CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) Version 03 - in effect as of: 22 December 2006 CONTENTS

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1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) Version 03 - in effect as of: 22 December 2006 CONTENTS A. General description of the small scale 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 proposed small scale project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring Information 1

2 Revision history of this document Version Date Description and reason of revision Number January 2003 Initial adoption 02 8 July 2005 The Board agreed to revise the CDM SSC PDD to reflect guidance and clarifications provided by the Board since version 01 of this document. As a consequence, the guidelines for completing CDM SSC PDD have been revised accordingly to version 2. The latest version can be found at < December The Board agreed to revise the CDM project design 2006 document for small-scale activities (CDM-SSC-PDD), taking into account CDM-PDD and CDM-NM. 2

3 SECTION A. General description of small-scale project activity A.1 Title of the small-scale project activity: BKR Biomass 4 MWe Condensing Steam Turbine Project Version 1.3; 24 October 2008 A.2. Description of the small-scale project activity: The project activity consists in the installation of an on-site biomass-based power facilities at the PT. Bukit Kapur Reksa (BKR) palm oil refinery and processing plant on Sumatra (Riau region) in Indonesia for the generation of electricity and steam for internal use. The project will involve the installation of: 45 ton/hour, 30 bar steam boiler 1.2 MWe back pressure (3 bar) steam turbine 2.8 MWe full condensing steam turbine The project will be realized to meet the additional electricity demand of 3.2 MW. The current facilities for electricity generation include a recently installed steam boiler and condensing steam turbine with a capacity of 9.7 MWe which is situated on the neighboring site of PT Murini Samsam (MSS) also which is also part of the Wilmar group. The steam boiler of MSS is running on palm kernel shell (PK shell), a biomass by-product from the production of palm oil and palm kernel oil. Next to this, the MSS site has two boilers running of PK shell and fibre that produce steam for the production processes. The use of biomass is an innovative and environmentally enhanced alternative for the use of diesel generators for the production of steam and electricity for internal use in the palm oil refining sector on Sumatra. The proposed project at BKR is a debundled component of the larger small-scale CDM project which is called Small-scale CDM Project: MSS Biomass 9.7 MWe Condensing Turbine (registered on ). As the total electricity output of the two turbines (14.7 MWe) does not exceed the limit of 15 MW, the proposed activity is developed under the rules for small-scale CDM projects. In Pelintung, which is close to Dumai on Sumatra in Indonesia, the Wilmar Group started new operations. The BKR operations started in 2004, until the project is realized electricity will be provided by diesel generators. At the Pelintung industry complex Wilmar currently has the following operations: a palm oil mill (MSS), a palm kernel oil production unit (BKR), an edible oil fractionation and refinery (BKR), a tank farm (BKR), a bio-diesel plant (WIB) and a fertilizer plant (SADP). The main energy sources for the production of steam and electricity for the Pelintung industry complex are PK shell and fibre. For palm oil refining this is not common practice on Sumatra, besides the CDM project at the sister company MNA and one other CDM project of the competitor Musim Mas, none of the other palm oil refineries in the Riau region use biomass residues. The management of Wilmar wants to go one step further by using PK shell also for the production of electricity for internal use, which is a novelty in the palm oil sector on Sumatra. PT. Bukit Kapur Reksa is part of the Wilmar Group. Wilmar is a large palm oil and palm kernel oil producer in South-East Asia. Wilmar is a leading producer of edible oils, oil seeds and related products in Asia. Wilmar s head office is based in Singapore. The company and its affiliates own palm oil mills, palm kernel and copra crushing facilities as well as edible oil refineries in Malaysia and Indonesia. 3

4 It is Wilmar s policy to consciously protect the environment. The company is highly committed to fully comply with environmental regulations in every country of operation. The products of the company ultimately come from the nature, and the company stands ready to protect it. The company is processing agricultural products. Waste minimization and reducing emissions is an integral part of the company s environmental protection policies. The extension of the on-site electricity generation by installing a turbine running on biomass makes a significant contribution to the sustainable development of the company. This will avoid the use of diesel generators for the production of electricity and the use of electricity from a planned coal fired power plant in Pelintung, that will operate separate of form the East Sumatra electricity grid. The project will avoid CO 2 emissions and also reduce landfilling of organic waste from palm oil plantations. A.3. Project participants: Name of Party involved Indonesia (host Party) Private and/or public entity(ies) project participants (as applicable) PT. Bukit Kapur Reksa (BKR) (private entity) Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) No The DNA of Indonesia (National Committee on CDM) issued a letter of approval for the project on 25 September 2008 (ref: E.362/Dep.III/L/H/09/08). A.4. Technical description of the small-scale project activity: Fresh Fruit Bunches (FFB) of a palm tree consist of many palm fruits. Each palm fruit contains about 23% palm oil. In the palm fruit there is a palm kernel that contains 43% palm kernel oil. Both oils can be used for various food applications. The palm kernel is covered with fibre that is separated from the kernel. Fibre constitutes about 13% of the FFB. Before the palm kernel can be used for oil production, the shell needs to be removed in a cruncher. The shell, called palm kernel shell or PK shell, constitutes about 8% of the FFB. 4

5 The pictures below give an idea of the raw material. Fresh Fruit Bunch (FFB): the fresh palm fruit contains 23% Palm Oil (PO). Palm Kernels: the palm kernels after removal of the fibre and shell contain 43% oil. This oil is called Palm Kernel oil (PK). PK shell: 8% of the Fresh Fruit Bunch consists of the shells of the palm kernel. Fibre: 13% of the Fresh Fruit Bunch consists of the fibre of the palm kernel. The proposed project activity consists in installing a 1.2 MWe back pressure steam turbine and a condensing steam turbine with the capacity of 2.8 MWe. The turbines will be used to produce 3.2 MWe electricity to extend the current level of the on-site biomass-based power generation up to the required electricity demand. The turbine will run on steam that is produced by using PK shell and fibre. This will avoid the production of electricity by diesel generators. The site is not connected to the electricity grid of Sumatra. In order to meet the rapidly growing energy demand of the companies on the Pelintung industry complex, Wilmar had the following options: 5

6 Option Description 1 The proposed project: install: a 45 ton/hr steam boiler (30 bar) running on PK shell, a 1.2 MWe back pressure condensing steam turbine and a 2.8 MWe full condensing steam turbine. In addition for sufficient back-up capacity for electricity diesel generators with 3 MWe capacity. 2 Install 1 diesel generator with a total gross capacity of 4 MWe in order to use it continuously. Steam will be provided by a boiler using Medium Fuel Oil (MFO). 3 Use electricity from the Sumatra grid and install a diesel generator as backup for the grid. In order to operate reliably, diesel generators with a gross capacity of 4 MWe has to be installed. Although the first option requires a much higher investment, this option was selected to contribute to the sustainable development which is in line with the environmental policy of the company. However, without the revenues through the sales of CERs the project would not be economically feasible. The revenues from the sales of CERs turned the project into an economically feasible project (see chapter B3). The third option, using electricity from the grid, was abandoned because of the expected problems with the grid electricity. Moreover, the BKR site in Pelintung does not have a connection to the grid. PLN, the electricity company operating the grid on Sumatra, informed BKR that in case the company wants to get connected to the electricity grid, it has to invest in a 40 km long cable itself. This would require an investment of 4 million USD. With this investment the company would also have to invest in diesel generators to ensure back-up during power failures. The 2.8 MWe turbine will be used as second-hand equipment. The turbine was produced by Shinko in Japan in Previously it was used for only 4200 hours by Prospect One SDN BHD, a wood processing company in Sandakan, Sabah, Malaysia. The wood company stopped using the turbine as its concession for wood cutting was finished. The BKR site decided to use this second-hand turbine as it represents modern equipment that corresponds to current technological and environmental standards. The 1.2 MWe back pressure steam turbine is new equipment. Even with the use of second hand equipment the project is not a feasible option without CER s. After the implementation of the proposed project activity, the total PK shell demand of the MSS and BKR site will be 223,163 tonnes/year. As shown in Annex 3.1 this demand results from the following consumption volumes of the heat and power generation units: Unit PK Shell eqv. Demand tonnes per year MSS boiler #1 (production of process steam) 70,000 MSS boiler #2 (production of steam for 9.7 MWe steam turbine) 78,913 BKR boiler ((production of steam for 1.2 and 2.8 MWe steam turbines) 74,250 Total biomass demand of Pelintung industrial complex 223,163 The palm oil mill of the BKR site produces 65,357 PK shell eqv/year. This biomass is used to produce process steam in boilers #1. The PK shell for the production of electricity in the 9.7 MW turbine is mainly 6

7 purchased from palm oil mills in the region of Riau. The mills of this region will also serve as the source of PK shell for the 1.2 MWe and 2.8 MWe turbines. Annex 3.2 outlines the estimated biomass demand and supply in the Riau region. The total annual production of biomass in the Riau region by 118 palm oil mills (POM s) is approximately 5 mln tonnes PK shell equivalents (EFB, PK shell and fibre). The total annual demand of POM s, refineries, CDM projects and the proposed CDM project is estimated to be 2.9 mln tonnes PK shell equivalents (EFB, PK shell and fibre). This indicates a surplus of biomass supply of 83%. In case the PK shell and fibre supplies from the Riau region become insufficient, empty fruit bunches from the BKR palm oil mill can be used to ensure sufficient amount of biomass for both steam production for process heating and electricity generation. The risk of biomass shortage is further excluded due to the possibility to use empty fruit bunches from other palm oil mills in the region of Riau located near the BKR site. A.4.1. Location of the small-scale project activity: Jl. Belitung no. 1 Kawasan Industri Dumai Pelintung, Dumai A Host Party(ies): Indonesia A Region/State/Province etc.: Riau Region A City/Town/Community etc: Dumai 7

8 A Details of physical location, including information allowing the unique identification of this small-scale project activity : The BKR palm oil production plant is located in Pelintung, 40 kilometres from Dumai on Sumatra. The site is located outside the village in an area with other industries in a region with numerous oil plantations. Outside the BKR site, there is room for expansions. The coordinates of the BKR site are 1º 36 N; 101 º 24 E. Map with the project location A.4.2. Type and category(ies) and technology/measure of the small-scale project activity: Project type: Project category: (i) renewable energy projects D grid connected renewable electricity generation Conformity with the project type and category: please see the description under p. A.4. Technical description of the of the small-scale project activity. Eligibility as a small-scale CDM activity: The proposed project at BKR is a debundled component of the larger small-scale CDM project which is called Small-scale CDM Project: MSS Biomass 9.7 MWe Condensing Turbine (registered on ). The aggregate installed capacity of the previous (9.7 MW) and proposed (1.2 MWe and 2.8 MWe) CDM activities constitutes 14.7 MW which is lower than the limit of 15 MW. Therefore, the proposed CDM activity is developed under the rules for small-scale CDM projects. 8

9 Transfer of environmentally safe and sound technology and know-how to the Host Party: the proposed project activity will result in the installation and operation of a second-hand, yet modern Japanese steam turbine that corresponds to current Western technological and environmental standards. The turbine will be run on steam produced by using PK shell. This will result in reduced landfilling of organic waste and avoid CO 2 emissions from the production of electricity by diesel generators. A.4.3 Estimated amount of emission reductions over the chosen crediting period: The total expected emission reductions of the proposed project activity are equal to the baseline emissions tonnes CO 2 over the crediting period of 10 years. The table below shows the estimated amount of emission reductions over the chosen crediting period: Years Annual estimation of emission reductions in tonnes of CO 2 Year Year Year Year Year Year Year Year Year Year Total estimated reductions (tonnes of CO 2 ) Total number of crediting years 10 Annual average over the crediting period of estimated reductions (tonnes of CO 2 ) A.4.4. Public funding of the small-scale project activity: No funding or other form of financial support has been obtained from any official development assistance resource or other resource from international development funding agencies. Also, the project has not been directly or indirectly subsidised by the Indonesian Government. Possibilities for funding of this type of projects in the private sector through development programmes or national subsidies do not exist. 9

10 A.4.5. Confirmation that the small-scale project activity is not a debundled component of a large scale project activity: The proposed small-scale project activity is a debundled component of the larger small-scale CDM project which is called Small-scale CDM Project: MSS Biomass 9.7 MWe Condensing Turbine. This project was registered on It was developed by the same project participants and in the same project category/technology/measure; it was registered within two years prior to the proposed project activity; its boundary is within 1 km of the project boundary of the proposed activity at the closest point. As the aggregate installed capacity of the proposed project activity (1.2 MWe and 2.8 MWe) combined with the previous small-scale CDM project activity (9.7 MWe) does not exceed the limit of 15 MW, the proposed project activity qualifies to use simplified modalities and procedures for small-scale CDM project activities. 10

11 SECTION B. Application of a baseline and monitoring methodology B.1. Title and reference of the approved baseline and monitoring methodology applied to the small-scale project activity: AMS-I.D. Grid connected renewable electricity generation (version 13). B.2 Justification of the choice of the project category: Project type: Project category: (i) renewable energy projects D grid connected renewable electricity generation The Pelintung industry complex, on which the BKR palm oil production plant is situated, is not connected to the electricity grid of the Riau region. The current electricity supply system (9.7 MWe), which is located at the neighbouring MSS site (also part of the Wilmar group), does not have sufficient capacity to meet the power demand of the BKR operations. Until the proposed project is realised the electricity will be supplied by diesel generators. This project category is used since it meets the technology/measure conditions of methodology AMS-I.D version 13 (methodology text about technology/measure in Italic, project situation in normal): 1. This category comprises renewable energy generation units, such as photovoltaics, hydro, tidal/wave, wind, geothermal and renewable biomass, that supply electricity to and/or displace electricity from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired generating unit. The project is renewable biomass project that displaces electricity that would have been generated by diesel generators. 2. If the unit added has both renewable and non-renewable components (e.g.. a wind/diesel unit), the eligibility limit of 15MW for a small-scale CDM project activity applies only to the renewable component. If the unit added co-fires fossil fuel, the capacity of the entire unit shall not exceed the limit of 15MW. The project has a capacity of 4 MW renewable electricity and therefore it is a small scale CDM project. 3. Combined heat and power (co-generation) systems are not eligible under this category. The project installation includes steam turbines for the production of electricity and only the replaced electricity contributes to emission reductions. 4. In the case of project activities that involve the addition of renewable energy generation units at an existing renewable power generation facility, the added capacity of the units added by the project should be lower than 15 MW and should be physically distinct from the existing units. 11

12 The project is no addition to an existing renewable electricity system. 5. Project activities that seek to retrofit or modify an existing facility for renewable energy generation are included in this category. To qualify as a small-scale project, the total output of the modified or retrofitted unit shall not exceed the limit of 15 MW. The project is no retrofit or modification of an existing facility but a new activity at the BKR site. B.3. Description of the project boundary: In figure 1 the boundaries of the baseline delivery system have been presented. The boundaries of the baseline situation are limited to the generation of electric power in diesel generators at the BKR site. Although for steam production fuel will be switched from MFO to biomass, the emission reduction is not included in the boundaries as a conservative choice. Therefore the project is limited to the electricity generation, apart from the electricity generation the processes do not change. The electricity supply to BKR form the MSS site is excluded form the boundary because it is registered as a CDM project and covers the monitoring of the use of the back-up diesel generators at MSS. For reasons of being conservative, the transport of diesel fuel has been kept outside the baseline boundaries because actual data is not available. The emission factor for electricity generation replacing diesel generators from the small-scale methodology AMS-I.D. (version 13) has been used for calculating the baseline emissions. This factor is 0.8 tonne CO 2 / MWh. Boundry Baseline Delivery System MSS (POM) BKR (PK plant, PO refinery and fractionation) Back-up diesel generators Diesel Diesel generators Production Process Boiler #1 Boiler #2 MFO PK shell & Fibre Boiler Production Process 9,7 MWe Turbine WIB (Biodiesel plant) SADP (fertilizer plant) Electricity Steam Fuel Boundry Figure 1: Boundaries Baseline Delivery System Figure 2 shows the boundaries of the project delivery system. The project boundaries contain the back-up diesel generators, the biomass boiler and the two steam turbines. The transport of PK shell and fibre has been kept outside the project boundaries to be consistent with the baseline scenario in which the transport of diesel has been kept out of the scope. PK shell and fibre are produced in the region of Riau, and transport distances will be smaller than those for the transport of diesel fuel. The diesel generators as back up of the electricity production have been included in the boundaries although there will be no difference 12

13 between producing power with the diesel generators in the project scenario and the normal power generation in the baseline scenario. Boundry Project Delivery System MSS (POM) BKR (PK plant, PO refinery and fractionation) Back-up diesel generators Back-up diesel generators Diesel Production Process Boiler #1 Boiler #2 9,7 MWe Turbine PK shell & Fibre Boiler 1,2 MWe Turbine 2,8 MWe Turbine Production Process WIB (Biodiesel plant) SADP (fertilizer plant) Electricity Steam Fuel Boundry Figure 2: Boundaries Project Delivery System B.4. Description of baseline and its development: Baseline emissions The most likely baseline scenario would be to install a new 4 MW diesel generator and run it in a continuous mode (load factor of 80%) to meet the electricity demand of the BKR palm oil refinery. This would require a much lower investment compared to the project, and the investment for 1 new diesel generator has a much lower risk. Using grid electricity is not a realistic option because there is no grid connection at the BKR site. The baseline and emission reduction calculation is based on a net electricity output of the renewable unit (turbine) and an emission coefficient for a modern diesel generator of the relevant capacity and workload. The net electricity output of the turbine is based on the electricity demand of the installed equipment on the BKR site (3.2 MW). Small-scale CDM methodology AMS-I.D. (version 13) suggests using an emission factor of 0.8 kg CO 2 /kwh for diesel generator systems larger than 200 kw and a load factor of 50%-100% in case the project replaces power generation by diesel generators. Experience with diesel generators in the operations of Wilmar on Sumatra demonstrates that the diesel fuel consumption of a modern generator is 0.29 liter per kwh, while the density of the diesel fuel used on Sumatra is kg/liter. Applying the IPCC net calorific value (43.33 GJ/tonne) and carbon content (74.04 kg CO 2 /GJ) of diesel fuel leads to an emission factor kg CO 2 /kwh. 13

14 CDM Executive Board Parameter Source Value Unit Diesel consumption of a modern generator Density of the diesel fuel used on Sumatra Net calorific value of the diesel fuel Carbon content of the diesel fuel Wilmar 0.29 liter/kwh Wilmar kg/liter IPCC GJ/tonne IPCC kg CO 2 /GJ Calculation: 0.29 * * * / 1000 = kg CO 2 /kwh The expected net quantity of electricity that will be produced by the turbines in one year is 21,120 MWh, based on the electricity demand of 3.2 MW and the expectation that the turbines will operate around 6,600 hours a year (330 days/ year, 20 hours/day). The net electricity production has been calculated by deducting the expected electricity consumption of the steam boilers and the turbine from the gross expected production of the turbine. The electricity use for EFB processing will be separately monitored and deducted from the gross electricity generation. For the calculation of the baseline emissions the following formulae has been used: ER y = ER electricity, y PE y L y = (EF electricity, y * EG y ) PE y (EF electricity, y * EU EFBprocessing,, y ) ER y = emission reduction of the project during the year y (tco 2 /y) ER electricity, y = emission reduction due to the displacement of electricity during the year y (tco 2 /y) PE y = Project emissions during the year (tco 2 /y) L y = Leakage emissions during the year (tco 2 /y) EF electricity, y = CO 2 emission factor for the electricity displaced due to the project activity during the year ((tco 2 /MWh) EG y = Net quantity of electricity generation generated with biomass residues as a result of the project activity (MWh) EU EFBprocessing,, y = Quantity of electricity used for EFB processing (MWh) ER y = ER electricity, y PE y L y = 0.8 tonne CO 2 /MWh * 21,120 MWh/year 0 0 = 16,896 tonnes CO 2 /year. 14

15 Leakage The installation and operation of a 1.2MW and 2.8 MW turbine will not lead to a decrease in electricity production from the 9.7 MW turbine on the MSS site. The 9.7 MW turbine will be supplied with steam from steam boiler #2 on the MSS site. The new turbines will be supplied with steam from a separate boiler which has sufficient capacity for both turbines (also see figure 2). The electricity demand of the Wilmar plants on the Pelintung industry complex is sufficient for both turbines and still increasing. Equally, as shown described in section A.4 and in Annex 3.2 a sufficient amount of biomass residue (PK shell, fibre, EFB) is available in the region of Riau that can be purchased for the production of electricity at the BKR site. An analysis of the supply and demand of biomass residue in the Riau region indicated a 40% surplus of biomass residue. In case the PK shell and fibre supply is insufficient Wilmar can use EFB as alternative biomass fuel in boilers. However this would require for the EFB to be processed. This processing step requires additional electricity. The Wilmar group owns one EFB processing unit which is situated at the MSS site. Although the electricity will most likely be generated by a biomass unit the electricity use of EFB processing will be monitored and deducted from the gross electricity generation of the turbines to calculate net electricity generation which is used for the emission reduction calculation. Finally, with the current oil prices, it is very unlikely that sites (POM s) in the Riau region that currently use biomass will switch to fossil fuels as a result of price increases for biomass resulting from increased demand by the CDM project. The current price level of biomass is 32 $/tonne PK Shell whereas the price level for medium fuel oil is 360 $/tonne MFO. 15

16 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 small-scale CDM project activity: Additionality The possibility to develop the project as a CDM activity has been taking into consideration from the very beginning of the project. After the development of the CDM projects of Wilmar at MNA and MSS the management has been in close contact with the climate change advisors of KPMG Business Advisory to discuss other CDM projects including this project. The management of Wilmar would not have decided to invest in the project if the project could not be developed as a CDM activity and the CERs could not be sold, because there were significant barriers for the implementation of the project. These barriers include: Investment barriers The project requires an investment that is considerably higher compared to the investment in the baseline scenario, in which Wilmar would purchase a diesel generator in order to meet the increasing electricity demand of the BKR location at Pelintung. Without CDM, the project would have a negative Net Present Value and no IRR. For investments in noncore utilities-related projects Wilmar normally applies a minimum IRR of 15%. As a CDM activity, the project has a positive NPV, and an IRR of 28.3%, based on a CERs price estimate of EUR 12 per tonne. Wilmar management decided to accept this investment assuming it could be developed as a CDM project. Biomass is abundantly available in the Riau Province and the biomass is relatively cheap. There is no long-term history of price developments in the market place in the current CDM environment in combination with higher fuel prices. A risk for the project is that the price of biomass will increase if the demand for biomass grows. Technological barriers Wilmar has longstanding experience with the use of diesel generators for the supply of electricity. Technologically this practice is certainly much less advanced than the installation of a biomass electricity project. The technology of the proposed project is new for Wilmar. Wilmar has limited experience with operating high pressure superheated steam turbines, and foreign experts from the turbine supplier will be needed to train BKR staff in handling the new installation. Moreover, the project requires a significant logistical effort to source and transport PK Shell from the region to the project site. Significant effort will be required of BKR s management and staff to overcome this barrier. The risks posed by the technological barriers of the biomass project are higher than those for continuing to use diesel generators for power supply. 16

17 Barriers due to prevailing practice The prevailing practice in palm oil refining and processing industry in Sumatra has been to use electricity from the electricity grid or to use diesel generators. Only recently companies active in this industry have started implementing biomass electricity projects, because these projects have become economically feasible if developed as CDM projects. There are no examples of similar projects in the palm oil sector in Sumatra that were not developed as a CDM project. Other barriers The experience with the technology of large scale biomass projects and large steam turbines is limited in Wilmar. The suppliers of this technology are not based in Sumatra and in case of problems with the new installation foreign experts will have to be consulted, especially at the beginning. At the same time, the current practice in Sumatra is using electricity from the grid or diesel generators. This way of sourcing electricity has been a proven reliable scheme of operation. As a result, BKR s personnel have a certain level of skepticism about the performance and the reliability of the new electricity plant which is a barrier to the project development. B.6. Emission reductions: The expected project emissions will be zero. The emissions of the combustion of PK shell and EFB do not have to be taken into account because they can be considered short-cycle CO 2 emissions. B.6.1. Explanation of methodological choices: The BKR site is not connected to the electricity grid. The project will result in CO 2 emission reductions as it will avoid using a diesel generator for the production of electricity. Electricity will be generated by a condensing steam turbine running on steam produced by using biomass fuel (PK shell and fibre). A diesel generator that will be installed together with the turbine, will only be used in a back-up mode during failures and maintenance of the 1.2 and 2.8 MWe turbines. The emission reductions (ER y ) will be emissions in the most likely baseline scenario (ER electricity, y ) minus project emissions (PE y ) minus the leakage emissions (L y ). ER y = ER electricity, y PE y L y The expected baseline emissions are: ER electricity, y = 0.8 tonne CO 2 /MWh * 21,120 MWh/year = 16,896 tonnes CO 2 /year. The expected project emissions (PE y ) will be zero. The emissions of the combustion of PK shell and fibre do not have to be taken into account because they can be considered short-cycle CO 2 emissions. The potential leakage emissions (L y ) resulting form the processing of EFB is expected to be zero. 17

18 B.6.2. Data and parameters that are available at validation: EF electricity, y Data / Parameter: Data unit: kg CO 2 /kwh Description: CO 2 emission factor for the electricity displaced due to the project activity during the year ((tco 2 /MWh) Emission factor of diesel generators Source of data used: AMS-I.D. (version 13) Value applied: 0.8 Justification of the Factor is applied in line with AMS-I.D. (version 13) choice of data or Experience with diesel generators in the operations of Wilmar on Sumatra description of demonstrates that the diesel fuel consumption of a modern generator is 0.29 liter measurement methods per kwh, while the density of the diesel fuel used on Sumatra is kg/liter. and procedures actually Applying the IPCC net calorific value (43.33 GJ/tonne) and carbon content applied : (74.04 kg CO 2 /GJ) of diesel fuel leads to an emission factor of 0.29 * * * / 1000 = kg CO 2 /kwh. Any comment: B.6.3 Ex-ante calculation of emission reductions: The emission reductions (ER y ) will be emissions in the most likely baseline scenario (ER electricity, y ) minus project emissions (PE y ) minus the leakage emissions (L y ). ER y = ER electricity, y PE y L y The expected baseline emissions are: ER electricity, y = 0.8 tonne CO 2 /MWh * MWh/year = tonnes CO 2 /year. The expected project emissions (PE y ) will be zero. The emissions of the combustion of PK shell and EFB do not have to be taken into account because they can be considered short-cycle CO 2 emissions. 18

19 B.6.4 Summary of the ex-ante estimation of emission reductions: The expected emission reductions will be 16,896 tonnes CO 2 per year. The table below shows the estimated amount of emission reductions over the chosen crediting period. Year Estimation of project activity emissions (tonnes of CO 2 e) Estimation of baseline emissions (tonnes of CO 2 e) Estimation of leakage (tonnes of CO 2 e) Estimation of overall emission reductions (tonnes of CO 2 e) Year Year Year Year Year Year Year Year Year Year Total (tonnes of CO 2 e) B.7 Application of a monitoring methodology and description of the monitoring plan: B.7.1 Data and parameters monitored: Data / Parameter: Data unit: Description: Source of data to be used: Value of data Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: EG y MWh Net quantity of electricity generation generated with biomass residues as a result of the project activity On-site measurement at BKR site 21,120 MWh per year expected Continuous metering of the (combined) electricity production of 1.2 MWe turbine and 2.8 MWe turbine. Commercial electricity meters (according to international standards) will be installed and calibrated annually. Expected electricity production is based on 6,600 running hours per year and electricity demand of 3.2 MWe. 19

20 Data / Parameter: Data unit: Description: Source of data to be used: Value of data Description of measurement methods and procedures to be applied: QA/QC procedures to be applied: Any comment: EU EFBprocessing,, y MWh Quantity of electricity used for EFB processing On-site measurement at MSS site To be determined during the year Continuous metering of the electricity use of the EFB processor. Commercial electricity meters (according to international standards) will be installed and calibrated annually B.7.2 Description of the monitoring plan: Commercial electricity meters (according to international standards) will be installed and calibrated annually according to Indonesian standards to assure high accuracy of the measurements. The electricity delivered by the biomass electricity unit to the processes of BKR will be documented in monthly reports. In addition the electricity demand of the EFB processing unit at the MSS site will be monitored in order to quantify the actual leakage (monthly basis). Once a year an annual report will be made in which the net emission reductions of the proposed project are aggregated. Monitoring data will be registered and filed over the full crediting period and two years after the end of the crediting period or the last issuance of CERs for this project activity, whichever occurs later. B.8 Date of completion of the application of the baseline and monitoring methodology and the name of the responsible person(s)/entity(ies) Date of completion of the final draft of the baseline: 24 October 2008 Name of the person/entity determining the baseline: Mr. Erik Tjia (Wilmar) 20

21 SECTION C. Duration of the project activity / crediting period C.1 Duration of the project activity: C.1.1. Starting date of the project activity: 1 January 2007 C.1.2. Expected operational lifetime of the project activity: 20 years C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period C Starting date of the first crediting period: Not applicable C Length of the first crediting period: Not applicable C.2.2. Fixed crediting period: C Starting date: 1 March 2009 or the date of registration, whichever occurs later. C Length: 10 years 21

22 SECTION D. Environmental impacts The project requires no Environmental Impact Assessment. According to the Indonesian regulation for Environmental Impact Assessments (Analysis Mengenai Dampak Lingkungan, or AMDAL) electricity generation units having a larger capacity than 10 MW should prepare an Environmental Impact Assessment (EIA). The proposed project at BKR has a lower capacity than 10 MW. Therefore no EIA will be required for this project. Brief description of the expected environmental impact of the project The project will result in a reduction of waste of the new palm oil mill at Pelintung. Empty fruit bunches of palm oil mills are usually dumped on the plantation or burned. Palm kernel shell was often dumped near the palm oil mills because there was a lack useful applications for this material. The new biomass power unit will solve this problem for many palm oil mills in the region. The transport of palm kernel shell in the region will increase. The new biomass power unit can process 220 tonnes of palm kernel shell per day. This will lead to additional transport from the palm oil mills in the region. Additional transport will lead to more traffic and consequently to more air emissions and noise from trucks in the region. The additional transport is partly compensated by the reduction of emissions and noise of the production and transport of diesel fuel for the diesel generators. Compared to the baseline scenario, the project will reduce the use of diesel fuel at the location in Pelintung. Consequently this will lead to a reduction of diesel transport and storage. The air emissions of the diesel generators at the location in Pelintung will be reduced while the project will generate its own air emissions. The combustion of palm kernel shell, and empty fruit bunches in the new installation is relatively clean, because the organic material does not contain sulphur. The air emissions of the new power plant will meet the Indonesian requirements regulated by the environmental permit for the new operations. The noise of the new turbine may increase the noise levels in the surrounding area which will be partly compensated by the fact the diesel generators will no longer produce noise. The production facilities at Pelintung are located in an industrial area far away from houses. Therefore no increase of noise levels is expected in the village. D.1. If required by the host Party, documentation on the analysis of the environmental impacts of the project activity: According to the Indonesian regulation for Environmental Impact Assessments (Analysis Mengenai Dampak Lingkungan, or AMDAL) for the proposed project at BKR an Environmental Impact Assessment is not required. 22

23 D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: Not applicable. 23

24 SECTION E. Stakeholders comments E.1. Brief description how comments by local stakeholders have been invited and compiled: On 19 July 2007 BKR organised a stakeholder consultation at Medang Kampai. The local authority of Medang Kampai, staff of the regional Environmental authority and representatives of the local community were invited for the meeting. The meeting was attended by 23 participants. The meeting was opened by Mr. Ahmad Ramadahan the head of the Authority Medang Kampai. Mr. Pranoto of Wilmar provided the participants with information about Wilmar and BKR. Mr. Ishak Efendi the head of the regional environmental authority gave an introduction about the environmental aspects of the BKR plant. Mr. Arief Zulkarnain presented the CDM project. After this presentation there was room for discussion. E.2. Summary of the comments received: Stakeholders were invited to ask questions, make comments or express concerns in relation to the project activity. No objections or concerns were raised in relation to the planned CDM project. The discussion following the presentation was about the general environmental and social aspects of the company. Representatives of the local community requested the company to contribute to community development and educational programmes. E.3. Report on how due account was taken of any comments received: BKR will undertake the following actions in order to meet the stakeholder demands: Monitoring and measurement of the key environmental parameters; Making report to the authorities concerning the environment management implementation; Continue with the development of the Wilmar Education Partnership Program (WEPP). This program helps to improve the quality of education in the local communities where the company operates. 24

25 Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: PT BUKIT KAPUR REKSA (BKR) Street/P.O.Box: Jl. Belitung no. 1 Kawasan Industri Dumai (KID) Building: City: Pelintung State/Region: Dumai Postfix/ZIP: Country: Indonesia Telephone: FAX: etjia@wilmar.co.id URL: Represented by: Mr. Erik Tjia Title: Director Salutation: Last Name: Tjia Middle Name: First Name: Erik Department: PT. Murini Samsam Mobile: Direct FAX: Direct tel: Extn Personal etjia@wilmar.co.id 25

26 Annex 2 INFORMATION REGARDING PUBLIC FUNDING The project does not obtain public funding from any Official Development Assistance source. BKR is a private company and there are no possibilities to obtain such funding from international funding sources or from the Indonesian Government. 26

27 Annex 3 BASELINE INFORMATION Annex 3.1: Production and consumption of the MSS and BKR site Steam consumption Electricity output, kwh/year Steam consumption Relative steam demand, kg/kwh Total steam demand, tonnes PK Shell eqv. demand per 1 tonne of steam, tonnes Total PK Shell eqv. demand, tonnes/year MSS boiler #1 (production of process steam for palm oil mill) , MSS boiler #2 (production of steam for 9,7 MWe steam turbine) BKR boiler (production of steam for 1,2 MWe steam turbine and 2,8 Mwe steam turbine) , , , Total Own PK Shell eqv. production at the MSS site (POM) Production capacity of the MSS site (POM), tonnes tonnes FFB per hour, 20 hours a day, 330 days a year (6600 hours a year) PK Shell production, tonnes % of the FFB Fibre production, tonnes % of the FFB Fibre production, tonnes of PK Shell eqv Fibre production tonnes * NCV fibre (11,35 GJ/tonne) / NCV PK Shell (17,35 GJ/tonne) Total own PK Shell eqv. production, tonnes PK Shell deficit, tonnes

28 Annex 3.2: Biomass supply and demand in the Riau region Biomass supply and demand in the Riau region Biomass supply Amount (Unit) Assumptions Capacity of 118 palm oil mills ton FFB / hr CPO report 2007 of statistical department (POM's ) in Riau Empty Fruit bunch (EFB) production PK shell production Fibre production Total supply of biomass ton EFB / yr EFB in ton PK shell eq. /yr ton PK shell / yr ton fibre / yr fibre in ton PK shell eq./ yr ton PK shell eq. / yr EFB is 23% utilisation of capacity is 55% NCV EFB is 46% of PK shell (EFB = 8,07 GJ/ton, PK shell = 17,35 GJ/ton) PK shell is 8% of FFB, utilisation of capacity is 55%, 20 operating hours per day, 330 operating days per year Fibre is 13% of FFB, utilisation of capacity is 55%, 20 operating hours per day, 330 operating days per year NCV fibre is 65% of PK shell (fibre = 11,35 GJ/ton, PK shell = 17,35 GJ/ton) Biomass demand Amount (Unit) Assumptions Demand of biomass for production of ton PK shell eq. / yr all fibre and 60% of PK shell steam for palm oil mills Demand of biomass for production of steam for refinery ton PK shell eq. / yr Biomass demand of boiler #1 at MSS site Biomass demand for MSS CDM project Biomass demand for PTIP CDM project Biomass demand for the proposed CDM project Total demand of biomass ton PK shell eq. / yr ton PK shell eq. / yr ton PK shell eq. / yr ton PK shell eq. / yr PDD MSS (9.7 MWe) PDD PTIP (7 MWe) PDD BKR (4MWe) See chapter B7 Annex 4 MONITORING INFORMATION 28