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: Kumbango POME methane capture project Version: Version 12 Date: 21 August 2011 A.2. Description of the small-scale project activity: Palm Oil is produced at the New Britain Palm Oil Limited (NBPOL) Kumbango 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 10 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 produces large amounts of methane which is freely released to the atmosphere. The Kumbango mill is currently not connected to the local PNG electricity grid n 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 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 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 (2014). A flare will be installed to combust any excess biogas that cannot be utilised in the biogas engine. When the additional genset is installed, the flare will remain inline and in use for safety. 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. A.3. Project participants: Name of Party involved Private and/or public entity(ies) project participants Kindly indicate if the Party involved wishes to be considered as project participant Papua New Guinea New Britain Palm Oil Limited (NBPOL) No

4 (Host) Carbon Bridge Pte Ltd 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: Kumbango 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 Kumbango Palm Oil Mill and Refinery which is located within NBPOLs Kumbango Plantation. Kumbango Plantation is located within West New Britain Province, Papua New Guinea. The precise co-ordinates of the biogas project activity is o S, o E. The precise location of the Kumbango Mill is o S, o E. The precise location of the Kumbango Oil Refinery is o S, o 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 Kumbango Mill Figure A b: Location of the Project Activity, West New Britain Province 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 generate renewable electricity from biogas for sale to the electricity grid. 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) The renewable electricity from biogas will also displace electricity from a separate diesel based mini-grid system supplying power to the Refinery and Fractionation plant. The relevant type and category for renewable electricity projects connected to a grid is: Type I: Renewable Energy Projects Category F: Renewable electricity generation for captive use and mini-grid 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 digestor equipped with a system for the capture, collection and utilization of biogas. This in-ground anaerobic digestor is designed to treat wastewater prior to discharge into the existing anaerobic pond system. Construction of the new digestor involves the excavation of a large in-ground pit and the installation of a network of pipes on the digestor floor. When completed, untreated effluent from the mill will be pumped into the digestor through this network of pipes. The digestor 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. Any sludge removed from the system will be applied to land within the plantation. The digestor 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 digestor 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 2011 (phase I) and a third engine is to be installed 2014 (phase II). Any excess biogas in 2014 will be combusted in the Kumbango Oil Refinery located on site at the Kumbango Oil Mill. A flare will be installed to combust any excess biogas that cannot be utilised in the biogas engines or oil refinery. 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 6

7 Speed Frequency Total capacity installed (Phase I and Phase II) Table A.4.2.a: Engine Specifications 1500 rpm 50 Hz (2+1) x 953kWe = 2,859kWe 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 Kumbango oil mill and will also be sold to the grid. Electricity generated by the project activity will be supplied to the Kumbango mill compound, executive compound, the Kumbango Oil refinery and fractionation plants and the loads associated with operating the Project Activity. The renewable electricity will also be utilised as an auxiliary supply for the Kumbango palm oil mill and Kumbango kernel mill during times when the existing biomass turbines do not function due to mill shutdown. The Kumbango fractionation plants are part of the oil refinery adjacent to Kumbango mill which utilises a separate power circuit supplied by diesel gensets that is physically isolated from the mill circuit. Electricity will also be supplied to the local power authority to be distributed through the Kimbe Power Grid. Prior to implementation of the project activity, the mill, refinery and all associated facilities were not connected to the PNG Power Kimbe 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 Kumbango mill met the legal requirements for wastewater treatment and discharge. 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 diesel fired electricity at the Kumbango Oil Refinery and Fractionation plant, which comprise of two 728 kw diesel units and one 880 kw unit, and also supply electricity to the grid. The existing diesel power plants 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 , , , , , , ,141 Total estimated reductions (tonnes of CO2 e) 439,527 Total number of crediting years 7 Annual average over the crediting period of estimated reductions (tonnes of CO2 e) 62,790 A.4.4. Public funding of the small-scale project activity: No public funding will be used for the project activity. 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 Mosa Mill CDM project is the closest to the Kumbango 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 Kumbango 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 8

9 Warastone Mill Numundo Mill Kumbango Mill Kapiura Mill Figure A.4.5.a: Location of NBPOL s CDM Mosa Projects, Mill West New Britain Province Figure A.4.5.b: Location of NBPOL s CDM Projects, West New Britain Province 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 for projects that 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 methodologies: AMSI.D: Grid Connected renewable electricity generation (Version 16, EB54) AMSI.F: Renewable electricity generation for captive use and mini-grid (Version1, 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) 9

10 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; (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 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). 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

11 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 (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. 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). The recovered biogas is used to generate electricity for export to the grid which is covered under paragraph 3 (a). Therefore, the corresponding methodology is AMSI.D and AMSI.F. The project does not involve the bottling of biogas and therefore this requirement is not applicable. 6 For project activities covered under paragraph 3 The project does not involve the 11

12 (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 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 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. 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. 12

13 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 location of the wastewater treatment plant is uniquely defined as being within the boundaries of the Kumbango Plantation and the source generating the wastewater is the Kumbango 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. The project is eligible to use small-scale methodology AMSI.F as the renewable biogas produced electricity will be used to displace electricity from the carbon intensive mini-gird at the Refinery and Fractionation plant. The Refinery and Fractionation plant use a separate diesel mini-grid system as outlined in Section B.4. Electricity displaced from the Kumbango Oil Mill electricity grid system will not be claimed due to complications with the application of emission factor calculations for minigrids with biomass and fossil fuels. Table B.2.b shows how the project complies with the applicability conditions described in AMSI.F. 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 user(s). The project activity will displace electricity from an electricity distribution system that is or would have been supplied by at least one fossil fuel fired generating unit i.e., in the absence of the project activity, the users would have been supplied electricity from one or more sources of (a) national or a regional grid (grid hereafter); (b) Fossil fuel fired captive power plant; or (c) carbon intensive mini-grid. 2 For the purpose of this methodology, a minigrid is defined as small-scale power system with a total capacity not exceeding 15 MW (i.e., the sum of installed capacities of all generators connected to the mini-grid is equal to or less than 15 MW) which is not connected to a national or a regional grid. 3 Project activities or project activity components supplying electricity to a grid shall apply AMS-I.D. Project activities for standalone off-the-grid power systems supplying electricity to households/users Project Scenario The project activity involves the installation of 3 x 954kW gensets to generate electricity from renewable biogas. The project activity will displace electricity from the onsite minigrid system providing power to the Refinery and Fractionation plant which is made up of two existing 728 kw diesel units and one 880 kw unit. Therefore option (c) applies. The minigrid system providing power to the Refinery and Fractionation plant is made up of two existing 728 kw diesel units and one 880 kw unit. It is not connected to a national or regional grid. The electricity exported to the grid applies AMS- I.D methodology. 13

14 included in the boundary are eligible under AMS-I.A. 4 Hydro power plants with reservoirs that satisfy at least one of the three conditions 5 For biomass power plants, no other biomass other than renewable biomass are to be used in the project plant. 6 This methodology is applicable for 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 addition, (c) involve a retrofit of (an) existing plant(s); or (d) involve a replacement of (an) existing plant(s). 7 In the case of project activities that involve the capacity 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. 9 If the unit added has both renewable and non-renewable components (e.g., a wind/diesel unit), the eligibility limit of 15 MW for a small-scale CDM project activity applies only to the renewable component. If the unit added co-fires fossil fuel, the capacity of the entire unit shall not exceed the limit of 15 MW. 10 Combined heat and power (co-generation) systems are not eligible under this category. 11 In case electricity produced by the project activity is delivered to another facility or facilities within the project boundary, a contract between the supplier and consumer(s) of the electricity will have to be entered into specifying that only the facility generating the electricity can claim emission reductions from the electricity displaced. Table B.2.c: Applicability Conditions for AMSI.F The project activity 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 is a new biogas facility. The electricity produced by the project activity will displace electricity at the diesel mini-grid supplying power to the Refinery and Fractionation plants. The existing diesel units will not continue to operate after the implementation of the project activity. There are no renewable energy power plants operating in this grid. The project is a new biogas facility. There are no renewable energy power plants operating in the diesel minigrid system. 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 replacement of an existing facility. The project is a new biogas facility. Therefore, it does not involve the addition of renewable generation units. The project plant is not a combined heat power system. The project does not generate steam and/or heat. No electricity will be delivered to another facility within the project boundary. NBPOL has invested in the project activity and is the owner of the oil palm site. 14

15 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 methodologies AMSI.D and AMSI.F. As the project will be exporting renewable electricity to the grid it is eligible to use AMSI.D. Table B.2.c shows how the project complies with the applicability conditions described in 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 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 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 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 is a new biogas facility. Therefore, it does not involve the addition of renewable generation units at an existing renewable power generation facility. The installed capacity of the power plant is 2.86MW 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 project is a new biogas facility. Therefore, it does not involve the addition of renewable generation units at an existing renewable power generation facility. 15

16 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.c: Applicability Conditions for AMSI.D The project is a new facility and therefore does not involve the retrofit or modification of an existing facility. 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 at Kumbango Mill within the Kumbango Plantation. The facilities affected by the project activity are: the existing open anaerobic ponds, the new covered anaerobic digestor, the new biogas collection and cleaning system, the new biogas engines and the oil palm refinery boilers. A graphical depiction of the project boundary is shown in Figures B.3.a and B.3.b. 16

17 Kimbe Power Grid Baseline Description Ru Hydro Power Station Kimbe Diesel Power Station Mill Compound Electricity 3.5 MW Steam Turbine Kumbango Mill Grid Kumbango Kernel Mill 1.2 MW Steam Turbine Biomass Boilers Electricity 1.5 MW Steam Turbine Electricity Diesel Engines Atmosphere Executive Compound Kumbango Palm Oil Mill Wastewater Anaerobic Open Ponds Methane Wastewater Local Waterways Kumbango Oil Palm Refinery Kumbango Fractionation Plants Diesel Boiler Kumbango Refinery & Fractionation Mini Grid Diesel Engines Aerobic Land Application Biosolid Figure B.3.a: Representation of the Baseline Scenario 17

18 Lock-out switch Lock-out switch CDM Executive Board Ru Hydro Power Station Kimbe Power Grid Kimbe Diesel Power Station Project Boundary Executive Compound Mill Compound Kumbango Kernel Mill 3.5 MW Steam Turbine Electricity 1.2 MW Steam Turbine Biomass Boilers Electricity 1.5 MW Steam Turbine Electricity Diesel Engines Electricity Biogas Engines Biogas Plant Biogas Treatment Oil Palm Refinery Boilers Biogas Kumbango Palm Oil Mill Wastewater Covered Digester Sludge Wastewater Flare Open Anaerobic Ponds (same as baseline system) Wastewater Local Waterways Sludge Dewatering Kumbango Oil Palm Refinery Kumbango Fractionation Plants Aerobic Land Application Biosolid Kumbango Refinery Diesel Engines Metering locations Figure B.3.b: Representation of the Project Boundary 18

19 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 ten 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 digestor installed prior to the inlet of the baseline pond system. Wastewater treated in the new digestor 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 Kumbango 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, both the Kumbango Palm Oil Mill and Oil Refinery 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 Kumbango Palm Oil Mill because it does not require further investment in equipment and because the pond system is a lowtech 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 ten 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 19

20 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 provided to the DOE during validation. Historical records are unavailable for the COD removal efficiency of the baseline wastewater treatment system. Therefore in accordance with AMSIII.H section 19 (a), removal efficiency has been determined through a ten day measurement campaign. The total COD removals of the pond system were determined through measurements of the difference between COD inflows and COD outflows. The removal ratio of the existing system has been found to be 87.03% 5 of total COD inflows as per table B.4.c below. When multiplied by 0.89 to account for uncertainties associated with the ten day measurement campaign, the resulting removal ratio is 77.46% 5. As shown in data published by the World Meteorological Organisation 6, the temperatures in New Britain are consistently between 23 C and 32 C throughout the year, including September-October when the measurements were taken. The mill was operating under normal conditions when the measurements were taken and the average flow rate of wastewater was 1,089 m 3 /day. Therefore, the measurements were taken during a period which is representative of typical operating conditions. Table B.4.b: Measurement Campaign to determine removal Efficiency 5 For calculation of removal efficiency refer to the emission reduction spreadsheet submitted with the PDD

21 As described further in section B.6, any sludge removed from the ponds in the baseline was applied to land aerobically. Sludge removal at the site was infrequent and periodic, on an as needs basis. 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, the oil palm refinery and fractionation plants and also for sale to PNG Power. Emission reductions associated with electricity displaced from the Kumbango Oil Mill electricity grid system will not be claimed. Small scale methodology AMSI.F applies for the biogas electricity displacing the diesel mini-grid suppling Kumbango Oil Refinery and Fractionation plant. Small scale methodology AMSI.D applies for the biogas power displacing the PNG power grid at Kimbe. Diesel mini-grid (AMISI.F) Electricity for the oil refinery and fractionation plants is provided exclusively of a diesel minigrid system made up of diesel power plants at the Kumbango Oil Refinery and Fractionation plant comprising of two existing 728 kw diesel units and one 880 kw unit. Therefore Section 13 of AMSI.F applies. The continuation of this diesel power minigrid at the Kumbango Oil Refinery is the most likely baseline scenario is the continued use of the diesel system as opposed to alternative options in the crediting period because: switching to grid electricity- this scenario is unlikely because the only reason the Kumbango site will now be connected to the grid is to sell the biogas renewable electricity to PNG Power. None of the Palm Oil Mills in West New Britain are connected to the grid, as they are all supplied by off-grid generation using a combination of biomass fired steam turbines and diesel engines, as confirmed by the PNG Palm Oil Research Association 7. using other fossil fuels like natural gas generation this scenario is unlikely within this crediting period as there is currently no natural gas electricity generation on West New Britain Island 8. switching to renewable fuel like oil palm residues a mass balance calculation of availability of biomass and turbine capacity has been provided to the DOE to demonstrate the installed biomass equipment are not operating at full capacity. This is why, despite NBPOL having recently installed an additional 3.5MW biomass turbine in 2008, the refinery and fractionation plants still continue to operate with diesel gensets. Therefore in the absence of the project activity, the Kumbango Oil Refinery would have continued to use diesel power. The diesel gensets at the Kumbango Oil Refinery were delivered new in December 2002, and NBPOL maintain and overhaul their diesel gensets until it is necessary to replace them. In the absence of the project activity, NBPOL would continue to maintain and when necessary, replace the diesel generators, since they are providing the necessary power to operate the Oil Refinery. Biogas Electricity sold to the PNG Power Grid at Kimbe (AMSI.D) 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 7 Letter from the Papua New Guinea Palm Oil Research Association, 28/01/09 8 PNG Power Ltd,

22 CDM Executive Board baseline situation for electricity exported to the grid involves the generation of electricity by fossil fuel and renewable power plants connected to the PNG Power Kimbe Grid. There is no published delineation of the PNG Power Kimbe Grid, therefore the Kimbe electricity system has been defined in consultation with PNG Power as follows: The Kimbe power 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 kg CO2e/kWh) 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, 2006, 2007 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 Hydro (MWh) a , , , , Total Generation (MWh) a 10, , , , , Percentage Hydro 6.96% 20.96% 17.77% 20.66% 15.79% a Kimbe System Data, PNG Power Limited Table B.4.c: Generation of Electricity in the PNG Power Kimbe Grid (PNG Power Limited) 22

23 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 PNG Power 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 AMSI.D 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 9. 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. 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 and updated PDD 9 Letter to the UNFCCC secretariat, 6/10/08 23