CDM Validation Report

Transcription

1 Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( SQ S ) B e r n s t r a s s e P. O. B o x C H Z o l l i k o f e n T e l F a x h e a d o f f i c s q s. c h w w w. s q s. c h CDM Validation Report Enterprise Business account: Company: Address: Phone: Fax: Contact person: ecotawa AG Breisacherstrasse 25 CH-4057 Basel Switzerland switzerland@ecotawa.com Daniel Wunderlin Service Audit/Assessment: CDM Validation Audit/Assessment beginning/end: 14/03/ /09/2011 Project name: DAKFOCAM Wastewater project GBZ/Report-No.: /P UNFCCC Scope(s)/Technical area(s): Sectoral scopes 1 and 13 Technical areas 1.2 and 13.1 UNFCCC Methodology: AMS-I.C, version 19 AMS-III.H, version 16 UNFCCC Scale: Small Scale Team of auditors/assessors: Mr Felix Martin Mr Hansruedi Bader Approved by Date Signature Felix Martin Lead Auditor Michael Gassner Reviewer Silvio Leonardi Member of the Executive Board 04/10/ /10/ /10/2011

2 CDM Validation Report Page 2 of 31 Table of Content 1 Introduction Objective Scope Project description Validation methodology Validation Opinion Summary of the validation conclusions Summary of the validation methodology and process used and the validation criteria applied Description of project components or issues not covered by the validation process Statement on the validation of the expected emission reductions Statement whether the proposed CDM project activity meets the stated criteria Validation Findings Approval Participation Project design document Project description Baseline and monitoring methodology Additionality of project activity Monitoring plan Sustainable development Local stakeholder consultation Global stakeholder consultation Environmental impacts Project design of small-scale clean development mechanism project activities Validation protocol List of Interviewees and Documents Reviewed Validation Team and Reviewer Quality Control Appendix A: On-Site Visit Programme Appendix B: Interviews Appendix C: Documents Reviewed Appendix D: Certificates of Competence...28 Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

3 CDM Validation Report Page 3 of Appendix E: Abbreviations Appendix F: CDM Validation Protocol Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

4 CDM Validation Report Page 4 of 31 1 Introduction 1.1 Objective ecotawa AG has commissioned SQS to perform a validation of the DAKFOCAM Wastewater project (hereafter called the project ). The validation objective is an independent assessment by a Designated Operational Entity (DOE) of a proposed project activity against all defined criteria set for the registration under the Clean Development Mechanism (CDM). Validation is part of the CDM project cycle and will finally result in a conclusion by the executing DOE whether a project activity is valid and should be submitted for registration to the CDM Executive Board (CDM-EB). The ultimate decision on the registration of a proposed project activity rests at the CDM-EB and the Parties involved. 1.2 Scope The validation scope is defined as an independent and objective review of the project design document (PDD). The PDD is reviewed against the criteria stated in The Kyoto Protocol, in particular 12 and modalities and procedures for the CDM Decision 2/CMP1 and Decision 3/CMP.1 (Marrakech Accords) MODALITIES AND PROCEDURES FOR A CLEAN DEVELOPMENT MECHANISM CLEAN DEVELOPMENT MECHANISM VALIDATION AND VERIFICATION MANUAL (ver. 01.2) Decisions and specific guidance by the EB published under AMS-III.H "Methane recovery in wastewater treatment" (ver. 16) AMS-I.C "Thermal energy production with or without electricity" (ver. 19) Tool for the demonstration and assessment of additionality (ver. 5.2) Tool to determine project emissions from flaring gases containing methane (ver. 1) Tool to calculate baseline, project and/or leakage emissions from electricity consumption (ver. 01) Tool to calculate project or leakage CO2 emissions from fossil fuel combustion (ver. 02) Guidelines on the demonstration and assessment of prior consideration of the CDM (ver. 3) Non-binding best practice examples to demonstrate additionality for SSC project activities (ver. 1) General Guidelines to SSC CDM methodologies (ver 15) Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities (ver 06) Guidelines on the Assessment of Investment Analysis (ver 05) The validation team has used a risk-based approach focusing on the identification of significant risks for project implementation and the generation of CERs. 1.3 Project description The objective of the project is the methane recovery and biogas utilization in a tapioca factory owned by Daklak Agricultural Materials and Food Joint Stock Company (DAKFOCAM). The factory processes around 43,000 tons of tapioca root to about 12,000 tons of tapioca starch products annually. The project is located in the central highlands of Vietnam. The project involves the installation of a covered anaerobic lagoon to capture the methane gases produced from the tapioca factory's wastewater in the lagoon. The produced biogas will be fired in boiler of the Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

5 CDM Validation Report Page 5 of 31 tapioca factory to generate process heat. The existing boiler will be retrofitted to allow co-firing of biogas and coal. Project participants are Daklak Agricultural Materials and Food Joint Stock Company (DAKFOCAM) as a private entity, Quang Ngai Agricultural Products and Foodstuff Stock Company (APFCO) as a private entity and ecotawa AG, also as a private entity. Starting date of the project activity is 18/19/2008 with an expected operational lifetime of the project activity of 30 years. The fixed 10 year crediting period starts on 01/11/2011 or after registration whichever later. Project specific annual average emission reductions over the chosen crediting period are estimated to be 17,557 tco2e. The total estimated emission reductions over the chosen crediting period are estimated to be 175,573 tco2e. 1.4 Validation methodology The SQS auditors apply standard auditing techniques to assess the correctness of the information provided by the project participants, including, where appropriate, but not limited to: (a) Document review, involving: review of data and information to verify the correctness, credibility and interpretation of presented information and cross checks between information provided in the PDD and information from sources other than that used, if available, and if necessary independent background investigations. (b) Follow-up actions (on-site visit, telephone, interviews), including: interviews with relevant stakeholders in the host country, personnel with knowledge of the project design and implementation and cross checks between information provided by interviewed personnel to ensure that no relevant information has been omitted from the validation. (c) Reference to available information relating to projects or technologies similar to the proposed CDM project activity under validation. (d) Review, based on the approved methodology being applied, of the appropriateness of formulae and correctness of calculations. If, during the validation of a project activity, the auditor identifies issues that need to be further elaborated upon, researched or added to in order to confirm that the project activity meets the CDM requirements and can achieve credible emission reductions, the auditor shall ensure that these issues are correctly identified, discussed and concluded in the validation report. The auditor shall raise a corrective action request (CAR) 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. The auditor shall raise a clarification request (CL) if information is insufficient or not clear enough to determine whether the applicable CDM requirements have been met. The auditor shall raise a forward action request (FAR) 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. The auditor shall resolve or close out CARs and CLs only if the project participants modify the project design, rectify the PDD or provide adequate additional explanations or evidence that satisfies the SQS s concerns. If this is not done, the SQS shall not recommend the project activity for registration to the CDM Executive Board. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

6 CDM Validation Report Page 6 of 31 In order to ensure transparency, a validation protocol (CDM Validation Protocol) was customized for the project. The protocol shows, in a transparent manner, criteria (requirements), means of validation and the results from validating the identified criteria. The validation protocol serves the following purposes: It organizes, 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 several tables. The different columns in these tables are described in below figure; The completed validation protocol is enclosed in appendix F to this report. CDM Validation Protocol 1-3: Requirements Requirement The requirements the project must meet. Ref. Reference to the PDD or documents. MoV Explains how conformance with the requirements is investigated. (Means of Validation) DR = Document Review, I = Interview, = Not Applicable Comment The section is used to elaborate and discuss the conformance to the requirement. Draft Concl. / Final Concl. OK = Conform, CAR = Corrective Action Request, CL = Clarification (Draft and/or Final Conclusion) Request, FAR = Forward Action Request CDM Validation Protocol 4: Summary of Requests No. The requests (CAR, CL, FAR) are numbered and listed in this section. Ref. Reference to the requirement number in Protocol 1-3 where the request is explained. Validator request The section is used to elaborate and discuss the request. The auditor may give reference to the PDD or documents. Project participant response The responses given by the client or other project participants during the communications with the validation team is summarised in this section. Validator conclusion This section summarises the validation team s responses and final conclusions. The conclusions are also included in Protocol 1-3, under Final Conclusion. Date Date when request was closed. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

7 CDM Validation Report Page 7 of 31 2 Validation Opinion 2.1 Summary of the validation conclusions Based on PDD "Dakfocam wastewater project", version 1.7, dated 04/10/2011 Consulted documents listed in Appendix C AMS-III.H "Methane recovery in wastewater treatment", version 16 AMS-I.C "Thermal energy production with or without electricity", version 19 Tool for the demonstration and assessment of additionality, version 5.2 Tool to determine project emissions from flaring gases containing methane, version 1 Tool to calculate baseline, project and/or leakage emissions from electricity consumption, version 01 Tool to calculate project or leakage CO2 emissions from fossil fuel combustion, version 02 Guidelines on the demonstration and assessment of prior consideration of the CDM, version 3 Non-binding best practice examples to demonstrate additionality for SSC project activities, version 1 General Guidelines to SSC CDM methodologies, version 15 Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities, version 06 Guidelines on the Assessment of Investment Analysis, version 05, EB 62, Annex 5 Validation and Verification Manual Version 01.2 On-site visit 05-06/04/2011 It is SQS's opinion that the project " DAKFOCAM Wastewater project" described in the PDD version 1.7, dated 04/10/2011, meets all relevant criteria of the listed references in paragraph 1.2 and correctly applies the approved small-scale methodologies AMS-I.C and AMS-III.H. SQS confirms that the approved methodologies AMS-I.C, version 19 and AMS-III.H, version 16 are applicable for this project activity and that the criteria are discussed in an exhaustive manner in the PDD and supported by the submitted documents. Furthermore the methodologies are correctly applied. Therefore, SQS requests the registration of the project. 2.2 Summary of the validation methodology and process used and the validation criteria applied The validation process has been carried out using the methodology described in paragraph 1.4. This included a desk review of the PDD including the annexes and the additional documents listed in the PDD annex 3, an on-site visit from 05/04/2011 to 06/04/2011 including interviews (see appendix B) and a physical inspection of the project activity site. Six CARs and twenty-four CLs were raised. All of them are closed. One FAR is open to be dealt with during the verification process. All requests and corresponding responses/conclusions are summarized in the Validation protocol, appendix F. 2.3 Description of project components or issues not covered by the validation process All project components have been covered by the validation process. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

8 CDM Validation Report Page 8 of Statement on the validation of the expected emission reductions The calculation of the expected emission reduction (originally 17,970 tco2e average per year) has been adjusted based on CL 16 (see appendix F). SQS confirms that the calculations of the expected emission reduction of 17,557 tco2e per year and 175,573 tco2e for the fixed 10 year crediting period are carried out in a transparent and conservative manner, so that the calculated emission reductions are most likely to be achieved, given that the underlying assumptions do not change. 2.5 Statement whether the proposed CDM project activity meets the stated criteria Based on the observations made during the validation process, SQS concludes that the proposed project is accurate, conservative, relevant, complete, credible and reliable. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

9 CDM Validation Report Page 9 of 31 3 Validation Findings 3.1 Approval A letter of approval issued by the host country s DNA Viet Nam National Steering Committee for UNFCCC and Kyoto Protocol, Department of Meteorology, Hydrology and Climate Change (MONRE) has been submitted to SQS by the project participant ecotawa AG. The letter (33/2010/DMHCC-BCD) is dated 24/08/2010 [52]. It contains the required information and statements with regard to confirmation of ratification of the Kyoto Protocol, voluntary participation, sustainable development and precise project title - all unconditional. The LoA does not contain additional specification of the project activity such as the PDD version. The LoA has been submitted to the DOE in the format of the scanned original, enveloped in a pdf. The DOE undertook a visual check and deems the LoA of Viet Nam as authentic. Switzerland s Federal Office for the Environment FOEN, acting as the Swiss Designated National Authority (DNA) has issued its letter of approval on 25/07/2011 [85]. It has been submitted to SQS by the project participant ecotawa AG. The letter (G ) contains the required information and statements with regard to confirmation of ratification of the Kyoto Protocol, voluntary participation and precise project title - all unconditional. The LoA does not contain additional specification of the project activity such as the PDD version. The LoA has been submitted to the DOE in the format of the scanned original, enveloped in a pdf. The DOE undertook a visual check and deems the LoA of Switzerland as authentic. 3.2 Participation The parties that are identified for the project activity are Vietnam and Switzerland. Vietnam ratified the Kyoto Protocol on 25/09/2002. Switzerland ratified the Kyoto Protocol on 09/07/2003. Project participants are Daklak Agricultural Materials and Food Joint Stock Company (DAKFOCAM), private entity and Quang Ngai Agricultural Products and Foodstuff Stock Company (APFCO), private entity of Vietnam and ecotawa AG, private entity of Switzerland. The participation of all three abovementioned project participants has been approved by the DNA of Vietnam. The participation of ecotawa AG of Switzerland has been approved by the Swiss DNA. The participation of all three project participants has been verified on the basis of the LoAs from the DNA of Vietnam and Switzerland. 3.3 Project design document A clarification was raised (CL.21) regarding the declaration of the host party in chapter A.3. Chapter A.3 was adjusted in the course of the validation and is now in accordance with relevant forms and guidance. A clarification was raised (CL.23) regarding table A3-6 mismatching the layout of the PDD. Figures from column 10 (year 2018) onwards were not readable. The PDD was updated with a fully readable table A3-6. CL.23 was closed. The PDD Dakfocam wastewater project, version 1.7, dated 04/10/2011 meets the CDM requirements for completing PDDs and is compliant with the latest template (CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) version 03 in effect as of: 28/07/2006) and guidance of the CDM EB available on the UNFCCC website. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

10 CDM Validation Report Page 10 of Project description The accuracy and completeness of the project description was validated during the on-site visit by interviews with stakeholders, relevant personnel and physical inspection of the place of project activity. The on-site visit was conducted from 05/04/2011 to 06/04/2011. A clarification was raised (CL.3) with regard to additional solids being pumped into the CIGAR-system. The PP clarified that solely sludge from lagoon 2 is pumped to the CIGAR-system to keep the ph stable. The DOE verified this on-site and deemed the pumping of sludge from lagoon 2 into the CIGAR-system as in accordance with the methodology. CL.3 was closed. A clarification was raised (CL.4) regarding the indication of units of figures given in the project description. The PP supplemented the project description with figures with SI-units. The DOE agreed with SI-units. CL.4 was closed. A clarification was raised (CL.5) regarding a formulation in the project description, which did not clearly describe the usage of biogas. The PP stated more precisely the usage of biogas in the project description. The biogas will only be used to generate process heat. The usage described in the PDD could be verified on-site by the DOE and is accepted as correct and in line with the methodology. CL.5 was closed. Clarification was raised (CL.7) on typing issues. These have been solved by the PP. The DOE deemed the PDD in accordance with the relevant guidances. CL.7 was closed. A clarification was raised (CL.20) to improve transparency of the documentation. CL.20 concerned the switch of DOE. The PP's explanation that the former DOE did not comply with timeline obligations and thus causing financial damage to the PP was accepted and deemed as plausible by the DOE. CL.20 was closed. The exact coordinates of the project activity (latitude: , longitude: ), i.e. the coordinates of Daklak Tapioca Factory have been verified on-site during physical plant inspection with a gps-device and are correct. Chapter A.4.5, foreseen for the confirmation that the small-scale project activity is not a debundled component of a large scale project activity, was empty. CAR.1 was raised. The PP then provided information regarding de-bundling in chapter A.4.5. The statements in the PDD Section A.4.5 have been verified on-site and deemed as in accordance with the relevant guidances. CAR.1 was closed. The DOE concludes that the small-scale project activity is not a de-bundled component of a large scale project activity. It is SQS's opinion that the project description is accurate and complete. 3.5 Baseline and monitoring methodology General requirement The project applies the methodologies - AMS-III.H "Methane recovery in wastewater treatment", version 16 - AMS-I.C "Thermal energy production with or without electricity", version 19 The project applies the following tools, which are referenced in the abovementioned methodologies: - "Tool to determine project emissions from flaring gases containing methane", version 1 - "Tool to calculate baseline, project and/or leakage emissions from electricity consumption", version 01 - "Tool to calculate project or leakage CO2 emissions from fossil fuel combustion", version 02 Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

11 CDM Validation Report Page 11 of Applicability of the selected methodology to the project activity In AMS-III.H applicability criteria are given in 1 to 14 which will be validated against the project activity below: 1: Option (f) applies. According to the project description, which was validated as correct in chapter 3.4 of this report, the DOE assessed option (f) of 1 as applicable and corresponding statement in the PDD as correct. 2 (a): CL.6 was raised to clarify the depth of the lagoon and that no aeration was installed. The PP could provide documentary proof [74] of the depth of the lagoon. Regarding aeration, the PP provided arguments on why aeration was not installed. The DOE checked documentation [73, 74] and argumentation in respect to plausibility and with the information gathered on-site. With that, the DOE deemed 2 as duly documented. CL.6 was closed. The DOE assessed option 2 (a) as applicable and corresponding statement in the PDD as correct. 2 (b): The ambient temperature was documented to be over 15 C by means of the official statistical yearbook of the Daklak Province [25]. The DOE assessed 2 (b) as applicable and corresponding statement in the PDD as correct. 2 (c): According to the PP, the wastewater from the production of tapioca starch contains very low fiber content which leads to very little sludge building. The DOE performed an internet-research by comparing this project with other similar registered projects at UNFCCC (Project N 2571, 2572) and checked the lagoons on-site to confirm the information given by the PP. The DOE came to the conclusion that 2 (c) is applicable and correctly stated in the PDD. 3: The PP chose to use the recovered biogas as described in 3 (a). This choice was assessed by the DOE by means of the project description and the information gathered on-site and deemed as applicable and corresponding statement in the PDD as correct. 4 to 12 are not valid due to the option (a) of 3 chosen by the PP and assessed as correct by the DOE. 13 The location of the wastewater treatment plant as well as the source generating the wastewater was uniquely defined in the PDD by means of coordinates. The plant was inspected by the DOE during the onsite visit, coordinates taken with a gps-device and compared with the coordinates given in the PDD. The coordinates did correspond. Thus, 13 is fulfilled. 14 The aggregate emission reductions do not exceed 60 kt CO2e. With the information gathered on-site and with a consistency-check of the data given in the PDD, the DOE assessed 14 as applicable in accordance with the pp. In AMS-I.C applicability criteria are given in 1 to 14 which will be validated against the project activity below: 1: Based on the on-site inspection of the plant and the project description, the DOE assessed 1 as applicable and corresponding statement in the PDD as correct. 2: The project activity does not produce electricity. Based on the on-site inspection of the plant and the project description, the DOE assessed 2 as not applicable. 3: 3 is not valid because 2 is not applicable. 4: The energy generation capacity does not exceed 45 MWthermal. Based on the information gathered onsite, with documentary proof of [36] and with a consistency-check of the data given in the PDD, the DOE assessed 4 as applicable and corresponding statement in the PDD as correct. 5: A correction request was raised (CAR.4) regarding co-firing. 5 was not addressed in the PDD. With version 1.5 of the PDD 5 was correctly addressed in the PDD. CAR.4 was closed. Based on the information gathered on-site, with documentary proof of [36] and with a consistency-check of the data given in the PDD the DOE assessed 4 as applicable and corresponding statement in the PDD as correct. 6: 6 is not valid because 2 is not applicable. 7: 7 does not apply since the project activity does not involve addition of renewable energy units. Based on the information gathered on-site and with a consistency-check of the data given in the PDD, the DOE Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

12 CDM Validation Report Page 12 of 31 assessed 7 as not applicable. 8: The project activity does not consist of the implementation of renewable energy generation but of a fuel switch from coal to biogas. Based on the on-site inspection of the plant, the DOE assessed 8 as not applicable. 9: The project activity consists neither of a Greenfield project nor does it involve capacity additions. Based on the on-site inspection of the plant, the DOE assessed 9 as not applicable. 10: No solid biomass is used. Based on the on-site inspection of the plant and the project activity description, the DOE assessed 10 as not applicable. 11: 11 is not valid because 10 is not applicable. 12: The heat produced is not delivered to another facility. Based on the on-site inspection of the plant, the DOE assessed 12 as not applicable. 13: AMS-I.C is not applied on a stand alone basis. AMS-III.H is also applied. 13 is thus not applicable. 14: The project activity is not a charcoal based biomass energy project. Based on the on-site inspection of the plant and the project activity description, the DOE assessed 10 as not applicable. The GHG addressed in the project are CO2 and CH4 while N2O is not included. It is the DOE's opinion that no greenhouse gas emissions occur within the proposed CDM project activity boundary as a result of the implementation of the project activity which are expected to contribute more than 1% of the overall expected average annual emissions reductions, which are not addressed by the applied methodology. SQS confirms that the applicability criteria of the selected small scale methodologies are met and the project activity is not expected to result in emissions other than those allowed by the methodologies. SQS confirms further that the choice of methodology is justified, its content is correctly quoted and interpreted in the PDD and the PP has shown in the PDD that the project activity meets each of the applicability conditions of the approved methodologies or any tool or other methodology component referred to therein Project boundary The spatial extend of the project boundary includes the industrial site of the factory without the starch production, the first lagoon, the heating system for the production, the flare and the national electricity grid. The project boundary is outlined in the PDD in figure 5. The national electricity grid is rightly included due to additional electricity consumption in the project activity. During the on-site visit, the DOE inspected the whole plant including the parts not included in the project boundary such as the starch production and the remaining six lagoons. Furthermore, the DOE traced the physical process-flow of wastewater generation to wastewater-treatment with biogas generation, piping of biogas to the flare and the boiler and the heat generation with biogas to verify the project boundary described in the PDD to be realistic and in line with the methodology AMS-III.H 15 and AMS-I.C 15. The DOE could verify on-site with respect to AMS-III.H 16, that those sections of the wastewatertreatment, which are affected by the project activity, are correctly included in the project boundary. In respect of 15 of AMS-I.C the DOE could verify on-site that the spatial extent of the project boundary is set correctly. The DOE confirms that the identified boundary and the selected sources and gases are justified for the project activity Baseline identification The determination of the baseline was done according to the small-scale methodologies AMS-III.H and AMS-I.C. Baseline options for both methodologies are given by the methodologies and are either the continuation of the current wastewater treatment system and heat generation with coal or the implementation of the project activity in absence of the CDM. The implementation of the project activity in absence of the CDM was ruled out as baseline by the PP on the grounds that it is not feasible. The Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

13 CDM Validation Report Page 13 of 31 assessment by the DOE that project activity in absence of the CDM is not feasible, is done in chapter and deemed as correct. The baseline is thus determined to be the continuation of the current wastewater system and heat generation with coal. Clarifications (CL.1 and CL.2) were raised to provide more evidence that the chosen baseline is legally compliant. The PP provided further documentary proof in Vietnamese and English language [66, 67, 68, 69, 70, 71, 72, 73, 74, 45, 46]. The DOE reviewed the documents and resumed that they are appropriate and authentic and that it underlines the evidence of legal compliance of the baseline. Legal compliance of the baseline was duly shown. CL.1 and CL.2 were closed. Based on the data given by the PP and the on-site inspection of the plant, the DOE assessed the correctness of the baseline determined in the PDD. It is the DOE's opinion that all the assumptions and data used by the project participants are listed in the PDD, including their references and sources, all documentation used is relevant for establishing the baseline scenario and correctly quoted and interpreted in the PDD, assumptions and data used in the identification of the baseline scenario are justified appropriately, supported by evidence and are reasonable, relevant national and/or sectoral policies and circumstances are considered and listed in the PDD, the approved baseline methodology was applied correctly to identify the most reasonable baseline scenario and the identified baseline scenario reasonably represents what would occur in the absence of the proposed CDM project activity Algorithms and/or formulae used to determine emission reductions SQS has conducted an assessment of the appliance of AMS-III.H (version 16), AMS-I.C (version 19) and each Tool mandated by the methodology as well as of the associated parameters and data used to calculate the baseline emissions, project emissions, leakage and emission reductions: AMS-III.H and AMS-I.C SQS has validated the calculations, data and parameters used in the PDD and attachments to the PDD (excel spreadsheet) by using a Protocol for Methodology AMS-III.H and AMS-I.C (refer to Appendix F Validation Protocol of this report). A clarification was raised (CL.13) regarding the 10d measure campaign [21] for the determination of the COD removal efficiency in project condition. The PP showed transparently and with reference to the methodology that the realisation of the measure campaign under project or baseline condition will not lead to different emission reduction estimations. In AMS-III.H 16 footnote 4, it is stated that changes of operational conditions due to a covering of the lagoon are considered small and not accounted for in the methodology. Physical on-site plant visit showed that the volume of lagoon 1, which is used as the digester, was not altered, i.e. the depth and size remained the same. Wastewater flow also remains the same. It is linked to the production volume of the starch plant. Thus, operational conditions of wastewater inflow, COD content, temperature and retention time of treatment systems remain the same in the baseline and project scenario. The DOE deemed the 10d measure campaign [21] as accurate and according to the methodology. CL.13 was closed. A clarification was raised (CL.14) on the choice of potential project activity emissions. In the PDD, ambiguous information was given if fugitive methane emissions shall be included in the project emissions. The PP improved the description of the project case which led to the exclusion of fugitive emissions. Applicability criteria in AMS-III.H were checked against the description in the PDD and on-site. The DOE deemed the exclusion of fugitive emissions as correct and in line with the methodology. CL.14 was closed. A clarification was raised (CL.15) on the choice of value of the net calorific value of methane. The reasoning of the PP led to the conclusion that the figure of MJ/kg is correct. The DOE checked the given arguments and provided sources (IEA Energy Statistics Manual 2005) and accepted the value Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

14 CDM Validation Report Page 14 of 31 provided originally in the PDD. CL.15 was closed. A clarification was raised (CL.16) regarding the parameter energy consumption. Parameter description, unit and value were not consistent. Furthermore, the value was estimated to be too low by the DOE. The PP rectified the parameter, which also led to a revision of the emission reduction calculation. CL was closed. A clarification was raised (CL.22) regarding 14 of AMS-I.C version 18. The PP updated the PDD to AMS- I.C version 19. In AMS-I.C 14 was reformulated and renumbered to 17. The PDD is in line with 17 of AMS-I.C. CL closed. A corrective action was raised (CAR.2) regarding the wastewater-outlet of the CIGAR-system. The CIGARsystem has two outlets to lagoon 2 which leads to imprecise COD-measurements. As a consequence, the PP will close the second outlet. CAR.2 was converted into a FAR to check on-site whether the second outlet is shut tight. A corrective action was raised (CAR.4) due to the situation that the boiler will be co-fired with biogas and coal. The PDD was amended to be in line with the respective paragraphs of AMS-I.C regarding co-firing. CAR.4 closed. A corrective action was raised (CAR.6) due to the missing documentation of the flare in the PDD acc. to the Tool to determine project emissions from flaring gases containing methane. The PP amended the PDD with sufficient information on flare efficiency and provided flare specification [88] in Vietnamese and English language to the DOE. The DOE checked the flare specification with the information gathered on-site and deemed the specification as correct. CAR.6 was closed. After the corrective actions and the clarifications, the calculation of the emission reductions is carried out step by step according to the methodologies AMS-III.H and AMS.I.C. The parameters for baseline, project and leakage emissions are defined per methodology. The data sources are referenced (inter alia [13, 14, 15, 18, 21, 23, 38, 41, 42, 43, 44, 47]). The applied values and references have been crosschecked by the validators and found to be complete, plausible and conservative. The calculation formulae are taken from the methodology. Details of the calculations are presented in PDD, annex 3 and in the excel sheet [17, 54, 79]. Calculation input values and formulae have been verified for completeness, correctness and consistency as follows: Data and parameters that are available at validation: Parameter MCFww,treatment,BL,i: Value: 0.8 (Unit: Fraction) Source: IPCC default value from Table III.H.1 in AMS-III.H. Reasonable: es, the value is chosen in accordance with the specifications in the methodology. For the proof of choice CL.6 was raised and successfully closed (see chapter 3.5.2). Proof of choice is now underlined with documentary evidence [74] which was assessed and checked on-site by the DOE and deemed as correct. Parameter ηbl,thermal: Value: 1.0 (Unit: Fraction) Source: Default efficiency according to 30 (c) of AMS-I.C. Reasonable: es. No data is available for option (a) and (b) thus option (c) is chosen. The DOE deemed this option as the most conservative one. Parameter NCVmethane: Value: MJ/kg Source: IEA Energy statistics manual 2005 Reasonable: es, after closing successfully CL.16, the value provided is reasonable and up-to-date. The source was verified on the internet and deemed as reasonable. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

15 CDM Validation Report Page 15 of 31 Parameter NCVcoal: Value: MJ/kg Source: Coal purchase document of Dakfocam production plant [38]. Reasonable: es, the reference was deemed as authentic by the DOE and the value was verified on the internet against official data (IPCC 2006) and deemed as reasonable. Parameter EFFF,CO2: Value: 94.6 tco2/tj Source: IPCC, 2006 default value. Reasonable: es. The source is publicly available and trustworthy. The choice of source is in accordance with the methodology. No reliable local or national data exist. Parameter EFgrid,y: Value: 1.3 tco2/mwh Source: Tool to calculate baseline, project and/or leakage emissions from electricity consumption (version 01). Reasonable: es. The value is applied in accordance with the respective tool. The choice of option A2(a) is correct since the parameter is used for the calculation of the project emissions. Values applied of data and parameters monitored: Parameter Qww,i,y: Value:183,936 m 3 Source: Value applied is based on the factory specific water consumption, the planned starch production and underlined with the 10-day measurement campaign. Reasonable: es, the figures are coherent and could be verified on-site and compared with the already running SCADA-system. Quality: The monitoring equipment is state-of-the-art. The calibration period of 1 year is correctly given in the PDD. Parameters CODww,untreated,y; CODww,treated,y; Value: t/m 3 ; t/m 3 Source: Values applied are based on the 10-day measurement campaign [21]. Reasonable: es, the figures could be checked on-site at the plant s laboratory. The figures are comparable with other wastewater-treatment systems. Quality: The sampling frequency given in the PDD (once per month) is deemed as representative of the COD content and accepted by the DOE. Parameter CODww,removed,PJ,k,y: Value: t/m 3 Source: Calculated from CODww,untreated,y; CODww,treated,y. Reasonable: es. The values on which the calculation is based are deemed as appropriate above. The calculation is regarded as correct by the DOE. Parameter ECy: Value: 23.3 kw Source: Capacity of electrical equipment. Reasonable: es. The capacities of the electrical equipment were checked on-site. The equipment was already installed and provided with a specification plate. Some of the capacities given in the PDD were not the same as found on-site. CL.16 was raised. The PDD was adapted by the pp and CL.16 was closed. Parameter BGboiler,y; BGflare,y: Value: 400,480 Nm 3 BG/y; 48,174 Nm 3 BG/yr Source: Calculated according to the methodologies and based on historical data. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

16 CDM Validation Report Page 16 of 31 Reasonable: The methodologies have been checked regarding correct application and the data based on historical records are checked with documentary proof. The values are deemed as reasonable by the DOE. Parameter Tflare: Value: > 500 C Source: According to the Tool to determine project emissions from flaring gases containing methane. Reasonable: es, during on-site inspection of the plant, the already installed flare with thermocouple could be checked and deemed as correct. The value applied is according to the Tool to determine project emissions from flaring gases containing methane. Parameter ηflare,h: Value: 0.9 / 0.5 (Unit: Fraction) Source: Tool to determine project emissions from flaring gases containing methane. Reasonable: es. The value is applied according to and in line with the Tool to determine project emissions from flaring gases containing methane. Parameter FCi,j,y: Value: 0 t/yr Source: Based on emission reduction calculations. Reasonable: es. The calculations were verified by the DOE and deemed as correct. A surplus of biogas will be available, thus the assumption of zero coal consumption is deemed as reasonable by the DOE. Parameter NCVi,y: Value: TJ/Gg Source: Based on coal purchasing contract and invoice [38]. Reasonable: es. If available, local data is used for the value. If local data will not be available, IPCC default values will be used as described in the PDD. DOE deems the choice of value as reasonable. Values of parameters not listed above were not required for the ex-ante emission reduction calculation and thus not discussed in detail in this chapter. It is the DOE's opinion, that all assumptions and data used by the project participants are listed in the PDD, including their references and sources, all documentation used by project participants as the basis for assumptions and source of data is correctly quoted and interpreted in the PDD, all values used in the PDD are considered reasonable in the context of the proposed CDM project activity, the baseline methodologies were applied correctly to calculate project emissions, baseline emissions, leakage and emission reductions and all estimates of the baseline emissions can be replicated using the data and parameter values provided in the PDD. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

17 CDM Validation Report Page 17 of Additionality of project activity The proof of additionality was checked by desk review and by interviews on-site. Information with regard to additionality was obtained from the identification of alternative scenarios and the investment analysis. The documentary evidence of additionally was checked on-site and the source of publicly available documents was checked if they are publicly available to assess if they are authentic. The additionality of the project is determined using the Attachment A to Appendix B of the simplified modalities and procedures for small scale project activities and EB35 Annex 34 Guideline on "Non-binding best practice examples to demonstrate additionality for SSC project activities Prior consideration of the clean development mechanism Prior consideration of the clean development mechanism is shown according to the guideline EB 49 Annex 22. The project starting date is set to 18/09/2008. The project is thus a new project activity. A clarification was raised (CL.8) with the request to provide evidence on how the project starting date had been set. The PP clarified that the starting date is the signing of the contract between Dakfocam and the engineering company concerning the construction of the biogas plant. Documentary reference is included in the respective chapter in the PDD [30]. The reference was assessed by the DOE and deemed as authentic. The choice of starting date based on the date of the contract mentioned above is agreed by the DOE to be in line with guideline EB 49 Annex 22. CL closed. The new project activity is in line with EB49 Annex 22 announced to the Vietnamese DNA and the UNFCCC [17]. The notification from the UNFCCC secretariat is also provided [18], thus, also in line with EB 41 Annex 46. It is SQS s opinion that the project activity starting date and prior consideration of CDM is soundly proven Identification of alternatives The completeness of the list of alternatives were assessed in chapter of this report and confirmed to be complete. The identification of alternatives is elaborated in the PDD according to AMS-III.H and AMS- I.C Investment analysis In accordance with Attachment A to Appendix B, the main barrier identified is the investment barrier. As an appropriate analysis method, the benchmark analysis was chosen by the PP. A simple cost analysis is not applicable since the project generates income other than CER revenues. Investment comparison analysis is neither applicable as the baseline has no investments. The DOE deems the benchmark analysis as most suitable. As an indicator, the IRR is chosen and compared to the commercial lending rate of Vietnam. Two clarifications were raised (CL.9 and CL.10) to improve transparency of the investment analysis. The PP adapted the PDD accordingly. CL.9 and CL.10 were closed. Two further clarifications were raised (CL.11 and CL.12) regarding documentation of investment figures. The PP provided improved documentation. CL.11 and CL.12 were closed. A clarification was raised (CL.24) regarding expected operational lifetime. The expected operational lifetime does not correspond with the max. lifespan of equipment. The PP corrected the expected operational lifetime to be coherent with the max. lifespan of equipment. CL.24 was closed. The commercial lending rate of Vietnam of 21% is discussed in depth in the PDD. It is the prime interest rate plus 50% risk factor [6]. The prime interest rate is publicly available on the homepage of the State Bank of Vietnam. At the time of investment decision, which is prior project starting date, the used prime Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011

18 CDM Validation Report Page 18 of 31 interest rate plus 50% risk factor in the PDD was checked on the official homepage of the State Bank of Vietnam and assessed to be correct by the DOE. The risk factor of 150% is applicable for every credit institution and thus reflects the risks associated with the project activity. The risk factor of 50% was documented by the pp with decision No. 16/2008/QD-NHNN dated 16/05/2008 of the Governor of the State Bank [6]. Principles used for all calculations are in line with EB51 Annex 58 (Guidelines on the assessment of investment analysis). Each guidance given in EB51 Annex 58 was checked against the PDD and deemed as correct by SQS. Investment sum of 28,314,000,000 VND is documented with the original quotation [24] and the English translation [51]. The documents were checked on-site and cross-checked with similar project activities registered in Vietnam [project references 2571, 2572, 2636, 2637, 2638, 2639, 2640 and 4702). The investment sum of the project activity is set in the same range as in the referenced registered projects. The investment sum is deemed as authentic and reasonable. The operational cost of 945,120,000 VND is calculated according to official directives of Vietnam [5]. The value is lower than provided in international literature [11]. The DOE accepts the official directives of Vietnam and assessed the implementation of it as correct in the PDD. The cost per ton of coal of 4,400,000 VND is documented with the coal quote of Dacfocam dated 15/08/2008 [38]. The document was checked by the DOE and deemed to be authentic. Quantity of coal saved per annum (ranging from 984 tons to 1,158 tons, depending on starch production) is calculated based on the future methane demand. The annual monetary coal savings (ranging from 4,329,371,000 VND to 5,093,460,000 VND, depending on starch production) derive from these figures. The calculation was assessed and accepted by the DOE in chapter The price of CERs of 557,000 VND per tco2 is documented with a publicly available source and a referenced screenshot [75]. The DOE checked the publicly available source. The CER price could be confirmed and the source is deemed as trustworthy by the DOE. The period of assessment is set to 20 years as recommended in "Guidelines on the assessment of investment analysis". The technical lifetime is set to 30 years as suggested in EB 50 Annex 15. The salvage value is calculated as 10/30 of the original investment. The DOE concludes that the period of assessment is correctly set and that the calculations are conducted in line with relevant guidelines. All documents provided from the PP were checked to be genuine and, where applicable, the public availability was checked. The calculation of the IRR without CER revenues results in a clearly smaller IRR (12%) than the official benchmark (21%). A sensitivity analysis of the relevant parameters do not alter the result that the IRR is smaller than the commercial lending rate: Base case: 12% 10% lower investment cost 14% 10% lower operational cost 13% 10% higher coal savings 14% Benchmark 21% The calculations were checked in the excel file provided [17, 54, 78] and deemed as correct. Thus, project activity in absence of CDM is not a viable alternative. Investment analysis with CER revenues shows a clearly higher IRR (32%) than the benchmark (21%). The price of the CERs were crosschecked online and deemed as correct. It is SQS's opinion that underlying assumptions are appropriate and the financial calculations are correct. Report-No.: P Swiss Association for Quality and M a n a g e m e n t S y s t e m s ( S Q S ) B e r n s t r a s s e 1 0 3, P. O. B o x 6 8 6, C H Z o l l i k o f e n Date: 05/10/2011