2 nd crediting period 01/11/2016 to 31/10/2023 (GS) 1.1 Aa 28/09/2016. Brazil

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1 Validation report form for renewal of crediting period for GS project activities VALIDATION REPORT FOR RENEWAL OF CREDITING PERIOD (RCP) Title of the project activity BK Energia Itacoatiara Project GS Reference number of the project activity 765 Number and duration of the next crediting period Version number of the validation report for RCP Completion date of the validation report for RCP Version number of PDD to which this report applies Project participant(s) Host Party 2 nd crediting period 01/11/2016 to 31/10/2023 (GS) 1.1 Aa 28/09/2016 version 06.2 of 04/08/2016 Foundation myclimate - The Climate Protection Partnership; BK Energia Itacoatiara Ltda; Precious Woods Holding Ltd. Brazil Sectoral scope(s), selected methodology(ies) Scope 1, energy industries (renewable-/nonrenewable sources), type I, renewable energy projects; methodology I.D Grid connected renewable electricity generation version 18 of 28/11/2014 and Scope 13, waste handling and disposal, type III, other project activities methodology AMS-III.E.: Avoidance of methane production from decay of biomass through controlled combustion, gasification or mechanical/thermal treatment version 17 of 28/11/2014 Estimated annual average GHG emission reductions or net anthropogenic GHG removals in the next crediting period Name of DOE Name, position and signature of the approver of the validation report for RCP 45,568 RINA Services S.p.A. (RINA) Laura Severino Sector Manager, Sustainability, Environment & Climate Change Version 01.0 Page 1 of 39

2 SECTION A. Executive summary GS-RCP-FORM Purpose and general description of the project The project purpose is to generate electricity with a thermoelectric power plant using wood waste from an FSC certified forest and a wood processing company in the city of Itacoatiara, in the State of Amazonas, Brazil or from other demonstrably renewable sources out of region. The power plant replaces several diesel generators and supplies the local grid of the town of Itacoatiara (approx. 80,000 inhabitants) in a region supplied by 100% diesel fuelled electrical electricity generators. The specific objectives of the project activity are (1) to generate electricity for the Itacoatiarian grid (in scope) and the sawmill Mill (out of scope) by renewable wood substituting fossil fuels. (2) to dispose the wood waste in a useful manner by incinerating it instead of putting it on a landfill and leaving it for decay and composting. Location The project is located on the north region of Brazil, state of Amazonas, municipality of Itacoatiara. Scope of Validation The validation scope is to review the updated PDD and GS Passport against the GS principles and requirements. The validation of the renewal of crediting period is also to be seen in conjunction with the validation report at the time of requesting registration of the project (DET NORSKE VERITAS Validation Report nº G revision 01 of 28/09/2011, for the Gold Standard project). Validation of the renewal of crediting period is a requirement and it is seen as necessary to provide assurance about: (a) the impact of new relevant national and/or sectoral policies and circumstances on the baseline; (b) the correctness of the application of an approved baseline methodology for the determination of the continued validity of the baseline or its update, and the estimation of emission reductions for the applicable crediting period. Validation process Validation is conducted using RINA procedures in line with the GS requirements and principles and applying standard auditing techniques. The validation assessment involved a document review of relevant documentation, the interview and/or on-site visit and the reporting. Validation is not meant to provide any consultancy toward the project participants. However, stated request for clarifications and/or corrective actions may have provided input for improvement of the project design. Conclusion RINA commissioned by Foundation myclimate - The Climate Protection Partnership the validation of the renewal of crediting period of the project activity BK Energia Itacoatiara Project, with regard to the relevant GS requirements and principles for project activities. In conclusion, it is RINA s opinion that the project activity BK Energia Itacoatiara Projectas described in the PDD version 06.2 of 04/08/2016 and GS Passport version 10 of 03/08/2016, meets all relevant GS requirements and principles, and correctly applied the baseline and monitoring methodology AMS-I.D Grid connected renewable electricity generation version 18 of 28/11/2014 and AMS-III.E Avoidance of methane production from decay of biomass through controlled combustion, gasification or mechanical/thermal treatment version 17 of 28/11/2014. Version 01.0 Page 2 of 39

3 Type of resource Desk review On-site inspection Interview(s) Validation findings GS-RCP-FORM SECTION B. Validation team, technical reviewer and approver B.1. No. Validation team member Role Last name First name Affiliation (e.g. name of central or other office of DOE or outsourced entity) Involvement in 1. Team Leader/ validator Technical Expert IR Carvalho Thaís RINA Brazil x x x x B.2. Technical reviewer and approver of the validation report for RCP No. Role Type of resource Last name First name Affiliation (e.g. name of central or other office of DOE or outsourced entity) 1. Technical reviewer IR Menon Rekha RINA India 2 Approver IR Severino Laura RINA Central Office SECTION C. Means of validation C.1. Desk review The PDD version 06.2 of 04/08/2016 and previous versions /02/, the GS passport version 10 of 03/08/2016 and previous version /35/ in particular the applicability of the methodology, the baseline determination, the emission reductions calculation, the sustainability indicators, were assessed as part of the validation. All documents reviewed or referenced during the validation are listed in Appendix 3. Version 01.0 Page 3 of 39

4 C.2. On-site inspection GS-RCP-FORM Duration of on-site inspection: 21/06/2016 No. Activity performed on-site Site location Date Team member 1. - Implementation and operation of the proposed project activity; - interviewed key personnel of the plant to confirm the operational and data collection procedures; QA QC procedures, sustainability indicators BK Energia Itacoatiara 21/06/2016 Thaís Carvalho C.3. Interviews No. Interviewee Date Subject Team member Last name First name Affiliation 1. Leon Paul Foundation myclimate - The Climate Protection Partnership 21/06/2016 PDD CERs calculation Methodology applicability Monitoring, QA/QC procedures; Sustainability indicators Thaís Carvalho 2 Brito Moacir BK Energia 21/06/2016 Project implementation/ operation/ monitoring Equipment installed Thaís Carvalho 3 Noronha Mauricio BK Energia 21/06/2016 Project installed equipment; monitoring; calibration; environmental license ; QA/QC procedures; Sustainability indicators Thaís Carvalho C.4. Clarification requests, corrective action requests and forward action requests raised Area of validation findings No. of CR No. of CAR No. of FAR Compliance with PDD form Compliance with GS Passport form Application of baseline and monitoring methodology and standardized baseline Validity of original baseline or its update Do No Harm assessment Impact assessment Sustainable Development Matrix Estimated GHG emission reductions or net anthropogenic GHG removals Validity of monitoring plan Validity of sustainable monitoring plan Project participants Local stakeholder consultation process (please specify) Total Version 01.0 Page 4 of 39

5 SECTION D. Validation findings GS-RCP-FORM D.1. Compliance with PDD form Means of validation Findings Conclusion D.2. PDD applies the applicable CDM-SSC-PDD-FORM: Project design document form for small-scale CDM project activities version 08.0 and complies with the Instructions for filling out the project design document form for small-scale CDM project activities. /09/ RINA verified that for the renewal crediting period, information transferred to the later valid version of the PDD form is materially the same as that in the registered PDD. CR 1: Some sections of the updated PDD refer to second crediting period instead of third crediting period. To close CL 1, PP has revised the PDD to describe the third crediting period. RINA confirms that the PDD is based on the currently valid CDM-SSC-PDD-FORM template version 08.0 and is completed in accordance with the Instructions for filling out the project design document form for small-scale CDM project activities /09/ Compliance with GS Passport form Means of validation Findings Conclusion D.3. The Gold Standard Passport /35/ submitted by the PP has been the basis for starting the validation process. RINA confirms that the GS passport is based on the currently valid template /36/ CR 10: In the section E.3 PP describes that a tool free number and a web page for the project will be created. PP is requested to clarify how the stakeholders will be informed as there is no detail in the GS Passport. To close CR, revised passport describes the phone number and from the project manager. RINA verified that the GS Passport /35/ was completed in accordance with current valid template, version 2.2 /36/ Application of baseline and monitoring methodology and standardized baseline Means of validation The project was originally registered based on version 06 of the AMS-I.D Grid connected renewable electricity generation /01/ and version 06 of AMS-III.E Avoidance of methane production from decay of biomass through controlled combustion, gasification or mechanical/thermal treatment ; the revised PDD /02/ applies AMS-I.D Grid connected renewable electricity generation version 18 of 28/11/2014 /06/ and AMS-III.E Avoidance of methane production from decay of biomass through controlled combustion, gasification or mechanical/thermal treatment version 17 of 28/11/2014. RINA verified that the AMS-I.D is still applicable to the project activity as described below: This methodology comprises renewable energy generation units, such as photovoltaic, hydro, tidal/wave, wind, geothermal and renewable biomass: (a) Supplying electricity to a national or a regional grid; or (b) Supplying electricity to an identified consumer facility via national/regional grid trough a contractual arrangement such as wheeling. RINA verified that the project activity consists of an installation of a new thermo power plant fuelled with renewable biomass (Greenfield), supplying energy to the city grid of Itacoatiara which is still isolated from the Brazilian Interconnected Grid. The project activity exclusively uses renewable biomass for electricity generation. The biomass residues are in accordance the provisions of Annex 18, EB 23 Definition of renewable biomass, as the biomass combusted for generating electricity is wood waste of the sawmill. The wood input of sawmill comes from sustainably and well managed forests certified to the world-wide leading standard for sustainable forestry FSC ( Thus, the original source of the biomass is renewable ensured by sustainable forestry, which cannot decrease carbon pools in the forest. During the onsite visit it was possible to confirm that the wood waste comes from the mill and the forest of Mil Madeiras Preciosas Ltda., which is a subsidiary of Precious Woods Holding Ltd (Project Participant). The biomass residues from sawmill would be, in the absence of the CDM, dumped Version 01.0 Page 5 of 39

6 creating methane emissions. This condition prevented by the project activity as the biomass residues are used for energy generation as described below. The project qualifies as a small-scale project activity (SSC) and will remain under the limits of the 15 MW of installed capacity for type I projects during the crediting period. RINA verified that the AMS-III.E is still applicable to the project activity as described below: This project category comprises measures that avoid the production of methane from biomass or other organic matter that: (a) Would have otherwise been left to decay under clearly anaerobic conditions throughout the crediting period in a solid waste disposal site without methane recovery, or (b) Is already deposited in a waste disposal site without methane recovery. RINA verified that the biomass residues used to generate electricity are residues from the mill located next to the power plant. In the absence of the proposed project activity these residues would have otherwise been left to decay under anaerobic conditions throughout the crediting period without methane recovery (option (a)) and due to the project activity, decay of the wastes of type is prevented through the controlled combustion as proposed project activity consists of generating electricity using biomass residues. The project qualifies as a small-scale project activity (SSC) and will remain under the limits of the cap of 60,000 CERs for type III projects during every year of the crediting period. Findings Conclusion The following tools are also described in the applied methodologies: Tool to calculate project or leakage CO2 emissions from fossil fuel combustion ; version 2 of 02/08/2008 /20/ Project and leakage from biomass, version 2 of 16/04/2015 /22/ Tool to calculate the emission factor for an electricity system, version 5 of 27/11/2015 /19/ Emissions from solid waste disposal sites, version 7 of 16/04/2015 /21/ Attachment C of Appendix B General guidance on leakage in biomass project activities, version 3 of 28/05/2009 /29/ Assessment of the validity of the original/current baseline and update of the baseline at the renewal of the crediting period, version of 02/03/2012 /08/ Project and leakage emissions from transportation of freight, version of 23/11/2012 /35/ CR 2: In accordance with the methodology AMS-III.E the tool Project and leakage emissions from transportation of freight is applicable; however it is not described in the PDD. In order to close CR 2, PDD was revised to include the the tool Project and leakage emissions from transportation of freight. RINA confirms that the selected baseline and monitoring methodologies have been previously approved by the CDM Executive Board and are applicable to the project, which complies with all the applicability conditions therein the selected versions are valid at the time of submission of the renewal of crediting period. It is also confirmed that the methodologies are correctly applied by comparing them with the actual text of the applicable versions. D.4. Validity of original baseline or its update Means of validation The baseline was assessed according to the tool Assessment of the validity of the original/current baseline and update of the baseline at the renewal of the crediting period, version /08/. The following steps were assessed: Step 1: Assess the validity of the current baseline for the next crediting period Step 1.1: Assess compliance of the current baseline with relevant mandatory national and/or sectoral policies. RINA verified during the onsite that there are no relevant mandatory national and/or sectoral policies applicable to the project activity that came into effect after the submission of the project activity for validation. For the component 1, the PROINFA program was explained in the renewal of the second crediting period, Version 01.0 Page 6 of 39

7 closed down for new projects on 31st December 2011 /23/. Moreover, RINA verified the renewable energy auctions held in Brazil /24/; the decennial Plan for Energy expansion (from ) from the Brazilian Ministry of Mines and Energy /25/ and the CCEE (Chamber for the Commercialization of Electric Power) /26/ historical evolution of the Brazilian electric power system to confirm that the current baseline complies with all relevant mandatory national and/or sectoral policies, which have come into effect after the submission of the project activity for validation. For the component 2- methane avoidance, RINA verified through the assessment of the local legislation /30/ /31/ /32/ that the current baseline complies with all relevant mandatory national and/or sectoral policies, which have come into effect after the initial crediting period. Moreover, PP has provided the Operation license for BK Energia Itacoatiara Ltda. nº 355/02-08, dated 28/08/2015, valid for 3 years /14/ to demonstrate the project activity is in compliance with national sectoral policies. Verified during the onsite visit the following project equipment: Turbine manufactured by Dresser-Rand, model ET1HB7, serial number ET- 103, rated capacity 9,000 KWel (10,000 KVA) at 5,000 rpm; Boiler manufactured by Equipalcool, model 45 V-2-S, serial number , feed water temperature 105 oc, rated capacity 45,000 kg/h of steam at 42 kgf/cm2 and 420 oc, biomass residues (wood chips) fuelled, LHV efficiency 85.48% (taken from technical documentation from manufacturer, insignificantly different from PDD (85,7%); Electrical generator manufactured by Toshiba, type TABL RCC, serial number , rated capacity 10,000 kva at 13.8 kv, 60 Hz; Scale 1 (the one used to weight the total of wood waste entering the boiler) manufactured by Toledo, model 9270, Maximum capacity 50t/h; serial number , precision class 0.02%; Scale 2 (the one used to weight wood waste coming from outside) manufactured by Toledo, model 820, Capacity 60t, Precision Class III; Two emergency diesel generators, manufactured by Caterpillar, Model 3412, Installed Capacity 545 kw and 455 kw. Small treatment facilities for boiler water and waste water PP has also presented the RAINFOREST ALLIANCE FSC certificate for the MIL MADEIRAS PRECIOSAS LTDA., Valid from December 1, 2012 to November 30, 2017 Certificate Registration Code: RA-FM/COC FSC License Code: FSC- C Certificate Issue Number: IN /15/ Step 1.2: Assess the impact of circumstances RINA verified that there are no new relevant national and/or sectoral policies and/or circumstances that affect the baseline scenario, therefore, there is no impact in the project activity and baseline scenario. RINA verified that in Brazil /33/ the biomass the biomass thermal power plant represents less than 9% of the energy generation. Moreover RINA verified that Itacoatiara remains in the isolated system with diesel fuelled power plants (UTE Hermasa and UTE Itacoatiara) /34/. For the methane avoidance,, the wood waste from the sawmill would be still left for decay in an unmanaged waste site close to the mill and not being burned in open fires. Step 1.3: Assess whether the continuation of the use of current baseline equipment(s) or an investment is the most likely scenario for the crediting period for which the renewal is requested The baseline equipment for Component 1 - generating electricity with Diesel generators in the local grid of Itacoatiara - is the continuation of the current practice. The remaining technical lifetime of the equipment (Diesel generators in Itacoatiara) either exceeds the crediting period for which renewal is requested or generators are replaced by generators using the same technology (electricity generation based on diesel). The baseline equipment for Component 2 avoidance of methane emissions is the hypothetical waste disposal site and the necessary machinery to dump and compact the waste (trucks, loaders, bulldozers). No changes occurred there. Therefore, RINA verified that continuation of the use of Version 01.0 Page 7 of 39

8 current baseline equipment(s) is the most likely scenario for the crediting period for which the renewal is requested. Step 1.4: Assessment of the validity of the data and parameters The baseline emissions of the project activity were updated considering the last version of the methodologies, related applicable tools and IPCC values. Step 2: Update the current baseline and the data and parameters Step 2.1: Update the current baseline The baseline emissions for the third crediting period have been updated, without reassessing the baseline scenario, based on the latest approved version of the methodologies AMS-I.D and AMS-III.E. Findings Conclusion Step 2.2: Update the data and parameters The data and/or parameter(s) for the third crediting period were updated. The assessment is described below. N/A RINA verified that the baseline was assessed according to the tool Assessment of the validity of the original/current baseline and update of the baseline at the renewal of the crediting period, version /08/. The current project baseline is still valid at the renewal crediting period. D.5. Do No Harm Assessment Means of validation RINA verified that for the renewal crediting period there is no change in the registered Do no harm Assessment. Human rights 1 - The project respects internationally proclaimed human rights including dignity, cultural property and uniqueness of indigenous people. The project is not complicit in Human Rights abuses. The risk is low. Brazil is signatory and has ratified the majority of the relevant conventions on Human rights such as the International Covenant on Economic, Social and Cultural Rights and has an government secretary to strengthen and promote the agenda of human rights in the country /39/. The project employees are contracted under Brazilian legislation, verified through interview during the onsite visit. Moreover, Precious Woods areas are certified under FSC norms considers the human rights aspects /15/ /41/ 2 - The project does not involve and is not complicit in involuntary resettlement. The risk is low, the project is implemented in private area. No mitigation measure is need. 3 - The project does not involve and is not complicit in the alteration, damage or removal of any critical cultural heritage. The risk is low, as per Precious Woods Code of Conduct [the company] does not pursue forestry activities in forest areas where indigenous people demonstrably follow their own culturally distinct and original way of life /51/ Labour Standards 4 - The project respects the employees freedom of association and their right to collective bargaining and is not complicit in restrictions of these freedoms and rights. The risk is low. Precious Woods ensures the freedom of association, which is also regularly checked by the FSC-auditors in consultation of employees and unions. PP has provided the valid FSC certificate /15/. Moreover, Brazil has ratified C098 - Right to Organise and Collective Bargaining Convention, 1949 (No. 98) /40/. No mitigation measure is need. 5 - The project does not involve and is not complicit in any form of forced or Version 01.0 Page 8 of 39

9 compulsory labour. The risk is low. The project employees are contracted under Brazilian legislation, verified through interview during the onsite visit. Moreover, the Brazilian government has ratified both ILO conventions 29- Forced Labour Convention, 1930 (No. 29) - on 25/04/ and 105- Abolition of Forced Labour Convention, 1957 (No. 105) - on 18/06/1965. /40/ No mitigation measure is need. 6 - The project does not employ and is not complicit in any form of child labour. The risk is low. The project employees are contracted under Brazilian legislation, verified through interview during the onsite visit. Moreover, the Brazilian government has ratified both ILO conventions138- Minimum Age Convention, 1973 (No. 138) - on 28/06/2001 and 182 Worst Forms of Child Labour Convention, 1999 (No. 182)- on 02/02/2000. No mitigation measure is need. 7 - The project does not involve and is not complicit in any form of discrimination based on gender, race, religion, sexual orientation or any other basis. The risk is low. Precious Wood s Code of Conduct5 explicitly instructs: 2. There is no discrimination or harassment against an employee or an applicant for race, colour, religion, sex, age, disability, national origin; this is valid for all employees at all levels at any time /51/. Moreover, the Brazilian government has ratified both ILO conventions100 -Equal Remuneration Convention, 1951 (No. 100) on 25/04/1957 and 111- Discrimination (Employment and Occupation) Convention, 1958 (No. 111) on 26/11/1965. No mitigation measure is need. 8 - The project provides workers with a safe and healthy work environment and is not complicit in exposing workers to unsafe or unhealthy work environments The risk is medium. Precious Woods Code of Conduct confirms: 4. The Company implements highest standards for health and safety. Precious Woods follows all state and local laws and regulations. /51/. Moreover, the Brazilian government has ratified both ILO convention 155- Occupational Safety and Health Convention, 1981 (No. 155) on 18/05/1992. Some activities occurring inside the project boundary may expose workers to potential hazards. Also, in forestry related activities and in the mill, potential hazards are present. Hence, all employees are specifically trained to perform their activities, oriented regarding the potential dangerous and equipped with personal protective equipments (PPE). As a mitigation measure, BK Energia ensures PPE (Personal Protective Equipment) are used and all employees are aware of the potential hazards and necessary measures to avoid them. RINA verified the the trainings registers and the EPI control spreadsheet signed by the workers /42/ Environmental Protection 9 - The project takes a precautionary approach in regard to environmental challenges and is not complicit in practices contrary to the precautionary principle. This principle can be defined as: When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically. The risk is low. The biomass used in the project activity comes from Precious Woods that is FSC certified /15/ and the power plant has the valid licenses issued by the Environmental agency: Instituto de Proteção Ambiental do Amazonas- IPAAM, Operation license for BK Energia Itacoatiara Ltda. nº 355/02-08, dated 28/08/2015, valid for 3 years /43/. No mitigation measure is need The project does not involve and is not complicit in significant conversion or degradation of critical natural habitats, including those that are (a) legally protected, (b) officially proposed for protection, (c) identified by authoritative sources for their high conservation value or (d) recognised as protected by traditional local communities. The risk is low. The forest management is FSC certified and the management plan has to be approved by the regulatory agency which ensures the harvest will only occur in permitted areas /15/. As a mitigation measure, it is requested to ensure that the residues used to generate electricity come from FSC certified forest land. Version 01.0 Page 9 of 39

10 Anti-corruption 11 - The project does not involve and is not complicit in corruption. The risk is low. Precious Woods Code of Conduct give specific instructions: 1.The Company is strongly committed to work with honesty and integrity, fully following all applicable laws. /51/. No mitigation measure is need. Findings Conclusion Additional relevant critical issues for my project type Not applicable. No applicable RINA verified that the renewal crediting period has no impact in the Do no harm Assessment. RINA verified that the Do no harm Assessment is in accordance with Gold Standard Toolkit, version 2.2 of 01/06/2012 /45/. D.6. Impact assessment Sustainable Development Matrix Means of validation RINA verified that for the renewal crediting period there is no change in the registered Sustainable Development matrix as described below. Air quality: neutral (0). Parameter: Emissions of PM, NOx, SOx, CO. In the baseline scenario the electricity would be supplied by the thermo power plant fuelled with diesel oil, in accordance with the registered PDD. The project activity combusts wood and bark waste (wet) generating less NOx, SOx and CO. A cyclone filter was installed to reduce the emission of fly ash and particulate matter. In conclusion, the air quality is not affected by the project implementation /2/. Water quality and quantity: neutral (0) Parameter: Thermal pollution. The water used in the plant is treated before being discharged; therefore, there is no negative impact. RINA verified during the onsite visit that a waste water treatment in the project activity. Soil condition: neutral (0) Parameter: Pollution of soils. In accordance with the registered PDD, the project activity uses residues from MIL that otherwise would be left to decay in a wood waste disposal, therefore having positive (humus-forming) and negative impacts on the soil (acid-forming). The project activity reduces these impacts and is classified as neutral. Other pollutants: neutralized (0) Parameter: frequency of noise (per day, per week, per month) time occurrence (day/night, weekdays/weekend). The project activity causes noise impact that can affect the company s employees. In order to mitigate the noise impact, all employees must use personal protective equipments /42/. Biodiversity: neutral (0) Parameter: Alteration/destruction of natural habitat. The power plant is fuelled with the biomass residues from the saw mill that is FSCcertified forest conserving biodiversity /15/. Therefore it has a neutral impact in the biodiversity. Quality of employment: neutral (0) Parameter: records of PPE supply and participation on the Health and Safety Dialogues. Employees working in the project activity have proper salary, social insurance and good working conditions /46/. Livelihood of the poor: neutral (0) Parameter: poverty alleviation, access to health care services, among others. The project activity has no impact in this indicator,as the conditions are the same as the baseline. Access to affordable and clean energy services: Positive (+): Parameter: System Average Interruption Duration Index (SAIDI), Diesel oil consumption. The project activity results in increase of the reliability of electricity supply and the utilization of local biomass residues avoids the consumption of Version 01.0 Page 10 of 39

11 diesel oil imported from other regions. /47/ GS-RCP-FORM Human and institutional capacity: neutral (0). Parameter: certificates. The impact is conservatively considered neutral as trained personnel ensures that the plant operates well. Quantitative employment and income generation: positive (+) Parameter: number of jobs created. The implementation of the project activity creates a long-term employment for 40 direct workers. In addition, the power plant secures the operation of the saw mill and the forest management which offers approx. 500 jobs /46/ Findings Conclusion Balance of payments and investment: positive (+). Average annual revenue from biomass sales. In the absence of the project activity electricity would be provided by the local thermo power plant, which is fuelled with diesel oil, confirmed in the registered PDD /01//02/. In the project activity, the biomass is produced locally. Technology transfer and technological self-reliance: neutral (0) Parameter: Number of similar activities in the Amazon region. Besides the project transfer a complex and well-known technology, i.e. biomass cogeneration, to a remote forest region of Brazil, the project owner does not conduct activities, such as seminars or workshops, that can motivate the replication of similar initiatives in the country. Therefore the parameter is considered neutral. N/A RINA verified that the renewal crediting period has no impact in the Sustainable Development matrix. RINA verified that the Sustainable Development matrix is in accordance with Gold Standard Toolkit, version 2.2 of 01/06/2012 /45/ D.7. Means validation Estimated GHG emission reductions or net anthropogenic GHG removals of The approved baseline and monitoring AMS-I.D Grid connected renewable electricity generation version 18 of 28/11/2014 /06/ and AMS-III.E Avoidance of methane production from decay of biomass through controlled combustion, gasification or mechanical/thermal treatment version 17 of 28/11/2014 /07/ have been applied. The following parameters are presented in the PDD: Data/parameter Unit Value applied Assessment , for baseline emissions in accordance with Application B, for wet conditions 1 Φ default (Default value for the model correction factor to account for model uncertainties) The climatic conditions at the SWDS site (Itacoatiara, State of Amazonas) are humid equatorial. /27/. The value is in accordance with the tool Emissions from solid waste disposal sites /21/, Application B: The CDM project activity avoids or involves the disposal of waste at a SWDS. The methane is generated from waste disposed or avoided from disposal during the crediting period. 2 OX: Oxidation factor (reflecting the amount of methane from SWDS that is Value applied in accordance with the tool Emissions from solid waste disposal sites /21/. Version 01.0 Page 11 of 39

12 oxidized in the soil or other material covering the waste) 3 F: Fraction of methane in the SWDS gas (volume fraction). GS-RCP-FORM Value applied in accordance with the tool Emissions from solid waste disposal sites /21/ 4 DOC f,default : Default value for the fraction of degradable organic carbon (DOC) in MSW that decomposes in the SWDS. Weight fraction 0.5 The proposed project activity corresponds to Application B to MSW described in the applicable methodological tool Emissions from solid waste disposal sites /21/. The default value was chosen. 5 DOC j : Fraction of degradable organic carbon in the waste type j weight fraction Wood and wood products= 43% DOC j (% wet waste) Value applied in accordance with the tool Emissions from solid waste disposal sites /21/ 6 MCF default : Methane correction factor. 7 k j : Decay rate for the waste type j 8 EF CO2,f : Default CO2 emission factor for freight transportation activity f As a conservative approach, the methane correction factor for open stockpiling was chosen. RINA verified that the value applied is in accordance the value described in the methodology AMS- III.E /29/, for unmanaged SWDS 1/yr 0.02 As a conservative approach, the decay rate kj for open stockpiling was chosen. RINA verified in accordance with the methodology AMS- III.E /27/, a conservative value should be used, therefore, PDD presents the lower value in accordance with Emissions from solid waste disposal sites /21/. gco2/t km 245 for light vehicles 129 for heavy vehicles Defined in accordance with the default value available in the tool Project and leakage emissions transportation freight /53/ from of Version 01.0 Page 12 of 39

13 The emission reduction ER y by the proposed project actiity during the crediting period is the difference between baseline emissions (BE y ), project emission (PE y ) and emissions due to leakage (L y ) as follows ERy= (BE y+ BE CH4,SWDS,y )- PE y - LE y Where: BE y = Baseline emissions for electricity generated by the plant and supplied to the grid in the year y (tco 2 ) BE CH4,SWDS,y = Yearly Methane Generation Potential of the wastes diverted to be disposed in the disposal site from the beginning of the project (x=1) up to the year y, calculated according to the Tool to determine methane emissions avoided from disposal waste at a solid waste disposal site (tco 2 e) PE y = Project emissions during year y (tco 2 ) LE y = Leakage emissions during year y (tco 2 ) Baseline emissions For the component 1, electricity generation In accordance with the applied methodology AMS-I.D Grid connected renewable electricity generation version 18 of 28/11/2014 the baseline emissions are estimated as follow: BE y = EG PJ,facility,y * EF grid.y Where: BE y = Baseline emissions in year y (tco 2 ) EG PJ,facility,y = Quantity of net electricity that is produce and fed into the grid as a result of the implementation of the CDM project activity in year y (MWh). RINA confirmed that the project is a greenfield project. EF grid.y = Combined margin CO 2 emission factor for grid connected power generation in year y calculated using the latest version of the Tool to calculate the emission factor for an electricity system (tco 2 /MWh) The net electricity shall be used to calculate emission reductions. Hence, the following formula is used: EG PJ,facility,y = EG Exporty EG Importy Where, EG Exporty = Quantity of electricity generated through biomass and exported to the grid in MWh in the year y EG Importy = Quantity of electricity imported from the grid in MWh in the year y and used for the project activity. For the ex-ante estimative, RINA verified that PP is considering data from the previous three years /10/ RINA verified that in PP has chosen option (b) of AMS-I.D paragraph 23: The weighted average emissions (in t CO2/MWh) of the current generation mix. The data of the year in which project generation occurs must be used. RINA verified that Itacoatiara remains an isolated city grid. The electricity supplied comes from the plant of the project activity and from other two thermo power plants fuelled with diesel oil (UTE Itacoatiara and UTE Hermasa) /34/. Therefore, the emission factor of the local electricity system is the weighted average emissions of these two plants. Data of the energy generation and fuel consumption is provided by the local power utility (Eletrobrás Amazonas Energia- confidential data). For the calculation PP will apply the option A.1 of the Tool to calculate the emission factor for an electricity system /19/: EF grid,y = Where, EF EL,m,y = CO2 emission factor of power unit m in year y (tco2/mwh) FC i, m,y = Amount of fossil fuel type i consumed by power unit m in year y (Mass or volume Version 01.0 Page 13 of 39

14 unit) NCV i,y = Net calorific value (energy content) of fossil fuel type i in year y (GJ/mass or volume unit) EFCO2,i,y =CO2 emission factor of fossil fuel type i in year y (tco2/gj) EGm,y= Net quantity of electricity generated and delivered to the grid by power unit m in year y (MWh) M= All power units serving the grid in year y except low-cost/must-run power units I= All fossil fuel types combusted in power unit m in year y Y= The relevant year as per the data vintage chosen in Step 3 RINA verified that for the ex-ante estimative, PP is applying average data from the previous three years (2015, 2014, 2013) /10/ For the component 2, methane-emissions-avoidance: In accordance with the applied methodology AMS-III.E Avoidance of methane production from decay of biomass through controlled combustion, gasification or mechanical/thermal treatment version 17 of 28/11/2014 the baseline emissions are estimated as follow: BEy= BE CH4,SWDS,y Where, BE y = Baseline emissions at year y during crediting period (tco 2 e) BE CH4,SWDS,y = Yearly Methane Generation Potential of the wastes diverted to be disposed in the landfill from the beginning of the project (x=1) up to the year y, calculated according to the Emissions from solid waste disposal sites /21/ In accordance with the tool Emissions from solid waste disposal sites /21/ BE CH4,SWDS,y = φyx (1-f y )* GWP CH4 *(1-OX)*16/12*F*DOC f,y *MCFy* (W j,x * DOC j xe -k(y-x) *(1-e - kj )) BE CH4,SWSD, y = Baseline methane emissions occurring in year y generated from waste disposal at the solid waste disposal site (SWDS) during a period ending in year y (tco 2 e/y); φy= Model correction factor to account for model uncertainties (default value of 0.85), for application B, humid/wet conditions /27/; fy= Fraction of methane captured at the SWDS and flared, combusted or used in another manner that prevents the emissions of methane to the atmosphere in year y. GWP CH4 = Global Warming Potential (GWP) of methane, valid for the relevant commitment period (25) OX= Oxidation factor (reflecting the amount of methane from SWDS that is oxidized in the soil or other material covering the waste) (default Tool value 0.1); F= Fraction of methane in the SWDS gas (volume fraction) (default Tool value 0.5); DOC f,y = Fraction of degradable organic carbon (DOC) that decomposes under the specific conditions occurring in the SWSD for year y (weight fraction). Default value of 0.5 used as per page 65 of the Tool; MCF y = Methane correction factor for year y (0.36 as a conservative approach, the methane correction factor for open stockpiling was chosen. RINA verified that the value applied is in accordance the value described in the methodology AMS-III.E /29/, for unmanaged SWDS); W j,x = Amount of solid waste type j disposed or prevented from disposal in the SWDS in the year x (t); DOCj= Fraction of degradable organic carbon (by weight fraction) in the waste type j; (43% wet waste for wood and wood products) k j = Decay rate for the waste type j (1/yr) (0.02 as a conservative approach, the decay rate kj for open stockpiling was chosen. RINA verified in accordance with the methodology AMS-III.E /27/); j= Type of residual waste or types of waste in the MSW; x= Years in the time period in which waste is disposed at the SWSD, extending from the first year in the time period (x=1) to year (x = y); Version 01.0 Page 14 of 39

15 y= Year for which methane emissions are calculated (considering a consecutive period of 12 months) For W j,x, the following equation is used at the time of the project verification, considering application B: Where, W j,x =Amount of organic waste type j disposed or prevented from disposal in the SWDS in the year x (t) W x = Total amount of organic solid waste disposed or prevented from disposal in the SWDS in year x (t) p n,j,x =Fraction of the waste type j in the sample n collected during the year x (weight fraction) Z =Number of samples collected during the year x n = Samples collected in year y j =Types of solid waste X= Years in the time period for which waste is disposed at the SWDS, extending from the first year in the time period (x = 1) to year y(x = y) Leakage emissions RINA verified that there is no leakage in the project activity. PP has provided a declaration from SEMMA (Secretaria Municipal de Meio Ambiente, the Environmental Secretariat of the Municipality of Itacoatiara) dated 04/05/2016, confirming that the only biomass residues consumer from Mil is BK Energia Itacoatiara /36/. In the radius of 50 km around the Project Activity there is only one company, Hermasa (approx. 50 km away) as other potential consumer of biomass residues in the region. Therefore, there is no competing use for the biomass. The biomass may in the absence of the project activity be used elsewhere, for the same or a different purpose. The other two situations described in the Indicative Simplified Baseline and Monitoring Methodologies for Selected Small-Scale CDM Project Activity Categories are not applicable to the project activity as neither there was a shift of the preproject activities (sustainable forest management and sawn wood production by MIL Madeiras Preciosas), nor there are additional emissions to produce the wood residues because of the project activity. Project emissions In accordance with AMS.I-D the project emissions applicable to the project activity are the CO2 emissions from on-site consumption of fossil fuels due to the project activity shall be calculated using the latest version of the Tool to calculate project or leakage CO2 emissions from fossil fuel combustion. This source of emission is considered below while calculating project emissions in the context of AMS-III.E. PE y PE y,comb PE TR,m PE y,power Where: PE y Project activity direct emissions in the year y (t CO 2 e) PE y,comb = Emissions through combustion and gasification of non-biomass carbon of waste Version 01.0 Page 15 of 39

16 and RDF/SB in the year y (t CO 2 e). Not applicable to the project activity, therefore= 0 PE TR,m = Project emissions from transportation of freight in the monitoring period m (t CO2e). RINA verified that PP will consider the emissions from the transportation of the ashes (residues transportation) (Same parameter as PE y,transp, described in the methodology). It is calculated in accordance with the tool Project and leakage emissions from transportation of freight /35/, as described below) PE y,power = Emissions through electricity or diesel consumption in the year y (t CO 2 e) (It is calculated in accordance with the Tool to calculate project or leakage CO2 emissions from fossil fuel combustion /20/) Project emissions from transportation of freight Is calculated in accordance with the tool Project and leakage emissions from transportation of freight /53/ PE 6 TR, m D f, m * FR f, m * EFCO2, f * 10 f Where: D f,m = Return trip distance between the origin and destination of freight transportation activity f in monitoring period m (km) FR f,m = Total mass of freight transported in freight transportation activity f in monitoring period m (t) EF CO2,f = Default CO2 emission factor for freight transportation activity f (g CO 2 /t km) f= Freight transportation activities conducted in the project activity in monitoring period m For the ex-ante estimative, PP is considering data monitored in the year of 2015, the distance of 2.6 Km, the total mass of freight transported equal to 597 tonnes and the emission default value of 129 g CO2/t km for heavy vehicles, resulting in 0.2 tco2/year. For the calculation of PE y,power PP has applied the Tool to calculate project or leakage CO2 emissions from fossil fuel combustion /20/ PE y,power = PE FC,j,y PE FC,j,y = Σ i FC i,j,y * COEF i,y Where PE FC,j,y = Are the CO2 emissions from fossil fuel combustion in process j during the year y (tco2/yr); FC i,j,y = Is the quantity of fuel type i combusted in process j during the year y (mass or volume unit/yr); COEF i,y = Is the CO2 emission coefficient of fuel type i in year y (tco2/mass or volume unit) i= Are the fuel types combusted in process j during the year y The project uses the option B of the tool, the CO 2 emission coefficient COEF i,y is calculated based on net calorific value and CO 2 emission factor of the fuel type i, as follows: COEF i,y = NCV i,y * EF CO2,i,y Where: COEF i,y = Is the CO2 emission coefficient of fuel type i in year y (tco2/mass or volume unit) NCV i,y = Is the weighted average net calorific value of the fuel type i in year y (GJ/mass or volume unit) EF CO2,i,y = Is the weighted average CO2 emission factor of fuel type i in year y (tco2/gj) i= Are the fuel types combusted in process j during the year y Version 01.0 Page 16 of 39

17 RINA verified that for the ex-ante estimative, PP is considering the amount of fuel consumed in 2015 and data from IPCC /16/, resulting in 190 tco 2 /year Findings Emission reduction The summary of ex-ante estimative is presented below: Year Baseline emissions (t CO 2 e) Project emissions (t CO 2 e) Leakage (t CO 2 e) Emission reductions (t CO 2 e) Nov/2016-Oct/ , ,851 Nov/2017-Oct/ , ,635 Nov/2018-Oct/ , ,337 Nov/2019-Oct/ , ,822 Nov/2020-Oct/ , ,121 Nov/2021-Oct/ , ,533 Nov/2022-Oct/ , ,678 Total 320,311 1, ,976 Total number of crediting years 7 Annual average over the crediting period 45, ,568 CR 3: The description of Choice of data or Measurement methods and procedures presented for the parameter OX, in not in accordance with the updated version of the tool Emissions from solid waste disposal sites CR 4: The paragraph number described in the choice of data of the parameter EF COe,transp is not in accordance with the methodology AMS-III.E. Moreover, PP is requested to taken into account the options of the Project and leakage emissions from transportation of freight. CR 5: PP is requested to provide the analysis/ evidences to confirm that the leakage is not applicable to the project activity due to competing uses for the biomass CAR 1: In accordance with the methodology, Project emissions from trucks for incremental collection activities should be estimated following the methodological tool Project and leakage emissions from transportation of freight CAR 2: PDD does not describe the option chosen to calculate the parameter COEF i,y in accordance with the Tool to calculate project or leakage CO2 emissions from fossil fuel combustion Conclusion To close CR 3, CR 4 and CAR 1 PP has considered the tool Project and leakage emissions from transportation of freight. To close CR 5 PP has provided a letter from SEMMA /54/ and to close CAR 2 PP has considered the Tool to calculate project or leakage CO2 emissions from fossil fuel combustion It is RINA s opinion: (a) All assumptions and data used by the PP are listed in the PDD; (b) All documentation used by the PP as the basis for assumption and source of data is correctly quoted and interpreted in the PDD /06/ /07/ /08/ /10/ /16/ /17/ /19/ /20/ /21/ /22/ /27/ /35/ /36/ (c) All values used in the PDD and CERs spreadsheet. including GWPs are considered reasonable in the context of the proposed project activity /18/ (d) The baseline methodology and methodological tools have been applied correctly to calculate project emissions, baseline emissions, leakage and emission reductions; /06/ /07/ /08/ /10/ /16/ /17/ /19/ /20/ /21/ /22/ /27/ /35/ /36/ All estimates of the baseline and project emissions can be replicated using the data and parameters values provided in the PDD and CERs spreadsheet. Version 01.0 Page 17 of 39

18 D.8. Validity of monitoring plan Means of validation GS-RCP-FORM The approved baseline and monitoring AMS-I.D Grid connected renewable electricity generation version 18 of 28/11/2014 /06/ and AMS-III.E Avoidance of methane production from decay of biomass through controlled combustion, gasification or mechanical/thermal treatment version 17 of 28/11/2014 /07/ have been applied. Parameters monitored ex-post The assessment of the ex-post parameters are described in the table below: Parameter EG PJ,facility,y; Quantity of net electricity generation supplied by the project plant/unit to the grid in year y (MWh) Description/Assessment This parameter is calculated as difference between (a) the quantity of electricity supplied by the project plant/unit to the grid; and (b) the quantity of electricity the project plant/unit from the grid. In case it is calculated then the following parameters shall be measured: (a) The quantity of electricity supplied by the project plant/unit to the grid: EG Export y (b) The quantity of electricity delivered to the project plant/unit from the grid: EG Import, y RINA verified during the onsite visit that data will be cross checked with sales receipt. EG export,y : Quantity of electricity export to the grid in the year y (MWh/y) Data is continuously measure by electricity meters (bidirectional), aggregated at least monthly. Double checked by BK s internal control and sales receipt. Equipment will be calibrated at least once in 3 years. PDD describes that the procedures of CDM project standard version 9.0 will be followed: project participants shall ensure that the equipments are calibrated either in accordance with the local/national standards, or as per the manufacturer s specifications. If local/national standards or the manufacturer s specifications are not available, international standards may be used, The calibration of measuring equipments shall be carried out by an accredited person or institution. EG Import,y : Quantity of electricity import from the grid in the year y (MWH/y) Data is continuously measure by electricity meters (bidirectional), aggregated at least monthly. Double checked by BK s internal control and sales receipt. Equipment will be calibrated at least once in 3 years. PDD describes that the procedures of CDM project standard version 9.0 will be followed: project participants shall ensure that the equipments are calibrated either in accordance with the local/national standards, or as per the manufacturer s specifications. If local/national standards or the manufacturer s specifications are not available, international standards may be used, The calibration of measuring Version 01.0 Page 18 of 39