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 2006 The Board agreed to revise the CDM project design 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: Mosa POME methane capture project Version: Version 08 Date: 29 August 2011 A.2. Description of the small-scale project activity: Palm Oil is produced at the New Britain Palm Oil limited (NBPOL) Mosa Mill from fresh oil palm fruit bunches. Processing of the fresh fruit bunches produces large amounts of organic rich wastewater which is discharged to a series of 8 open anaerobic ponds before discharge to open waterways. This current baseline system and the final discharge meets the legal requirements in PNG. The open anaerobic ponds releases large amounts of methane which is freely released to the atmosphere. The Mosa mill is currently not connected to the local PNG electricity grid in Kimbe, instead power is provided by onsite biomass turbine and diesel gensets. The primary technology employed by the Project Activity is an in-ground anaerobic digester equipped with a system for the capture, collection and utilization of biogas. This technology is new to Papua New Guinea and the NBPOL projects are amongst the first of their kind. The biogas will be used as fuel to generate electricity in three biogas engines. Two 953kW biogas engines will be installed in phase I and a third 953kW biogas engine will be installed in phase II, most likely in 2012 and operational in 2013 but it is dependent on success of system and volume of gas available. A flare will be installed to combust any excess biogas that cannot be utilised in the biogas engine. Papua New Guinea is a classified as a Small Island Developing State (SIDS) 1 and therefore faces sustainable development challenges including limited resources, remoteness, susceptibility to natural disasters, vulnerability to external shocks, and excessive dependence on international trade. Located in West New Britain province, the project is situated on an island east of mainland New Guinea. The project will help to achieve the sustainable use of energy resources in Papua New Guinea because the project makes use of a previously unutilized waste product. Through the installation of dedicated engines to utilize biogas for electricity production, the project will add an additional renewable generation source to the PNG Power Kimbe grid. In doing so, the project helps to increase the amount of environmentally safe renewable electricity which is generated in Papua New Guinea. The project will also help promote the Clean Development Mechanism (CDM) in Papua New Guinea where only one CDM project has been submitted 2 for registration. The projects contributions to sustainable development are transparently reported in accordance with the Gold Standard best practice guidelines

4 A.3. Project participants: Name of Party involved Papua New Guinea (Host) Private and/or public entity(ies) project participants New Britain Palm Oil Limited (NBPOL) Carbon Bridge Pte Ltd Kindly indicate if the Party involved wishes to be considered as project participant No A.4. Technical description of the small-scale project activity: A.4.1. Location of the small-scale project activity: A Host Party(ies): Papua New Guinea A Region/State/Province etc.: West New Britain Province A City/Town/Community etc: Bebere Plantation A Details of physical location, including information allowing the unique identification of this small-scale project activity : The project is located at the site of the Mosa Palm Oil Mill which is located within NBPOLs Bebere Plantation. Bebere Plantation is located within West New Britain Province, Papua New Guinea. The precise co-ordinates of the Mosa Mill are: o S, o E. E. NBPOL are also developing four other CDM projects at physically distinct Palm Oil Mills in West New Britain province. The location and co-ordinates of these projects are described further in section A

5 Figure A a: Location of the Project Activity, West New Britain Province Figure A b: Location of the Project Activity, West New Britain Province Mosa Mill 5

6 A.4.2. Type and category(ies) and technology/measure of the small-scale project activity: The primary goal of the project is to capture methane produced during the treatment of wastewater produced by the Palm Oil Mill. Therefore, the relevant type and category for methane recovery is: Type III: Other Project Activities Category H: Methane Recovery in Wastewater Treatment Sectoral Scope 13: Waste handling and disposal The project will also generate renewable electricity from biogas. This electricity will be used as a substitute for electricity previously generated from fossil fuels. The relevant type and category for renewable electricity projects connected to a grid is: Type I: Renewable Energy Projects Category D: Grid Connected Renewable Electricity Generation Sectoral Scope 01: Energy industries (renewable - / non-renewable sources) Description of Technology Used in the Project The primary technology employed by the project activity is an in-ground anaerobic digester equipped with a system for the capture, collection and utilization of biogas. This in-ground anaerobic digester is designed to treat wastewater prior to discharge into the existing anaerobic pond system. Construction of the new digester involves the excavation of a large in-ground pit and the installation of a network of pipes on the digester floor. When completed, untreated effluent from the mill will be pumped into the digester through this network of pipes. The digester is designed to optimize contact between the effluent and naturally occurring anaerobic bacteria which convert the organic material to biogas. The treated effluent from the digester will be discharged to the existing series of open ponds which will remain in place Any sludge removed from the system will be applied to land within the plantation. The digester is covered with an anchored flexible HDPE sheet to capture the biogas produced from the wastewater. This gas which accumulates beneath the flexible cover is transported from the digester through pipes to a scrubber which strips the biogas of hydrogen sulphide. The gas is further treated in a dehumidifier where moisture is removed. Following cleaning, biogas is piped to three engines where it is used as a fuel to generate electricity. Two engines are planned to be installed in phase I (2011). A third engine may be installed at the end of 2012 if the COD removal efficiency of the biogas plant is higher than what is guaranteed by the technology designer (85%) and therefore producing more biogas than predicted on a design basis (phase II). A flare will be installed to combust any excess biogas that cannot be utilised in the biogas engines. The flare will remain online when the additional gensets are installed for safety. Specifications for the gas engines are shown in table A.4.2.a below. Gas Engine Specifications Manufacturer Guascor S.A. Model Number SFGLD 560 Electrical Power 953 kwe Speed 1500 rpm Frequency 50 Hz Total capacity installed (Phase I and Phase II) (2+1) x 953kWe = 2,859kWe Table A.4.2.a: Engine Specifications The electricity generated by the project will be used to meet NBPOL s own energy demand at the facilities associated with and adjacent to the Mosa oil mill and will also be sold to the grid. Electricity generated by the project activity will be supplied to the Mosa mill compounds and the loads associated 6

7 with the Project Activity. The renewable electricity will also be utilised as an auxiliary supply for the Mosa palm oil mill when the existing biomass turbines do not function due to mill shutdown. Electricity will also be supplied to the local power authority to be distributed through the PNG Kimbe Power Grid. Prior to implementation of the project activity, the mill and all associated facilities were not connected to the Kimbe PNG power grid. The existing baseline open ponds will remain in place and receive the wastewater after it is treated from the new digester. This baseline open pond system is the common practice in PNG and there is no legal requirement to install a biogas system in PNG. The existing baseline open pond system at Mosa mill met the legal requirements for wastewater treatment and discharge and will continue to do so in the project scenario. The existing onsite biomass boiler and steam turbine will continue to operate the same as in the baseline case because the fibre biomass fuel is a waste by product of the milling operation and effectively operating to provide power and steam to the mill. The new biogas renewable energy will completely displace the existing diesel fired electricity (two 900 kw diesel gensets and one 700 kw genset) and supply electricity to the grid. The diesel gensets will remain onsite as backup in the event of problems with the new biogas system. Technology Transfer and the Application of Environmentally Safe and Sound Technology Through technology transfer, the project will employ an improved wastewater treatment system and result in the installation of power generation equipment fuelled with biogas. The wastewater treatment system is designed by an international consultant from New Zealand. At the time of the decision to proceed with the project, there were no examples of this technology being employed at palm oil mills in Papua New Guinea. In order to generate electricity, the project will import biogas gensets from Spain. The genset is designed specifically for biogas to ensure high efficiency of generation and to minimize the risk of equipment failure from volatile gases contained in the biogas. In addition, the project will import an enclosed flare which is designed to control the combustion air mixture and thereby maximise combustion efficiency. Prior to the implementation of the project, the wastewater treatment plant released methane and H 2 S directly to the atmosphere producing an odour around the ponds. The project will reduce odour from the ponds by installing biogas capture equipment and removing H 2 S from the gas stream using a biogas scrubber. The project will help to achieve the sustainable use of energy resources in Papua New Guinea because the project makes use of a previously unutilized waste product. Through the installation of dedicated engines to utilize biogas for electricity production, the project will add an additional renewable generation source to the PNG Power Kimbe grid. In doing so, the project helps to increase the amount of environmentally safe renewable electricity which is generated in Papua New Guinea. 7

8 A.4.3 Estimated amount of emission reductions over the chosen crediting period: Annual estimation of emission Years reductions in tonnes of CO 2 e , , , , , , ,502 Total estimated reductions (tonnes of CO2 e) 441,032 Total number of crediting years 7 Annual average over the crediting period of estimated reductions (tonnes of CO2 e) 63,005 A.4.4. Public funding of the small-scale project activity: No public funding will be used for the project activity. 8

9 A.4.5. Confirmation that the small-scale project activity is not a debundled component of a large scale project activity: NBPOL is developing five methane capture projects in West New Britain province at each of the physically distinct mills shown in figure A.4.5.b below. The Kumbango Mill CDM project is the closest to the Mosa Mill CDM project and it is more than four kilometres away. This can be checked from the project co-ordinates shown in table A.4.5.a. Therefore, the project activity is not a debundled component of a large scale project activity because there are no projects within 1km of the Mosa POME methane capture project. CDM Project Mill WGS84 Zone56 Latitude & Longitude NBPOL Mosa POME methane capture project Mosa E N o S, o E. NBPOL Kapiura POME methane capture project Kapiura E N o S, o E. NBPOL Numundo POME methane capture project Numundo E N o S, o E. NBPOL Kumbango POME methane capture project Kumbango E N o S, o E. NBPOL Warastone POME methane capture project Warastone E N o S, o E. Table A.4.5.a: Co-ordinates of NBPOL s CDM Projects, West New Britain Province Warastone Mill Numundo Mill Figure A.4.5.a: Location of NBPOL s CDM Projects, West New Britain Province Kapiura Mill Kumbango Mill Figure A.4.5.b: Location of NBPOL s CDM Projects, West New Britain Province Mosa Mill 9

10 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: The Approved baseline and monitoring methodology applied to the project is: AMSIII.H: Methane Recovery in Wastewater Treatment (Version 16, EB58) Section 27 specifies that project emissions from flaring will be estimated ex-ante using the Tool to determine project emissions from flaring gases containing methane (EB28, Annex 13) Section 4 specifies that projects which use biogas for electrical energy generation can apply the corresponding methodology under Type I for that component of the project. Therefore, baseline emissions for the electricity generated in the project are calculated using the following methodology: AMSI.D: Grid Connected renewable electricity generation (Version 16, EB54) As per the guidance of AMSI.D, the baseline emissions are calculated using the Tool to calculate the emission factor for an electricity system (version 02, EB50) and Tool to calculate project or leakage CO2 emissions from fossil fuel combustion (Version 02 EB41) Further details of these approved small-scale baseline and monitoring methodologies can be found at the UNFCCC CDM website at B.2 Justification of the choice of the project category: The project is eligible to use small-scale methodology AMSIII.H because it meets all the applicability conditions. Table B.2.a demonstrates how the project complies with the applicability conditions described in AMSIII.H. Applicability Condition 1 This methodology comprises measures that recover biogas from biogenic organic matter in wastewaters by means of one, or a combination, of the following options: (a) Substitution of aerobic wastewater or sludge treatment systems with anaerobic systems with biogas recovery and combustion; (b) Introduction of anaerobic sludge treatment system with biogas recovery and combustion to a wastewater treatment plant without sludge treatment; (c) Introduction of biogas recovery and combustion to a sludge treatment system; Project Scenario The project activity involves the introduction of a sequential stage of wastewater treatment in the form of an anaerobic reactor with biogas recovery. This will be installed prior to the existing anaerobic lagoons which do not have methane recovery. Therefore, the project activity is in compliance with option (f). 10

11 (d) Introduction of biogas recovery and combustion to an anaerobic wastewater treatment system such as anaerobic reactor, lagoon, septic tank or an on-site industrial plant; (e) Introduction of anaerobic wastewater treatment with biogas recovery and combustion, with or without anaerobic sludge treatment, to an untreated wastewater stream; (f) Introduction of a sequential stage of wastewater treatment with biogas recovery and combustion, with or without sludge treatment, to an anaerobic wastewater treatment system without biogas recovery (e.g. introduction of treatment in an anaerobic reactor with biogas recovery as a sequential treatment step for the wastewater that is presently being treated in an anaerobic lagoon without methane recovery). 2 In cases where baseline system is anaerobic lagoon the methodology is applicable if: (a) The lagoons are ponds with a depth greater than two meters, without aeration. The value for depth is obtained from engineering design documents, or through direct measurement, or by dividing the surface area by the total volume. If the lagoon filling level varies seasonally, the average of the highest and lowest levels may be taken; (b) Ambient temperature above 15 C, at least during part of the year, on a monthly average basis; (c) The minimum interval between two consecutive sludge removal events shall be 30 days. 3 The recovered biogas from the above measures may also be utilised for the following applications instead of combustion/flaring: (a) Thermal or electrical energy generation directly; or (b) Thermal or electrical energy generation after bottling of upgraded biogas, in this case additional guidance provided in Annex 1 shall be followed; or (c) Thermal or electrical energy generation after upgrading and distribution in this case additional guidance provided in Annex 1 shall be followed: (i) Upgrading and injection of biogas into a natural gas distribution grid with no significant transmission constraints; or As described in section B.4, the ponds are greater than 2 meters in depth and do not have aeration. Temperatures in New Britain are consistently above 15 C as shown by data available from the World Meteorological Organization 3. Sludge removal events are periodic as required and usually more than 12 months between events. The project activity involves the direct use of recovered biogas for electricity generation. Therefore the project activity complies with option (a)

12 (ii) Upgrading and transportation of biogas via a dedicated piped network to a group of end users; or (d) Hydrogen production. 4 If the recovered biogas is used for project activities covered under paragraph 3 (a), that component of the project activity can use a corresponding methodology under Type I. 5 For project activities covered under paragraph 3(b), if bottles with upgraded biogas are sold outside the project boundary, the end-use of the biogas shall be ensured via a contract between the bottled biogas vendor and the end-user. No emission reductions may be claimed from the displacement of fuels from the end use of bottled biogas in such situations. If however the end use of the bottled biogas is included in the project boundary and is monitored during the crediting period CO2 emissions avoided by the displacement of fossil fuel can be claimed under the corresponding Type I methodology, e.g. AMS-I.C. 6 For project activities covered under paragraph 3 (c) (i), emission reductions from the displacement of the use of natural gas are eligible under this methodology, provided the geographical extent of the natural gas distribution grid is within the host country boundaries. 7 For project activities covered under paragraph 3 (c) (ii) emission reductions for the displacement of the use of fuels can be claimed following the provision in the corresponding type I methodology, e.g. AMS-I.C. 8 In particular, for the case of 3(b) and (c) (iii), the physical leakage during storage and transportation of upgraded biogas, as well as the emissions from fossil fuel consumed by vehicles for transporting biogas shall be considered. Relevant procedures in para 11 of Annex 1 of AMS-III.H Methane recovery in wastewater treatment shall be followed in this regard. 9 For project activities covered under paragraph 3 (b) and (c), this methodology is applicable if the upgraded methane content of the biogas is in accordance with relevant national regulations (where these exist) or, in the absence of national regulations, a minimum of 96% (by volume). 10 If the recovered biogas is utilized for the production of hydrogen (project activities covered The recovered biogas is used to generate electricity for export to the grid which is covered under paragraph 2 (a). Therefore, the corresponding methodology is AMSI.D. The project does not involve the bottling of biogas and therefore this requirement is not applicable. The project does not involve the displacement of natural gas and therefore this requirement is not applicable. The project does not involve the transport of biogas via a dedicated piped network to a group of end users and therefore this requirement is not applicable. The project activity does not involve bottling or upgrading of methane. The project activity does not involve bottling or upgrading of methane. The project activity does not involve production of hydrogen. 12

13 under paragraph 3 (d)), that component of the project activity shall use the corresponding methodology AMS-KII.O Hydrogen production using methane extracted from biogas. 11 If the recovered biogas is used for project activities covered under para 3(e), that component of the project activity shall use corresponding methodology AIS-III.AQ Introduction of Bio- CNG in road transportation. 12 New facilities (Greenfield projects) and project activities involving a change of equipment resulting in a capacity addition of the wastewater or sludge treatment system compared to the designed capacity of the baseline treatment system are only eligible to apply this methodology if they comply with the requirements in the General Guidance for SSC methodologies concerning these topics. In addition the requirements for demonstration of the remaining lifetime of the equipment replaced as described in the general guidance shall be followed. 13 The location of the wastewater treatment plant shall be uniquely defined as well as the source generating the wastewater and described in the PDD. 14 Measures are limited to those that result in aggregate emission reductions of less than or equal to 60 kt CO2 equivalent annually from all type III components of the project activity. Table B.2.a: Applicability Conditions for AMSIII.H. The project activity does not involve use of biogas for transportation. The project activity is not a Greenfield project and it does not involve a change of equipment resulting in a capacity addition of the wastewater treatment system. There are no plans to expand and increase the designed capacity of the existing wastewater system. Therefore, these criteria are not applicable. The location of the wastewater treatment plant is uniquely defined as being within the boundaries of the Bebere Plantation and the source generating the wastewater is the Mosa Palm Oil Mill. Co-ordinates for the Mill are defined in Section A The aggregate emission reductions for all type III components of the project activity is less than 60 kt CO2 equivalent annually as shown in section B.6.3. Three gensets will be installed each with a capacity of 953 kw. The total installed capacity of 2.86 MW (phase I + II) is less than the eligibility limit of 15MW for small-scale CDM project activities. The project is eligible to use small-scale methodology AMSI.D because it meets all the applicability conditions. Table B.2.b shows how the project complies with the applicability conditions described in sections 1-6 of AMSI.D. Applicability Condition 1 This category comprises renewable energy generation units, such as photovoltaic, hydro, tidal/wave, wind, geothermal and renewable biomass that supply electricity to a national or a regional grid. Project activities that displace electricity from an electricity distribution system that is or would have Project Scenario The project activity involves the installation total of 2,859kWe (2.859MW) gensets to generate electricity from biogas (two gensets in Phase I and an additional genset in Phase II). Electricity from the project will be used by the facilities associated with the mill, adjacent refinery and sold to the PNG Power Kimbe grid in West New Britain. This 13

14 been supplied by at least one fossil fuel fired generating unit shall apply AMS I.F. 2 This methodology is applicable to project activities that (a) install a new power plant at a site where there was no renewable energy power plant operating prior to the implementation of the project activity (Greenfield plant); (b) involve a capacity addition1; (c) involve a retrofit of (an) existing plant(s); or (d) involve a replacement of (an) existing plant(s). 3 Hydro power plants with reservoirs that satisfy at least one of the applicability conditions described in AMS-I.D are eligible to apply this methodology. 4 In the case of biomass power plants, no other biomass types than renewable biomass are to be used in the project plant. 5 If the new 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 new unit co-fires fossil fuel, the capacity of the entire unit shall not exceed the limit of 15MW. 6 Combined heat and power (co-generation) systems are not eligible under this category. 7 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. 8 In the case of retrofit or replacement, to qualify as a small-scale project, the total output of the retrofitted or replacement unit shall not exceed the limit of 15 MW. Table B.2.b: Applicability Conditions for AMSI.D grid is supplied by two power plants; one hydro plant and one diesel plant. The project involves the installation of a new gridconnected renewable power plant and is not a capacity addition (since it is not an increase in the installed power generation capacity of an existing power plant; the existing power plant is a physically distinct unit using a different renewable energy supply and is not connected to the grid). The project plant is not a hydro power plant. The project activity uses only renewable biomass the biogas is recovered from the decomposition of the biodegradable wastewater, which is a byproduct of the agriculture palm oil industry. The project does not involve non-renewable components; the power plant will only use biogas as fuel. The installed capacity of the power plant is 2,859kWe (2.859MW) which is less than the eligibility limit of 15MW for small-scale CDM project activities. The project plant is not a combined heat power system. The project does not generate steam and/or heat. The installed capacity of the power plant is 2,859kWe (2.859MW) which is less than the eligibility limit of 15MW. The project is a new renewable energy facility completely separate and physically distinct from the existing power generation facilities supplying electricity at the Numundo mill. Therefore, it does not involve the addition of renewable generation units at an existing renewable power generation facility. The project is a new facility and therefore does not involve the retrofit or modification of an existing facility. 14

15 B.3. Description of the project boundary: As per AMSIII.H section 14&15, the project boundary is the physical, geographical site where the wastewater treatment takes place in the baseline and the project situation. It covers all facilities affected by the project activity including sites where the processing, transportation and application or disposal of waste products as well as biogas takes place. Therefore, the project boundary for the proposed project activity is defined as the physical project site within Bebere Nursery located at Bebere Plantation. The facilities affected by the project activity are: the existing open anaerobic ponds, the new covered anaerobic digester, the new biogas collection and cleaning system and the new biogas engines. A graphical depiction of the project boundary is shown in Figures B.3.a and B.3.b. Kimbe Power Grid Baseline Description Ru Hydro Power Station Kimbe Diesel Power Station Executive & Main Compound Diesel Engine Mosa Mill Grid Steam Turbine #1 Biomass Boilers Electricity Steam Turbine #2 Electricity 2 x Diesel Engines Atmosphere Mill Compound & Associated Operations Mosa Palm Oil Mill Wastewater Anaerobic Open Ponds Methane Wastewater Local Waterways Biosolid Aerobic Land Application Figure B.3.a: Representation of the Project Boundary 15

16 Lock-out switch Lock-out switch CDM Executive Board Kimbe Power Grid Project Boundary Ru Hydro Power Station Kimbe Diesel Power Station Compounds & Associated Operations Electricity Steam Turbine #1 Biomass Boilers Electricity Steam Turbine #2 Electricity 3 x Diesel Engines Electricity Biogas Engines Biogas Plant Biogas Treatment Biogas Flare Mosa Palm Oil Mill Wastewater Covered Digester Sludge Wastewater Anaerobic Open Ponds (same as baseline system) Wastewater Local Waterways Sludge Dewatering Biosolid Metering locations Aerobic Land Application Figure B.3.b: Representation of the Project Boundary 16

17 Ex-ante assessment and identification of the systems affected by the project activity AMSIII.H section 14&15 requires that an ex-ante assessment and identification of the systems affected by the project activity be undertaken. The baseline situation at the project site involves the use of one anaerobic treatment system consisting of a sequential series of eight ponds. In the baseline situation, wastewater from the factory is directly discharged into this single treatment system. After treatment, wastewater is discharge from the final pond into the local watercourse. This baseline system meets the legal requirements in PNG according to the Environmental Code PNG Oil Palm Industry. The project activity will alter this baseline situation by introducing a sequential treatment step consisting of an anaerobic digester installed prior to the inlet of the baseline pond system. Wastewater treated in the new digester will be discharged into the baseline treatment system during operation of the project activity. This activity will substantially reduce the quantity of COD entering the baseline treatment system and the methane generation potential of all ponds in the baseline treatment system will be affected by the project activity. Therefore, in accordance with AMSIII.H section 14&15, emissions from all these ponds must be accounted for in the calculation of baseline and project emissions. Details of the baseline anaerobic pond system in use at the Mosa Palm Oil Mill are further described in section B.4. B.4. Description of baseline and its development: AMSIII.H comprises measures that recover biogas from biogenic organic matter in wastewaters. As per section 1(f), this includes measures that introduce a sequential stage of wastewater treatment with biogas recovery and combustion to an existing anaerobic wastewater treatment system without biogas recovery. In the absence of the proposed project activity, the Mosa Palm Oil Mill would continue with the existing practice of using open anaerobic ponds for wastewater treatment. This business as usual situation represents the most attractive course of action for the Mosa Palm Oil Mill because it does not require further investment in equipment and because the pond system is a low-tech waste treatment solution requiring minimal maintenance. The baseline system does not have any equipment installed for capturing biogas and all methane is directly released to atmosphere. The baseline of open anaerobic lagoons is the common practice for treating POME in Papua New Guinea. This was confirmed by the Oil Palm Research Association of Papua New Guinea who advised that all 12 palm oil mills in Papua New Guinea operate open anaerobic lagoons 4 for the treatment of palm oil mill effluent. Therefore, the use of open anaerobic lagoons is the only credible wastewater treatment method for treatment of palm oil mill effluent in Papua New Guinea. A further summary of the data provided by OPRA is provided in section B.5. Data used to determine Baseline Emissions for Wastewater Treatment The existing wastewater treatment system consists of eight ponds, all of which are greater than 2m in depth. Dimensions of these ponds are summarised in table B.4.a below. All of the ponds are uncovered and there is no equipment installed for the capture of biogas. As such, all methane produced in the pond system is released to atmosphere. The final outflow of wastewater from the existing pond system is directed to the local river system. 4 Letter from the Oil Palm Research Association of Papua New Guinea, 27/10/09 17

18 Table B.4.a: Details of the Baseline Pond System In accordance with para 20 AMSIII.H, ex ante estimation of wastewater volumes are based on forecasted wastewater generation volumes. The forecasted wastewater volumes are based on the NBPOL company forecast crop supply of fresh fruit bunches (FFB) and historical ratio of FFB to wastewater volumes produced. Historical records for the COD removal efficiency of the baseline wastewater treatment system was taken between September 2008-June The total COD removals of the pond system were determined through measurements of the difference between COD inflows and COD outflows. Table B.4.b: Historical COD data to determine removal efficiency As described further in section B.6, any sludge removed from the ponds in the baseline was applied to land aerobically. As a conservative estimate, baseline sludge emissions are assumed to be zero and no historical records are required. Similarly, as a conservative estimate, baseline emissions from electricity consumption associated with wastewater treatment is assumed to be zero. Data used to determine Baseline Emissions for Electricity Generation Biogas produced by the project will be used to generate electricity for use in the facilities associated with the palm oil mill and also for sale to PNG Power. In the absence of the project, the mill would not have been connected to the grid and electricity for the mill and associated compounds would have been supplied by the existing power units which consist of two biomass fired boiler/turbine generation units and three diesel gensets. The biomass turbines have ratings of 1,500 kw & 1,100kW. Two of the diesel gensets have power ratings of 900 kw and one has a rating of 700 kw. Emission reductions associated with electricity displaced from the Mosa Oil Mill electricity grid system will not be claimed due to complications with the application of emission factor calculations for 18

19 minigrids with biomass and fossil fuels in AMS.I-D. Therefore only emission reductions from electricity displacing the grid will be claimed. This is conservative, as electricity generated by the project and used in the facilities associated with the mill will displace the electricity previously generated from the on-site diesel gensets, because the biomass power plant will continue to operate with the introduction of the Project Activity because the biomass fuel is a free by-product of the palm oil milling process. In the absence of the project activity, the electricity that will be sold to PNG Power would have otherwise been supplied by power plants connected to the PNG Power Kimbe Grid. Therefore, the baseline situation for electricity exported to the grid involves the generation of electricity by fossil fuel and renewable power plants connected to the Kimbe grid. There is no published delineation of the PNG Power Kimbe grid, therefore the PNG Power Kimbe electricity system has been defined in consultation with PNG Power as follows: The PNG Power Kimbe grid is centred on the town of Kimbe on the north coast of the island of West New Britain. The extent of the system is from Kulungi in the west to Nahavio (most easterly point) then to Ru Creek in the south. The grid contains two separate generating centres. A diesel powered generation facility is located in Kimbe and a hydro-electric powered generation facility is located at Ru creek. The baseline scenario is as defined in AMSI.D paragraphs 10, 11 and 12, as follows: The project activity is the installation of a new grid-connected renewable power plant/unit, and according to para 10 AMSI.D, the baseline scenario is the electricity delivered to the grid by the project activity that otherwise would have been generated by the operation of grid-connected power plants and by the addition of new generation sources. The baseline emissions are the product of electrical energy baseline EGBL, y expressed in MWh of electricity produced by the renewable generating unit multiplied by the grid emission factor. The emission factor can be calculated in a transparent and conservative manner as follows: (a) A combined margin (CM), consisting of the combination of operating margin (OM) and build margin (BM) according to the procedures prescribed in the Tool to calculate the emission factor for an electricity system. OR (b) The weighted average emissions (in tco 2 e/mwh) of the current generation mix. The data of the year in which project generation occurs must be used. Option (a) is selected as the baseline and the method for calculating the emissions coefficient for the project. For full details of the application of each step of the Tool to calculate the emission factor for an electricity system Version 2 and the data used to calculate the emissions factor, refer to the excel sheet CEF Kimbe v3.1 - Emissions Factor Tool EB50 calculation spreadsheet submitted with the PDD. Data for electricity production and fuel use of power plant in the PNG Power Kimbe Grid was provided by PNG Power for the years 2004, 2005 and All data used to calculate the Combined Margin emissions coefficient is shown in tables B.4.c, B.4.d, and B.4.e. 19

20 2004 Hydro (MWh) a Total Generation (MWh) a 10, Percentage Hydro 6.96% a Kimbe System Data, PNG Power Limited , , % , , , , , , % 20.66% 15.79% Table B.4.c: Generation of Electricity in the Kimbe Grid (PNG Power Limited) Manufactured/ Installed Fuel Used Electricity (MWh) Fuel (litres) Electricity (MWh) Fuel (litres) Electricity (MWh) HYDRO UNIT 1 (MWH) 1982/ % Hydro 2, , , HYDRO UNIT 2 (MWH) 1982/ % Hydro TOTAL RU-CREEK HYDRO (MWH) - 100% Hydro 2, , , Fuel (litres) DIESEL UNIT 1 (MWH) 1991/ % Diesel , ,405 1, ,053 DIESEL UNIT 2 (MWH) 1978/ % Diesel , , ,307 DIESEL UNIT 3 (MWH) 1999/ % Diesel 4, ,149,893 4, ,160,304 1, ,838 DIESEL UNIT 4 (MWH) 1978/ % Diesel 1, ,154 1, , ,229 DIESEL UNIT 5 (MWH) 1978/ % Diesel DIESEL UNIT 6 (MWH) 1996/ % Diesel 1, ,550 1, ,773 4, ,473,904 DIESEL UNIT 7 (MWH) 1999/ % Diesel 3, ,162,855 3, ,025,976 3, ,038,218 TOTAL KIMBE DIESEL (MWH) - 100% Diesel 11, ,311,871 11, ,301,499 12, ,701,549 TOTAL KIMBE SYSTEM (MWH) 13, , , Table B.4.d: Electricity Production and Fuel Consumption for the Kimbe Grid (PNG Power Limited) Fuel Type Diesel Units litres Emissions Factor b (tco 2 /TJ) 72.6 EF CO2,i,y (tco 2 /GJ) b. IPCC default values at the lower limit of the uncertainty at a 95% confidence interval as provided in table 1.4 of Chapter 1 of Vol. 2 (Energy) of the 2006 IPCC Guidelines on National GHG Inventories Table B.4.e: CO 2 emissions factor and net calorific value of each fossil fuel type (diesel) for grid EF calculation 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: Demonstration of Prior consideration of CDM. EB48 Annex 61 provides the Guidelines on the demonstration and assessment of prior consideration of CDM (Version 2). For project activities with a start date after 2 August 2008, the project participant must inform a Host Party DNA and/or the UNFCCC secretariat in writing within 6 months of the commencement of the project activity and of their intention to seek CDM status. In accordance with this guidance, notification was sent to the UNFCCC in a letter dated 06/10/08 5. The secretariat sent an on the 04/12/08 to confirm that the letter had been received. The Start Date of the Project Activity was 03/09/2008, the date the design contract was entered into. CDM notification was therefore within 6 months of the start date of the project activity. 5 Letter to the UNFCCC secretariat, 6/10/08 20

21 The following provides a brief chronology of the Project Activity and continuing CDM Development: 22/08/2008 Board Decision to invest in project 01/09/ CDM consulting contract with Carbon Bridge 03/09/ date of design contract with technology supplier, KPSR 06/10/ date of notification to the UNFCCC secretariat 30/10/ PDD available for Global Stakeholder Consultation on UNFCCC website 09/12/ Validation Site Visit 12/07/ Submission of responses for validation protocol for NBPOL Kumbango project (it was decided to focus on resolving all issues for validation for the Kumbango project first, as most of the issues for validation were the same for all other NBPOL projects). 30/09/2010 Purchase order of coversheet for digester signed. 02/10/ Submission of Validation Protocol responses and updated PDD for Mosa project 11/01/ Receipt of updated Validation Protocol questions from DOE 19/04/2011 Receipt of Technical Review comments 01/11/2011 Planned commissioning of project activity. 01/01/2012 Crediting Period start date Additionality In accordance with Attachment A to Appendix B of the simplified modalities and procedures for Small Scale CDM project activities, the additionality of the project is demonstrated by showing that the project would not have occurred anyway due to at least one barrier. The guidance for the Technological Barrier and Barrier due to Prevailing Practice is provided as follows: Technological barrier: a less technologically advanced alternative to the project activity involves lower risks due to the performance uncertainty or low market share of the new technology adopted for the project activity and so would have led to higher emissions. Barrier due to prevailing practice: prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions. The project activity is located in Papua New Guinea which is a Small Island Developing State. The latest guidelines demonstrating additionality of microscale project activities (EB 60 Annex 25) state projects are additional if the geographic location is in a SIDS and the project activity is less than 5MW or for Type III activities less than 20,000tCO2e/year. As the Type I renewable energy component of the project activity is 2.859MW and located in a SIDS, the Type I renewable energy component of the project is automatically additional. The Type III component of the project activity is not automatically additional, and therefore, to further substantiate the barriers, the guidance provided in the Non-binding best practice examples to demonstrate additionality for SSC project activities, version 1 EB35, is applied as follows: Technological barrier: Best practice examples include but are not limited to, the demonstration of unavailability of the technology and high level of technology risk. Barrier due to prevailing practice: Best practice examples include but are not limited to, the demonstration that project is among the first of its kind in terms of technology, geography, sector, type of investment and investor, market etc. 21

22 In both cases, the best practice examples for demonstrating additionality mandate that the additionality of a small scale project can be demonstrated by showing that the project technology is unavailable in the region, i.e. the project is amongst the first of its kind. As a conservative definition, the geographic region has been defined as the national borders of PNG. In order to substantiate that the project is amongst the first of its kind in PNG, data 6 provided by PNGOPRA who is responsible for providing scientific and technical services to all stakeholders in Papua New Guinea s oil palm industry and is a part of the National Agricultural Research System (NARS) confirms that the project is amongst the first of its kind as per table B.5.a below Mill Name Location in Papua New Guinea Type of Wastewater Treatment System Mosa West New Britain Open Anaerobic Lagoons Kumbango Kapiura Numundo Gusap Hargy Navo Sangara Sumbaripa Mamba Lakurumau West New Britain West New Britain West New Britain Morobe West New Britain West New Britain Sangara Sumbaripa Mamba Lakurumau Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Open Anaerobic Lagoons Hagita Hagita Open Anaerobic Lagoons Table B.5a: Baseline technology for POME treatment in Papua New Guinea Furthermore, the guidance of the Validation and Verification Manual is applied in order to clearly demonstrate that the project activity faces barriers that: (a) Prevent the implementation of this type of proposed CDM project activity; (b) Do not prevent the implementation of at least one of the alternatives. In regards to part (b), the alternatives to the project activity are; the continued release of methane to atmosphere from the existing open lagoons and the continued operation of existing power plants both in the PNG Power Kimbe grid and at the mill facilities. As this scenario is already in practice, the barriers described below do not prevent implementation of this alternative scenario. The barrier due to prevailing practice and technical barriers presents a number of risks to the project developer including those relating to lack of technical standards, lack of a technical service industry, lack of domestic technology experts and ultimately the potential under-delivery of anticipated electricity output. The risks are particularly acute for the project because it is located on an island in a SIDS. The project location possesses particular risks in regards to staff recruitment and retention, procurement and transportation of equipment and risks in relation to the timely delivery of replacement parts/equipment. In order to demonstrate that the barriers would prevent the implementation of the project activity the following EB guidelines are applied: 1. Information relating to the nature of the company involved with implementing the project is provided to substantiate the credibility of the barrier. New Britain Palm Oil is an agricultural company with expertise in the cultivation, processing and sale of palm oil. At the time of the 6 Letter from the Papua New Guinea Palm Oil Research Association, 28/01/09 22

23 investment decision, NBPOL had no previous experience in biogas power generation projects (see table B.4.a). 2. The existence of the barrier is confirmed through reference to national data from the Papua New Guinea Oil Palm Research Association which shows that the barrier has actually prevented implementation of this type of project because use of the technology in the sector is non-existent, a penetration rate of 0%. 3. Information relating to the contribution of CDM revenues to the project is provided to demonstrate that the additional revenues helped overcome the increased risks associated with the barriers. The potential revenues from carbon credits are shown that to be significant in relation to the cost of the project. 4. It is substantiated that the project participants faced the barriers at the time of the investment decision through a letter from PNGOPRA confirming that there were no biogas power projects at Palm Oil Mills in PNG at the time of the investment decision. Technological Barrier NBPOL currently utilises open lagoons for the treatment of POME at its existing mills. The use of open lagoons is a low-tech wastewater treatment solution which is well understood, requires no further investment and negligible maintenance costs associated with the upkeep of pumps and flow channels. This less technologically advanced alternative involves lower risks than the project activity which employs an anaerobic digester equipped with methane capture for electricity generation. At the time of the decision to proceed with the project, there were no functional examples of the use of anaerobic digesters with methane capture in Papua New Guinea 7. This has been confirmed by PNGOPRA who provides scientific and technical services to all stakeholders in Papua New Guinea s oil palm industry and is a part of the National Agricultural Research System (NARS). In addition, there is no other business in Papua New Guinea registered for the activity of methane capture. 8 Therefore, it is clear that there is low market share for the technology employed in the project activity and that the less technologically advanced alternative of open lagoons would have led to higher emissions. Anaerobic digestion performance risks are significant and information on the actual performance of POME biogas plants in Papua New Guinea is unavailable due to the lack of projects. The performance risk is related to site conditions such as temperature as well as the nature of the POME input stream. A study on anaerobic digestion of POME, Jacob et al 9, discusses the cause of variable methane yields from the large variation in the chemical properties of POME and the volume discharged to the ponds, resulting in the daily variation of organic loading rate and hydraulic retention time the measured quantity and quality of POME discharge varied from time to time. This in turn will affect the growth and activity of microorganisms especially the methanogens and hence the methane emission rate. Constant and predictable methane generation is necessary to ensure stable generation of electricity which is necessary to recover project development costs. Therefore, the performance uncertainty of the technology discourages the decision to invest in the project. The CDM benefits have helped overcome the risks associated with the technology barrier because the CDM revenues are significant in relation to the investment cost. Therefore, the CDM revenues support the decision to invest in the project. POME biogas projects face specific technological risks because POME is fat (oil) based while most research into anaerobic digestion has been with carbohydrate based wastes 10. Some of the long chain 7 Letter from the Papua New Guinea Palm Oil Research Association, 28/01/09 8 Letter from the Investment Promotion Authority, ref# 04newbritainpalmoil915let, 17/12/08 9 Yacob, S, Hassan, M, Shirai, Y, Wakisaka, M, Subash, S, Baseline study of methane emission from anaerobic ponds of palm oil mill effluent treatment. Science of the Total Environment 366 (2006) pg Hearn, C, 2009 Differences and Technical Issues of POME vs starch wastewater streams New Zealand. 23