires that facilities and activities up to and including the GACL substation be included in the project boundary on the downstream while on the upstream, all emissions on account of the transport of fuel be included. Accordingly, the project boundary includes: Direct on-site emissions including: 1. Fuel combustion 2. Auxiliary consumption 3. Methane emission on account of storage of rice husk on premises. Direct off-site emissions including: 1. Emissions on account of transport of rice husk 2. Emission on account of transport of coal. Indirect off-site emissions including: 1. Avoidance of methane emissions at the rice husk suppliers premises 2. Decreased use of rice husk in paper and cattle feed to the extent consumed. B.5. Details of baseline information, including the date of completion of the baseline study and the name of person (s)/entity (ies) determining the baseline: >> The baseline has been developed on the following premises: a) The control group is the PSEB Grid. b) Generating stations feeding PSEB Grid have been considered in the operating margin. c) The emission factors selected are based on IPCC emission factors and GHG emission factors for power sector in India worked out in Electricity Generation case Study (Martina Bosi, Emission Baselines Estimating the Unknown, 2000, OECD IEA). The baseline study was completed on 6 November Dr. P Ram Babu of PwC, whose contact information is set out in Annex 1, has assisted GACL in determining the baseline methodology.

11 CDM Executive Board page 11 SECTION C. Duration of the project activity / Crediting period C.1 Duration of the project activity: C.1.1. Starting date of the project activity: >> The earliest start date for the project activity (the date of placement of order for main plant and equipment or construction start date) was in May Since, this is post adoption of Decision 17/CP.7 (10 November 2001), no documentation is required to be included. C.1.2. Expected operational lifetime of the project activity: >> The project is expected to be operational for a period of 20 years from the date of commencement of operations. C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period C >> Not applicable. C >> Not applicable. Starting date of the first crediting period: Length of the first crediting period: C.2.2. Fixed crediting period: C Starting date: >> The starting date for crediting period 1 January >> 10 years. C Length: SECTION D. Application of a monitoring methodology and plan D.1. Name and reference of approved monitoring methodology applied to the project activity: >> The monitoring methodology is as per the approved monitoring methodology AM0004 Gridconnected Biomass Power Generation that avoids Uncontrolled Burning of Biomass. Broadly, the monitoring plan would include monitoring the following: a) Project emission from biomass electricity generation b) Project emission from fossil fuel use c) Project emission from transportation (including transportation distance) d) Biomass supply and demand for the biomass sources used by the proposed project e) Baseline emissions from grid electricity generation f) Baseline emissions from biomass disposal (open air burning). In order to monitor the above, records on the following should also need to be checked at the GACL unit:

12 CDM Executive Board page 12 total quantity of rice husk consumed by GACL, Ropar Unit; total quantity of coal consumed by GACL, Ropar Unit; GCV of rice husk used at GACL, Ropar Unit; GCV of coal used at GACL, Ropar Unit; heat rate of power plant at GACL, Ropar Unit; power generation at GACL, Ropar Unit; power consumed at GACL, Ropar Unit; power wheeled to GACL Bhatinda unit; auxiliary consumption at GACL, Ropar Unit. D.2. Justification of the choice of the methodology and why it is applicable to the project activity: >> The approved monitoring methodology (AM0004) is applicable for the project activity, since it displaces grid electricity through biomass generated power, and takes into account the baseline methodology for such project activity.

13 CDM Executive Board page 13 D Option 1: Monitoring of the emissions in the project scenario and the baseline scenario D Data to be collected in order to monitor emissions from the project activity, and how this data will be archived: ID number (Please use numbers to ease crossreferencing to D.3) 1 EF_CH4 Data variable Source of data Data unit Quantitative, Methane in stack gas Project proponent, third party monitoring Measured (m), calculated (c) or estimated (e) Recording Frequency % m Minimum of four times Per year Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment - electronic Minimum of two years after last issuance of CERs. Spectroscopic measurements (Data 1) are to be performed quarterly to obtain the proportion of methane in the stack gas emitted to the atmosphere. This data, together with the aggregated monthly report on biomass usage (Data 2), will be used to calculate the total methane emissions from biomass combustion. 2 BFy Quantitative, Amount of biomass combusted Project proponent, third party monitoring T fuel m Monthly (aggregate) 100% electronic Minimum of two years after last issuance of CERs 3 FFy Quantitative, Fuel/ coal used Project proponent T of fuel m Continuous 100% electronic Minimum of two years after last issuance of CERs

14 CDM Executive Board page 14 D Data to be collected in order to monitor emissions from the project activity, and how this data will be archived: ID number (Please use numbers to ease crossreferencing to D.3) 4 OFy Data variable Source of data Data unit Quantitative, On-site use of transport fuel Project proponentplant site Measured (m), calculated (c) or estimated (e) Recording Frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment L m Continuous 100% electronic Minimum of two years after last issuance of CERs 5 AVDy 6 EPy Quantitative, Off-site transport distance Quantitative, Electricity Produced Third party monitoring, based on data sheets Project proponent km m (by a third party) Monthly (aggregate) 100% electronic Minimum of two years after last issuance of CERs MWh m/c Electronic 100% electronic Minimum of two years after last issuance of CERs 7 HR Quantitative, Efficiency (heat rate) of the boiler Project proponent t fuel/ MWh m Minimum of Four times Per year - electronic Minimum of two years after last issuance of CERs

15 CDM Executive Board page 15 D Description of formulae used to estimate project emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.) >> 1. Emission due to burning of rice husk (biomass) for generation of electricity (BBEG_CH 4y ) in tco2e EGy = (PC * 1000) * (PLF*365*24) * (1 Rate of annual auxiliary consumption) (1) BFy = (EGy* HR* 6/12) / GCVr / 1000 (2) BBEG_CH 4y = BFy * BF_HV * EF_CH 4 * GWP_CH 4 (3) where: BFy = Biomass used as fuel during the year (metric tonnes), BF_HV = Heating value of the biomass fuel used [terajoules (TJ) per tonne of biomass], EF_CH 4 = CH 4 emission factor for the biomass fuel (tonnes CH 4 per TJ), GWP_CH 4 = Approved Global Warming Potential value for CH 4 (tonnes of CO 2e per tonne of CH 4 ) i.e. 21, GCVr = Gross calorific value of rice husk (kcal/kg), PLF = Plant load factor (0.7), EGy = Electricity available for supply to the grid by the project activity (kwh), PC = Power Plant Capacity (MW), HR = Heat rate (kcal/kwh). 2. GHG emission due to transport of biomass to the generation facility (BT_GHGy) in tco2e BT_GHGy = BFy/TC * AVDy * [VEF_CO2 + VEF_CH4 * GWP_CH4 + VEF_N2O * GWP_N2O] (4) where: BFy = Biomass used as fuel during the year (metric tonnes), TC = Truck capacity (tonnes of biomass), AVDy = Average return trip distance between the biomass fuel supply sites and the electricity generating unit site (kilometers), VEF_CO 2 = CO 2 emission factor for the trucks (tco 2 /km), VEF_CH 4 = CH4 emission factor for the trucks (tch 4 /km), VEF_N 2 O = N 2 O emission factor for the trucks (tn 2 O/km),

16 CDM Executive Board page 16 GWP_CH 4 = Approved Global Warming Potential value for CH 4 (tonnes of CO 2e per tonne of CH 4 ) i.e. 21. GWP_N 2 O = Approved Global Warming Potential value for N 2 O (tonnes of of CO 2e per tonne of N 2 O) i.e GHG emission due to on-site transportation of biomass (OT_GHGy) in tco2e OT_GHGy = OFy * [VEF_CO2 + VEF_CH4 * GWP_CH4 + VEF_N2O * GWP_N2O] (5) where, OFy = Transportation fuel used on-site during the year (kilograms), VEF_CO2 = CO2 emission factor for the transportation fuel (gco2/kg), VEF_CH4 = CH4 emission factor for the transportation fuel (gch4/kg), VEF_N2O = N2O emission factor for the transportation fuel (gn2o/kg), GWP_CH4 = Approved Global Warming Potential value for CH4 (tonnes of CO2e per tonne of CH 4 ) i.e. 21, GWP_N2O = Approved Global Warming Potential value for N2O (tonnes of of CO2e per tonne of N2O) i.e GHG emission due fossil fuel used by generating facility for start-up and as auxiliary fuel in tco2e FFy= [{(EGy* HR* 6/12) * 1000} * ( / )] (6) FF_GHGy = FFy * [GEF_CO2 + GEF_CH4 * GWP_CH4 + GEF_N2O * GWP_N2O] (7) where, FFy = Fossil fuel used by the electricity generating unit as start-up and auxiliary fuel during the year (TJ), GEF_CO2. = CO2 emission factor for the generating unit (tco2/tj), GEF_CH4 = CH4 emission factor for the generating unit (tch4/tj), GEF_N2O = N2O emission factor for the generating unit (tn2o/tj), GWP_CH4 = Approved Global Warming Potential value for CH4 (tonnes of CO2e per tonne of CH4) i.e. 21, GWP_N2O = Approved Global Warming Potential value for N2O (tonnes of of CO2e per tonne of N2O) i.e Project Emission (PEy) = BBEG_CH4y + BT_GHGy + OT_GHGy + FF_GHGy (8) D Relevant data necessary for determining the baseline of anthropogenic emissions by sources of GHGs within the project boundary and how such data will be collected and archived :

17 CDM Executive Board page 17 ID number (Please use numbers to ease crossreferencing to table D.3) 8 Egy Data variable Quantitative, Electricity exported by the project to the grid Source of data Project proponents bills from PSEB Data unit Measured (m), calculated (c), estimated (e), Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment MWh m/c Monthly 100% electronic minimum of two years after last issuance of CERs 9 CEFy Quantitative, Grid CO2 emission factor Published information for connected grid tco 2e / MWh m/c Annual 100% electronic minimum of two years after last issuance of CERs 2 Bfy Quantitative, Amount of biomass combusted Project proponent t fuel m/c Monthly 100% electronic minimum of two years after last issuance of CERs D Description of formulae used to estimate baseline emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.) >> 1. Methane emission due to open air burning of biomass in tco2e BB_CH4y = BFy * BCF * CH4F * CH4/C * GWP_CH4 (9)

18 CDM Executive Board page 18 where, BFy = Biomass used as fuel during the year (metric tones), BCF = Carbon fraction of the biomass fuel (tonnes of carbon per tonne of biomass), CH4F = Fraction of the carbon released as CH4 in open air burning expressed as a fraction, CH4/C = Mass conversion (tonnes of CH4 per tonne of carbon) i.e.16/12, GWP_CH4 = Approved Global Warming Potential value for CH4 (tonnes of CO2e per tonne of CH4) i.e CO2 emission due to generation of electricity by other sources in tco2e EG_CO2y = EGy * CEFy (10) where, EGy = Electricity supplied to the grid by the project activity during the year (MWh), CEFy = CO2 emission factor for the electricity grid during the year (tco2e/mwh) Total baseline emission: BL_GHGy = BB_CH4y + EG_CO2y (11) D Option 2: Direct monitoring of emission reductions from the project activity (values should be consistent with those in section E). Not opted for. D Data to be collected in order to monitor emissions from the project activity, and how this data will be archived: ID number (Please use numbers to ease crossreferencing to table D.3) Data variable Source of data Data unit Measured (m), calculated (c), estimated (e), Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment

19 CDM Executive Board page 19 equ.): >> Not applicable. D Description of formulae used to calculate project emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 D.2.3. Treatment of leakage in the monitoring plan activity ID number (Please use numbers to ease crossreferencin g to table D.3) D If applicable, please describe the data and information that will be collected in order to monitor leakage effects of the project Data variable Source of data Data unit Measured (m), calculated (c) or estimated (e) Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) Comment Leakages are not applicable to the project activity due to the following reasons: the survey conducted by GACL on biomass has already indicated that excess/ surplus rice husk is available for the project activity; there is no other competitive user of the biomass proposed for use in the project activity (as per the above survey); and the project activity will not deplete the supply of biomass to any current user; also there are no other power generator in the PSEB that uses rice husk. It may also be noted that the project activity provides for dry and covered storage of rice husks so that there is insignificant chance of biomass decomposition and associated methane generation.

20 CDM Executive Board page 20 D Description of formulae used to estimate leakage (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.) >> No leakage situation, as envisaged in the baseline methodology, is expected. D.2.4. Description of formulae used to estimate emission reductions for the project activity (for each gas, source, formulae/algorithm, emissions units of CO 2 equ.) >> ERy = BL_GHGy (BBEG_CH4y + BT_GHGy + OT_GHGy + FF_GHGy) (12) D.3. Quality control (QC) and quality assurance (QA) procedures are being undertaken for data monitored Data (Indicate table and ID number e.g ; 3.2.) Uncertainty level of data (High/ Medium/ Low) Are QA/QC procedures planned for these data Explain QA/QC procedures planned for these data, or why such procedures are not necessary. D Low Yes The sampling instruments will undergo maintenance subject to appropriate industry standards. The spectroscopy results will be compared to the IPCC default emission factor. The larger of the two values will be used to ensure conservatism. D and D Low Yes Trucks carrying biomass will be weighed twice, upon entry and exit. Meters at the weigh station will undergo maintenance and calibration subject to appropriate industry standards. This quantity will be checked against purchase receipts and inventory data. D Low Yes Meters will undergo maintenance and calibration subject to appropriate industry standards. The meter readings will be checked against purchase receipts and inventory data. D Low Yes Fuel pump readings will be compared against fuel purchase invoices. D Low Yes The distance records submitted by the truckers will be compared to the average distance between the plant and the fuel supply site. D and D Low Yes The electricity meters will undergo maintenance/ calibration subject to appropriate industry standards. The accuracy of the meter readings for electricity sold to the grid will be verified by receipts issued by the purchasing power company. D Low NA Standard test procedures will be used to calculate the heat rate of the boiler.

21 CDM Executive Board page 21 D Low NA Calculation of the CO 2 emission factor for grid electricity involves the use of publicly available official information. D.4 Please describe the operational and management structure that the project operator will implement in order to monitor emission reductions and any leakage effects, generated by the project activity >> The project will be operated and managed by the GACL who are also the project proponent. The GACL will ensure safety in operation of the plant; a project manager will be allocated with the responsibility for ensuring that the safety issues are addressed. The GACL can only utilize rice husks as per the design and the quantum of fuel will be logged in and archived electronically. The power plant will abide by all regulatory and statutory requirements as prescribed under the state and central laws and regulations. GACL will monitor all its activities and performance related to emission and solid waste generation. GACL will install meters to record, measure and calculate actual creditable emission reduction in most transparent and relevant manner. Installed meters will be calibrated according to the maintenance schedule programmed at the start of the operation and refreshed according to the plants performance requirement. All the monitoring data will be recorded and kept under safe custody of the power plant manager. Also any change within the project boundary, such as change in spares and or equipment will be recorded and any change in the emission reduction due to such alteration will also be studied and recorded. D.5 Name of person/entity determining the monitoring methodology: >> Dr. Ram Babu of PwC whose contact information is set out in Annex 1 has assisted the Sponsor in determining the monitoring methodology.

22 CDM Executive Board page 22 SECTION E. Estimation of GHG emissions by sources E.1. Estimate of GHG emissions by sources: >> 1. Emission due to burning of rice husk (biomass) for generation of electricity EGy BFy =129,507,840 kwh =62, t BBEG_CH4y = tco 2e 2. GHG emission due to transport of biomass to the generation facility BT_GHGy = 1, tco 2e 3. GHG emission due to on-site transportation of biomass OT_GHGy = 0.00 tco 2e There will be no on-site transportation of bio-mass, since the bio-mass procured from off-site locations will be transported to the storage hopper from which it can be directly fed to the boiler. Hence, the GHG emissions due to onsite transportation have been considered to be zero. 4. GHG emission due fossil fuel used by generating facility for start-up and as auxiliary fuel FFy = TJ FF_GHGy = 80, tco 2e The detailed calculations are provided later in this document under Appendix 3. E.2. Estimated leakage: >> No leakage is expected due to the project activity. E.3. The sum of E.1 and E.2 representing the project activity emissions: >> Project Emission (PEy) = BBEG_CH4y + BT_GHGy + OT_GHGy + FF_GHGy = 81, tco 2e. E.4. Estimated anthropogenic emissions by sources of greenhouse gases of the baseline: >> 1. Methane emission due to open air burning of biomass BB_CH4y = BFy * BCF * CH4F * CH4/C * GWP_CH4 = 3, tco 2e 2. CO2 emission due to generation of electricity by other sources

23 CDM Executive Board page 23 EG_CO2y = EGy * CEFy = 120, tco 2e. Total baseline emission: BL_GHGy = BB_CH4y + EG_CO2y =124, tco 2e. The baseline has been taken as constant for the fixed crediting period. E.5. Difference between E.4 and E.3 representing the emission reductions of the project activity: >> Emission reduction per year by the project activity will be 42,815.3 tco 2e. The total emission reduction for the crediting period will be 428,153 tco2e. E.6. Table providing values obtained when applying formulae above: >> Details of project emission and baseline emission using the above formula are given in the tables in Annex 3 and Appendix 3. Particulars Annual Emissions and Emission Reductions (tco2) Total Baseline (tco2) Project Emissions (tco2) Emission Reduction (tco2) SECTION F. Environmental impacts F.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: >> Thirty-two categories of projects with certain investment criteria, are required to undertake an Environmental Impact Assessment (EIA) under notification of the Government of India. For this project activity, an EIA has been carried out 4 in accordance with the said notification and clearance has been obtained from the authorities. The executive summary of the EIA report is included as Appendix 4. This EIA was completed as per requirements for Indian projects as per guidelines of the Ministry of Environment and Forests (MoEF). Such guidelines by the MoEF address local issues only pertaining to the sustainable development of India. However, the information collected in this EIA report demonstrates that there will be no transboundary impacts from this project activity. F.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: >> On the basis of the EIA Studies, it was inferred that the project activity is safe from environmental angle and when set up at the site shall present minor environmental concerns for which abatement and control measures have been provided as per the environment management plan recommended in the EIA for the construction and operation phases of the project. 4 Rapid EIA carried out between February 2000 to May 2000.

24 CDM Executive Board page 24 SECTION G. Stakeholders comments >> G.1. Brief description how comments by local stakeholders have been invited and compiled: >> Initial intimation about the stakeholder meeting was circulated as Notice of the Meeting 15 days in advance. The objective of the Meeting and its benefits in the development of the CDM Project has been incorporated therein. The project sponsor has carried out a stakeholder consultation on 27 May 2003 for about 2 hours duration. The stakeholder consultation process has been described in Appendix 5. G.2. Summary of the comments received: >> The MOM of the Public Consultation meeting has been included at Appendix 5. G.3. Report on how due account was taken of any comments received: >> A note on how account was taken of the concerns raised in the above public consultation meeting has been included in Appendix 5. The stake-holders were provided reasonable opportunity to convey their views and concerns of the project activity, and immediate responses were provided to them.

25 CDM Executive Board page 25 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Gujarat Ambuja Cements Limited Street/P.O.Box: 122, Maker Chambers III, Building: Nariman Point City: Mumbai State/Region: Maharashtra Postfix/ZIP: Country: India Telephone: FAX: avr@ambujamail.com URL: Represented by: Title: Chief - Projects Salutation: Mr. Last Name: Rao Middle Name: V First Name: A Department: Projects Mobile: Direct FAX: Direct tel: Personal avr@ambujamail.com

26 CDM Executive Board page 26 Organization: PricewaterhouseCoopers (P) Ltd. Street/P.O.Box: Veer Savarkar Marg, Building: 252, 3 rd Floor City: Mumbai State/Region: Maharastra Postfix/ZIP: Country: India Telephone: FAX: ram.babu@in.pwcglobal.com URL: Represented by: Title: Associate Director Salutation: Dr. Last Name: Ram Babu Middle Name: - First Name: P Department: Sustainable Business Solutions Mobile: Direct FAX: -- Direct tel: Personal ram.babu@in.pwcglobal.com

27 CDM Executive Board page 27 Annex 2 INFORMATION REGARDING PUBLIC FUNDING This is a unilateral CDM Project activity undertaken by the project proponent undertaken using internal accruals of GACL; no public funding or ODA has been used. The proponent proposes to identify potential participants from Annex I Parties in due course.

28 CDM Executive Board page 28 Annex 3 BASELINE INFORMATION Particular Value Unit Capacity of the Power Plant MW Plant Load Factor (Expected) 0.70 Average annual electricity production at above PLF GWh Rate of Auxiliary Consumption % Auxiliary Consumption GWh Net electricity available for consumption at expected PLF MWh Heat Rate (default value) kcal/kwh GCV of rice husk kcal/kg GCV of coal Kcal/Kg Total Energy input required kcal Quantity of rice husk consumed per annum Tonnes Quantity of coal consumed per annum Tonnes Baseline Emission Particular Value Unit CH4 EMISSIONS DUE TO OPEN AIR BURNING OF RICE HUSK (BIOMASS) Quantity of rice husk consumed per annum Tonnes (t) Carbon fraction of biomass fuel (Table 4.17-IPCC manual) tc/t of rice husk Fraction of carbon released as CH4 in open air burning (Table 4.16-IPCC manual) Mass conversion 1.33 tch4/tc Global Warming potential of CH tco2e/tch4 CH4 emissions during the year due to open air burning of the biomass used for electricity generation tco2e CO2Emission during the year due to Electricity Generation Electicity supplied to the grid GWh CO2 emission factor for the grid tco2e/gwh CO2 emissions during the year due to generation of the electricity by other sources tco2e Baseline emission tco2e

29 CDM Executive Board page 29 Annex 4 MONITORING PLAN As per the approved methodology the following monitoring plan shall be developed and followed: Spectroscopic measurements (Data 1) are performed quarterly to obtain the proportion of methane in the stack gas emitted to the atmosphere. This data, together with the aggregated monthly report on biomass usage (Data 2), will be used to calculate the total methane emissions from biomass combustion. The project must include a system for monitoring the amount of biomass combusted. If the amount of biomass combusted is estimated from the amount of biomass delivered to the site, a procedure for estimating the biomass inventory at the beginning and end of each verification period will be provided. Emissions from auxiliary fuel (i.e. coal) will be measured appropriately and continuous record of the amount of fuel fed into the boilers (Data 3) will also be kept. This will be double-checked against fuel purchase receipts. Transportation of biomass will occur both on- and off-site. On-site emissions can be calculated from the amount of transport fuel used (Data 4). Off-site emissions can be calculated from the distance traveled by the trucks (Data 5). If the biomass is supplied from a limited number of sites the distance can be calculated using standard distances and records of deliveries from and/or payments to each of the sources. If the sources of the biomass vary significantly, then GACL will provide an alternative means of monitoring the distance traveled or the fuel used for off-site transportation. The project should meter the total amount of electricity generated (Data 6), as well as the quantity supplied to the grid, and periodically measure the efficiency of the boiler (Data 7) so that the quantity of biomass fuel supplied to the boiler can be checked

30 CDM Executive Board page 30 Appendix 1 Project Site Location Map Rupnagar District Appendix 1

31 CDM Executive Board page 31 Project Site Location Map (contd.) Appendix 2