CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006 CONTENTS

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1 page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 03 - in effect as of: 28 July 2006 CONTENTS A. General description of project activity B. Application of a baseline and monitoring methodology C. Duration of the project activity / crediting period D. Environmental impacts E. Stakeholders comments Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring plan Appendix A: Abbreviations Appendix B: List of References Appendices Enclosures Enclosure 1: Summary of the Environmental Impact Assessment Report

2 page 2 SECTION A. General description of project activity A.1 Title of the project activity: >> Energy Efficiency Improvement at Tamil Nadu Newsprint and Papers Limited Version 01 20/03/2008 A.2. Description of the project activity: >> Background on the project promoter Tamil Nadu Newsprint and Papers Limited (TNPL), world s largest bagasse based paper mill and one of the largest state owned paper mills in India, is a globally competitive player, exporting about 20% of its production to 22 countries across the world. Bagasse, a waste residue from sugar mills, is the primary raw material used at TNPL. Purpose TNPL proposes to increase the efficiency of energy generation in its biomass residue based cogeneration system by the implementation of this CDM project activity. It involves the replacement of low efficiency cogeneration systems with a high efficiency system resulting in higher quantity of energy output for the same biomass residue input. The incremental electricity generation would replace the fossil fuel intensive grid electricity thereby reducing Green House Gas (GHG) emissions. This is in addition to the local environmental benefits accrued through fugitive dust and pollution control by implementation of modern and best commercially available technology, in comparison to the existing practices. Salient Features of the Project Activity During the pulping process of paper manufacturing, bagasse is treated in digesters in the presence of chemicals to separate the fibre content (pulp) from lignin. At the end of this process, lignin and the chemicals are removed as Black Liquor Solids (BLS). The BLS is concentrated in evaporators and fired in recovery boilers where the organic content (lignin) burns to generate steam. The steam is inlet to turbo generators (TGs) to produce electricity and low/medium pressure process steam. The inorganic chemicals in the BLS are collected as char and are recovered and reused.

3 page 3 At the present paper production capacity, TNPL generates 760 Tonnes per Day (TPD) of BLS that is fired in two existing Recovery Boilers (RBs). TNPL is expanding its production capacity under the Mill Development Plan (MDP) that would increase the total BLS quantity to 1300 TPD. The business as usual scenario for TNPL would have been the replacement of the existing RBs with a higher capacity RB (of similar configuration as the existing RBs), to fire the excess quantity of BLS (540 TPD). However, guided by the principles of environmental responsibility, TNPL proposes to implement an improved cogeneration configuration to increase the efficiency of electricity generation despite the technological barriers faced. The project activity involves the installation of a single high efficiency recovery boiler to replace the low efficiency recovery boiler that would have been installed in the business as usual scenario. The energy efficiency (EE) project activity would result in incremental electricity generation that would displace the grid based electricity. The project activity also generates incremental process steam (heat) that would displace heat generation from fossil fuel based systems. Project s contribution to sustainable development The project activity would contribute to sustainable development on local, global and social fronts in the manner described below: S.N Benefits/Contribution to Project Related Activity Effect o Sustainable Development 1 Export surplus electricity to the grid displacing fossil fuel generated power in the local grid. Improves electricity scenario in the vicinity of the project activity. Aids in the development of agricultural / small scale industries. It also provides indirect employment to the local people. 2 Construction, operation and maintenance of the Provides employment to both skilled and unskilled personnel. Capacity building of the local population. project activity. 3 Biomass based power generation. Conserves fossil fuels and is a more effective and efficient way of utilising locally available biomass. Reduces GHG emissions and pollution attributed to combustion of fossil fuel. Also helps conserve natural resources. 4 Adoption of more efficient Serve as a successful model for Encourage similar ventures in the

4 page 4 Chemical Recovery Boiler efficient chemical recovery region. (CRB) technology. boilers A.3. >> Project participants: Name of Party involved Public entity Project Participants Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) India (Host Country) Tamil Nadu Newsprint & Papers Limited (TNPL) No A.4. >> >> India Technical description of the project activity: A.4.1. Location of the project activity: A Host Party(ies): >> Tamil Nadu A Region/State/Province etc.: A >> Kagithapuram, Karur district 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 site is located within the TNPL compound in Kagithapuram, Karur District, Tamil Nadu, South India as shown in figure 1. The nearest airport is at Tiruchirapalli, which is around 80 km away from the site. The nearest railway station is Pugalur station, which is less than 0.5 km from the site. The site is well connected with road and rail. It is located at the intersection of longitude E and latitude N about 400 km (aerial) from Chennai, the State Capital and is about 15 km from Karur,

5 page 5 the District Headquarters. The National Highway NH-7, which connects Salem with Karur, is at 3 km in northeast direction from the plant site. The geographic location in which the project activity is located is depicted in the map below: =

6 page 6 A.4.2. Category(ies) of project activity: >> The project activity may principally be categorized in Category 1 Energy Industries (Renewable/Non- Renewable Sources) as per the scope of the project activities enlisted in the list of sectoral scopes & linked approved baseline and monitoring methodologies on the UNFCCC website for accreditation of Designated Operational Entities. A.4.3. Technology to be employed by the project activity: >> The project activity is the installation of a high pressure Steam-Rankine cycle replacing the existing low pressure system. Steam-Rankine cycle is one of the commercial methods available for cogeneration in the Mega Watts scale. The process involves circulation of working fluid (steam) around the cycle by creating high pressure steam in the boiler which drives a Turbo Generator (TG) to generate power. When an alternator is connected to the TG s shaft, electricity is generated. Low pressure steam for process requirements is extracted from the TG. TNPL s proposed project plant and the low pressure system being used presently are both based on this cycle. The project activity constitutes a boiler capable of firing 1300 TPD of BLS and generating around 195 TPH steam with outlet parameters of 65 kg/cm 2 and C; a 20 MW single extraction back pressure Turbo Alternator Set. The high-pressure configuration of the system is technologically advanced, modern and highly efficient. The project activity generates around tonnes steam at 65 kg/cm 2 per tonne of BLS fired compared to 2.8 tonnes steam at 45 kg/cm 2 generated by the existing configuration. TNPL took a conscious step towards implementing the project activity in the best interest of the environment. The steam generated from the recovery boiler would be used in a new extraction back pressure turbine. The power generated and the extraction steam would then be used to meet the additional captive energy requirements of the facility (as a result of the mill expansion) and the surplus power would be exported to the local grid.

7 page 7 >> A.4.4 Estimated amount of emission reductions over the chosen crediting period: Operating CO 2 Emission Reductions Years (tones of CO 2 ) , , , , , , , , , ,259 Total emission reductions (tco 2 e) 1,642,590 Total number of crediting years Ten years Annual average over the crediting period of emission reductions (tco 2 e) 164,259 A.4.5. Public funding of the project activity: >> There is no public funding available for the project activity

8 page 8 SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the project activity: >> Title: Consolidated baseline methodology for grid-connected electricity generation from biomass residues ACM0006, Version 06 Reference: This consolidated baseline methodology is based on elements from the following methodologies: AM0004: Grid-connected Biomass Power-Generation that avoids uncontrolled burning of biomass which is based on the A.T. Biopower Rice Husk Power Project in Thailand whose Baseline study, Monitoring and Verification Plan and Project Design Document were prepared by Mitsubishi Securities; AM0015: Bagasse-based cogeneration connected to an electricity grid which is based on the Vale do Rosario Bagasse Cogeneration project in Brazil, whose baseline study, monitoring and verification plan and project design document were prepared by Econergy International Corporation; NM0050: Ratchasima SPP Expansion Project in Thailand whose baseline study, monitoring and verification plan and project design document were prepared by Agrinergy Limited; NM0081: Trupan biomass cogeneration project in Chile whose baseline study, monitoring and verification plan and project design document were prepared by Celulosa Arauco y Constitutcion S.A; NM0098: Nobrecel Fossil-to-Biomass Fuel Switch Project in Brazil ; whose baseline study, monitoring and verification plan and project design document were prepared by Nobrecel S.A.Celulose e Papel and Ecosecurities Ltd. This methodology also refers to the ACM0002 ( Consolidated baseline methodology for grid-connected electricity generation from renewable sources ).

9 page 9 B.2 Justification of the choice of the methodology and why it is applicable to the project activity: >> This methodology is applicable to grid-connected and biomass residue fired electricity generation project activities, including cogeneration plants. Conditions of ACM0006 Applicable to grid connected and biomass residue fired electricity generation project activities May be based on the operation of a power generation unit located in an agro-industrial plant generating the biomass residues Biomass residues are defined as biomass that is a byproduct, residue or waste stream from agriculture, forestry and related industries. No other biomass types than biomass residues, as defined above, are used in the project plant and these biomass residues are the predominant fuel used in the project plant (some fossil fuels may be co-fired). For projects that use biomass residues from a production process (e.g. production of sugar or wood panel boards), the implementation of the project shall not result in an increase of the processing capacity of raw input (e.g. sugar, rice, logs, etc.) or in other substantial changes (e.g. product change) in this process. The biomass used by the project facility should not be stored for more than one year. No significant energy quantities, except from transportation of the biomass, are required to prepare the biomass residues for fuel combustion Applicability to project activity Black Liquor Solids fired in the project activity is a biomass residue. The project activity is connected to the TNEB grid to which it exports surplus electricity Based on the efficiency improvement of a power generation unit located in a paper plant BLS used in the project activity is a residue from agriculture and forestry related industry (paper plant). BLS will be used as the predominant fuel, however, some amount of furnace oil may be co-fired during starting-up or other emergency situations The project activity uses the residue (BLS) from paper manufacturing. The production process is independent of the project activity and shall not result in increase of the paper plant crushing capacity. BLS is not stored on the site for more than one year. No significant energy quantities are required to prepare the biomass residues for fuel combustion

10 page 10 The methodology is only applicable for the 20 combinations of project activities and baseline scenarios identified in the methodology. Project activity applies scenario 18. B.3. Description of the sources and gases included in the project boundary >> Source Gas Justification/Explanation CO 2 Included Main emission source. Excluded for simplification. This is CH 4 Excluded Grid electricity generation conservative. N 2 O Excluded Excluded for simplification. This is conservative. CO 2 Included Main emission source. Excluded for simplification. This is CH 4 Excluded Heat generation conservative. A Baseline N 2 O Excluded Excluded for simplification. This is conservative. CO 2 Excluded It is assumed that CO 2 emissions from surplus biomass residues do not lead to changes of carbon pools in the LULUCF sector. Uncontrolled burning or decay of surplus biomass residues CH 4 Excluded This emission source has been excluded as B4 has been identified as the most likely baseline scenario. Excluded for simplification. This is N 2 O Excluded conservative. Note also that emissions from natural decay of biomass are not included in GHG inventories as anthropogenic sources. ct On-site fossil fuel and CO 2 Included Maybe an important emission source.

11 page 11 CH 4 Excluded Excluded for simplification. This emission source is assumed to be very small. N 2 O Excluded Excluded for simplification. This emission source is assumed to be very small. Off-site transportation of biomass residues is CO 2 Excluded not likely since BLS can only be generated at Off-site transportation of biomass residues CH 4 Excluded the paper mill Excluded for simplification. This emission source is assumed to be very small. N 2 O Excluded Excluded for simplification. This emission source is assumed to be very small. It is assumed that CO 2 emissions from CO 2 Excluded surplus biomass do not lead to changes of Combustion of biomass residues for electricity and/or heat generation CH 4 Excluded carbon pools in the LULUCF sector. This emission source is excluded as the baseline scenario is not uncontrolled burning or decay of biomass. N 2 O Excluded Excluded for simplification. This emission source is assumed to be small. It is assumed that CO 2 emissions from CO 2 Excluded surplus biomass residues do not lead to changes of carbon pools in the LULUCF sector. Storage of biomass residues CH 4 Excluded Excluded for simplification. Since biomass residues is stored for not longer than one year, this emission source is assumed to be small. N 2 O Excluded Excluded for simplification. This emissions source is assumed to be very small.

12 page 12 B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: >> As prescribed by ACM0006 version 06, the project participants have determined the baseline scenario and demonstrated additionality using the Combined tool to identify the baseline scenario and demonstrate additionality (version 02.1). The procedure for determining the baseline scenario and demonstrating additionality is described in the indicative flowchart below:

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14 page 14 Before identifying the alternative scenarios, a brief of the pre-project scenario is provided below for better understanding of the baseline options available to TNPL. Pre-project scenario: In the pre-project scenario, the paper plant generates 760 TPD of BLS. The BLS is fired in two recovery boilers operating at 45 kg/cm 2. The steam generated in the recovery boilers is inlet to three different TGs to generate power for captive use. Any surplus power generation is exported to the grid. The process steam requirements are met by extracting steam from the TGs and rest of the steam is allowed to condense in the TGs. It may be noted that the TGs are also fed by steam from coal fired boilers. Refer Figure B.1 for details.

15 CDM Executive Board page 15 Figure B.1: Pre-project Scenario BLS Recovery Boiler 1 45 kg/cm 2 Recovery Boiler 2 45 kg/cm 2 Coal Fired Boilers TG#1 8MW TG#2 18MW TG#3 10.5MW LP Header MP Header To process To process

16 page 16 STEP. 1 Identification of alternative scenarios Step 1a. Define alternative scenarios to the proposed CDM project activity The project participants have determined the most plausible baseline scenario among all realistic and credible alternatives separately regarding: How power would be generated in the absence of the CDM project activity In case of cogeneration projects: how heat would be generated in the absence of the project activity What would happen to the biomass residues in the absence of the project activity Alternatives available for power generation: P1 The proposed project activity not undertaken as a CDM project activity. This is a possible alternative scenario for power generation. P2 The continuation of power generation in an existing biomass residue fired power plant at the project site, in the same configuration, without retrofitting and fired with the same type of biomass residues as (co-)fired in the project activity. The capacity of the existing biomass residue fired power plants is not sufficient for the quantity of biomass residues available after capacity increase in the agro-industrial facility. Therefore, this is not a possible alternative scenario for power generation. P3 The generation of power in an existing captive power plant, using only fossil fuels. This is not a plausible alternative scenario for power generation as the existing captive power plants are already operating at their full capacity. P4 The generation of power in the grid. This is a possible alternative scenario for meeting the power requirement. However this is not a credible alternative as a standalone option. Co-generation is an essential aspect of the operation of any large scale paper mill from an economical perspective, and as the process continuously

17 page 17 generates biomass residues (black liquor solids). This scenario may be combined with other alternatives involving captive generation. P5 The installation of a new biomass residue fired power plant, fired with the same type and with the same annual amount of biomass residues as the project activity, but with a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project plant and therefore with a lower power output than in the project case. This is a possible alternative scenario for power generation. In this scenario, since the power generation is lower than that of the project activity, the remaining power would be generated in the grid. P6 The installation of a new biomass residue fired power plant that is fired with the same type but with a higher annual amount of biomass residues as the project activity and that has a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project activity. Therefore, the power output is the same as in the project case. This is not a possible alternative scenario as the additional biomass residues would not be available. The project activity boiler will have a capacity for firing 1300 tpd of black liquor solids and a higher capacity would not be feasible unless there is a further increase in capacity of the paper mill. P7 The retrofitting of an existing biomass residue fired power plant, fired with the same type and with the same annual amount of biomass residues as the project activity, but with a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project plant and therefore with a lower power output than in the project case. This is not an alternative scenario for power generation as the quantity of biomass residues available after capacity increase in the paper mill (1300 tpd) can not be accommodated by retrofitting the existing biomass residue fired power plants (of capacity 760 tpd).

18 page 18 P8 The retrofitting of an existing biomass residue fired power plant that is fired with the same type but with a higher annual amount of biomass residues as the project activity and that has a lower efficiency of electricity generation (e.g. an efficiency that is common practice in the relevant industry sector) than the project activity. This is not an alternative scenario for power generation as the as the quantity of biomass residues available after capacity increase in the paper mill (1300 tpd) can not be accommodated by retrofitting the existing biomass residue fired power plants (of capacity 760 tpd). Furthermore, a higher amount of biomass residues than that used by the project activity (1300 tpd) would not be available as this is dependent on the paper mill capacity. BLS cannot be sourced from outside. P9 The installation of a new fossil fuel fired captive power plant at the project site. This is a possible alternative for power generation. However this is not a credible alternative scenario. Any large scale paper mill needs to adopt a BLS based cogeneration system for its economical operation. Therefore, this scenario is not considered. Alternatives available for heat (process steam) generation: H1 The proposed project activity not undertaken as a CDM project activity This is a possible alternative for heat generation. H2 The proposed project activity (installation of a cogeneration power plant), fired with the same type of biomass residues but with a different efficiency of heat generation (e.g. an efficiency that is common practice in the relevant industry sector) This is a possible alternative for heat generation. H3 The generation of heat in an existing captive cogeneration plant, using only fossil fuels This is not a plausible alternative scenario for power generation as the existing captive power plants are already operating at their full capacity. H4 The generation of heat in boilers using the same type of biomass residues

19 page 19 This is a possible alternative scenario for heat generation. However, the combustion of biomass residues in heat only boilers is an inefficient method compared to cogeneration. From an efficiency and economic point of view, the cogeneration of heat and power is a necessary component of any modern large scale paper mill. Therefore, this scenario is not considered. H5 The continuation of heat generation in an existing biomass residue fired cogeneration plant at the project site, in the same configuration, without retrofitting and fired with the same type of biomass residues as in the project activity This is not an alternative scenario for heat generation as the capacity of the existing cogeneration plants (760 tpd) is not sufficient for the quantity of biomass residues available after capacity increase in the paper mill (1300 tpd). H6 The generation of heat in boilers using fossil fuels This is a possible alternative for heat generation. However, this is not a credible alternative. BLS based cogeneration is an essential aspect of the operation of any large scale paper mill from an economical perspective. The use of fossil fuels at an additional cost as against the use of readily available biomass residues is not an economically feasible option. Therefore, this scenario is not considered. H7 The use of heat from external sources, such as district heat This is a possible alternative for heat generation. However, the use of heat from external sources is an uneconomic method compared to biomass cogeneration. The cogeneration of heat and power form biomass residues is an established norm in paper mills as the biomass residues are generated continuously and are readily available. Therefore, this scenario is not considered. H8 Other heat generation technologies (e.g. heat pumps or solar energy) This is a possible alternative scenario for heat generation. However, from an economic point of view, this is not a realistic alternative for meeting the heat requirements of a paper mill. The cogeneration of heat and power form the combustion of biomass residues is an established norm in paper mills as the biomass residues are generated continuously and are readily available. Therefore, this scenario is not considered.

20 page 20 Alternatives available for biomass: B1 The biomass residues are dumped or left to decay under mainly aerobic conditions. This applies, for example, to dumping and decay of biomass residues on fields. This is a possible alternative scenario. However, for a large scale paper mill it would be uneconomical to dump black liquor solids instead of utilizing the biomass residues for cogeneration. Further, the dumping of this large quantity of BLS on a continuous basis is constrained by huge space requirements. Therefore, this scenario is not credible and is not considered. B2 The biomass residues are dumped or left to decay under clearly anaerobic conditions. This applies, for example, to deep landfills with more than 5 meters. This does not apply to biomass residues that are stock-piled or left to decay on fields. This is a possible alternative scenario. However, for a large scale paper mill it would be uneconomical to dump black liquor solids instead of utilizing the biomass residues for cogeneration. Further, the dumping of this large quantity of BLS on a continuous basis is constrained by huge space requirements. Therefore, this scenario is not credible and is not considered. B3 The biomass residues are burnt in an uncontrolled manner without utilizing it for energy purposes. This is a possible alternative scenario for the biomass used in the project activity. However this is not a credible alternative. For a large scale paper mill, the combustion of biomass in an uncontrolled manner is not an economic alternative as against the combustion of biomass residues in a boiler for generation of heat and power. Therefore this alternative is not considered. B4 The biomass residues are used for heat and/or electricity generation at the project site This is a possible alternative scenario.

21 page 21 B5 The biomass residues are used for power generation, including cogeneration, in other existing or new grid-connected power plant. This is a possible alternative scenario for the use of biomass. However, it would be uneconomical to transport the biomass residues to grid-connected power plants vis-à-vis using the biomass residues on-site for captive generation. The cogeneration of heat and power from the combustion of BLS biomass residues is an established norm in paper mills. Therefore, this scenario is not considered. B6 The biomass residues are used for heat generation in other existing or new boilers at other sites This is a possible alternative scenario. However, it would be uneconomical to transport the biomass residues to other sites vis-à-vis using the biomass residues on-site for captive generation. The cogeneration of heat and power from the combustion of BLS biomass residues is an established norm in paper mills. Therefore, this scenario is not considered. B7 The biomass residues are used for other energy purposes, such as the generation of bio-fuels This is a possible alternative scenario for the use of biomass. However, this is not an economical alternative as the biomass residues can be fired directly as is the established norm in large scale paper mills. Therefore, this scenario is not considered. B8 The biomass residues are used for non-energy purposes, e.g. as fertilizer or as feedstock in processes (e.g. in the pulp and paper industry) This is a possible alternative scenario for the use of biomass. However, this is not an economical alternative as the biomass residues can be fired directly as is the established norm in large scale paper mills. Therefore, this scenario is not considered. Outcome of Step 1a: List of plausible alternative scenarios to the project activity The identified alternative scenarios for heat, power and biomass residues are as below: Identified credible alternatives for power generation Identified credible alternatives for heat generation Identified credible alternatives for biomass P1, P4, P5 H1, H2 B4

22 page 22 Realistic and credible combinations of the alternatives for power, heat and biomass residues identified above are considered as plausible alternatives to the project activity. These alternatives are in line with the combinations (scenarios) of ACM0006 version 06 and are listed below: As a result of the paper mill expansion, the quantity of BLS generated would increase by 540 TPD to 1300 TPD. The steam and power demand of the paper mill would also increase correspondingly. TNPL would have the following options to process the additional black liquor and to meet the additional steam and power demand of the paper mill: Baseline Option 1 (BA1): Implementation of the project activity not undertaken as a CDM project activity Installation of a high efficiency high pressure cogeneration system of sufficient capacity to fire the entire quantity of BLS generated (1300 TPD). Once the new high efficiency system is commissioned, the existing recovery boilers would be decommissioned. The new system would not only replace the existing boilers and TGs but also use the incremental BLS generated by the paper plant capacity addition. The additional steam and power demand of the paper mill would be met by this system and the surplus power would be exported. Refer Figure B.2 for details This baseline alternative corresponds to combination of options P1, H1 and B4 of ACM0006 Baseline Option 2 (BA2): Installation of a new recovery boiler and TG of sufficient capacity to fire the entire quantity of BLS generated (1300 TPD). The efficiency of the new cogeneration system would be equivalent to that of the existing system (lower than that of the project activity) Once the new system is commissioned, the existing recovery boilers would be de-commissioned. The new system would not only replace the existing boilers but also use the incremental BLS generated by the paper plant capacity addition.

23 page 23 The additional process steam (heat) and power demand of the paper mill would be partially met from the new recovery boiler TG system. The remaining power demand would be met through electricity import from the grid. The remaining process steam (heat) requirements would be met through fossil fuel based systems. Refer Figure B.3 for details This baseline alternative corresponds to combination of options P4, P5, H2 and B4 of ACM0006

24 page 24 Figure B.2: Baseline option 1 BLS from process New Recovery Boiler 67 kg/cm 2 Coal Fired Boilers TG#4 20MW LP Header MP Header To process To process

25 CDM Executive Board page 25 Figure B.3: Baseline option 2 BLS from process New Recovery Boiler 45 kg/cm 2 TG#1 8MW TG#2 18MW TG#3 10.5MW TG#4 10 MW LP Header MP Header To process To process

26 page 26 Sub-step 1b. Consistency with mandatory laws and regulations Both the above two alternatives are consistent with applicable laws and regulations: The applicable regulations do not restrict TNPL to continue steam and power generation using the lower efficiency systems The applicable regulations do not restrict TNPL to continue steam and power generation from BLS. Though the Ministry of Non-Conventional Energy Sources (MNES) aims to achieve 10% of installed power generation capacity from renewable sources, there is no mandate on any private entity to enhance power generation capacity from renewable sources.

27 page 27 B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity (assessment and demonstration of additionality): >> In order to demonstrate that the CDM project activity reduces anthropogenic GHG emissions that would have occurred in the absence of the project activity, it is necessary to prove that the implementation of the project activity is not the baseline scenario, (i.e., There would be no increase in efficiency of energy generation and TNPL would not export the incremental power to the grid). ACM0006 version 06 prescribes the use of the Combined tool to identify the baseline scenario and demonstrate additionality (Figure B.1 in section B.4 above) for the above purpose, which is applied to the project activity. The step 1 of the tool is applied in section B.4 above and the subsequent steps are applied below: Step 2: Barrier Analysis It is required to demonstrate that the project activity faces barriers which: Prevent the implementation of this type of project activity; and Do not prevent the implementation of at least one of the alternatives Sub-step 2a: Identify barriers that would prevent the implementation of alternative scenarios Technological barriers: Performance uncertainties and lack of skilled/trained manpower: A plausible alternative to the project activity is installation of a low pressure recovery boiler cogeneration system with low efficiency. The project activity involves the replacement of the existing low efficiency system with a high efficiency cogeneration technology at a high capital investment. The high efficiency system for bagasse based recovery boilers is the first of its kind in the region and meant a major technological leap for TNPL. The lack of success stories on the performance of high pressure technology and the lack of skilled manpower to operate such systems posed as major barriers to TNPL and are

28 page 28 described below. The three major technical differences between the project activity and the alternative scenario BA2 are: High solids concentration of black liquor High viscosity necessitating high temperature handling of black liquor Lack of historical data on the characteristics of high temperature and high concentration bagasse based black liquor The above three parameters are likely to pose significant risks to the project activity in the following areas: Scaling Corrosion Flashing Handling The cause, description, impacts and effects of the above are presented below in detail: Type of technical Performance uncertainties as a result of scaling in evaporators barrier Cause Higher BLS concentration and higher temperature in evaporators Description The concentration of BLS generated at the paper plant is around 10% solids. The BLS at this concentration is inlet to the evaporator section of the recovery boiler system. The evaporators are heat exchangers that use steam to evaporate water and thereby concentrate the BLS to a higher solids level. Scaling in evaporators is formed when water evaporates resulting in the precipitation of insoluble compounds. These compounds settle on the evaporator surface as scales. At lower BLS concentrations (below 50%), the scales formed are mostly water soluble and are easy to remove. At higher concentration and higher temperatures, scaling is very heavy resulting in rapid deterioration of evaporator performance. In the baseline scenario, the BLS concentration at the evaporator outlet is around 45% solids whereas in the project activity case, the BLS concentration is around 72% at the evaporator outlet. The higher concentration and temperature in the project scenario would result in the formation of heavy scales like silica, calcium and potassium scales that are difficult to remove. The

29 page 29 rate of scaling also increases with higher temperatures. This necessitates complicated monitoring, operation and maintenance procedures to remove scales and maintain evaporator performance. The above problem is further complicated by the unique nature of BLS generated by TNPL, which is the largest producer of bagasse based paper. TNPL uses the largest ratio of bagasse based pulp in the world. The ratio of BLS from hardwood pulping and bagasse pulping at TNPL is 30:70. The properties of bagasse based BLS is significantly different from that of hardwood pulp. Bagasse based BLS has higher proportion of the scale forming compounds (like silica, potassium) which makes the design and operation of the evaporators further complicated. The performance of the system is also difficult to predict. Impacts 1. Reduces evaporator efficiency resulting in lower BLS concentration at outlet and thus lower boiler efficiency 2. Scaling in evaporators interrupts black liquor flow creating a serious bottle neck in pulp production affecting the entire paper manufacturing process Effects 1. Revenue loss due to reduced power generation 2. Revenue loss from disturbances to paper manufacturing Type of technical Performance uncertainties and safety risks as a result of corrosion in boilers barrier Cause Higher BLS concentration High pressure operation BLS properties scaling - deposits Description Corrosion is a major challenge to the availability and safety of recovery boilers. Corrosion occurs in all parts of the boiler (lower furnace through to the upper section and electrostatic precipitators) in the form of sulfidation, thermal oxidation, stress corrosion cracking, molten salt corrosion, pitting corrosion,

30 page 30 Impacts Effects erosion-corrosion, aqueous corrosion and dew point corrosion. While designing the boiler, it is important to consider the composition of the flue gas and boiler tube surface temperatures. The following factors influence the flue gas composition and surface temperatures, increasing the rate of corrosion in recovery boilers: Operation at higher superheated steam temperatures and pressures Firing BLS at high concentration Minimizing pulp mill chemical losses which leads to accumulation of chloride and other elements in the liquor cycle Increased hardwood pulping leading to high potassium content in liquors and deposits These factors are therefore undesirable from a recovery boiler corrosion point of view. It may be noted that all of the above four factors occur in the project scenario (with respect to baseline scenario) resulting in higher corrosion levels. Though the boiler design has considered the above factors, the actual extent of corrosion is unpredictable. Frequent and thorough monitoring of corrosion by experienced and trained manpower is required to prevent tube failures. 1. Unscheduled boiler shutdown due to tube failure 2. Smelt water explosion resulting in extensive equipment damage When water from corrosion induced tube leakage comes in contact with the hot smelt in the char bed, rapid generation of water vapour occurs. The volume expansion of water as it vaporizes pushes the surrounding furnace gases away rapidly generating a highly destructive detonation wave causing massive damage to the boiler. 3. Accelerated reduction of equipment life 1. Revenue loss due to lower power generation 2. Revenue loss from disturbances to paper manufacturing 3. Significant unplanned capital expenditure

31 page 31 Type of technical barrier Cause Performance uncertainties as a result of Flashing Higher BLS concentration and High temperature of BLS firing visc-properties scaling - deposits Description Impacts Effects In a closed piping system, water can only evaporate when the local vapour pressure of water exceeds the local total pressure. At one atmosphere total pressure, evaporation of water can occur only when the liquor temperature exceeds its Elevated Boiling Point (EBP). The elevated boiling point is defined as the temperature of the liquor where the vapour pressure of water in equilibrium with the liquor is one atmosphere. For 70% solids liquor, the EBP is around 116 C. The liquor pressure at the firing nozzle orifice is one atmosphere and gradually increases upstream of the liquor delivery system. No evaporation of water would occur in the delivery system at temperatures lower than 115 C. However, as the temperature is increased, evaporation (flashing) can occur in the system and this would have a pronounced effect on flow and droplet formation. In the project activity case, BLS is fired at a high solids content of around 70% at which the viscosity is very high. In order to maintain proper flow in the liquor delivery system, the liquor is maintained at a high temperature (around 125 C). Since this temperature is above the EBP, there is a high tendency of flashing in the delivery system. The effect of flashing on flow and droplet formation varies with the liquor type, liquor solids and nozzle type in an unknown way. This makes the selection of the number and size of nozzles appropriate to a particular firing condition more complicated. 1. Low boiler efficiency 2. Reduced capacity of firing 3. Unstable operation 4. Damage to liquor delivery systems 1. Revenue loss due to lower power generation

32 page Revenue loss from disturbances to paper manufacturing 3. Higher maintenance expenditure Type of technical barrier Cause Performance uncertainties and lack of skilled manpower in handling of high concentration BLS Higher BLS concentration High Viscosity Description Impacts Effects The viscosity of BLS increases drastically with increase in solids content above 50%. At 70% solids content in the project scenario, the viscosity is likely to be very high posing challenges in its handling. Special pumps have been imported for handling this high viscous liquor. However, considering that there no working models available for this type of liquor, the performance of these pumps and the handling system is uncertain. Skilled manpower is required to monitor and operate this liquor handling system. 1. Disturbances or stagnation of flow in the liquor handling and delivery system 1. Revenue loss due to lower power generation 2. Revenue loss from disturbances to paper manufacturing 3. Higher maintenance expenses Prevailing practices barrier: The project activity is the first of its kind being implemented in the region. Implementation of high pressure high efficiency recovery boiler operating at high solids concentration (70%) for bagasse based black liquor is the first of its kind. The composition of bagasse based black liquor generated at TNPL is different (Table B.1) from that of the normal hardwood black liquor generated in other paper mills. There is very little data available on the characteristics and behaviour of this type of black liquor at high concentrations. No paper mill in the region has the experience in handling and firing high solids bagasse based black liquor. There is no readily available technology and equipment supplier for the project activity. The technology required

33 page 33 had to be developed by TNPL in association with consultants in the field. Since there was no prevalence of any similar project activities in the region, TNPL was apprehensive in implementing this technology. Table B.1: Composition of black liquor from bagasse and hardwood based pulp Compositio Hardwoo Unit n Bagasse d Na % K % Cl % C % S % SiO 2 % Fe 2 O 3 % Fibre PPM Sub-setp 2b. Eliminate alternative scenarios which are prevented by the identified barriers Barrier analysis is used to determine the most plausible baseline alternative(s) separately regarding power generation, heat generation and biomass. Power generation: How power would have been generated in the absence of the project activity? Alternatives available for power generation: 1. The proposed project activity not undertaken as a CDM project activity is a likely baseline option (Option P1 as per ACM0006). Refer Baseline option 1 above for details. 2. In the absence of the project activity, the power generated in the project activity would be partly generated in the new biomass residue fired power plant whose efficiency is same as that of the existing boilers/efficiency that is common practice in the sector (Option P5) and partly in existing and/or new grid connected power plants (Option P4). Refer Baseline option 2 above for details. The first option (P1 - implementation of the project activity not undertaken as a CDM project activity) cannot be a baseline alternative since it faces prohibitive barriers to its implementation. The second alternative is a combination of options P5 and P4. This option does not face any prohibitive barriers as that

34 page 34 of the project activity. This alternative is in compliance with all applicable legal and regulatory norms and therefore could be a possible baseline scenario. The barrier analysis for the above two alternatives have been tabulated below: Barriers Option P1 P4 and P5 Technological Yes No Common practice Yes No The most likely baseline power generation scenario would be a combination of Options P4 and P5 Heat generation: How heat (process steam) would be generated in the absence of the project activity? Alternatives available for heat generation: 1. The proposed project activity not undertaken as a CDM project activity is a likely baseline option (Option H1 as per ACM0006). 2. In the absence of the project activity, the heat (process steam) generated in the project activity would be generated in the new biomass residue fired boiler whose efficiency is same as that of the existing boilers/efficiency that is common practice in the sector (Option H2). Refer Baseline option 2 identified in step 1a for details. The first option (H1 - implementation of the project activity not undertaken as a CDM project activity) cannot be a baseline alternative since it faces prohibitive barriers (Refer to step 2a) to its implementation. The second alternative (option H2) does not face any prohibitive barriers as that faced by the project activity. This alternative is in compliance with all applicable legal and regulatory norms and therefore could be a possible baseline scenario. The barrier analysis for the above two alternatives have been tabulated below:

35 page 35 Barriers Option H1 H2 Technological Yes No Common practice Yes No The most likely baseline heat generation scenario would be option H2. Biomass: What would happen to the biomass in the absence of the project activity? Alternative(s) available for biomass: 1. The proposed project activity not undertaken as a CDM project activity is a likely baseline option (Option B4 of ACM0006) 2. In the absence of the project activity, the BLS would be used in a new recovery boiler cogeneration system whose efficiency is same as that of the existing boilers/efficiency that is common practice in the sector. The capacity of the new recovery boiler would be larger than that of the existing boilers and thus the entire quantity of biomass residues available after capacity addition of the paper mill would be utilized in the new recovery boiler. Thus in the absence of the project activity, the entire quantity of BLS would be used at the project site for heat and electricity generation (Option B4 of ACM0006). Refer to Baseline option 2 above for details. The first option (implementation of the project activity not undertaken as a CDM project activity Option B4) cannot be a baseline alternative since it faces prohibitive barriers (Refer Section B.5) to its implementation. The second alternative (Options B4) does not face any prohibitive barriers as that of the project activity. This alternative is in compliance with all applicable legal and regulatory norms and therefore could be a possible baseline scenario. The most likely baseline biomass scenario would be option B4. Most plausible baseline scenario for the project activity: The above analysis shows that the most likely baseline scenario is the Baseline option 2 described in section B.4 (step 1a), which is a combination of: Options P4 and P5 for power generation

36 page 36 Options H2 for heat generation Option B4 for biomass residues The above combination of baseline scenarios for power, heat and biomass is applicable under scenario 18 of ACM0006. Step 4: Common Practice Analysis Sub-step (4a): Analyse other activities similar to the project activity There are no other similar project activities occurring in the region/country as demonstrated below. The table B.1 below shows the major paper manufacturing plants in the country. It may be noted that, except TNPL, none of the other mills produce bagasse based paper. The type of black liquor generated in TNPL is of unique nature and characteristics. There is no other project activity involving bagasse based high concentration black liquor in the country. Table B.2: Prevalence of bagasse based paper manufacturing in India S.No Mill Name Bagasse based paper 1 1 BILT No 2 Star Paper Mills Ltd No 3 Century Pulp and Paper No 4 Orient Paper Mills No 5 The Sirpur Paper Mills Ltd No 6 JK Paper Ltd No 7 ITC Ltd No 8 The Andhra Pradesh Paper Mills Ltd No 9 The West Coast Paper Mills Ltd No 10 The Mysore Paper Mills Ltd No 11 Seshasayee Paper and Boards No 12 Hindustan Paper Corporation No 13 TNPL Yes Sub-step (4b): Discuss any similar options that are occurring No similar activity occurring in the region/country. 1 Whether bagasse is used as the predominant raw material

37 page 37 B.6. Emission reductions: B.6.1. Explanation of methodological choices: >> The emission reductions are primarily from the incremental energy generation using the same quanta of biomass residues (BLS) that would have been combusted in the baseline scenario (i.e. low pressure cogeneration plant resulting in lower efficiency). The incremental energy would displace the electricity generated through fossil fuels in the grid connected power plants. B.6.1.1: Project emissions Project emissions include CO 2 emissions from transportation of biomass residues to the project site (PET y ), CO 2 emissions from on-site consumption of fossil fuels due to the project activity (PEFF y ), CO 2 emissions from consumption of electricity (PE EC,y ) and where applicable, CH 4 emissions from the combustion of biomass residues (PE Biomass,CH4,y ) PE y = PET y +PEFF y + PE EC,y + GWP CH4. PE Biomass,CH4,y Where: PET y PEFF y PE EC,y GWP CH4 PE Biomass,CH4,y CO 2 emissions during the year y due to transportation of the biomass residues to the project plant (tco 2 /yr) CO 2 emissions during the year y due to fossil fuels co-fired by the generation facility or other fossil fuel consumption at the project site that is attributable to the project activity (tco 2 /yr) CO 2 emissions during the year y due to electricity consumption at the project site that is attributable to the project activity (tco 2 /yr) Global Warming Potential for methane valid for the relevant commitment period CH 4 emissions from the combustion of biomass residues during the year y (tch 4 /yr) Carbon dioxide emissions from transportation of biomass residues to the project site (PET y ) This would not be applicable to the project activity since the BLS is generated on-site in the paper manufacturing process. The purchase or transportation of BLS from outside is technically not viable.