PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02

Transcription

1 CDM Executive Board page 1 CLEAN DEVELOPMENT MECHANISM PROJECT DESIGN DOCUMENT FORM (CDM-PDD) Version 02 - in effect as of: 1 July 2004) CONTENTS A. General description of project activity B. Application of a baseline methodology C. Duration of the project activity / Crediting period D. Application of a monitoring methodology and plan E. Estimation of GHG emissions by sources F. Environmental impacts G. Stakeholders comments Annexes Annex 1: Contact information on participants in the project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring plan Annex 5: Details of financial analysis

2 CDM Executive Board page 2 SECTION A. General description of project activity A.1 Title of the project activity: Kim Loong Methane Recovery for Onsite Utilization Project at Kota Tinggi, Johor, Malaysia. Version 1.2 June 17, 2006 A.2. Description of the project activity: The use of anaerobic ponds is the most common technology for wastewater treatment in the palm oil sector in Malaysia. Roughly 85% of the palm oil mills use this low-technology way of cleaning their organic rich wastewater. The ponds give rise to annual methane emissions of 0.5 million tons (or more than 10 million tons of CO 2 e) and are thus a major source of GHG emissions from Malaysia 1. This project aims to reduce the methane emissions from the existing treatment of Palm Oil Mill Effluent (POME) from Kim Loong Palm Oil Mill at Kota Tinggi, Johor State of Malaysia. The methane emissions are avoided by closing the existing anaerobic digester tanks to capture the methane for utilization in on-site heat and power generation. The current situation The Kim Loong Palm Oil Mill (hereafter referred as the mill ) is processing oil palm Fresh Fruit Bunch (FFB) into crude palm oil and crude palm kernel oil. Currently, this mill is processing on average of 75 metric tons (t) of FFB per hour which is equivalent to approximately 430,000 t of FFB per year. The availability of FFB varies from year to year from a combination of biological (how much FFB is produced) and commercial (how much FFB is purchased from other plantations). The maximum production of the existing Kota Tinggi palm oil mill is 650,000 t FFB per year. For the processing of FFB, steam is used for sterilization and hot water for dilution. In addition, empty fruit bunches are squeezed to reduce the moisture content prior to be used as fuel for boiler. All these streams produce wastewater with high organic content, known as Palm Oil Mill Effluent (POME). The mill produces about 0.61 m 3 POME per ton FFB. The POME has a high content of organic matter typically 55,000 mg Chemical Oxygen Demand (COD)/litre of raw POME. POME is immediately piped from the mill to a de-oiling tank. It is retained in the tank for half a day to allow the residue palm oil to separate and be collected before it is pumped to a cooling and acidification pond for further treatment. Currently the remaining wastewater at the Kim Loong plant is treated in open anaerobic tanks

3 CDM Executive Board page 3 followed by anaerobic lagoons where the methane gas formed during the anaerobic conditions (both tanks and lagoons) is emitted to the atmosphere. The COD in the outlet from the anaerobic tanks is around 2000 mg COD/litre. The last polishing of the waste water down to the discharge level of 100 mg COD/litre is done in aerobic ponds. The current heat and power consumption on-site is produced using biomass waste (palm kernel shells, mesocarp fibres and empty fruit bunches) from the plant with a fossil diesel generator as backup. The use of fossil diesel is required during start up, mal-functioning of biomass boilers or shortage of biomass fuel. There is an ongoing expansion of the palm oil mill to incorporate facilities in downstream palm oil processing at the site. The expansion includes extraction of tocotrienols and other products from crude palm oil, and further recovery of oil from mesocarp fibre. The expansion will not increase the amount of effluent since the input of FFB will remain constant and the new production process does not produce wastewater. The new production facilities will increase the need for energy. The power need will be 600 kw and 8-10 t steam per hour. With 300 working days of 24 hours this transforms into an electricity demand of 4320 MWh and a steam demand of 195 TJ (with 10 t steam/hour and GJ/t steam) The existing biomass boiler will have to be upgraded to cater for this increased energy demand. The biomass residues from the existing production will not be sufficient to cater for this increase in energy demand and the baseline for the expansion will be the use of fossil diesel. The biogas from the project will avoid such an increase in use of fossil fuels. CDM Project Activity The Clean Development Mechanism (CDM) project activity will avoid the methane emissions from the current anaerobic wastewater treatment (open tanks and lagoons) by capturing the methane in a closed biogas system. The proposed CDM project activities will include: Converting the current open tanks in the mill to closed anaerobic digesters (biogas system); Replacing the anaerobic lagoons with closed anaerobic digesters; Replacing future use of fossil diesel with POME biogas. Biogas (consisting 65% methane by volume) produced from the closed anaerobic digesters will be captured, collected and used in a boiler to produce steam for direct steam application (heat as energy source). Part of the steam generated will be used on site for electricity generation for the present plant s own consumption and also other planned integrated facilities on site as mentioned above. The project activity will contribute to sustainable development by: 1 Danida/Pusat Tenaga Malaysia: Study on CDM Potential in Waste Sectors in Malaysia. Presentation on January 26, 2005 at Ministry of Energy, Water and Communication by Soon Hun Yang

4 CDM Executive Board page 4 Reducing air pollution from the open ponds for anaerobic treatment of the POME. The emissions to air include methane, volatile fatty acids and H 2 S. These emissions contribute to global climate change, acid rain and offensive smell in the local area Reducing water pollution from the POME as the new biogas system will provide better controlled and more efficient process for removal of the organic content of the POME Reducing the dependence on fossil fuels by replacing fossil diesel by biogas A.3. Project participants: Name of Party involved ((host) indicates a host Party) Malaysia Private and/or public entity(ies) project participants (*) (as applicable) Kim Loong Power Sdn. Bhd Private party Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) Yes Switzerland Vitol S.A Private party Yes Malaysia First Carbon Sdn Bhd. Private party No Norway ECON Carbon AS, Private party No A.4. Technical description of the project activity: A.4.1. Location of the project activity: A Host Party(ies): Malaysia (Host country) A Region/State/Province etc.: Johor

5 CDM Executive Board page 5 A City/Town/Community etc: Kota Tinggi A Detail of physical location, including information allowing the unique identification of this project activity (maximum one page): The CDM project will be physically implemented at the Kim Loong Palm Oil Mill located at 7 th Milestone Off Jalan Mawai, Kota Tinggi, Johor. Kota Tinggi is located approximately 1 hour by car North East from Johor Bahru, the capital city of Johor State, Malaysia. The location of the site is shown in the figure below: Project Site Figure 1: Project Location of CDM Project at Kim Loong Palm Oil Mill, Kota Tinggi A.4.2. Category(ies) of project activity: This methane avoidance project falls under waste handling and disposal (scope 13) category while the utilization of biogas (methane) as renewable energy source for power and heat on site is categorized as substitution of fossil fuel with renewable energy project activity (Scope 1).

6 CDM Executive Board page 6 A.4.3. Technology to be employed by the project activity: The project will replace the existing open anaerobic systems (open digester tanks and lagoons) with well-proven closed, anaerobic contact digesters. This closed anaerobic digester technology is well-proven globally for managing high organic waste and commonly referred to as biogas or anaerobic digestion technologies. The POME will be distributed into the closed digesters at appropriately spaced inlets at the bottom and flows to the top in an upward direction. The upward motion of the POME influent will improve the mixing in the digesters. The organic matters in the wastewater are decomposed under the controlled anaerobic process. The decomposition process leads to the formation of biogas containing CH 4 and CO 2. For a well designed and operated closed digester, the Chemical Oxygen Demand (COD) removal efficiency would be in the range of 90-95% while biogas containing CH 4 concentration of 60-65% can be achieved. Biogas (Methane) Digested effluent to aerobic ponds Closed Anaerobic digester Waste gas burner (flare) Steam Electricity Boiler POME Influent Compressor Steam turbine & generator Figure 2: Project Layout: Closed tank anaerobic digesters and biogas utilisation (Source: Own Illustration) The appearance of a similar closed anaerobic digester is illustrated below:

7 CDM Executive Board page 7 Figure 3: An Example of a POME Closed Anaerobic Digesters (Source: Novaviro Technology Sdn Bhd, 2004) The specific biogas technology employed in the project is developed in Malaysia based on global and local experience with biogas. Since Malaysia is the leading country in the world in the area of palm oil it is not surprising that biogas technology for the use in this sector is adapted locally. The use of biogas technology is a clear improvement of the existing open pond system in a number of ways: The process will be better controlled and thus give more consistent reduction in organic content of the discharge from the palm oil mill The air pollution from the waste water treatment is reduced, benefiting to both the local environment and the global climate The biogas system allows the use of the biogas to replace fossil fuels and thus promote renewable energy in Malaysia Finally, allowing the local adaptation of the biogas technology leads to significant cost reductions necessary for the spread of the technology in the palm oil sector. The biogas plants developed in industrial countries are typically twice as expensive as locally manufactured plant. This price differential makes the use of biogas prohibitive in the palm oil industry even if CERs can be claimed for the reductions in methane emissions. The development of a local biogas technology is thus a necessity for a long term sustainable implementation of biogas in the palm oil sector. It will also generate jobs in Malaysia to develop such equipment. The local development of the technology also secures the availability of skills for the operation and maintenance of the plant. In summary, the local adaptation of a globally available technology can be seen as the final stage of technology transfer. (For reference see for instance the IPCC special report: Methodological and technological issues in Technology Transfer ) 2 2 IPCC 2000: Special Report: Methodological and technological issues in Technology Transfer

8 CDM Executive Board page 8 A.4.4. Brief explanation of how the anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed CDM project activity, including why the emission reductions would not occur in the absence of the proposed project activity, taking into account national and/or sectoral policies and circumstances: Currently, methane generated from the open tanks and open lagoon systems at Kim Loong Palm Oil Mill is emitted to the atmosphere. This project proposes to capture the methane with the substitution of the open digester tanks and lagoons with a more efficient, closed anaerobic digester (biogas) system before discharging to the aerobic ponds. With the implementation of the project activities, the anthropogenic methane emissions from the open tanks and lagoons (baseline scenario) would be avoided. The utilization of biogas (methane) generated from closed tank digesters will reduce GHG emissions directly as well as supplying steam to generate electricity, substituting the diesel generator set. The total estimated emission reduction is estimated to be 451,421 tco 2 e over the entire crediting period. The maximum emission reductions can be achieved if the palm oil mill used to its maximum capacity will be 589,456 tco 2 e. The actual amount of emission reductions will be calculated ex post based on actual production. A Estimated amount of emission reductions over the chosen crediting period: Years Annual estimation of emission reductions in tonnes of CO2 e , , , , , , ,649 Total estimated reductions (tonnes of CO2 e) 451,421

9 CDM Executive Board page 9 Total number of crediting years Annual average over the crediting period of estimated reductions (tonnes of CO2 e) 7 (with the possibility of 2 times 7 years extension) 64,489 A.4.5. Public funding of the project activity: The project will be privately funded and will not involve any public funding or Official Development Assistance (ODA) in this project. Hence, there will be no diversion of ODA for this project.

10 CDM Executive Board page 10 SECTION B. Application of a baseline methodology B.1. Title and reference of the approved baseline methodology applied to the project activity: AM0022: Avoided Wastewater and On-site Energy Use Emissions in the Industrial Sector. Version 2, July B.1.1. Justification of the choice of the methodology and why it is applicable to the project activity: This project activity falls under sector scope 13 (waste handling and disposal) of the approved baseline methodology. There are two existing approved methodologies identified to be applicable to this project: AM0013: Avoided methane emissions from organic waste-water treatment- version, 3 AM0022: Avoided wastewater and on-site energy use emissions in the industrial sector. The AM 0013 may appear to be more applicable to this project since it was developed for methane avoidance and utilization based on a proposed Malaysian palm oil mill project. However, AM 0022 was chosen for this project with the following reasons: Both methodologies establish methane baseline emissions based on the amount of organic matter (COD) removed. The estimation of methane emissions in AM 0022 is considered more accurate than AM 0013 as AM 0022 includes the actual COD removal rate and detail quantifications of losses due to e.g. sedimentations while AM 0013 uses a fixed, generic value (Methane Conversion Factor) for establishing uncertainties 3 ; No specific POME based or related values or conditions applied to AM 0013, thus there appears no major advantage in using AM 0013 over AM A comparison of the project to the applicability of selected baseline methodology (AM 0022) is presented in the table below: 3 Malaysia Energy Centre / DANIDA. (2005). Study on CDM Baseline Methodologies for POME Methane Recovery Project in Malaysia. (Unpublished).

11 CDM Executive Board page 11 Table 1: Comparison of project conditions to AM0022 applicability criteria Applicability Criteria of AM0022 Project is implemented in existing lagoonbased industrial waste water treatment facilities for wastewater with high organic loading. The organic wastewater contains simple organic compounds (mono-saccharides). If the methodology is used for waste water containing materials not akin to simple sugars a CH 4 emissions factor different from 0.21 kg CH 4 /kgcod can be estimated and applied. The methodology is applicable only to the improvement of existing wastewater treatment facilities. It is not applicable for new facilities to be built or new build to extend current site capacity. The current lagoon based system is in full compliance with existing rules and regulations. The depth of the anaerobic lagoons should be at least 1m. The temperature of the wastewater in the anaerobic lagoons is always at least 15 C. Project conditions This project involves POME which is a high organic content wastewater treated in open anaerobic digester tanks and lagoons. There appears no difference in anaerobic processes in open digester tanks and lagoons as both are designed to operate anaerobically with depth more than 1 m. The only notable difference is the sludge residence time which is taken accounted of in the baseline calculation in AM The POME consists more complex organic compounds (e.g. lipids) and thus expected to yield a higher CH 4 emissions factor per kg COD digested. To ensure conservativeness, the 0.21 kg CH 4 /kgcod (default value in AM 0013 and AM 0022) is used in this project. This project involves upgrading of the existing anaerobic wastewater treatment systems that are already in placed. Furthermore, it does not involve an increase in the milling capacity of the plant. The current wastewater treatment systems, combining the anaerobic and subsequent aerobic (aerobic ponds and sequencing batch reactors) are complying with the effluent discharge standards set by the Malaysian Department of Environment (DOE) under the Environment Quality (Prescribed Premises)(Crude Palm Oil) Regulations, In this project, the anaerobic digester tanks are around 13 m in height with a depth of at least 10 m. The open anaerobic lagoons are 5-6 m in depth which is clearly above the criteria. The temperature of the wastewater fed into the open tanks is about 40 C and the temperature at the outlet is measured to be around 30 C. The annual mean ambient temperature in Malaysia is between C, therefore clearly meets this criterion.

12 CDM Executive Board page 12 Applicability Criteria of AM0022 In the project, the biogas recovered from the anaerobic treatment system is used onsite for heat and/or power generation, surplus biogas is flared. Heat and electricity needs per unit input of the treatment facility remain largely unchanged before and after the project. Data requirements as laid out in the related monitoring methodology are fulfilled. In particular, organic materials flow into and out of the considered lagoon based treatment system and the contribution of different removal process can be quantified (measured or estimated) Project conditions This project plans to recover heat and electricity for on-site uses only. There will be no major changes to the heat and electricity need for the operation of existing open tank digesters and lagoons (before project) compared to the closed tank digesters (after project). The energy requirement of feeding in the open tanks is expected to be similar to the requirement for up flow feeding to the closed tank digesters. No heating requirement is needed for the closed tank digesters as the system will be operated at mesophilic conditions (35-45 C) under ambient temperature conditions. The only additional electricity needed is relatively small, for the compressors and a gas pump. All the data specified in the monitoring methodology can be easily measured or estimated. Clear and specific sampling locations for POME inlet and outlet sampling have been identified. The reliability and applicability of the emission calculation is expected to be higher with the use of project derived data in this project. B.2. Description of how the methodology is applied in the context of the project activity: The AM 0022 is applicable for project activities involving the introduction of a new anaerobic treatment facility (in this project, the closed tank anaerobic digesters) into an existing lagoon-based treatment system (in this project, the open anaerobic tanks and lagoons) for industrial organic waste water treatment (in this project, the POME). The steps involved in the application of methodology AM 0022 are as below: 1. Demonstrate project additionality using the consolidated additionality assessment tool: Tool for the demonstration and assessment of additionality (Version 2, Nov 05) approved by the UNFCCC CDM Executive Board. (See details in Section B 3);

13 CDM Executive Board page Definition of baseline scenario : to demonstrate the continuation of current practices is the baseline in the absence of the project activity (See details in Section B 3); 3. Determination of project boundary (Section B 4); 4. Estimation of baseline emissions (Section E); 5. Estimation of project emissions, potential leakage and derive the emissions reductions (Section E); Key data necessary for the calculation of the calculation of the baseline emissions and the sources for their quantification are summarised in table 2 below: Table 2: Sources for data for baseline determination Type of Data Data source Data collection method Amount of POME (m 3 ) Kim Loong Measurement over last three years Organic content of POME (inlet to pond system) (COD/l) Organic content of discharge water (outlet of pond system) COD/l) Surface area of anaerobic ponds and existing tanks Sedimentation of organic matter in tanks Kim Loong Kim Loong Kim Loong Kim Loong Measurements collected for the PDD Measurements collected for the PDD Calculated based on map of the existing ponds Observation over operation time Methane emission factor IPCC AM00022 GWP of methane IPCC Diesel consumption Kim Loong Calculated future fuel need B.3. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered CDM project activity: The CDM Executive Board has given different elements of guidance to assess the baseline scenario and additionality for CDM projects. The AM00022 provides a framework for establishing the baseline scenario for the project activity and the Tool for demonstration and assessment of additionality addresses the issue of additionality.

14 CDM Executive Board page 14 The two activities determining the baseline and assessing additionality are closely linked and to some extent overlapping. In the following first the AM0022 baseline determination is concluded to identify the baseline alternative(s) and then the additionality tool is used to further substantiate the claim that the proposed project activity is additional. Baseline determination The baseline determination process from AM0022 is summarised in table 3. Table 3: AM0022 baseline determination process Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Listing a range of potential baseline options Select the barriers from the range of potential barriers that can be demonstrated to be significant in the context of the particular project under consideration Score the barrier Compare, through assessment of the barrier results, which is the most plausible option and determine whether, on balance, it can be shown that particular barriers drive a particular baseline option Investment analysis Conclusion Step 1: Listing a range of potential baseline options Five options are identified as plausible alternatives to assess in relation to determining the baseline: Option 1: Direct release of POME to nearby water body This option is not used in Malaysia as the high organic content of the POME would be very damaging to the water ecosystems and would disturb downstream use of the water. Option 2: Installation of new treatment system (activated sludge or filter bed type treatment) There has been no or very little experience in the palm oil industry with alternative, aerobic sewage treatment. The investment costs will be significantly higher than the conventional pond systems and possibly also technical difficulties in making such systems function with the POME. Since the existing systems can fulfil the environmental constraint there has also been no push for such solutions. Option 3: Continuation of the current situation (business as usual)

15 CDM Executive Board page 15 The present system of open ponds or tanks is the most common waste water treatment system for palm oil mills in Malaysia. 85% of the palm oil mills are using this system. The treated POME can be applied either to land (with a biological oxygen demand (BOD) requirement of 5000 mg/l) or to water ways (with a BOD requirement of 100 mg/l) 4 The anaerobic ponds are necessary in both cases to bring down the BOD from around 25,000 mg/l in the raw POME. For discharge to water ways it is customary as in the case of Kim Loong to have a final polishing with an aerobic system to remove the last 5% of the organic matter. Option 4: The proposed biogas system not undertaken as a CDM project activity There is very limited experience in Malaysia with biogas system for POME and a number of tests have been negative. This gives reluctance in the palm oil industry to enter into biogas projects. At the same time the investment cost are significant and the savings in energy costs from the generation of biogas are not in itself enough to make the investments attractive. Option 5: Composting of empty fruit bunches (EFB) and POME A new technology developed in recent years is composting of EFB and POME. Composting will reduce both waste stream and is thus an interesting alternative to the open ponds. The experiences with open field composting are mixed 5. There are significant technological uncertainties. The composting will also require significant extra investments both for open and even more for closed systems. In a case without CDM there will thus be significant barriers for the composting solution. Step 2: Select the barriers from the range of potential barriers that can be demonstrated to be significant in the context of the particular project under consideration Table 4 summarises the main types of barriers for project implementation and their significance. Table 4: The potential barriers and their significance Potential Barriers Legal Technical Financial Social Significance Absolute Most Significant Most Significant Significant 4 Dr. Shamsudin ab Latif, Deputy Director General of Department of Environment: The way forward: the need for better management of palm oil mill waste. Presentation on April 3, Dr. Anhar Suki, Golden Hope Plantations: Composting at Golden Hope Plantations Berhad, Presentation at April 3, 2006.

16 CDM Executive Board page 16 Business Culture Significant The legal barrier is an absolute barrier in the sense that illegal options can not be the baseline. Therefore no further assessment of this option will be carried out. Beyond the legal barrier, the technical and financial barriers are evaluated as the most significant. Existing and perceived technical and financial barriers can lead to cultural barriers. In many cases, there may be remaining barriers against change in common practice even if the technical and financial barriers have been overcome. Step 3: Score the barrier Table 5: Barrier test framework Barrier Tested Plausible Baseline Option Direct release New system Business as usual Biogas Compost Legal Does the practice violate any host country laws or regulations or is it not in compliance with them? Y N N N N Technical Is this technology option currently difficult to purchase through local equipment suppliers? Are skills and labour to operate and maintain this technology in the country insufficient? Is this technology outside common practice in similar industries in the country? NA Y N N N NA Y N (Y) (Y) NA Y N Y Y Is performance certainty not guaranteed with tolerance limits? NA N N N N Is there real or perceived technology risk associated with the technology? NA Y N Y Y Financial Is the technology intervention financially less attractive in comparison to other technologies (taking into account potential subsidies, soft loans or tax windows available)? NA Y N Y Y

17 CDM Executive Board page 17 Is equity participation difficult to find locally? NA (Y) N (Y) (Y) Is equity participation difficult to find internationally? NA NA NA NA NA Are site owners/project beneficiaries carrying any risk? NA Y N Y Y Social Is the understanding of the technology low in the host country/industry considered? NA Y N Y Y Business culture Is there a reluctance to change to alternative management practices in the absence of regulation? NA Y N Y Y Others Is there lack of experience in applying the technologies? NA Y N Y Y ** Y: Barrier exists N: Barrier does not exist NA: Question is not relevant Step 4: Compare, through assessment of the barrier results, which is the most plausible option and determine whether, on balance, it can be shown that particular barriers drive a particular baseline option After assessing the barrier results, the most plausible option is the third (business as usual), where least barriers are identified. Legal is an absolute barrier. Hence first option cannot be considered because it violates the host country s law stating that POME must be treated to certain acceptable quality before being released to water bodies. The second, fourth and fifth options are not economically attractive. They require additional construction, operational and maintenance costs. In additional, technical barriers exist where the less successful operation examples have been demonstrated. This leads again to a negative perception among management and investors against these technologies. Step 5: Investment analysis In situations whereby more than one baseline option results from the barrier analysis in steps 2, 3 and 4, the financial viability of each of these options should be assessed. In this case however, since only one option has been found to be the most plausible, a financial analysis is not needed for comparison purposes. A financial evaluation of the main alternative is conducted as part of the additionality argument below. Step 6: Conclusion The assessment of the different alternatives can be summarised as follows: Option 1: Direct discharge into water ways is prohibited by Malaysian law and thus not a possible alternative.

18 CDM Executive Board page 18 Option 2: Aerobic waste water treatment is facing both technical and financial barriers that will prevent it from being implemented. Option 3: Business as usual is the least costly solution as it does not include investment costs. At the same time this solution allows to fulfil legal requirements and the technical properties are known. Thus is also the least risky solution. Option 4: Biogas has significant technical and financial barriers as it requires extra investments and a technological risk that would demand extra financial attractiveness to overcome the decision barriers in the management. Option 5: Composting is facing both technical and financial barriers that will prevent it from being implemented. The existing POME treatment systems, combining open digester tanks, anaerobic lagoons followed by aerated ponds and sequencing batch reactor (SBR) is currently complying with the stipulated effluent discharge standards. Open digester tanks and lagoons are the most common and standard practices 6, in all palm oil mills in Malaysia, accepted by the Department of Environment, Malaysia. The current practice (business as usual) using open tanks and lagoons were reported to be able to remove > 95% of organic pollutant 7. Thus, there exists no legal requirement or any other motivation factors to implement options which will require additional investments. Malaysia has a scheme to promote renewable energy, the Small Renewable Energy Project (SREP) programme has been in place since This scheme addresses only projects with an aim to deliver power to the grid and is thus not relevant for the project at hand, where the generated energy will be used on site. Even beyond this point the SREP programme has not been successful, with only 12 MW installed from two projects in the five year period It can thus be concluded safely that the Malaysian energy policy has not been able to provide incentives that would have made the proposed biogas project a baseline. In conclusion continuation of the existing open pond system is the most likely scenario without CDM since it has the lowest investment costs (none) and the lowest technological risk (as the performance is know). Additionality assessment This section elaborates the additionality of this project. The consolidated additionality assessment tool approved by the UNFCCC CDM Executive Board was used. The additionality test includes the following steps: 6 Ma. A.N. (1999). Management of palm oil industrial waste in Malaysia. Paper presented at the Seminar on integrated waste management in Sarawak. Kuching, July Ma, A. N., Cheah, S. C. & Chow, M.C. (1993). Current status of palm oil processing wastes management in waste management in Malaysia: Current status and prospects for bioremediation. Yeoh, B.G. et al. (Eds), pg Economic Planning Unit, Prime Ministers Department, 2006: Ninth Malaysian Plan

19 CDM Executive Board page 19 Figure 4: Consolidated Additionality Assessment Tool Steps (Source: UNFCCC CDM EB. (2006). Tools for demonstration and assessment of additionality.) Each step of the assessment of additionality for the project activity is elaborated below: Step 0: Starting date The implementation of the project is expected to only start in June Project activity has thus not been implemented and therefore passes the starting date step. Step 1: Identification of alternatives consistent with laws and regulations In Malaysia all mills processing of oil palm fresh fruit bunches into crude palm oil, whether to an intermediate or final products, are licensed as prescribed premised under the Malaysian Environmental Quality (Prescribed Premises)(Crude Palm Oil) Regulations, In terms of environmental considerations including the treatment and discharge of POME, the governing regulation is the Environmental Quality Act Palm oil mill effluent (POME), as an extremely polluting effluent with high organic content, is legally regulated to ensure the discharge will not pollute the receiving environment.

20 CDM Executive Board page 20 Subsidiary legislations of the EQA 1974, the Environmental Quality (Sewage and Industrial Effluent) Regulations, 1979 stipulate the effluent discharge standards into any inland water (any river, streams, drains, lakes, sea and so forth). In this particular project, due to its proximity to surface drains and main road, Standard A of the above regulation was imposed on Kim Loong Palm Oil Mill at Kota Tinggi. The regulations however, do not specify the treatment technologies or requirement. In the above section on baseline definition it is established that the most likely baseline scenario is the existing open tanks and ponds system. Other legal alternatives have higher investment costs and all of them are also associated with real and perceived technology risks. Step 2: Investment analysis 2a Choice of analytical method The Tools for demonstrating and assessment of additionality suggests three options for an investment analysis in the additionality assessment: Simple investment analysis, Investment comparison analysis and Investment Benchmark analysis. Since the project has an additional source of revenue (saved fuel costs) compared with the baseline, the simple investment analysis can not be used and since there is only one alternative in the financial analysis the investment comparison analysis is not relevant. The remaining method is the Investment Benchmark Analysis. 2b Investment Benchmark Analysis The palm oil sector is generally very profitable. There are a large number of profitable investments to be made in the sector both upstream (in plantations and palm oil mills) and downstream - in processing of Crude Palm Oil to more refined products including vitamins, nutraceuticals, functional foods and biodiesel. In the internal comparison of investment options the Internal Rate of Return (IRR) is often used as benchmark. Here the project IRR is used. The abundance of attractive investment options means that the expectations for IRR in the projects is usually high compared to other sectors. Expectations of IRR of 20% are not unusual 9. Here it is chosen to use 15% IRR as a reasonable benchmark for the palm oil sector. The assumptions for the economic evaluation are presented in Annex 5. The IRR of the project activity without financing incentives from CDM will be just positive (0.7%) for 10 years of financial projection. However, with CDM financing, the IRR can be increased to above 27% (see Figure 5). 9 Ministry of Water, Energy and Communication / Malaysia Energy Centre / DANIDA Study on the CDM Potential in Waste Sectors in Malaysia. (Unpublished).

21 CDM Executive Board page 21 Figure 5: Comparison of Project IRR with and without CDM Financing 30.00% Project IRR with and without CDM financing for 10 years 25.00% Project IRR (%) 20.00% 15.00% 10.00% 5.00% 0.00% Without CDM With CDM Table 6 shows a sensitivity analysis for the major parameters in the calculation of the IRR. Focus has been on identifying the parameters of most relevance for the without CDM situation. The sensitivities illustrated are the period of financial projection from 7 to 10 years. This sensitivity is shown for the two other calculations reduced capital cost by 25% and Increased value of energy production by 25%. Table 6 Sensitivity analysis for IRR of biogas project Scenario IRR w/o CDM IRR w CDM 7 years 10 years 7 years 10 years Basis assumptions Capital cost 25% Value of energy production + 25%

22 CDM Executive Board page 22 The sensitivity analysis shows that the project IRR in all cases is unattractive without the extra income from sale of CERs. The result of this analysis is supported by abundant documentation of investment barriers in implementing same project type as the project activity. Generic studies performed by the Pusat Tenaga Malaysia 10 (Malaysia Energy Centre) and the Malaysian Economic Planning Unit 11 showed that financial returns of investing in POME biogas projects are not feasible without CDM and that CDM could increase the IRR significantly. Even with the inherent uncertainty of establishing a financial benchmark and on calculation of IRR, in general the results of the calculation gives so clear results that the conclusion that there is a financial barrier for implementing the project without CDM is very robust. It is therefore clear that the project activity cannot be considered financially attractive unless with CDM financing Step 3: Barriers analysis Apart from the financial barrier that has already been demonstration in step 2, there exist other barriers that would impede the project activity. These are discussed further below: Barriers due to prevailing practice As indicated above, the use of open digester tanks and lagoons are clearly in accordance to the palm oil industrial norms of POME treatment. The current system in placed is meeting the treatment requirement by the authority. As opposed to the project activity, the current system is relatively easy to maintain and there exist no reason to substitute the existing systems. The project activity would be one of the first of its kind in the palm oil industries in Malaysia. Although closed tank anaerobic digesters has already been discussed in the mid 1980s, there are no major take up of this technology since, further revealing the existence of various barriers. Currently, there is only one similar project (Keck Seng Palm Oil Mill) at full scale operation which was build as early as Technological Barriers The technological aspects of the project activity are more complicated than the baseline scenario. An existing pilot project similar to the project activity discovered that biogas plant performance is very sensitive subjected 10 CDM potential in the waste sector in Malaysia workshop, 26 January 2005, Putrajaya, Malaysia. Ministry of Energy, Water and Communication. 11 EPU/Ministry of Water, Energy and Communication/DANIDA Renewable Energy and Energy Efficiency Component (Integrated Resource Planning 2). 12 Jaafar, A.B and Tong, S.L Waste to energy: Methane recovery from anaerobic digestion of POME. Malaysia Energy Centre EnergySmart Issue 0014.

23 CDM Executive Board page 23 to different variables including loading rate, mixing, etc 13. There is a need for skilled and experienced operators and the availability of such personnel locally is limited as biogas system is still new. Intensive operational monitoring and maintenance introduce higher operational cost. Currently, there are only a few closed tank anaerobic digester technological providers in Malaysia. Formal training, technological programmes and research institutes are lacking. Recently (2005), an international research and development collaboration was established between University Putra Malaysia, FELDA (Federal Land Development Authority, government owned Palm Oil Company) and the Kyushu Institute of Technology Japan in the area of biogas plants. This further indicates that technological development of the technology is still in the development phase where many technological barriers exist. In fact, the pioneer anaerobic digester tank system in Malaysia was built at Tennamaram Palm Oil Mill, but is no longer operational due to technical problems, demonstrating the high technological barrier. This technological barrier will not avoid the baseline scenario since open digester tanks and lagoons have been practiced since the start of the palm oil mill effluent technology in Malaysia. Step 4: Common practice Based on surveys conducted by the Malaysia Palm Oil Board (formally known as the Palm Oil Research Institute of Malaysia), more than 85% of the palm oil mills are using open lagoons while another 5-10% using open digester tanks. When well designed and properly maintained, these widely used wastewater systems will meet final effluent BOD limits set by the government 14. As indicated earlier, these systems are considered the industrial norms for treating POME in Malaysia. Thus, it is clear that the baseline scenario should be the current practice for this project. Step 5: Impact of CDM registration As described in Step 2, the approval and registration of the project activity will alleviate the economic barrier of the project activity thus enable the project to be undertaken by providing a necessary extra source of income for the project. The registration of the project will also allow opportunities for biogas technology providers to build on local experiences and the technological transfer benefits will not only benefit the project participants, but the whole industry. With the project, greenhouse gas emission from POME treatment can be reduced while other potential issues such as odour and acid rain problems to the surrounding can be minimized. The successful implementation of the project activity will encourage other palm oil mills to implement similar systems in the future and will 13 Hassan, M.A., Yacob, S., Shirai, Y., Wakisaka, M. & Sunderaj, S. (2005). UPM-KIT-FELDA international R & D collaboration: Biogas pilot plant. BioTech communications, vol 2: 10-15, July 2005.

24 CDM Executive Board page 24 significantly reduce the GHG emission (particularly methane) from POME, which is one of the major methane emission sources in Malaysia 15. The successful implementation of the project will also project an improved image on palm oil, as this should eliminate methane emission from palm oil mills as an issue for the EU objection of the CPO production process. The project also shall reduce the usage of fossil fuel in mills/palm oil processing. The project activity, as a renewable energy project, will also support the sustainable development of Malaysia, particularly in terms of sustainable energy development. The project is in line with the national policy encouraging renewable energy development. B.4. Description of how the definition of the project boundary related to the baseline methodology selected is applied to the project activity: The systems boundary is the physical delineation of geographical extent where the effects of the project activity need to be assessed, measured and monitored. There are two boundaries to be clearly defined: Baseline boundary technical extent where methane will be avoided from the project activity and the fossil fuel will be substituted; Project boundary similar to baseline but include any project emissions including incomplete combustion of biogas, leakage and so forth. Baseline boundary In this project, the baseline boundary for the POME methane emissions is illustrated in Figure 6 below. The boundary includes the existing open digester tanks (AR 1&2) (from the feeding point to the tanks) and anaerobic lagoons (A 1&2, B1, 2 & 3, C1, 2&3) up to the effluent outlet before the aerated pond (E1). 14 Ma. A.N. (1999). Management of palm oil industrial waste in Malaysia. Paper presented at the Seminar on integrated waste management in Sarawak. Kuching, July Hassan, M.A., Yacob, S. & Shirai, Y. (2004). Treatment of palm oil wastewaters. In: Wang, L.K., Hung, Y., Lo, H. H., Yapijakis, C. (eds) Handbook of industrial and Hazardous wastes treatment pp New York: Marcel Dekker, Inc.

25 CDM Executive Board page A1 A2 4 D 1 AR 2 B1 B2 B3 A3 Diesel consumption in Mill AR 1 C3 E1 SBR 3 SBR 2 River C1 C2 SBR 1 Baseline boundary A1: ANAEROBIC POND: B3: ANAEROBIC POND: SBR 1: SEQ BAC REACTOR 1: COOLING POND RT: 15 DAYS 14112t RT: 14 DAYS t RT: 1 DAYS 1308 t CAPACITY: 4680 t A2: ANAEROBIC POND: C1: ANAEROBIC POND: SBR 2: SEQ BAC REACTOR 2: COOLING POND RT: 15 DAYS t RT: 20 DAYS t RT: 1 DAYS 1308 t CAPACITY: 4680 t A3: ANAEROBIC POND: RT: 14 DAYS t B1: ANAEROBIC POND: RT: 18 DAYS t C2: ANAEROBIC POND: RT: 20 DAYS t C3: ANAEROBIC POND: RT: 11 DAYS t SBR 3: SEQ BAC REACTOR RT: 1 DAYS 1308 t AR1: ANAEROBIC REACTOR RT: 4 DAYS 4000 t 3: ACIDIFICATION POND CAPACITY: 3840 t 4: ACIDIFICATION POND B2: ANAEROBIC POND: D1: DEOILING TANK AR2: ANAEROBIC REACTOR CAPACITY: 3840 t RT: 16 DAYS t E1: AEROBIC POND: RT: 4 DAYS 4000 t RT: 6 DAYS 6048 t Figure 6: Baseline boundary of the project

26 CDM Executive Board page 26 Project Boundary With the project activity, the project and system boundary is presented in Figure 7. POME Generation Mixing Pond(s) Anaerobic Digester(s) Effluent Biogas Aeration Pond & SBRs (Receiving effluent from digesters) Flame arrester Flame arrester Biogas compressor Waste gas burner (Flaring) Steam generation Electricity generation On-site use at mill Project Boundary Figure 7: Project and system boundary of project activity The two existing open digester tanks will be converted into closed tank anaerobic digesters. In addition, an extra closed tank anaerobic digester with similar capacity will be constructed. With the closed tank anaerobic digesters in place, similar if not better treatment efficiency (organic removal rate of more than 90% at least) can be expected. Thus, the treatment by the original open tanks and possibly some lagoons will be replaced. The total treatment efficiency with the project is expected to be similar or better compared to the baseline.

27 CDM Executive Board page 27 Within the boundary defined above, the methane emissions due to incomplete combustion, piping leakage and flaring are included and measurable. A summary of the system boundaries are tabulated in Table 7 below. Table 7: Summary of the project and system boundaries Source Gas Emissions Baseline Scenario Project Scenario POME treatment CH 4 Yes. From both open digester tanks and anaerobic lagoons. Except for the first year where the open lagoons will still be used, There will be no project related emissions. CH 4 production from digesters is captured and no methane emissions anticipated from the closed tanks, aerated ponds and SBRs (see Figure 10 above). CO 2 No. CO 2 emission originating from biogenic sources are considered carbon-neutral No. CO 2 emission originating from biogenic sources are considered carbon-neutral Fossil diesel / Biogas systems CH 4 Not applicable Yes if the system is not well operated and closed. Emissions from incomplete combustion and pipeline leakage. CO 2 Yes. From the existing diesel generator set. This will be monitored but expected to be negligible. No - for the combustion. CO 2 emissions originating from biogenic sources are considered carbonneutral. There are no off-site / grid generation of electricity and heat since all power and heat are generated on-site.

28 CDM Executive Board page 28 B.5. Details of baseline information, including the date of completion of the baseline study and the name of person (s)/entity (ies) determining the baseline: The detailed baseline information and calculation of emission reduction can be found in section E and Annex 3. B.5.1. Date of completion of baseline study: 22/05/2006 B.5.2. Name of the person(s)/entity(ies) determining the baseline: Mr. Soeren Varming Managing Director SV Carbon 501 Block B Cameron Towers Gasing Heights Petaling Jaya Mr. Soon Hun Yang Executive Director Eco-Ideal Consulting Sdn Bhd 7, Jalan SS4/19, Petaling Jaya, Selangor,Malaysia. Selangor, Malaysia Tel: / Tel: sv@svcarbon.com URL: H/P: Fax soonhy@ecoideal.com.my URL:

29 CDM Executive Board page 29 SECTION C. Duration of the project activity / Crediting period C.1 Duration of the project activity: C.1.1. Starting date of the project activity: This project is expected to start on the 01 January 2007 (defined as the start of the biogas collection and electricity generation). C.1.2. Expected operational lifetime of the project activity: The expected operational lifetime of the project is more than 20 years. C.2 Choice of the crediting period and related information: C.2.1. Renewable crediting period C Starting date of the first crediting period: 1. January 2007 is expected to be the starting date of the first crediting period C Length of the first crediting period: The first crediting period will be 7 years covering C.2.2. Fixed crediting period: C Starting date: Not Applicable C Length: Not Applicable

30 CDM Executive Board page 30 SECTION D. Application of a monitoring methodology and plan D. APPLICATION OF A MONITORING METHODOLOGY AND PLAN D.1. Name and reference of approved monitoring methodology applied to the project activity: Title: AM0022: Avoided Wastewater and On-site Energy Use Emissions in the Industrial Sector (Version 2, dated 8 July 2005) 16. D.2. Justification of the choice of the methodology and why it is applicable to the project activity: As indicated in Section B.1.1, AM 0022 is applicable to this project and thus the monitoring methodology will be established based on AM The applicability criteria of AM 0022 specifically stressed the importance to quantify (measured or estimated) the: Organic material flowing into and out of anaerobic systems; Contribution of different removal processes in this case, can include the sludge removal from the open digester tanks. D.2.1. Option 1: Monitoring the emissions in the baseline scenario and the project scenario. D Data to be collected in order to monitor emissions from the project activity and how this data will be archived: Project Scenario The elements to be monitored include: POME volume and COD as for baseline (D 3-1, 3-2, 3-3 &3-5) and COD effluent from closed tank digesters (D 3-4); Biogas volume (D 3-6) and concentration (D 3-7) sent to boilers; 16 UNFCCC CDM Website :

31 CDM Executive Board page 31 Biogas volume sent for flaring (D 3-8) and flare combustion efficiency (D 3-9); Inefficient biogas combustion boiler combustion efficiency (D 3-10) and biogas calorific value (D 3-11); Biogas leakage in project from production in closed digester tanks or pipelines (D 3-12); Ratio of COD removal (D 3-13). D-3-6 & 3-7 D- 3-4 Biogas (Methane) D-3-3 & 3-5 Digested effluent to aerobic ponds Closed Anaerobic digester Waste gas burner (flare) Stack Gas D Electricity D- 3-9 D POME Influent D-3-1 & 3-2 Compressor D-3-12 D- 3-8 Boiler Steam turbine & generator D-3-13 Figure 8: Monitoring Parameters for Project Activity Overall, the following data variables in accordance to AM 0022 were not included in the monitoring baseline for the following reasons: The energy supply for this project comes from electricity generated in this project on-site. No grid connection anticipated; Amount of chemical oxidizing agents entering project boundary is negligible; Generator-set combustion efficiency no gas generator-set will be used for this project.

32 CDM Executive Board page 32 Details of the monitoring parameters for project emissions are tabulated below: Table 8: Monitoring Parameters for Project Emissions ID number Data type Data variable Data unit Measured (M), calculated (C) or estimated (E) Recording frequency Proportion of data to be monitored How will data be archived? (electronic/paper) Comment D.3-1 Volume POME amount entering the system boundary m 3 M Continuously 100% electronic Using flow meter D.3-2 Concentration COD of POME entering the system boundary kg COD M Monthly* 100% Paper and transferred to / m 3 electronic Indicator of project wastewater methane emissions. Organic material concentration can be sampled on site, but off-site analysis by an accredited lab is recommended D.3-3 Volume POME amount leaving the system boundary m 3 M Continuously 100% electronic Can be measured using flow meter D.3-4 Concentration COD of POME leaving closed tank digesters kg COD/ M Monthly* 100% Paper and transferred to m 3 electronic Indicator of project wastewater methane emissions. Organic material concentration can be sampled on site,

33 CDM Executive Board page 33 ID number Data type Data variable Data unit Measured (M), calculated (C) or estimated (E) Recording frequency Proportion of data to be monitored How will data be archived? (electronic/paper) Comment but off-site analysis by an accredited lab is recommended D.3-5 Concentration COD of POME leaving the system boundary kg COD/ M Monthly* 100% Paper and transferred to m 3 electronic Indicator of project wastewater methane emissions. Organic material concentration can be sampled on site, but off-site analysis by an accredited lab is recommended D. 3-6 Volume Biogas sent from closed digesters D. 3-7 Concentration Biogas methane concentration Nm 3 M Continuously 100% electronic Gas flow meter is to be installed. Volume in Nm 3, normalized to take into account pressure and temperature. % M Continuously 100% electronic Methane detector and logger are to be installed D. 3-8 Volume Biogas sent to flare Nm 3 M Continuously 100% electronic Gas flow meter is to be installed.

34 CDM Executive Board page 34 ID number Data type Data variable Data unit Measured (M), calculated (C) or estimated (E) Recording frequency Proportion of data to be monitored How will data be archived? (electronic/paper) Comment (waste gas burner) Volume in Nm 3, normalized to take into account pressure and temperature. D. 3-9 Percentage Flare combustion efficiency (waste gas burner) D Concentration Stack CH 4 concentration % M During regular O&M cycle % M Annually During regular O&M cycle 100% electronic 100% electronic To quantify the possible emission of unburned CH 4 through the stack D Energy concentration Biogas calorific value J/Nm 3 M Annually 100% electronic D Percentage Loss of biogas from pipeline % M Annually 100% electronic Integrity of biogas pipeline for losses of biogas methane will be tested annually through pressurizing the system and establishing pressure drops

35 CDM Executive Board page 35 ID number Data type Data variable Data unit Measured (M), calculated (C) or estimated (E) Recording frequency Proportion of data to be monitored How will data be archived? (electronic/paper) Comment through leakage. D Ratio organic material removal ratio, R NAWTF C Annually 100% Electronic R NAWTF = COD load removed/ COD load influent * For this project case, the monitoring frequency for the COD concentration both entering and exiting the digesters and system boundary was suggested to be modified from daily (AM 0022) to monthly. The adjustment is based on the following justifications: The input COD concentration of the POME to the wastewater does fluctuate according to the process but within a specific range over the entire year. This has been demonstrated by several studies carried out on studying the COD loading in Malaysia. As the fluctuation is relatively systematic and predictable, the average value from monthly monitoring is expected to generate comparable average as if it was done daily; According to general wastewater treatment process design, the system dynamic of large open anaerobic lagoons used in this project is relatively stable and less subjected to disturbances provided that the lagoons are regularly maintained. This implies the outlet concentration should be relatively constant over time so there is no need to monitor it daily; Besides, no major fluctuation pattern over long period except the seasonal cropping effect that can be levelised with monthly monitoring.

36 CDM Executive Board page 36 The proposed adjustment frequency is complying also with the frequency of at least monthly as stipulated in the AM0013 monitoring requirement which is also applicable to palm oil mill effluent. D Description of formulae used to estimate project emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 e.): The estimation of project emissions is based on the selected AM The following formulae will be used: Equation 1: Total project emissions E project = E CH4_lagoons + E CH4_NAWTF + E CH4_IC+Leaks (1) where: E project = total project emissions (tco 2 e) E CH4_lagoons = fugitive methane emissions from subsequent lagoons after the new closed tank digesters (tco 2 e) E CH4_NAWTF = fugitive methane emissions from the new anaerobic waste water treatment facility, E CH4_IC+Leaks = methane emissions from inefficient combustion and leaks (tco 2 e) Applicability to this project For this project, the fugitive methane emissions from subsequent lagoons after the new closed tank digesters is only expected for the first year where the lagoons will be in use while the additional closed tank is built. The lagoons will also be used as a back up while the new closed tank system is commissioned. Beyond the first year, all the anaerobic lagoons will be replaced and no project emissions will be expected. Insignificant methane formation is expected from the aerated ponds and sequencing batch reactors that follows the new closed tank digesters. In the case where a bypass is required in the situation of break down of close digester tanks, the abundant anaerobic lagoons will be used. In such case, the following equation will be used for calculating the fugitive methane emissions: E CH4 _ lagoons = M lagoon_ anaerobic EF CH 4 GWP CH 4

37 CDM Executive Board page 37 where: (2) M lagoon _ anaerobic = amount of organic material removed by anaerobic processes in the lagoon system (kg COD) EF CH4 = methane emission factor (kg CH 4 / kg COD) GWP CH4 = Global Warming Potential of methane (GWP CH4 = 21) Details of the calculations are found in Section E. Applicability to this project The closed tank digesters is expected not to emit any methane. Thus the fugitive methane emission from the new anaerobic waste water treatment facility (ECH4_NAWTF) for this project is not further considered in this project. For methane emissions from inefficient combustion, the following formula will be used: E CH4_IC + Leaks = V r.c CH4_r. (1 - f r ). GWP CH4 r (3) where: The sum is made over the two predominant routes r for methane destruction (flaring and heating); V r = biogas combustion process volume in route r (Nm 3 ) C CH4 = methane concentration in biogas (tch 4 /Nm 3 ) f r = proportion of biogas destroyed by combustion Applicability to this project The extent of incomplete combustion and leaks is expected to be negligible in this project as the project will engage brand new pipe lines and efficient biogas boilers. With proper monitoring and corrective actions, the amount of leakage is expected to be negligible.

38 CDM Executive Board page 38 D Relevant data necessary for determining the baseline of anthropogenic emissions by sources of GHGs within the project boundary and how such data will be collected and archived: Baseline Scenario Fugitive methane emissions quantification using amount (volume and concentration) of organic material (COD) in the POME flowing in and out of the baseline. In this case, the volume (D 3-1) and COD concentration (D 3-2) at the inlet of the open digester tanks should be monitored. Similarly, at the outlet of the last anaerobic lagoons, volume (D 3-3) and COD concentration (D 3-4) of the effluent flowing into the aerated ponds (E1) need to be monitored. COD removal desludging from open tanks less than 1 year must be monitored. The sludge volume removed (D 3-14) and COD concentration (D 3-15). However, in this case, no desludging is expected. These parameters are only measured in case there is any sludge removal from the digesters. Amount of fossil fuel (diesel) used that would be replaced (D 3-16) will be calculated from the volume and calorific value of the biogas sent to the boiler.

39 CDM Executive Board page A1 A2 4 D 1 AR 2 D-3-1 & 3-2 B1 B2 B3 A3 D-3-3 & 3-5 AR 1 C3 E1 SBR 3 SBR 2 River D-3-16 D-3-14 & 3-15 C1 C2 SBR 1 Figure 9: Monitoring parameters for baseline emissions

40 CDM Executive Board page 40

41 CDM Executive Board page 41 Table 9 Monitoring Parameters for Baseline Emissions ID number Data type Data variable Data unit Measured (M), calculated (C) or estimated (E) Recording frequency Proportion of data to be monitored How will data be archived? (electronic/paper) Comment D.3-1 Volume POME amount entering the system boundary m 3 M Continuously 100% electronic D.3-2 Concentration COD of POME entering the system boundary kg COD / m 3 M Monthly* 100% Paper and transferred to electronic Frequency modified from daily to weekly. No major fluctuation pattern over long period of monitoring except the seasonal cropping effect that can be levelised with weekly monitoring. D.3-3 Volume POME amount leaving the system boundary m 3 M continuously 100% Paper and transferred to electronic Can be measured using V- Notch weir D.3-5 Concentration COD of POME leaving the project boundary kg COD/ m 3 M monthly 100% Paper and transferred to electronic Indicator of project wastewater methane emissions. Organic material concentration can be sampled on site, but off-site analysis by an accredited

42 CDM Executive Board page 42 lab is recommended D 3-14 Volume Volume of sludge removal (not recycled back to system) m 3 M Upon each sludge removal 100% Paper and transferred to electronic D 3-15 Concentration COD concentration of sludge removed kg COD/ m 3 M Upon each sludge removal 100% Paper and transferred to electronic volume Fossil fuel volume equivalent to generate the same amount of heat generated from the biogas collected in the anaerobic collected in the anaerobic treatment facility litre calculated continuousl y 100% electronic The calculation of the amount of fossil fuel displaced is based on the biogas volumen and biogas calorific value sent to boilers.

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44 CDM Executive Board page 44 D Description of formulae used to estimate baseline emissions (for each gas, source, formulae/algorithm, emissions units of CO 2 e): The total baseline emissions from the project activity can be calculated using the following formula: E BL = E CH4_BL + E CO2_fossil_BL (4) where: E BL = total baseline emissions (tco 2 e) E CH4 BL = fugitive methane emissions from anaerobic system in the baseline case (tco 2 e). E CO2_fossil_BL = CO 2 emissions related to fossil heat and/or power generated that are displaced by biogas collected in this project Both fugitive methane emissions are calculated using the same formula (2) for project emission. Detail calculations are presented in Section E. For the total organic material in the baseline, the following can be assumed: M input_bl = M input_project (5) where: M input_bl = total amount of organic material fed into the open digesters system (kg COD). M input_project = input of organic material to the new closed digesters system (kg COD) Baseline emission for fossil diesel utilisation can be calculated using following formulae: E CO2_fossil_BL = E CO2_heat + E CO2_power (6) E CO2_heat = F NCV EF (7)

45 CDM Executive Board page 45 Where: E CO2_heat = CO 2 emissions related to diesel heat generated that are displaced by biogas collected (nil in this project) F = amount of diesel displaced by the use of biogas for heat generation NCV = the net calorific value of diesel (TJ/liter) EF = carbon emission factor of diesel (tco 2 /TJ) D.2.2. Option 2: Direct monitoring of emission reductions from the project activity (values should be consistent with those in Section E): Not applicable. D.2.3. Treatment of leakage in the monitoring plan: D If applicable, please describe the data and information that will be collected in order to monitor leakage effects of the project activity: Not applicable because leakage is negligible and not relevant in this project. D Description of formulae used to estimate leakage (for each gas, source, formulae/algorithm, emissions units of CO 2 e): No leakage identified and thus relevant in this project. D.2.4. Description of formulae used to estimate emission reductions for the project activity (for each gas, source, formulae/algorithm, emissions units of CO 2 e): The emission reduction of the project is calculated based on the following: ER = E BL - E project (6) where: ER = total emission reduction (tco 2 e)

46 CDM Executive Board page 46 E BL = total baseline emissions (tco 2 e) E project = total project emissions (tco 2 e) Applicability to this project For this project, the project emissions are expected to be negligible unless due to unforeseen circumstances. Thus, the total emission reduction from the project activity is expected to be equivalent to the total baseline emissions. D.3. Quality control (QC) and quality assurance (QA) procedures undertaken for data monitored: Table 10: Quality control and procedures ID Data Monitored Uncertainty level of data (High/Medium/Low ) Are QA/QC procedure s planned for these data? Outline explanation why QA/QC procedures are or are not being planned D.3-1 D.3-2 D.3-3 D.3-4 D 3-5 POME amount entering the system boundary COD of POME entering the system boundary POME amount leaving the system boundary COD of POME leaving closed digesters COD of POME leaving the project boundary Low Yes Flow meters should be subject to a regular maintenance and testing regime to ensure accuracy Low / Medium Yes COD should be sampled monthly, and tests carried out by accredited laboratory Low Yes Flow meters should be subject to a regular maintenance and testing regime to ensure accuracy Low / Medium Yes COD should be sampled monthly, and tests carried out by accredited laboratory Low / Medium Yes COD should be sampled monthly, and tests carried out by accredited laboratory

47 CDM Executive Board page 47 ID Data Monitored Uncertainty level of data (High/Medium/Low ) Are QA/QC procedure s planned for these data? Outline explanation why QA/QC procedures are or are not being planned D 3-6 D 3-7 D 3-8 D 3-9 Biogas sent from closed digesters Biogas methane concentration Biogas sent to flare (waste gas burner) Flare combustion efficiency (waste gas burner) Low Yes Biogas meters should be subjected to regular maintenance and testing to ensure accuracy Low Yes Biogas meters should be subjected to regular maintenance and testing to ensure accuracy Low Yes Biogas meters should be subjected to regular maintenance and testing to ensure accuracy Low/Medium Yes Biogas methane concentration should be measured by near infrared spectrometry or other quantitative process. D 3-10 Stack emission methane Low Yes Biogas methane concentration should be measured by near infrared spectrometry or other quantitative process. D 3-11 Biogas value calorific Low Yes Regular calibration of equipment D 3-12 D 3-13 D 3-14 Loss of biogas from pipeline Organic material removal ratio Volume of sludge removal (not recycled back to system) Low Yes Annual checks to be carried out to international standards Medium Yes Removal of COD after monitoring and prior to entry to lagoon system should be recorded to ensure CH 4 emissions are not overestimated. Medium Yes Flow meters should be subject to a regular maintenance and testing regime to ensure accuracy D 3-15 COD concentration of Low / Medium Yes COD should be sampled frequently, and tests carried out by accredited laboratory sludge removed D 3-16 Amount of fossil diesel to be Low / Medium Yes Calculated based on calorific value and volume of biogas to boiler

48 CDM Executive Board page 48 ID Data Monitored Uncertainty level of data (High/Medium/Low ) replaced Are QA/QC procedure s planned for these data? Outline explanation why QA/QC procedures are or are not being planned

49 CDM Executive Board page 49 D.4. Please describe the operational and management structure that the project operator will implement in order to monitor emission reductions and any leakage effects generated by the project activity: The monitoring of emission reductions generated by the project activity will be carried out systematically according to the monitoring plan derived. Specific personnel will be assigned to be responsible for project management as well as for all the different parameters to be monitored and reported. Specifically, the following roles and responsibilities will be assigned: CDM project manager overall responsible to management on the monitoring programme; Plant engineer and technicians responsible in the key monitoring works; Other relevant staff responsible for the parameters to be monitored. In order to lower the uncertainties and to produce accurate data, the following measures will be introduced: Appointment of accredited laboratories, purchase good quality measurement devices; Appropriate training for staff handling the monitoring; Clear procedures and guidelines for conducting the monitoring, including sampling and measurement methods, clear scheduling, recording, reporting and so forth clearly spelled out; Provision of internal review, quality check and assurance procedures with a quality assurance manager appointed. Regular calibration and assessment of potential leakage to be monitored; Clear preventive and corrective actions to be prepared. D.5. Name of person/entity determining the monitoring methodology: Mr. Soeren Varming Managing Director Mr. Soon Hun Yang Executive Director SV Carbon 501 Block B Cameron Towers Eco-Ideal Consulting Sdn Bhd 7, Jalan SS4/19,

50 CDM Executive Board page 50 Gasing Heights Petaling Jaya Petaling Jaya, Selangor,Malaysia. Selangor, Malaysia Tel: / Tel: sv@svcarbon.com URL: H/P: Fax soonhy@ecoideal.com.my URL:

51 CDM Executive Board page 51 SECTION E. Estimation of GHG emissions by sources E.1. Estimate of GHG emissions by sources: As indicated in Section D 2.1.2, the main possible GHG emissions sources from the project activity will be coming from 3 main sources: Fugitive methane emissions from subsequent lagoons after new close tank digesters; Fugitive methane from new closed tank anaerobic digesters; Methane emissions from boilers (inefficient combustion and flaring) and piping leakage. These will be discussed below: Methane from subsequent lagoons As indicated earlier, the fugitive emissions from subsequent lagoons after the newly installed closed tank digesters will not arise. Due to the anticipated high organic removal efficiency (reported from 90% up to 95% 17 ) of the closed tank digesters if operated properly, the total organic removal from the newly introduced tanks can gradually replace the existing open tanks and lagoons. The anaerobic lagoons could be completely bypassed with the installation of closed tank digesters. However, during the initial operation (the first year of operation), the lagoons series C will remain as safety measure, whereas the lagoons series A and B will be bypassed. The lagoons series C will be by-passed once the treatment efficiency is found satisfying. On the other hand, the aerobic system (aeration pond and SBRs) can be enhanced to cater the effluent directly from closed tank digesters. The POME treatment system will be modified accordingly to finally evade anaerobic lagoons. Thus, the effluent from the closed tanks is expected to be channelled to the subsequent aerobic treatment processes including aerated ponds (with depth less than 2-3 m) and 3 sequencing batch reactors (see Figure 10) in due course. 17 Hassan, M.A., Yacob, S., Shirai, Y., Wakisaka, M. & Sunderaj, S. (2005). UPM-KIT-FELDA international R & D collaboration: Biogas pilot plant. BioTech communications, vol 2: 10-15, July 2005.

52 CDM Executive Board page 52 Figure 10: Heavily aerated ponds and sequencing batch reactor at Kim Loong As these aerobic systems will be operated under aerobic conditions, negligible amount of methane can be expected from these ponds. In the unlikely case where the closed tank digesters need to be abandoned or replaced, an alternative discharge route channelling to the series of existing anaerobic lagoons will be done. Under these circumstances, methane will be emitted and these can be estimated using the fugitive methane emissions formula (2) indicated in section D At this juncture, the above scenario (diversion of closed tanks) is not expected due to the provisions of additional closed tanks (3 in total to be built) as alternative buffer or back up capacity. With this additional capacity and flexibility, the operation of the closed tanks is expected to be under normal operations throughout the year. Furthermore, the key technical person of Kim Loong involved in this project activity, Dr. Gee, has gained hands on experiences from the operation of the only POME biogas system in Malaysia (Keck Seng, mentioned earlier) and thus expected to be able to operate the project activity smoothly. The anaerobic treatment system under project scenario is proposed as below: Biogas Raw POME Closed Anaerobic digester POME Anaerobic Lagoons Aerobic system Optional (Could be by-passed) Figure 11: Anaerobic treatment system (project scenario)