Gold Standard Passport CONTENTS

Transcription

1 CONTENTS A. Project title B. Project description C. Proof of project eligibility D. Unique Project Identification E. Outcome stakeholder consultation process F. Outcome sustainability assessment G. Sustainability monitoring plan H. Additionality and conservativeness deviations Annex 1 ODA declarations

2 SECTION A. Project Title Gold Standard Passport Version 6, 1 st November 2013 Mosa POME methane capture project SECTION B. Project description 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 has historically been treated in open anaerobic ponds. The anaerobic treatment process produces large amounts of methane which is freely released to the atmosphere. The project will reduce GHG emissions by capturing this methane and combusting it in an engine to produce electricity. This will result in a reduction of The primary technology employed by the Project Activity is an in-ground anaerobic digestor 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 two biogas engines. A flare will be installed to combust any excess biogas that cannot be utilised in the biogas engine. The in ground digester technology will ensure that all the Palm Oil Mill Effluent (POME) will be sufficiently treated under anaerobic conditions and discharged to the existing effluent treatment ponds. The existing effluent treatment ponds will process the POME under aerobic conditions before final discharge and therefore improve the quality of the POME being discharged. The monitoring program for the site will ensure that the quality of the POME being discharged is in compliance with the appropriate environmental permit regulations and discharge parameters. 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 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. The projects contributions to sustainable development are transparently reported in accordance with the Gold Standard best practice guidelines. Project Status

3 The Mosa Biogas project started on 3 rd September 2008 when the design contract was signed. After extensive construction delays, the project was commissioned in July 2012 and is now successfully operating. Connection to the grid was delayed due to technical issues, but started selling electricity to PNG Power in December The project was registered by the CDM Executive Board on 20th September 2011 (project registration number 5020). The CDM renewable crediting period runs from 01 October th September

4 SECTION C. Proof of project eligibility C.1. Scale of the Project Please tick where applicable: Project Type Large Small C.2. Host Country Papua New Guinea C.3. Project Type Please tick where applicable: Project type Yes No Does your project activity classify as a Renewable Energy project? Does your project activity classify as an End-use Energy Efficiency Improvement project? Please specify your project type: 4

5 Renewable Energy Supply. The project involves the generation and delivery of electricity from non-fossil and non-depletable biogas. The biogas is a by-product of the naturally occurring anaerobic processes in the wastewater treatment system of the palm oil mill. The primary technology employed by the project activity is an in-ground anaerobic digestor equipped with a system for the capture, collection and utilization of biogas. After treatment, the biogas is utilised in a gas engine to produce electricity. This electricity is sold to the local distribution grid and used on-site to displace diesel generation. The new grid connected generation source is important for the province of West New Britain which experiences frequent power outages due to unavailability of the existing generation capacity which primarily consists of diesel thermal power units. In accordance with the Gold Standard toolkit Annex C and updated rules November 2011, methane recovery project activities shall be eligible for emission reductions from both methane avoidance (including from the flared biogas fraction) and non-renewable fuel substitution as long as at the time of validation, evidence shows that the system is designed in a way to make use of some of the biogas recovered for the delivery of energy services (e.g. electricity, heat). As described in the engineering design contractor s technical assessment report, the project has been designed to maximise the amount of methane that is utilised. Compliance with this requirement will be monitored as per the details in section G. Pre Announcement Yes No Was your project previously announced? The project was first announced in the New Britain Palm Oil Annual Report 2007 (page 17). The report states that NBPOL has plans for the capture of methane at source through technology that is classified as a Clean Development Mechanism (CDM) project that will attract carbon credits. C.4. Greenhouse gas Greenhouse Gas Carbon dioxide Methane Nitrous oxide 5

6 C.5. Project Registration Type Project Registration Type Regular Pre-feasibility assessment Retro-active projects (T.2.5.1) Preliminary evaluation (T.2.5.2) Rejected by UNFCCC (T2.5.3) Explanation of Project Registration Type: The Gold Standard consultation process was designed as an integral part of the project development. To demonstrate that the Gold Standard process was seriously considered throughout the project development, an extensive consultation process was undertaken prior to commencement of construction. Construction first commenced on the 05/12/08 following completion of the stakeholder consultation meetings on 13/11/08 and uploading the draft report to the gold standard registry on the 01/12/08. This is consistent with the guidance provided in section 2.5 of the Gold Standard toolkit. In accordance with Annex C of the Gold Standard Toolkit, a pre-feasibility assessment is required for Palm Oil projects. SECTION D. Unique project identification D.1. GPS-coordinates of project location Latitude Longitude Coordinates 5 37' " S ' " E Explain given coordinates 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 6

7 developing four other CDM projects at physically distinct Palm Oil Mills in West New Britain province. D.2. Map Mosa Mill Location of the Project Activity, West New Britain Province 7

8 SECTION E. Outcome stakeholder consultation process E.1. Assessment of stakeholder comments For a full summary of the stakeholder consultation process please refer to the Local Stakeholder Consultation Report. Stakeholder Comment Assessment Response to comment If you produce power from the project will this benefit the local people? What will the by-product of burning methane be? How will you tell people from surrounding villages about the project? Will you meet with them? The project will produce 2MW of electricity is that correct? Is there another option for disposal of the wastewater? Can it be diverted from the river; can you do something else with it? You are going to sell power to PNG power. Is there an alternative to PNG Power that can give energy to local farm owners? The local people will benefit through reduced odour from the ponds. Also, the additional generation capacity provides PNG power with an opportunity to improve reliability in the Kimbe grid. Carbon dioxide is the same byproduct as is produced from burning diesel in the existing engines. Hence no negative affects results from burning methane. Substantial efforts were made to invite local stakeholders to the consultation as outlined in Section A2. This was a clarification of project details and not directly related to social/ environmental impacts. The question was answered in the stakeholder meeting. The quality of discharged wastewater exceeds national regulations in the existing system and the proposed system. Therefore, diversion of the wastewater is not necessary. The project will not distribute free/subsidised electricity directly to local land owners. This is not considered a reasonable request; the project does not negatively affect any of the local farm owners. A subsequent assessment of the potential for bottling gas for distribution to local users found that it would not be viable due to the cooking demand being to small to warrant the high capital cost of a biogas treatment, compression and bottling system. The project will capture the gases which will reduce the smell from the ponds. The project will produce clean electricity which can be provided to the power grid. NBPOL is speaking with PNG Power to work out if power from the project can be supplied to the power grid. NBPOL cannot install the power lines to distribute power. (subsequently PNG Power confirmed that power from the Mosa site can be supplied to the grid) The by-product is Carbon Dioxide. This is a less potent greenhouse gas than methane. Carbon dioxide from the Palm Oil Mill Waste is already part of the natural cycle; it comes from the Palm Oil Waste which is a renewable source. They have been invited and personal invitation letters were delivered by hand. We have given them an opportunity to attend the meeting but they did not decide to come. 2MW is the theoretical design capacity for Mosa and Kumbango. If the generators run all the time than 2MW will be available. However, it may be possible that the project produces excess methane and therefore more energy will be available. We do not have an alternative use for the wastewater. There is a possibility for gas bottling but we must determine appropriate the technology and if it will be practical to install. NBPOL is not a power company, so we will not supply electricity directly to the community. We are looking at the potential for installing gas bottling equipment in order to create additional benefits for the community. (A subsequent assessment of the potential for bottling gas for distribution to local users found that it would not be viable) 8

9 We need to look at the needs of the workers who must collect firewood. The majority of workers need to spend time collecting firewood after working all day. (The projects) close proximity to the main road and town/stations (is a concern) since the gas may leakage/erupt if the safety/security measures are not adhered to. What will happen if there are large POME flows? Blockages in the system can result in overflow when there are large flows. The solid waste and EFB that is generated by the project, will this be used? Can you recommend a way to increase the power distribution infrastructure around this project? Will the treatment process result in extra Nitrogen and Phosphorus being discharged. Can you recommend any fuels for substituting Kerosene? Will the wastewater quality be improved? The need for NBPOL workers to collect firewood is outside the boundary of the project. The risk of fire and explosion will be managed by excluding untrained staff from the site through installation of a fence and by training employees to understand the risks of fire, and other operational hazards. This will be implemented through the operations manual. The project will increase the residence time of the system and the cover will help prevent overflow during periods of heavy rains. Ponds are de-silted regularly to prevent overflow. EFB will be continued to be dispersed in the palm fields, the project does not affect the use of EFB. The project will not upgrade power distribution infrastructure. This is not considered a reasonable request as NBPOL are not in the business of distributing power; it is the role of PNG Power. The quality and quantity of wastewater discharged from the factory will remain the same as the project does not alter the production processes of the Palm Oil Mill. Extra Nitrogen and Phosphorus will not result from the project. This enquiry is outside the scope of the project, it does not directly relate to any of the functions of the project. The quality of wastewater discharged from the treatment system will be improved due to the addition of a sequential stage of treatment. The installation of a covered in-ground anaerobic digester will substantially increase We want the NBPOL workers to benefit from the project first; we are looking at ways for NBPOL s people to benefit from the project. The risk of fire and explosion will be managed by excluding untrained staff from the site through installation of a fence and by training employees to understand the risks of fire, and other operational hazards. This will be implemented through the operations manual. We will de-silt the ponds to ensure there is no overflow. The amount of processes effluent flowing out of the ponds will, be the same as is flowing in. The Mills already use some solid waste in boilers to produce electricity. EFB will be continued to be dispersed in the palm fields. Solids from the waste water treatment system will be re-circulated to the anaerobic reactor and any sludge will be placed in the fields. NBPOL is not a power company and we will not be involved in the distribution of power. It may be possible that the Asian Development Bank or a similar organisation can get involved. However, this is not the purpose of the project. The effluent coming from the Mill will be the same as before the project. The Nitrogen and Phosphorus in the effluent will be the same. (Carbon Bridge) We have worked with a company in South East Asia who is starting a project to distribute solar lanterns to substitute for kerosene. For such a project to be successful, a local partner is required to implement the project. The project will install an additional step in the wastewater treatment process. This will increase the capacity of the system and the time over which the water is in the system. 9

10 What will be done about Nitrogen and Phosphorous discharge? What will be done to account for emissions from the beef production? And what about vehicle emissions, will these be accounted for? How much methane will be capture by the system? the capacity of the treatment system. The installation of a cover will prevent rainwater from flowing into the primary treatment pond and therefore reduce the risk of untreated effluent being flushed through the ponds (and from the final pond into the watercourse) during heavy rains. This will make the quality of discharged wastewater more consistent. Extra Nitrogen and Phosphorus will not result from the project. Existing buffer zones in place around the plantations are designed to minimise the impact of runoff from the plantations and the project will not alter this. The project design will account for any relevant leakage emissions through the CDM methodology. Other emission sources are not relevant to the project. This was a clarification of project details and not directly related to social/ environmental impacts. This enquiry was answered in the stakeholder consultation meeting. There are buffer zones in place to control runoff from the plantations. NBPOL have started to account for and manage the emissions from our operations. The methane capture project is the first step. In the future we will look at other ways to reduce the emissions from our operations; however this project was identified as the best opportunity to reduce emissions. The project will reduce emissions by approximately 45,000 55,000 tonnes of CO2 equivalent per project. E.2. Stakeholder Feedback Round The stakeholder consultation report was prepared taking into account all comments received during the consultation process. Following completion of the report, three copies were made available so that local stakeholders could access the outcomes of the stakeholder consultation process. One report was made available at the Engineering Department office reception; one report was provided to the Oil Palm Industry Corporation and one to the Governor s Office. A letter was prepared and hand delivered to stakeholders who attended the consultation providing details of the consultation report and the location where they can access a copy. This was assessed to be a more locally appropriate means than uploading to an internet site as most stakeholders do not have access to the internet. Also, the intermittent electricity supply means that the internet is not always available in the area of the project. A sample copy of the letter is shown below and additional samples were provided to the DOE during Validation.. There were no comments made during the Stakeholder Feedback Round. The Stakeholder Feedback Round was conducted with reference to the GS rules, however unfortunately the guidance provided in the PFA relating to consultation with International NGOs and GS Supporter was overlooked. After consulting with GS local technical expert, NBPOL 10

11 contacted the listed International NGOs and GS supporter for feedback during this GS Review round (it was considered that 1-2 weeks was an acceptable period for receiving comments considering these organizations were also contacted during the GS Review round). The following organizations were contacted to provide feedback (and date contacted): REEEP (renewable energy and energy efficiency program) (26/9/2013) WWF (26/9/2013) Greenpeace (9/10/2013) Mercy Corps (26/9/2013) Helio International (26/9/2013) Gold Standard Expert (Ellen) (26/9/2013) No responses were received from these stakeholders. 11

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13 SECTION F. Outcome Sustainability assessment The Gold Standard safeguarding principles and the sustainability criteria have many cross overs and similarities to the RSPO Principles and Criteria (2007) and the subsequent PNG National Interpretation (2008) (PNG NI). The RSPO Certification process and Surveillance reports assess these criteria to ensure continued compliance with these requirements. As such, the Do no harm assessment has been updated to indicate the relevant links with the RSPO and PNG NI. F.1. Do no harm Assessment Safeguarding principles Description of relevance to my project Assessment of my project risks breaching it (low/medium/high) Mitigation Measure Human Rights 1. The project respects internationally proclaimed human rights including dignity, cultural property and uniqueness of indigenous people. The project is not complicit in Human Rights abuses. PNG is a party to the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR) however compliance with these principles is not uniformly enforced in PNG. To ensure that NBPOL is not complicit in human rights abuses they have implemented a Sustainability Handbook to ensure employees have clear guidelines regarding conduct which respects human rights. Furthermore, NBPOL company regulations include a Code of Conduct that sets out policies to prevent discrimination. RISK = LOW NBPOL has a firm commitment to internationally proclaimed human rights. The policies outlined in NBPOLs Sustainability Handbook ensure that the risk of breaching the safeguarding principle is low. Not Required NBPOL respect customary land rights and as such allows local people to access customary lands. NBPOL comply with all subcomponents of RSPO Criteria 2.2 (The right to use the land can be demonstrated, and is not legitimately contested by local communities with 13

14 Human Rights 2. The project does not involve and is not complicit in involuntary resettlement. Human Rights 3. The project does not involve and is not complicit in the alteration, damage or removal of any critical cultural heritage. Labour Standards 4. The project respects the employees freedom of association and their right to collective bargaining and is not complicit in restrictions of these freedoms and rights. demonstrable rights) and Criteria 2.3 (Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent) and the subsequent PNG NI Indicators The project does not result in the relocation of any people. It is located within the boundary of the existing facilities/plantations which have been under the operation of NBPOL for over 40 years. The project does not involve and is not complicit in the alteration, damage or removal of any critical cultural heritage. The project is located within the boundary of the existing facilities/plantations which are on land where there are no ongoing issues relating to land rights or cultural heritage. These sites have been under the operation of NBPOL for over 40 years. Papua New Guinea has ratified the ILO convention 87 (freedom of association) and 98 (right to collective bargaining). The Industrial Relations Dispute Settlement Machinery prescribed by the PNG Industrial Relations Act (2005) allows collective bargaining and recognises the rights of freedom of association. Two unions are active among NBPOL s employees; the West New Britain Palm Oil Workers Union and the Amalgamated General Workers Union (AGWU). NBPOL s sustainability handbook defines the commitment to employee s rights as follows: NBPOL respects the right of all personnel to form and join RISK = LOW There is no risk of breaching this principle as the project does not involve any relocation of any people. RISK = LOW There is no risk of breaching this principle as the project is located within the boundary of the existing facilities/plantations RISK = LOW NBPOL recognises all workers right to form or join a union and abides by the Industrial Relations Dispute Settlement Machinery prescribed by the PNG Industrial Relations Act (2005) allowing collective bargaining and recognises the right to freedom of association. In 2007/2008, NBPOL had no major industrial disputes and 18.7 % of workers were members of one of the two active unions in the area. An employee relations officer engages with the union on behalf of NBPOL. Not Applicable Not Applicable Not Required. 14

15 Labour Standards 5. The project does not involve and is not complicit in any form of forced or compulsory labour trade unions of their choice and to bargain collectively. NBPOL comply with RSPO Criteria 6.4 (Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions) and 6.6 (The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel) and the subsequent PNG NI Indicators and All employees of NBPOL offer their services on a voluntary basis. Papua New Guinea has ratified the ILO convention 29 (forced labour) and 105 (abolition of forced labour). NBPOL s sustainability handbook affirms the company s commitment to labour standards and their people as follow: NBPOL shall not engage in or support the use of forced labour, nor shall personnel be required to lodge deposits or identity papers upon commencing employment with NBPOL. NBPOL is compliant with RSPO criteria 6.5 (Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages) and the subsequent PNG NI Indicators RISK = LOW There is no risk of breaching this principle as NBPOL has ratified the ILO convention 29 and convention 105 and NBPOL is compliant with RSPO criteria 6.5 Not Applicable Labour Standards NBPOL only employs workers RISK = LOW Not Applicable 15

16 6. The project does not employ and is not complicit in any form of child labour Labour Standards 7. The project does not involve and is not complicit in any form of discrimination based on gender, race, religion, sexual orientation or any other basis. over the age of 16 and no children below the age of 18 are employed in hazardous work. PNG has ratified the ILO convention 138 (minimum age) and 182 (worst form of child labour). NBPOL s sustainability handbook affirms the commitment to employee s rights as follows: NBPOL shall not engage in or support the use of child labour as defined by PNG law and will provide adequate support to enable children of its employees to attend and remain in school until no longer a child. NBPOL shall not expose children or young workers to situations in or outside of the workplace that are hazardous, unsafe, or unhealthy. NBPOL comply with RSPO Criteria 6.7 (children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education programmes. Children are not exposed to hazardous working conditions) and the subsequent PNG NI indicator NBPOL s employment policy does not exclude or prefer people based on race, colour, gender, religion, sexual orientation, political opinion, national extraction, social origin or physical/mental disability. PNG has ratified the ILO convention 100 (equal remuneration) and 111 (discrimination in employment/occupation). Favouritism is known to occur in PNG based on ancestry/cultural ties. To combat this, NBPOL actively employ s personnel from across varied cultural groups. NBPOL s sustainability handbook affirms the right s of employees as follows: NBPOL will not engage in nor support discrimination in There is no risk of breaching this principle because NBPOL has ratified the ILO convention 138 and 182 and RSPO Criteria 6.7. RISK = LOW NBPOL has a firm commitment to labour standards and the principle of equal opportunity as affirmed in the sustainability handbook. Hiring of staff is undertaken by management following the principles outlined in the sustainability handbook. Not Required 16

17 Labour Standards 8. The project provides workers with a safe and healthy work environment and is not complicit in exposing workers to unsafe or unhealthy work environments. any form. Furthermore, NBPOL has a zero tolerance to Sexual Harassment in the work place. NBPOL wishes to maintain safe and healthy working environment where all employees, irrespective of status, position or sex, are treated with dignity and free from any form of harassment, humiliation and intimidation of a sexual nature. NBPOL has created a code of practise to be implemented in all its operations to address this problem to assist it to ensure that adequate procedures are available to deal with the problem and prevent its recurrence. NBPOL comply with RSPO Criteria 6.8 (Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited) and the subsequent PNG NI indicator and The main hazards associated with the project are associated with the use of heavy machinery during construction, the risk of falls during excavation of the in ground digester and the risk of fire associated with storage of biogas. Hazards associated with falls, earth movement equipment and other mechanical equipment will be identified and managed through a risk assessment and mitigation process. RISK = MEDIUM An OH&S officer is employed by NBPOL to oversee operations. On-site risk assessments and onsite safety audits are conducted to identify safety issues and improve practises. Company standards are compliant with OHSAS principles. A biannual safety check of the biogas plant will be undertaken to check the integrity of equipment and mitigate the risk of fires or explosion. Please refer to the monitoring plan in section G. Risks associated with the ongoing operation of the project will be evaluated and incorporated into the existing site safety plans. Emergency response plans are in place for each site; they will be revised to include the new risks associated with 17

18 the project. The project does not involve the use of hazardous chemicals. National workers compensation is in place for PNG. The NBPOL employer superannuation contribution plan has a death/injury component and optional life insurance. Environmental Protection 9. The project takes a precautionary approach in regard to environmental challenges and is not complicit in practices contrary to the precautionary principle. NBPOL comply with RSPO Criteria 4.7 (An occupational health and safety plan is documented, effectively communicated and implemented) and the subsequent PNG NI indicator The wastewater used by the project is generated by NBPOL s existing plantations which are certified under RSPO guidelines. NBPOL has obtained certification under the RSPO guidelines and has implemented the ISO Environmental Management standard in all operations concerned with the production and export of Palm Oil. The environmental protections implemented through these management systems demonstrate that NBPOL is not complicit in practices contrary to the precautionary principle. RISK = LOW The existing environmental management system employed under the ISO framework together with the sustainability principles employed through the RSPO guidelines will ensure that risk of breaching this safeguarding principle is low. Not Required Construction and excavation activities will not involve the transportation of soil from/to the site and the project does not involve invasive species. 18

19 Environmental Protection 10. The project does not involve and is not complicit in significant conversion or degradation of critical natural habitats, including those that are (a) legally protected, (b) officially proposed for protection, (c) identified by authoritative sources for their high conservation value, or (d) recognized as protected by traditional local communities. The project is located within the boundary of the existing facilities/plantations that have been under the operation of NBPOL for over forty years. The project is not a Greenfield project and it does not require additional lands to be used for the project. The projects footprint is approximately 150m x 150m and it will not result in increased stress on the site. Local NGO s were invited to and attended the community consultation sessions held for the project. They were given the opportunity to comment and did not identify any issues related to the protection of critical habitats. RISK = LOW The project does not involve activities that have the potential to convert or degrade critical natural habitats. Not Required Anti-corruption 11. The project does not involve and is not complicit in corruption. NBPOL is compliant with RSPO criteria 5.2 (The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations) and will document buffer zone monitoring program. NBPOL is compliant with the PNG NI indicator PNG has legislation in place to address corruption however it is not enforced and corruption is known to be common in PNG. The project does not involve the distribution of funds for compensation and/or subsidies; therefore there is limited potential for corruption in regard to diversion of funds. The project does not involve land acquisition or resettlement therefore there is limited potential for corruption in regard to misappropriation of land/property. Also the project will be constructed/ RISK = LOW Whilst corruption is known to be prevalent in PNG, the project does not involve aspects that are at specific risk of corruption. Not Required 19

20 operated under existing permits/approvals and as such will not be subject to substantial approval processes that are at risk of corruption. Regardless, corruption is known to be prevalent in PNG. As such NBPOL has an ethics policy outlining the company s commitment to fair competition, and outlining employees responsibility for avoiding conflicts of interest. NBPOL do not give any political donations or support any political parties in the countries of operation. NBPOL have committed to developing a formal anticorruption and bribery guideline. 20

21 F.2. Sustainable Development matrix Indicator Air quality The baseline involves the uncontrolled release of gases from the open ponds including hydrogen sulphide which produces an unpleasant odour characterised as rotten eggs. Mitigation measure Prevention of uncontrolled release of H 2 S through biogas capture and treatment systems. Relevance to achieving MDG MDG Goal 7: Ensure Environmenta l Sustainability Chosen parameter and explanation A reduction in H 2 S content of the treated biogas, as an indicator of odour reduction. Preliminar y score Positive + The project will change the baseline situation by installing biogas capture equipment to prevent the uncontrolled release of gases from the ponds. A scrubber will be installed to remove hydrogen sulphide from the gas stream prior to combustion. As a result the smell produced by the ponds will be substantially reduced. Water quality and quantity The quality and quantity of wastewater discharged from the factory will remain the same as the project does not alter the production processes of the Palm Oil Mill. The existing treatment system is designed to meet the PNG water discharge standards. Wastewater discharged from the new treatment system will be treated significantly before discharge to the existing system due to the addition of a sequential stage of treatment. The installation of a covered in-ground anaerobic digester will substantially increase the capacity of the treatment system. The installation of a cover will prevent rainwater from flowing into the primary treatment pond and therefore reduce the risk of untreated effluent being flushed through the ponds (and from the final pond into the watercourse) during heavy rains. Soil condition The project has little impact on soil condition. Any organic sludge extracted from the CIGAR during the project which will be used as an organic fertilizer on the oil palm Installation of a covered anaerobic digestor to treat wastewater prior to discharge into the existing open lagoon system. Sludge removal from the covered lagoon will be dispersed aerobically on the MDG Goal 7: Ensure Environmenta l Sustainability MDG Goal 7: Ensure Environmenta l Sustainability Wastewater quality will be maintained consistently below historical values as an indicator of improvements in the quality of discharged wastewater. An operations log book will be maintained to record the end use of any sludge that is removed from the system Positive + No Change 0 21

22 plantations. Other pollutants The project will install a new source of noise in the form of a biogas engine and at the same time it will also result in the removal of a source of noise by making it unnecessary to run the existing diesel gensets during normal operation. Hence, the duration and intensity of noise will remain essentially the same. The gensets will be designed to ensure noise levels are below safe limits. Biodiversity The project will be located on company land which is no longer a natural habitat nor receives any habitation of fauna. The project will have no impact on biodiversity conservation compared to the baseline scenario Quality of employment The project will change the baseline situation by introducing additional risks to the workplace associated with the handling of biogas. However, the design, construction and operation of the project will be conducted to ensure that this does not negatively affect the quality of employment. The risk of fire and explosion will be managed by excluding untrained staff from the site through installation of a fence and by training employees to understand the risks of fire, and other operational hazards. This will be implemented through a safety guidelines document. Plantations Not Required, unless the Noise audit conducted when the project is commissione d raises an issue with noise levels. Not Required MDG Goal 7: Ensure Environmenta l Sustainability Not Required MDG Goal 1: Eradicate Extreme Poverty and Hunger N/A Not Required No Change 0 Not Required Not Required However, to ensure that the project does not develop a risk of fire and/or explosion, a biannual safety check of the biogas plant will be undertaken to check the integrity of equipment. No Change 0 No Change 0 A biogas project supervisor will be employed to oversee operation of all of the wastewater projects being implemented throughout West New Britain. This will be a technical role with exposure to some aspects of Palm Oil Mill operation. Livelihood of the poor It is unlikely that there will be a change to the livelihood of the poor from the baseline scenario related to this project. Access to affordable and clean energy services Not Required MDG Goal 1: Eradicate Extreme Poverty and Hunger Construction of a biogas power MDG Goal 1: Eradicate Extreme Not Required Increase in the amount of renewable No Change 0 Positive + 22

23 The baseline situation for electricity production at the mill is the use of a biomass boiler/turbine supplemented by diesel generator sets. The biomass fired turbine will continue to remain in operation and the project will change the baseline situation by substituting renewable biogas fired generation for the existing diesel fired electricity generation. generation system. Poverty and Hunger electricity generated from biogas (MWh) sold to the Kimbe grid. Excess capacity of the generation equipment installed in the project will be sold to PNG power to supply the Kimbe Grid. The existing generation capacity in the Kimbe grid consists of 0.8 MW of Hydro and 4.6 MW of diesel. The grid currently suffers from frequent power outages. The additional electricity capacity sold to the grid will enable the availability of power to be improved. Human and institutional capacity The project does not impact access to education, the livelihood/ education of women or changes in the social structure through distribution of income/assets. Quantitative employment and income generation The project will result in the creation of at least four positions, including a Supervisor, labourers and operators. The four positions will be permanent positions for local staff. At least one will be salary of 7 Kina per hour; one will be above 5 Kina per hour and the remaining two will be above 3 Kina per hour. All staff packages will be paid above the minimum wage set by the Government. NBPOL has a ruling from the PNG Department of Labour to pay a minimum of 2.15 Kina per hour, as referenced pg 26&27 of the NBPOL RSPO 4th Surveillance Report. Not Required MDG Goal 1: Eradicate Extreme Poverty and Hunger MDG Goal 2: Achieve Universal Primary Education MDG Goal 3: Promote Gender Equality and Empower Women A net increase in jobs has been created as a result of the project. MDG Goal 1: Eradicate Extreme Poverty and Hunger Not Required Number of jobs created No Change 0 Positive + 23

24 Balance of payments and investment There will be a very small overall reduction in demand for diesel fossil fuel imports into PNG and the project will import most of the materials including biogas engines. Overall this will have negligible impact on PNGs balance of payments. The overall project investment cost was over $7m, however this is negligible compared to PNGs 2012 GDP of $15.65b (World Bank) Technology transfer and technological self-reliance New technology will be employed in Papua New Guinea for the first time in the form of a biogas reactor and biogas engine for electricity generation. This will demonstrate the viability of biogas as an electricity source and will result in the first Power Purchase Agreement to be signed between PNG Power and a biogas electricity producer. The addition of an independent generation source in the Kimbe grid will enable PNG power to increase reliability of the grid. Not Required MDG Goal 8: Develop a Global Partnership for Development NBPOL will initiate the adoption of new technology for POME treatment and power generation in PNG. MDG Goal 8: Develop a Global Partnership for Development Not Required NBOPOL will conduct at least one Open Day after project construction is complete to share information about the biogas technology. NBPOL will have a Power Purchase Agreement in place between NBPOL & PNG Power No Change 0 Positive + Justification choices, data source and provision of references Air quality Water quality and quantity Soil condition Other pollutants Biodiversity Purchase see Purchase Order for the H2S Scrubber installed on the site, file PO13020 Scrubber Mosa Biogas. Refer to CDM PDD submitted to the CDM EBshowing that the Covered Lagoon is a sequential stage within the existing the existing wastewater system Refer to the CDM Validation report submitted to the CDM EB that states that the existing system meets the PNG water discharge standards.. The new treatment system will treat the incoming wastewater to the existing system, documents from the designer expect 85% COD removal rate. See attached file Covered Lagoon Digester Cross Section Generic 01 that shows the size of the new covered lagoon. The digester liquid volume capacity is 88,705m3 (based on the liquid level being one meter from the top of the digester) Sludge removal from the covered lagoon will be monitored as a GS and CDM parameter. See attached documentation from Guascor for the noise levels within 1m of the biogas engine room (file Guascor SFLG560 Noise Level ). Noise levels will be audited after commissioning of the biogas engine and mitigation measures put in place if found to be higher than acceptable levels. The covered lagoon is located on the road between the Mosa Mill and the existing wastewater ponds. This land was partly oil palm nursery and the other part was oil 24

25 Quality of employment Livelihood of the poor Access to affordable and clean energy services palm plantation as per the attached photo photo of land for new Mosa biogas project. Refer to the documentation submitted during the CDM validation process CAR01 - Mosa Locality Layout Locality. KPSR are responsible for developing the Project Safety Guidelines. See attached Mosa Methane Capture Project Safety Guidelines. Please see attached Purchase Order for the construction of the fence around the biogas plant (file PO MOM & KOM Biogas Project Fence ) No change. Please refer to the PNG Power data (July 2010) provided during CDM Validation which indicates the hydro and disel genset capacity of the Kimbe grid. Also refer to the ADB Report Papua New Guinea- Preparing the Power Sector which states that most rural generation facilities have fallen into poor conditions. Human and institutional capacity Quantitative employment and income generation Balance of payments and investment Technology transfer and technological selfreliance The biogas project is located within the Mosa Mill factory and will not have any impact on social structure. The biogas electricity will be sold to PNG Power so it will not be distributed directly to households via NBPOL. This will be monitored with payroll and employment appointment documentation. All the equipment has been imported, except some minor equipment that was purchased locally. The main item imported was the biogas engines, the evidence of the purchase of those items were provided to the DOE during the CDM Validation process. Please refer to the OPRA documentation that states that there are no biogas plants operating in PNG and the contract provided for the hiring of international consultant KPSR, showing this is new international technology transferred to PNG. 25

26 SECTION G. Sustainability Monitoring Plan The sustainability outcomes of the project will be monitored through the following parameters. No. 1 Indicator Air quality Mitigation measure The project will change the baseline situation by installing biogas capture equipment to prevent the uncontrolled release of gases from the ponds. A scrubber will be installed to remove hydrogen sulphide from the gas stream prior to combustion. As a result the smell produced by the ponds will be substantially reduced. Chosen parameter % H 2 S content of the treated biogas Current situation of parameter Approx ppm Future target for parameter <300 ppm Way of monitoring How Portable gas analyser or inline gas analyser after scrubber When Quarterly By who NBPOL No. 2 Indicator Water quality and quantity Mitigation measure The existing treatment system is designed to meet the PNG water discharge standards. Wastewater discharged from the new treatment system will further exceed the standards met by the existing system due to the addition of a sequential stage of treatment. The installation of a covered in-ground anaerobic digester will substantially increase the capacity of the treatment system. The installation of a cover will prevent rainwater from flowing into the primary treatment pond and therefore reduce the risk of untreated effluent being flushed through the ponds (and from the final pond into the watercourse) during heavy rains. Chosen parameter Wastewater quality discharged from the anaerobic digester will be maintained consistently below historical values of COD discharged from the factory as an indicator of improvements in the quality of discharged wastewater. Current situation of parameter 85,527 mg/l (average of sample in validated PDD) Future target for parameter < 85,527mg/l Way of monitoring How COD of wastewater discharged from the new digestor When Sampled once per week By who NBPOL No. 3 Indicator Access to affordable and clean energy services Mitigation measure Excess capacity of the generation equipment installed in the project will be sold to PNG power to supply the Kimbe Grid. The existing generation capacity in the Kimbe grid consists of 0.8 MW of Hydro and 4.6 MW of diesel. The grid currently suffers from frequent power outages. The additional electricity capacity sold to the grid will enable the availability of power to be improved. Chosen parameter Increase in the amount of renewable electricity generated from biogas 26

27 (MWh) sold to the Kimbe grid. Current situation of parameter 0 MWh Future target for parameter > 0 MWh Way of monitoring How Electricity meter When Monthly accumulative measurements By who NBPOL No. 4 Indicator Technology transfer and technological self-reliance Mitigation measure Parameter 1 Chosen parameter New technology will be employed in Papua New Guinea for the first time in the form of a biogas reactor and biogas engine for electricity generation. This will demonstrate the viability of biogas as an electricity source and will result in the first Power Purchase Agreement to be signed between PNG Power and a biogas electricity producer. The addition of an independent generation source in the Kimbe grid will enable PNG power to increase reliability of the grid. NBOPOL will conduct at least one open day after project construction is complete to share information about the biogas technology. Current situation of parameter No biogas technology operating in PNG. Future target for parameter Conduct at least one open day to share information about the technology Way of monitoring How By invitation to an open day When Within two years of commissioning the biogas system By who NBPOL Parameter 2 Chosen parameter NBPOL will have a Power Purchase Agreement in place between NBPOL & PNG Power Current situation of parameter No power purchase agreement Current situation of parameter Signed power purchase agreement Way of monitoring How Through negotiation with PNG Power When Prior to selling electricity to the grid By who NBPOL No. 5 Indicator Quality of employment Mitigation measure A biannual safety site walk-through to monitor the effectiveness and adequacy of the safety mitigation measures employed sighting at least the following:: Integrity of pipes and joins for leaks Integrity of CIGAR cover Check engine room for any sparks and sufficient ventilation Check all pumps and blowers for ventilation and sparks. adequate Personal Protection Equipment (PPE) at the genset room to avoid risk of noise exposure. Chosen parameter Biannual Safety Check Current situation of parameter Not Applicable Future target for parameter Completion of a Safety Check biannually Way of monitoring How Direct Inspection 27

28 When By who Bi-annually NBPOL No. 6 Indicator Eligibility Criteria for methane recovery projects Mitigation measure Some of the biogas is recovered for the delivery of energy services Project proponents will monitor the methane use over the period to ensure some of the biogas is used for electricity and/or heat purposes. Chosen parameter use of methane for energy purposes Current situation of parameter no methane used for energy purposes Future target for parameter some methane used for energy purposes Way of monitoring How - Metering the total volume of biogas fed to the generator(s) to ensure some methane is used for energy purposes during the monitoring period. When Continuously By who NBPOL No. 7 Indicator Quantitative employment and income generation Mitigation measure A net increase in jobs has been created as a result of the project. Chosen parameter Number of jobs created Current situation of parameter 0 Future target for parameter At least 4 jobs have been created Way of monitoring How Appointment memo/letter; annual payroll When Annually By who NBPOL No. 8 Indicator Soil Condition Mitigation measure Sludge removal from the covered lagoon will be dispersed aerobically on the Plantations Chosen parameter Sludge removal Current situation of parameter Not Applicable Future target for parameter All sludge removed from lagoon is dispersed aerobically on the Plantations Way of monitoring How An operations log book will be maintained to record the end use of any sludge When Per sludge removal event By who NBPOL No. 9 Indicator Compliance with RSPO requirements Mitigation measure Ensure NBPOL continue to comply with RSPO requirements 28

29 Chosen parameter RSPO Current situation of parameter Compliance Future target for parameter Compliance Way of monitoring How Surveillance assessment by Auditor for RSPO providing statement that NBPOL is approved as producer of RSPO Certified sustainable palm oil. When Annually By who RSPO Auditor. Additional remarks monitoring NBPOL will conduct a noise audit after the commissioning of the biogas project to ensure the noise levels are within acceptable levels. This will include an assessment when both the diesel gensets and biogas gensets are operating. If the noise levels are beyond the acceptable range as a result of the biogas plant, then an additional Gold Standard monitoring parameter will be added. 29

30 SECTION H. Additionality and conservativeness This section is only applicable if the section on additionality and/or your choice of baseline does not follow Gold Standard guidance H.1. Additionality To demonstrate Additionality, the Tool for the demonstration and assessment of additionality v06.1 has been applied. The tool defines a step-wise approach as follows: 1. Identification of alternatives to the project activity; 2. Investment analysis to determine that the proposed project activity is not the most economically or financially attractive; 3. Barriers analysis; and 4. Common practice analysis. The project activity is located in Papua New Guinea which is a Small Island Developing State. The latest guidelines for demonstrating additionality of microscale project activities V3, EB 63 Annex 23 state in paragraph 2a projects are additional if the geographic location is in a SIDS 3 and the project activity is less than 5MW or for Type III activities less than 20,000 tco2e/year. As the Type I renewable energy component of the project activity is 2.871MW 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 the Additionality Tool is applied for this aspect of the project. Step 1. Identification of alternatives to the project activity consistent with current laws and regulations The realistic and credible alternatives to the project activity are identified through the following two steps: Sub-step 1a. Define alternatives to the project activity: The project activity involves the provision of two outputs/services; wastewater treatment andelectricity generation for use on site (at the oil mill, the refinery and fractionation plant) and sale to the electricity grid (however this is automatically additional and therefore not applied in this Additionality assessment). Realistic and credible alternative scenarios that deliver similar outputs and services to the project activity are identified as follows: Wastewater Treatment W1. The use of open lagoons for the treatment of the wastewater; W2. Direct release of wastewaters to a nearby water body; W3. Anaerobic digester with methane recovery and flaring; 3 See 30

31 W4. Anaerobic digester with methane recovery and utilization for electricity or heat generation (the proposed project activity without CDM). Sub-step 1b. Consistency with mandatory laws and regulation: Alternatives that are not in compliance with applicable legal and regulatory requirements must be eliminated. Under PNG regulations, the quality of the liquid outflow to the environment must adhere to the criteria specified in the water discharge permits which are issued by the Department of Conservation and Environment. Therefore, it is illegal to directly discharge waste water into water bodies. Therefore alternative scenario W2, the direct release of wastewaters to a nearby water body is not in compliance with regulations and therefore must be eliminated. The use of open lagoons for the treatment of waste water is in compliance with regulation, and it is not mandatory to use specific technologies such as biogas digesters. The Mosa mill is in full compliance under these regulations and therefore faces no barrier for continuation of the existing practice which is alternative scenario W1. To date, there is no existing legislation that enforces anaerobic waste water treatment with coupled biogas collection and utilization. Thus there is no legal barrier to alternatives W1, W3 or W4. Therefore, alternative scenario W2 is the only scenario that does not comply with applicable laws and regulations. W2 is eliminated and will not be considered further. Step 2. Investment analysis In the step-wise approach described in the Tool for the demonstration and assessment of additionality, project participants may chose to perform either an investment analysis or a barrier analysis. The Barrier Analysis method has been chosen for this project and an investment analysis is not applied. Step 3. Barrier analysis The barrier analysis method has been chosen as a means to demonstrate additionality because the project activity faces barriers that prevent its implementation and these barriers do not prevent the implementation of the current practice (Scenarios W1). CDM registration of the project activity will help the proponents overcome these barriers. The barrier analysis was performed through the following two steps: Sub-step 3a. Identify barriers that would prevent the implementation of the proposed CDM project Activity: There are realistic and credible barriers that would prevent the implementation of the project if it were not registered as a CDM activity. These barriers identified for this project are classified as follows: Technological barriers Other Barriers (Business Culture Barriers - as specified in the original large scale methodology for biogas, AM22). 31

32 Technological barriers At the start date of the project there were no biogas projects at Palm Oil Mills in PNG 4. Anaerobic digestion performance risks are significant and information available on the actual performance of POME biogas plants in PNG was unavailable due to the lack of projects. Additional revenue stream through the sale of the CERs was seen as crucial to the investor (NBPOL) to help alleviate this performance uncertainty. 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 5, 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. Due to the lack of application of the technology, there is a non-availability of human capacity to operate and maintain the technology. Therefore the project utilises the expertise of an international consultant from New Zealand to design the system and a biogas engine will be imported from an Annex I country to enable electricity to be generated from biogas. The CDM helps alleviate this barrier by providing revenues to support the decision to invest in a technology which is yet to be demonstrated in PNG. Business Culture Barriers For NBPOL at the date of signing the first contract for implementation in September 2008, there were no covered lagoon biogas plant systems operating at a palm oil mill in Papua New guinea. 4 From a business culture point of view, it was difficult for NBPOL to have confidence in the performance of the technology and make a significant investment decision in the covered lagoon technology, especially given the significant technical and investment risks outlined previously. Furthermore, there are no legal incentives encouraging the business to move away from the existing practice of anaerobic local lagoons. Sub-step 3 b. Show that the identified barriers would not prevent the implementation of at least one of the alternatives (except the proposed project activity): W4 faces barriers as outlined in Sub-step 3a. Scenario s W1: the use of open lagoons, E2: electricity generation in the grid and E3: electricity generation using dedicated diesel gensets do not face technological, investment or business culture barriers whereas W3 and E1 both face barriers as follows: Technological Barriers W1 - The current situation of POME treatment in open anaerobic ponds is the most common practice of treating effluents in Papua New Guinea. This basic technology is available through local equipment suppliers, operated by local staff and presents no uncertainty or perceived risk. Therefore it does not face technical barriers. 4 Letter from the Papua New Guinea Palm Oil Research Association, 28/01/09 5 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

33 Business Culture Barriers W1: The continued use of open anaerobic ponds does not face any business culture barriers, and it is in compliance with all relevant regulations. Therefore, there is no motivation for the factory owners to change the current situation and no business culture barriers exist. W3: An anaerobic digester with methane recovery and flaring would face business culture barriers, because the scenario would require an investment in building the anaerobic digester and buying the flare, without any commercial return on the investment as the biogas would be flared and not used as an energy resource.. Summary Scenario s W1: the use of open lagoons face no barriers to their implementation/continued use. These scenarios represent the existing standard practice for Mosa mill and are not affected by the barriers which the proposed CDM project faces. Whereas W3 & W4 face barriers which would prevent the implementation of these scenarios. Step 4 Common Practice Analysis As per paragraph 6 of tool for Demonstration and assessment of additionality the project is in accordance with measure (c) methane destruction. The geographical area is defined as PNG, the entire host country as the default. Therefore the steps outlined in paragraph 47 are outlined below: Step 1: Calculate applicable output range as +/-50% of the design output or capacity of the proposed project activity: The service provided by the Project Activity is the treatment of wastewater at a palm oil mill. The design capacity of the proposed project activity is the volume of wastewater treated in the anaerobic digester. The project activity design capacity is to treat on average 274,399m 3 /yr wastewater from the palm oil mill. Therefore +/-50% of the design capacity range is 137,199.5m 3 /yr 411,598.5m 3 /yr. Step 2: In the applicable geographical area, identify all plants that deliver the same output or capacity, within the applicable output range calculated in Step 1, as the proposed project activity and have started commercial operation before the start date of the project. Note their number N all. Registered CDM project activities and projects activities undergoing validation shall not be included in this step: As there is insufficient information to identify the design capacity of all plants that treat wastewater at palm oil mills in PNG, to be conservative, all palm oil mills are considered in this step, excluding those that are applying for CDM ie N all = 4 Mill Name Mosa (this project) Kumbango Province in PNG West New Britain West New Britain Current wastewater treatment and electricity system Open anaerobic lagoons. Onsite biomass and diesel electricity production Open anaerobic lagoons. Onsite biomass and diesel electricity production Future wastewater electricity system Open anaerobic lagoons and CDM biogas system Open anaerobic lagoons and CDM biogas system 33

34 Kapiura West New Britain Open anaerobic lagoons. Onsite biomass Open anaerobic lagoons and diesel electricity production and CDM biogas system Numundo West New Britain Open anaerobic lagoons. Onsite biomass Open anaerobic lagoons and diesel electricity production and CDM biogas system Warastone West New Britain Mill under construction Open anaerobic lagoons and CDM biogas system Hargy West New Britain Open anaerobic lagoons. Onsite biomass Open anaerobic lagoons and diesel electricity production and CDM biogas system Navo West New Britain Open anaerobic lagoons and some EFB Open anaerobic lagoons composting. Onsite biomass and diesel and CDM biogas system electricity production Gusap Morobe Open anaerobic lagoons. Onsite biomass and diesel electricity production N/A Hagita Milne Bay Open anaerobic lagoons. Onsite biomass Open anaerobic lagoons and diesel electricity production and CDM biogas system Sumbaripa Oro Open anaerobic lagoons. Onsite biomass and diesel electricity production N/A Mamba Oro Open anaerobic lagoons. Onsite biomass and diesel electricity production N/A Lakurumau New Ireland Open anaerobic lagoons. Onsite biomass and diesel electricity production N/A Sangara Oro Open anaerobic lagoons. Onsite biomass Open anaerobic lagoons and diesel electricity production and CDM biogas system National data from the Papua New Guinea Oil Palm Research Association (PNGOPRA) 6 Step 3: Within plants identified in Step 2, identify those that apply technologies different that the technology applied in the proposed project activity. Note their number N diff. Different technologies The different technologies available to deliver the same output (treated wastewater at the palm oil mill) and differ by (a) energy fuel are: (i) Treatment of wastewater from palm oil mill in open anaerobic lagoons where no energy biogas fuel is captured (prevailing practice) (ii) Treatment of wastewater from palm oil mill in an enclosed anaerobic digestor system where energy biogas fuel is captured and used for fuel (biogas projects, ie the project activity) The project activity involves technology (ii) whereas the 4 other sites use technology (i). Therefore: N diff = 4. Step 4: Calculate factor F=1-N diff /N all representing the share of plants using technology similar to the technology used in the proposed project activity in all plants that deliver the same output or capacity as the proposed project activity. F = 0 N all -N diff = 0 As F is equal to 0 and N all N diff is equal to 0, the proposed project activity is not common practice and therefore the project is additional. 6 Letter from the Papua New Guinea Palm Oil Palm Research Association, 29/11/11 34

35 Conclusion All steps in the Additionality Tool are satisfied; therefore the proposed project activity is additional. H.2. Conservativeness To demonstrate Additionality, the Tool for the demonstration and assessment of additionality v06 has been applied. This exceeds the requirements of Attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM projects which states that project participants shall provide an explanation to show that the project activity would not have occurred anyway due to at least one barrier. The calculation of emission reductions involves a number of elements of conservativeness which are compounded together to ensure a high level of conservativeness. This includes: Use of a discount factor of 0.89 in the determination of the COD removal ratio used to calculate baseline methane emissions from wastewater treatment. Use of the IPCC lower value of 0.21 kgch4/kg COD for the methane producing capacity of wastewater in the baseline. The IPCC default value of 0.25 is conservatively corrected to Use if a model correction factor of 0.94 to discount methane emissions from the baseline treatment system. Use of a model correction factor of 1.06 to inflate project emissions from uncovered lagoons during operation of the project. Use of a default factor of 0.9 for the capture efficiency of biogas recovery equipment to account for project emissions from leakage. In effect this results in the assumption that 10% of all recovered gas is lost through physical leakage from equipment which is an extremely conservative assumption. The emission reductions are calculated as the lowest of either: (1) the monitored volume of methane captured and destroyed or (2) the theoretical emission reductions calculated from the actual project COD flows and the historical removal efficiency of the existing system. This ensures that any gains in methane production per unit of COD achieved by the new treatment system do not result in the creation of emission reduction credits. In addition, the project does not claim baseline emissions from electricity use in the baseline wastewater treatment system. This is countered by the fact that Option a) of AMS.I.D is chosen for the emissions factor for the electricity component. Option b) of AMS.I.D is not feasible for NBPOL to carry out, as it relies on data annually from PNG Power. In order to complete the emissions factor, NBPOL needed updated data from PNG Power and they tried many different ways to access the data from PNG Power. Eventually it took 2 years to receive the most updated data. Therefore NBPOL would be unable to update the emissions factor every year and unable to arrange issuance for the GS CERs and the much needed revenue for the projects. However, the difference in calculating the EF according to Option a) (0.666tCO 2 e/mwh) or Option b) (0.625tCO 2 e/mwh for the latest year data available 2008) results in the difference in 293 CERs in the first year. This represents less than 1% (0.6%) of the projects total CERs in the first year. Therefore, on the grounds of difficulty in accessing the data annually and that the overall impact on conservativeness is not material, Option a) has been applied. 35

36 36

37 ANNEX 1 ODA declarations NBPOL is self financing the project therefore no ODA is used to finance the project. Two letters of statement regarding the non-use of ODA and the financing for the project are attached. 37

38 38