JOINT IMPLEMENTATION PROJECT DESIGN DOCUMENT FORM Version 01 - in effect as of: 15 June 2006 CONTENTS

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1 Joint Implementation Supervisory Committee page 1 JOINT IMPLEMENTATION PROJECT DESIGN DOCUMENT FORM Version 01 - in effect as of: 15 June 2006 CONTENTS A. General description of the project B. Baseline C. Duration of the project / crediting period D. Monitoring plan E. Estimation of greenhouse gas emission reductions F. Environmental impacts G. Stakeholders comments Annexes Annex 1: Contact information on project participants Annex 2: Baseline information Annex 3: Monitoring plan

2 Joint Implementation Supervisory Committee page 2 SECTION A. General description of the project A.1. Title of the project: YARA Rostock N 2 O abatement project at plant 2.01 Version: 12 th February 2009 (Version #1) A.2. Description of the project: The sole purpose of the proposed project activity is to significantly reduce current levels of N 2 O emissions from the production of nitric acid at YARA s first nitric acid plant ( plant 2.01 ) at Poppendorf (near Rostock), Germany. At that site, YARA also operates one other nitric acid plant named plant 2.02 that will be part of separate JI project activity not covered by this PDD. The plant 2.01 nitric acid plant was designed by Grand Paroisse. Commercial nitric acid production started in It is a 3.5 /13 bar dual pressure plant with a proven maximum daily production output of 1,600 metric tonnes of HNO 3 (100% conc.) per day 1. Due to highly efficient operational management practices, YARA Rostock can run the plant for campaign durations longer than a year. Depending on whether or not the plant is shut down for maintenance purposes or exchange of the primary catalyst gauze, the plant can be operated for a full 365 days per year resulting in a theoretical maximum annual production output of 584,000 thno 3. To produce nitric acid, ammonia (NH 3 ) is reacted with air over precious metal normally a platinumrhodium-palladium (Pt-Rh-Pd) alloy catalyst gauze pack in the ammonia oxidation reactor of the nitric acid plant. The main product of this reaction is NO, which is metastable at the conditions present in the ammonia oxidation reactor and therefore it reacts with the available oxygen to form NO 2, which is later absorbed in water to form HNO 3 nitric acid. Simultaneously, undesired side reactions yield nitrous oxide (N 2 O), nitrogen and water. N 2 O is a potent greenhouse gas with a Global Warming Potential (GWP) of The plant currently emits an average of 8.3 kgn 2 O / thno 3 which means that the continued operation of the plant without any N 2 O abatement technology installed would entail the emission of more than 1,200,000 tco 2 e annually 3. Until end of September 2010, this is considered the baseline scenario 4. The project activity involves the installation of a new N 2 O abatement technology: a pelleted catalyst that will be installed inside the ammonia oxidation reactor, underneath the precious metal gauzes. It is expected that this catalyst will reduce approximately 85% of current N 2 O emissions on average over its lifetime. The N 2 O abatement catalyst applied to the proposed project has been developed by YARA. Industrial trial runs have been undertaken at various YARA plants (mainly in France) over the last four years. By now, the YARA management considers the technology as sufficiently mature for full application in nitric acid plants. For tracking the N 2 O emission levels, YARA Rostock will install and operate an Automated Monitoring System according to EU standards 5. YARA Rostock adheres to ISO 9001 / management standards 6 and will implement procedures for monitoring, regular calibrations and QA/QC in line with the requirements of these standards. A.3. Project participants: 1 All nitric acid amounts are provided in metric tonnes of 100% concentrated HNO 3, unless otherwise indicated. 2 IPCC Second Assessment Report (1995); applicable according to UNFCCC-decision 2/CP.3, paragraph 3. 3 N 2 O concentration in the stack has been measured since May 2007 showing an average concentration equal to approximately 8.3 kgn 2 O/tHNO 3. This statement is based on the very conservative assumption of a yearly production of 496,800 thno3 (1,380 t/day for 360 days / year). 4 See section B.1 for detailed information. 5 See sections A.4.3 and D.1 for detailed information. 6 See YARA internal notice of May 2007, published on the company website under

3 Joint Implementation Supervisory Committee page 3 Name of Party involved (*) ((host) indicates a host Party) Germany (host) Norway United Kingdom Private and/or public entity(ies) project participants (*) (as applicable) YARA Rostock Branch office of YARA GmbH & Co.KG (Germany) YARA International ASA, Oslo (Norway) N.serve Environmental Services GmbH (Germany) Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No) No No No This JI Project will be developed as a party verified activity in accordance with UNFCCC decision 9/CMP.1, paragraph 23 by the host country Germany. A.4. Technical description of the project: A.4.1. Location of the project: Germany A Host Party(ies): A Region/State/Province etc.: Mecklenburg Vorpommern A City/Town/Community etc.: Poppendorf (near Rostock) A Detail of physical location, including information allowing the unique identification of the project (maximum one page): The project plant is part of a combined production complex that also contains a second production unit named plant The picture below illustrates the location of both plants. The coloured marks are set at the stack of the respective plants. The burners are located inside the long, north-south situated, building just west of the stacks.

4 Joint Implementation Supervisory Committee page 4 Figure 1: Location of YARA Rostock plants 2.01 and 2.02 Plant absorption towers: 54 08'10.25'' N, 12 18'43.05'' E (plant 2.01 green) 54 08'09.75'' N, 12 18'43.05'' E (plant 2.02 yellow) This PDD only covers the project activity at plant 2.01; the project activity planned for plant 2.02 will be documented in a separate PDD. A.4.2. Technology(ies) to be employed, or measures, operations or actions to be implemented by the project: The main parts of the plant as currently set up are the ammonia burner inside which the ammonia oxidation reaction takes place, the absorption tower where the gas mix from the burner is led through water in order to form nitric acid and the stack through which the off-gasses are vented into the atmosphere. The precious metal gauze pack i.e. the primary catalyst required for the actual production of nitric acid have been manufactured by KAR Rasmussen located in Norway for a number of years. The design, composi-

5 Joint Implementation Supervisory Committee page 5 tion and weight of these gauze packs previously used for standard plant operation 7 will remain unchanged for the duration of the project activity. The project activity entails the implementation of - N 2 O abatement technology, until recently only applied on industrial trial level within the European Union that will be inserted into the ammonia oxidation reactor after slight modifications to its interior structure; and - Specialised monitoring equipment to be installed at the stack (detailed information on the AMS is contained in section D.1). Catalyst Technology A number of N 2 O abatement technologies have become commercially available in the past 3 years after several years of research, development and industrial testing. Since end of 2005, several CDM project activities employing various kinds of N 2 O abatement catalysts have been registered with the CDM EB. But these activities are naturally limited to plants located in developing nations. Due to lack of incentives for voluntary reductions before 2008 and the absence of legal limits on industrial N 2 O emissions in nearly all the European Union member states, the vast majority of EU based plant operators have so far not invested in N 2 O abatement devices. YARA International ASA (Norway) is a noteworthy exception to this general rule, because the company conducted long term industrial trial runs of its selfdeveloped catalyst system YARA58 Y 1 in various plants in France since However, these trials are about to be completed in the near future. Until now, the catalyst system could only be marketed successfully under the auspices of the CDM. The plants operated by YARA Rostock have not been part of the catalyst industrial trial programme. Thus, the proposed JI project activity entails a first time installation of secondary catalyst technology at the plant. Figure 2: Installation of secondary catalyst 7 See the relevant tables in section B.6.2 below for more specific information.

6 Joint Implementation Supervisory Committee page 6 YARA Rostock plans to install the YARA 58 Y 1 catalyst system consisting of an additional base metal catalyst that will be positioned below the standard precious metal gauze pack. This technology will be implemented inside the plant 2.01 ammonia burner. Operation with catalyst installed is scheduled to begin in May A secondary catalyst will reduce N 2 O levels in the gas mix resulting from the primary ammonia oxidation reaction. A wide range of metals (e.g. Cu, Fe, Mn, Co and Ni) have shown to be of varied effectiveness in N 2 O abatement catalysts. The YARA 58 Y 1 abatement catalyst is made of cylindrical pellets containing cobalt as an active ingredient. The abatement efficiency has been shown to be more than 80% in the following reaction: 2 N 2 O 2N 2 + O 2 If operated properly, the secondary catalyst system may significantly reduce N 2 O emissions for up to three years, before the catalyst material needs to be replaced. The YARA 58 Y 1 abatement catalyst has been proven by industrial testing not to affect plant production levels 8. Also, it does not contaminate the nitric acid produced in any way, neither with cobalt nor with any of the other catalyst materials 9. No additional heat or other energy input is required, because the temperature levels present inside the ammonia oxidation reactor suffice to ensure the catalyst s optimum abatement efficiency. There are no additional greenhouse gases or other emissions generated by the reactions at the N 2 O abatement catalyst. Basket modifications and Heat Shield design Most nitric acid plants have some sort of basket structure that gives structural support to the precious metal gauzes. The ammonia oxidation reaction in YARA s 2.01 nitric acid plant normally operates at temperatures between 850 and 880ºC, which causes the basket assembly to expand compared to when the plant is not operational (i.e. during installation of the catalyst). This effect increases the basket diameter by 1-1.5%. The ammonia oxidation reactor of plant 2.01 has a diameter of 4850 mm that expands by mm when in operation. To counter this occurrence, the baskets which support the catalyst installation and the gauze pack will have to be modified 10 to provide containment of the pelleted bed in a manner which will prevent preferential gas flow at the circumference and to optimise the N 2 O abatement efficiency of the catalyst. N 2 O abatement catalyst installation The secondary catalyst itself is easily installable during a routine plant shut-down and gauze change. The pellets are poured into the support basket / perforated plate arrangement and levelled. The gauze pack is then installed above the levelled catalyst pellets. After the end of its useful life, the catalyst will be refined, recycled or disposed of according to EU regulations, hence fulfilling sustainability standards. 8 See the European IPPC Bureau publication Integrated Pollution Prevention and Control; Reference Document on Best Available Techniques for the Manufacture of Large Volume Inorganic Chemicals Ammonia, Acids and Fertilizers (August 2007), page 152 therein. This source states that NO yields for the ammonia oxidation reaction remain unchanged when operating secondary N 2 O abatement catalysts. 9 This has been proven in industrial testing. The underlying information is commercially sensitive and will be made available to the DOE mandated with the determination procedure upon request. General information on this question is contained in the European IPPC Bureau publication Integrated Pollution Prevention and Control; Reference Document on Best Available Techniques for the Manufacture of Large Volume Inorganic Chemicals Ammonia, Acids and Fertilizers (August 2007), page 152 therein (available for downloading under 10 The modifications required to prevent preferential gas flow are of commercially sensitive nature. The AIE representative will be allowed to verify this information during the on-site visit.

7 Joint Implementation Supervisory Committee page 7 YARA s nitric acid plant 2.01 operates at a pressure of around 3.5 bars inside the ammonia oxidation reactor. Through the introduction of the secondary catalyst into the ammonia reactor, a slight pressure drop ( P) is expected to occur. This P may lead to a slight reduction in ammonia conversion efficiency and hence a small reduction in nitric acid output. In practice, this loss of production is likely to be insignificant. Technology operation and safety issues As mentioned before, the secondary abatement technology has been tested in several industrial trials and has proven to be a reliable and environmentally safe method of reducing N 2 O. Once installed, the catalyst and the already installed AMS will be operated, maintained and supervised by the employees of YARA Rostock according to European industry standards 11. Due to the long-term catalyst development phase, there is expert know-how readily available within the YARA group. Therefore, YARA Rostock is very confident that the effective operation of the catalyst technology, the operation of the monitoring system and the data collection, storage and processing can be managed in accordance with the JI requirements. Adherence to the applicable standards will be ensured by thorough and regularly repeated training sessions for the YARA employees involved. A.4.3. Brief explanation of how the anthropogenic emissions of greenhouse gases by sources are to be reduced by the proposed JI project, including why the emission reductions would not occur in the absence of the proposed project, taking into account national and/or sectoral policies and circumstances: Without JI participation, present emission levels would remain unchanged until end of September 2010, because o there is no legal requirement for YARA Rostock to reduce the emissions of its plant before that date; o Implementing N 2 O reducing catalyst technology requires significant investments, may result in some technical difficulties with regard to the plant s operation, potentially even causing a reduction in production output; and o Implementing N 2 O catalyst technology does not yield any other benefits besides potential revenues from ERU sales. be reduced to a level below 2.5 kgn 2 O/tHNO 3 (understood as an absolute limit to plant emissions at any time during operation, not just merely an maximum permitted average 12 ) from October 2010 onwards, because only from 1 st October 2010 German TA Luft requires this value to be maintained as a maximum emissions level permissible. More detail on these assumptions will be provided in section B.1 below. A Estimated amount of emission reductions over the crediting period: The following paragraphs describe the factual emission reductions achievable by the project activity. However, the question about how many ERUs will be awarded to the Project Participants for their free use will not be answered based on factual emission reductions. ERU production estimates are contained in section E.6 below. 11 See section D.4 below. 12 The reasoning behind this assumption is explained in section B.2 below (see step 1b of the baseline identification procedure). The assumption shall not be interpreted as any form of indication on what average emissions level will be appropriate during the project s operation.

8 Joint Implementation Supervisory Committee page 8 Factual emission reductions achievable by the proposed project activity will be dependent on the amounts of nitric acid produced. In accordance with AM0034, emission reductions are determined pro unit of product measured in metric tonnes of 100% concentrated nitric acid produced. YARA Rostock has budgeted for the following production amounts: Year Budgeted production (thno 3 ) , , , ,000 Following years 540,000 Table: Budgeted nitric acid production Based on these production figures, one can make assumptions on how much N 2 O would be emitted into the atmosphere without employing catalyst technology. Past data suggests that 8.3 kgn 2 O are emitted per metric tonne of 100% concentrated nitric acid. The project activity is likely to have a significant impact on the plant s factual emissions. However, deviating from AM0034, factual (historic) emission reductions will not serve as a basis for determining the amount of ERUs awardable 13. For the reasons described in section B.1 below, a benchmark value will be applied. The project proponents will only receive ERUs that are freely marketable in so far as the project activity achieves emission levels below that benchmark value. Accordingly, the following assumptions apply to the establishment of the baseline emissions: The project activity starts on 1 st May 2009; YARA Rostock produces the amounts of nitric acid according to the production budget provided above, each year s production being equally distributed throughout the period; Factual emissions from the plant without catalyst are 8.3 kgn 2 O/tHNO 3 ; The secondary catalyst employed performs with an expected average abatement efficiency of 85% throughout the project s lifetime (resulting of project emissions of kgn 2 O/tHNO 3 ); 13 See section E.6 below for detailed information.

9 Joint Implementation Supervisory Committee page 9 Crediting period Years Emission reductions (tn 2 O) Estimated Emission Reductions [tco 2 e] 1 3,666 1,136, ,723 1,154, ,777 1,170,801 4* (until December 2012) 2, ,338 Total estimated Emission Reductions (until end 2012) 4,248,709 Table (part A): Emission reductions until 2012 Crediting period Years Emission reductions (tn 2 O) 4* (from 1 st January 2013 onwards) Estimated Emission Reductions [tco 2 e] 1, , ,810 1,135, ,810 1,135, ,810 1,135, ,810 1,135, ,810 1,135, ,810 1,135,291 Total number of crediting years 10 Total estimated Emission Reductions 11,438,883 Annual average of estimated reductions over total crediting period 1,143,888 Table (part B): Emission reductions from 2013 onwards * Due to the likely inclusion of N 2O emissions emanating from nitric acid production into the EU ETS from 1 st January 2013 onwards, the project may not be eligible to earn ERUs after that time or continuing the project under the JI may not be economically viable. Also, from 2013 onwards a GWP of 298 for N 2O as defined by the IPCC Third Assessment Report will be applied. This is why this PDD differentiates in between prospective emission reductions achieved until 31 st December 2012 and emissions reductions generated from 1 st January 2013 onwards. The scenario outlined by the above table does not yet take into account the reductions required by the German TA Luft standard from October 2010 onwards. In consequence, two further assumptions will have to be made in order to include the legal aspects relevant for forecasting the future emissions from the plant in case a JI project would not be undertaken: From October 2010 onwards, N 2 O emission levels from the plant have to be kept below 800 mgn 2 O/m³ of daily average at all times during operation.

10 Joint Implementation Supervisory Committee page 10 The TA Luft maximum daily average level of 800 mgn 2 O/m³ is assumed to correspond with a maximum emissions factor of 2.5 kgn 2 O/tHNO 3 and an average emissions factor of 2.0 kgn 2 O/tHNO 3 14, for estimation of Emission reductions from October 2010 onwards, the latter is applied. The following table illustrates the prospective emissions from the plant if a catalyst system is being operated with the above assumed efficiency of 85% and TA Luft is being complied with from October 2010 onwards: Crediting period Years Emission reductions (tn 2 O) Estimated Emission Reductions [tco 2 e] 1 3,666 1,136, , , ,295 4* ,258 Total estimated Emission Reductions 1,896,809 Table (part A): Emission reductions until 2012 (including TA Luft) Crediting period Years Emission reductions (tn 2 O) Estimated Emission Reductions [tco 2 e] 4* , , , , , , ,495 Total number of crediting years 10 Total estimated Emission Reductions 2,666,275 Annual average of estimated reductions over crediting period 266,627 Table (part B): Emission reductions from 2013 onwards (including TA Luft) * Due to the likely inclusion of N 2O emissions emanating from nitric acid production into the EU ETS from 1 st January 2013 onwards, the project may not be eligible to earn ERUs after that time or continuing the project under the JI may not be economically viable. Also, from 2013 onwards a GWP of 298 for N 2O as defined by the IPCC Third Assessment Report will be applied. This is why this PDD differentiates in between prospective emission reductions achieved until 31 st December 2012 and emissions reductions generated from 1 st January 2013 onwards. In spite of no further compulsory regulations on N 2 O emissions other than the mentioned TA Luft standard valid only from October 2010 onwards, the German DFP has asked to apply a benchmark of 2.5 kgn 2 O/tHNO 3 for the period until September 2010 inclusively 15. This detail and its implications on the project s operation will be dealt with in section E. below. 14 See footnote See section A.5 (last paragraph) for information on under what circumstances this benchmark must be applied.

11 Joint Implementation Supervisory Committee page 11 A.5. Project approval by the Parties involved: The Project Participants had applied for a Letter of Endorsement from the German DFP, the German Emissions Trading Authority in German the Deutsche Emissionshandelsstelle (DEHSt) on 13 th June The DEHSt has issued two written statements, jointly containing the desired Letter of Endorsement. The initial Letter of Endorsement issued by the DEHSt on 8 th October 2008 had in principle expressed full support for the proposed project. However, the decision on the reference case emissions applicable for calculating the number of ERUs freely awardable for emission reductions achieved had been left open in this statement. The reference case benchmark emissions factor has been specified by an additional letter dated 9 th December According to German law ( 5 IX in connection with 3 VI 2 ProMechG) this statement of the DEHSt is not binding. A final decision about the modalities of the JI project will be taken in the project approval procedure that will be initiated upon the submission of the PDD and the AIE s Determination Report. Concerning the aforementioned 2.5 kgn 2 O/tHNO 3 benchmark set by the German Emissions Trading Authority (DEHSt), this measure may be subject to a juridical verification launched in a comparable JI project application currently processed by the DEHSt. The project proponents explicitly reserve the right to refrain from applying this benchmark in case it is found to be not compliant with the law.

12 Joint Implementation Supervisory Committee page 12 SECTION B. Baseline B.1. Description and justification of the baseline chosen: Regulatory framework The regulatory framework for implementing JI projects in Germany is influenced by several acts of law. The fundamental framework is provided by the Kyoto Protocol to the United Nations Framework Convention on Climate Change ( UNFCCC ) and subsequent decisions by UNFCCC-entities, most importantly the decisions of the Conference of the UNFCCC Parties serving as the Meeting of Parties to the Kyoto Protocol ( CMP ) and the Joint Implementation Supervisory Committee ( JI SC ). In addition, there is the European Union legislation adapting the Kyoto JI framework for application in its member states such as the Emissions Trading Directive 16, the Linking Directive 17 and various JI relevant decisions by EU bodies 18. Besides acts of law of direct relevance, there also are Directives that have an indirect influence on JI implementation such as the IPPC Directive 19. EU Directives do not entail direct consequences on private entities located in the EU member states. In order to be enforceable on member state level, they generally have to be transformed into national legislation by the respective member state. These national transformation acts as well as other national legislation are the third layer of the regulatory framework relevant for JI project implementation. In Germany, the transformation laws most relevant are the Project-Mechanismen-Gesetz ( ProMechG ) and the Treibhausgasemissionshandelsgesetz ( TEHG ) 20. Of indirect relevance are the Bundes-Immissionsschutzgesetz ( BImSchG ) and various administrative guidelines issued thereunder such as the Technische Anleitung zur Reinhaltung der Luft ( TA Luft ). Illustration: Three layers of jurisdiction relevant for the implementation and subsequent operation of N2O nitric acid JI projects in Germany The JI SC has specified that JI project proponents may choose between two options when implementing JI projects: they may either (i) use a multi project emission factor (ii) or establish a project specific baseline 21. Due to the significant variances typically observable in different nitric acid plants, it would not be appropriate /87/EC, published in the internet under /101/EC, published in the internet under 18 Such as the Double Counting decision 2006/780/EC, published in the internet under /1/EC, published in the internet under 20 Both laws are to be found in the internet under 21 The requirements for this approach are outlined in the 4 th JI SC Meeting Report, Annex 6 Guidance in the Criteria for Baseline Setting and Monitoring (Version 01), section B; paragraphs 18 ff. (see the internet under for reference).

13 Joint Implementation Supervisory Committee page 13 to derive a multi-project emission factor. Instead, the project proponents apply a project specific emission factor by establishing a baseline in accordance with appendix B of the JI guidelines 22. Whilst using AM0034 Catalytic reduction of N 2 O inside the ammonia burner of nitric acid plants (Version 03.1) as a basis 23, the project proponents have chosen to amend this methodology and establish a projectspecific baseline in order to appropriately account for the significantly different context of the proposed project activity in comparison to the circumstances usually applicable in a CDM project 24. Explanation and Justification for deviations from AM0034 The following aspects of AM0034 are either not applied or applied in a modified manner: Project Implementation Aspect AM0034 Adjustment in JI project specific context Explanation / Justification Applicability criteria Applicability criteria include some aspects which are not required in the JI context Applicability criteria have been in part modified or not applied. (a) limitation to existing production capacity The reason for this limitation under CDM was to avoid a shift of production capacity from Annex I countries to non-annex I countries. This risk does not exist under JI and therefore, this criterion can be deleted. (b) exclusion of projects resulting in shut-down of N 2 O abatement Unchanged. (c) no effect on HNO 3 production Eliminated, because there is no justification for this criterion. N 2 O abatement does not affect nitric acid production. (d) no N 2 O abatement already installed Deleted, because operation may already have commenced on a trial basis before the start of the crediting period. Also, this criterion is redundant in relation to criterion (b) above. (e) no increased NO X emissions Unchanged. (f) no other GHG emissions This criterion does not apply, because secondary catalyst technology does not lead to any non-n 2 O GHG emissions. (g) continuous N 2 O measurement possible This criterion does not address a question of applicability as such. If monitoring is not possible / is complicated, a more appropriate and differentiating discussion 22 UNFCCC decision 9/CMP.1, Annex B; to be found under 23 AM0034 has been authored by N.serve and was approved by the CDM EB in July The approach chosen is in line with 4 th JI SC Meeting Report, Annex 6 Guidance in the Criteria for Baseline Setting and Monitoring (Version 01), section B; paragraphs 20 (b); (see the internet under for reference).

14 Joint Implementation Supervisory Committee page 14 can take place within the discussion of the monitoring aspects associated with the project. Baseline campaign Baseline emissions established based on distinct baseline campaign. Benchmark factors are used for determining reference case emissions. The use of benchmark values instead of establishing a baseline on a set of pre-catalyst campaign data (i.e. the baseline approach) is not used in the context of the proposed JI project activity, because from 1 st October 2010 onwards, German legislation of 48 I S.1 Nr.2 BImSchG in connection with Nr m.1 TA Luft sets a maximum compulsory N 2 O emissions limit for nitric acid production of 0.8 gn 2 O/m³. This value corresponds to 2.5 kgn 2 O/tHNO 3 produced. Baseline Emissions Baseline Emissions are based on the factual business as usual emissions. For this project, a benchmark value is applied for assessing the amount of emission reductions for which free ERUs will be allocated. This difference in approach for establishing the assumed reference case scenario is owed to paying reference to European standards (such as the IPPC directive), even though no compulsory legislative caps on N 2 O emissions from nitric acid production are currently in force anywhere in the European Union. Crediting Period starting date Crediting Period starts at a date specified in the PDD which is later than registration. Crediting Period starts with catalyst installation which already took place before the Final Determination of the project had been completed. The project s implementation occurred already before the determination procedures have been initiated. This is due to the time taken by the administrative procedures for deciding on the reference case scenario. In some cases, the N 2 O abatement technology is already in place due to industrial testing undertaken before the actual start of the project activity, i.e. the abatement activity is maintained after the trial operation phase has ended. Permitted range of operational parameters These are established in order to prevent baseline gaming (i.e. manipulation of baseline emissions) by plant operators aiming to unduly increase their emission reduction potential. No permitted range of operational parameters is established. In theory, a plant operator could increase N 2 O emission levels by modifying the plant s operational parameters (e.g. increasing the ammonia to air ratio). This would unduly increase the emission reduction potential of the project activity, because baseline emissions would not represent the business as usual scenario. As no baseline campaign is used, but emission reductions are calculated based on the conservative Benchmark Emissions Factor instead, there is no possibility for the operator for baseline gaming and hence, there is no need to establish a permitted range of operational parameters. Statistical Analysis of baseline emissions data Collected baseline campaign data is subject to statistical analysis in order to No such step is undertaken. As no baseline campaign is undertaken, there is no baseline campaign data that could be subject to statistical analysis.

15 Joint Implementation Supervisory Committee page 15 eliminate values which are not representative for standard plant operation. Statistical Analysis of Project emissions data Collected project campaign data is subject to statistical analysis in order to eliminate values which are not representative for standard plant operation. No such step is undertaken. Instead all plausible data sets are included. Eliminating all implausible data sets suffices for ensuring data integrity. This approach is technically more reasonable than the AM0034 approach and corresponds to common industry practice. Cap on baseline campaign length Maximum allowable nitric acid production is capped for the baseline campaign. No baseline campaign is conducted. In an AM0034 project, baseline emissions could be increased by extending the baseline campaign beyond its business as usual production. This is due to N 2 O emission levels increasing the longer a primary catalyst gauze is used. In the project specific scenario, no baseline campaign is conducted. Deduction of AMS uncertainty from baseline emissions factor Combined uncertainty for all parts of the AMS is deducted from EF BL. Uncertainty is not taken into account. Because no baseline campaign is conducted and emission reductions achieved by the project will not be assessed based on measured factual baseline emissions, but on non-measured benchmark values instead, applying uncertainty is not appropriate. Recalculation of EF BL - value in case of shorter project campaign. In case a project campaign is shorter than the baseline campaign, EF BL is recalculated for that campaign. EF BL is not being applied. Because emission reductions are not assessed based on factual emissions, this measure is not needed. Monitoring Periods based on campaigns Verifications can only be undertaken for full campaigns, not merely for parts of campaigns. This restriction does not apply. Under AM0034, emission reductions are assessed by comparing project campaign emissions to those of the baseline campaign. Due to the modification of not assessing emission reductions based on factual emissions (and thus not being dependent on a baseline campaign), emission reductions can also be determined for parts of campaigns. Moving Average Emissions Factor Project emissions are compared to This step is not being applied. AM0034 uses this measure to account for platinum deposits formed downstream of the ammonia oxidation reactor to account for the catalytic effect these deposits

16 Joint Implementation Supervisory Committee page 16 the average emission factor of all previous project campaigns (of the first 10 campaigns only). The higher value applies for calculating emission reductions. would have had on N 2 O concentrations in the off gas in the identified baseline scenario (assuming that the plant would have been operated without any N 2 O abatement devices in the absence of the proposed project activity). In effect, this step aims to include platinum deposit related changes to the baseline emissions. Because emission reductions are not assessed based on factual emissions (i.e. a baseline campaign). Minimum project emissions factor after 10 th campaign No project emissions factor after the 10 th project campaign may be higher than the lowest recorded during these campaigns. This restriction does not apply. AM0034 uses this measure to account for platinum deposits formed downstream of the ammonia oxidation reactor to account for the catalytic effect these deposits would have had on N 2 O concentrations in the off gas in the identified baseline scenario (assuming that the plant would have been operated without any N 2 O abatement devices in the absence of the proposed project activity). In effect, this step aims to include platinum deposit related changes to the baseline emissions. Because emission reductions are not assessed based on factual emissions (i.e. a baseline campaign). AMS downtime AM0034 requires either using 4.5 kgn 2 0/tHNO 3 as a default factor or eliminating data sets with missing values. During downtime of the AMS or other interruption of measurement lasting longer than 1/3 of the respective operating hour, the hour in question will be considered as not valid and all data sets (NCSG and VSG) collected therein are eliminated. If more than 20% of a Verification Period s operating hours require elimination, the Emission Reduction Units awardable for this Verification Period are limited to the pro-rata share of operating hours AM0034 is inconsistent in this point (elimination of data when AMS was down vs. application of the 4.5kg benchmark). In addition, the default factor contained in AM0034 would not be appropriate in a setting, where a benchmark factor lower than the default value is being used.

17 Joint Implementation Supervisory Committee page 17 for which valid data is available. Applicability of AM0034 taking into account the above modifications The methodology is applicable to project activities aiming to install secondary N 2 O abatement at a nitric acid plant. Plant 2.01 consists of two ammonia burners feeding into one absorption tower, the off-gasses of which are emitted through one stack. The ammonia oxidation reactors of each plant are operated synchronously, i.e. the primary catalyst gauzes are used for identical spans of time and always exchanged at the same shut-down. In fact, it would not be possible to run a plant with one ammonia burner only, because the ammonia flow to both burners can only be regulated for both burners jointly. In consequence, the mode of plant operation is in fact identical to the standard set up (one reactor, leading into one absorption tower and on to one stack) with regard to JI project implementation. Secondary N 2 O catalyst systems will be inserted into both ammonia reactors during the same shut down; the abatement systems will be installed underneath the primary catalyst gauzes. This corresponds to the defined scope of the methodology. Also, the project activity does not lead to the shut down of any N 2 O abatement devices already installed. At the time of the project start, there will not be any N 2 O abatement technology in place nor has there been before. Moreover, the project activity will not increase NO X emissions. The secondary catalyst technology to be installed has no effect on NO X emission levels. This has been scrutinised in industrial testing over extended industrial process application 25. In addition, the regular and compulsory NO X tests conducted by YARA under the supervision of the responsible local environmental authority would reveal any changes in NO X emission levels. B.2. Description of how the anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the JI project: Identification of the baseline scenario The approved baseline methodology AM0034 (Version 03) refers to AM0028 (Version 04) with regard to the identification of the baseline scenario. These methodologies were adapted to the JI specific context as described in section B.1 above. Furthermore, the following steps are based on the Combined Tool to identify the baseline scenario and demonstrate additionality (Version 02.2) 26 Step 1a Identification of alternative scenarios to the project activity 1.1 Assessment of the present situation 25 See the European IPPC Bureau publication Integrated Pollution Prevention and Control; Reference Document on Best Available Techniques for the Manufacture of Large Volume Inorganic Chemicals Ammonia, Acids and Fertilizers (August 2007), page 124 f. therein. This source states that NO yields for the ammonia oxidation reaction remain unchanged when operating secondary N 2 O abatement catalysts. 26 AM_Tool_02, provided by the CDM EB in its 28 th Meeting; published on the UNFCCC web site under

18 Joint Implementation Supervisory Committee page 18 At the time of the intended starting date of the JI project activity, no N 2 O abatement technology had been installed in the plant. Therefore, all scenario alternatives dealing with continuing the operation of already installed N 2 O abatement catalysts do not apply in the context of this project. 1.2 Most realistic scenario if no JI revenues for N 2 O reductions achieved are available The realistically feasible scenario alternatives are: Status quo: The continuation of the current situation, without installing any N 2 O abatement technology in the plant Modified Status quo: The continuation of the current situation without installing any N 2 O abatement technology in the plant before October 2010; only from then onwards an N 2 O catalyst system will be installed to meet the requirements of TA Luft 27 Installation of Non-Selective Catalytic Reduction (NSCR) De-NOx system Installation of an N2O destruction or abatement technology: o Tertiary measure for N2O destruction o Primary or secondary measures for N2O destruction or abatement In principle, none of these scenario alternatives are ex ante unrealistic or technically unfeasible. Scenario alternatives such as changing to another production method or using the N 2 O emitted for other purposes that have to be dealt with under AM0034 are not taken into perspective here, because they are no realistic alternative given the present plant layout and the general procedures of nitric acid production. Changing the production process would require setting up a new production facility, because the present plant cannot be amended to employ a different production procedure. Choosing another production procedure would also not be state of the art, because the presently operated procedure is the most advanced method available. Using N 2 O for other purposes other than just emitting it into the atmosphere is not done anywhere in the world, because N 2 O cannot be put to any economic use at the concentrations it occurs in the stack gas of nitric acid plant. Neither can it be used as a feedstock for the production process itself as N 2 O is not a raw material in nitric acid production. Step 1b Consistency with mandatory applicable laws and regulation There are currently no regulatory requirements in Germany regarding N2O emissions. However, from October 2010 onwards, YARA Rostock is required to stay below 0.80 gn 2 O / Nm³ in accordance with TA Luft. Therefore, the continuation without any N 2 O abatement catalyst from that date onwards can be excluded as a baseline. In consequence, the baseline scenario alternative "Status quo" would violate compulsory standards of German Environmental Law from October 2010 onwards and therefore must be discarded. However, to minimise the costs and potential impact on nitric acid production, the baseline scenario would be for Yara to optimise the installed volume/weight of N 2 O abatement catalyst to a level that would ensure emissions at or below 0.80 g/m³ throughout a campaign. This scenario is listed above as the "Modified Status quo" alternative. For the time after September 2010, it is not possible to predict what average emissions factor must be maintained in order to ensure that emissions are at or below the 2.5 kgn 2 O/tHNO 3 -treshold at all times. This will need to be established for each Verification Period specifically at the occasion of each subsequent Verification visit. This is only possible after the project emissions data have become available and a trend curve for 27 TA Luft is binding for installed production capacity 8 years after its coming into force; it came into on the first day of the third month after its publication which was 30 th July In consequence, the coming into force of the TA Luft was 1 st October 2002, making it binding for installed capacity from 1 st October 2010 onwards.

19 Joint Implementation Supervisory Committee page 19 project emissions across a whole production campaign has been established. For example, a level of about 2.0 kgn 2 O/tHNO 3 (or slightly lower) could be regarded as sufficient for ensuring compliance with TA Luft. This level does not represent the maximum N 2 O reduction achievable. Using secondary catalyst technology, N 2 O emissions could be lowered significantly below the stated value. But higher catalyst abatement efficiency would require more catalyst material, thus the costs would increase. Also, a heavier catalyst load needs a stronger containment structure and occupies more space inside the burner which affects the pressure drop and may thereby affect gas flow through the burner potentially lowering nitric acid production yields. In conclusion, implementing such technology into an existing plant although well researched by now is not totally risk free as it may negatively affect production output if done wrongly. Unless such surplus investment is made economically viable by means of JI revenues, the business as usual scenario would be not to invest in N 2 O abatement at all until September 2010 and thereafter use just enough catalyst material as required for achieving compliance with the then applicable TA Luft limit. For the sake of estimating baseline emissions from the plant in times when TA Luft has become applicable for it, the mentioned average value of 2.0 kgn 2 O/tHNO 3 has been used in this PDD. This preliminary limit is in no aspect a prediction or valid assessment on what level will have to be maintained In order to keep emissions below the mandatory TA Luft limit at all times during plant operation. NO X -emissions are regulated by the operational permit for the YARA plant. Currently, the permitted level is 0.45 g/m³, but from the beginning of October 2010 a maximum value will be reduced to 195 mg/m³. According to continuous MEAC 2000 readings since , the plant is in compliance with these requirements. YARA Rostock s NO X emissions will remain constant and in compliance with the regulatory limit also after the installation of the secondary catalyst. This is safeguarded by the fact that NO X emissions are online monitored by the responsible local environmental authority 29. In consequence, all but one of the above scenarios are in compliance with all applicable laws and regulatory requirements. However, due to TA Luft becoming applicable to the plant s operation from October 2010 onwards, the unlimited continuation of the Status quo (the first of the scenarios listed above) must be eliminated. It would most certainly be impossible to achieve emissions below the TA Luft threshold without installing some sort of N 2 O abatement system. Step 2 Barrier Analysis At the next step, baseline alternatives that face prohibitive barriers are eliminated from the further baseline identification process (barrier analysis). On the basis of the alternatives that are technically feasible and in compliance with all legal and regulatory requirements, a complete list of barriers that would prevent alternatives to occur in the absence of JI is established. Barriers include, among others: Investment barriers The investment barriers analysis asks which of the remaining scenario alternatives is likely to be prevented by the costs associated with it becoming reality. The assumption is that these scenarios would be unlikely to be the business as usual scenario. 28 NO X -readings from the MEAC 2000 will be provided to the AIE during the on-site visit. More information on the MEAC 2000 is to be found in section D.1 below. 29 This is the Staatliches Amt für Umwelt und Naturschutz in Rostock; this authority also issued the operational permit for the plant which will be held available for inspection by the AIE during the on-site visit.

20 Joint Implementation Supervisory Committee page 20 None of the N 2 O destruction technology options (including NSCR) are expected to generate any financial or economic benefits other than JI related income. Their operation does not create any marketable products or by-products. However, any operator willing to install and thereafter operate such technology faces significant investment and additional operating costs. Therefore, plant operators would face significant investment requirements if they decided to install N 2 O abatement (including NSCR) technology. Unless there is a legal obligation to reduce N 2 O emission levels (NO X limits already being complied with), there is no need to overcome these barriers. Accordingly, the NSCR scenario alternative could be triggered by NO X regulation. From this perspective, YARA Rostock could be forced to reduce N 2 O in a business as usual scenario if NO X regulation forced the plant operators to install NSCR technology. Such technology would be useful for reducing NO X emission levels, but would also lower N 2 O emissions. However, the installation of a Non-Selective Catalytic Reduction (NSCR) NO X catalyst unit is uneconomic, because YARA Rostock is already in compliance with the prevailing NO X regulations. Also, NSCR units require additional natural gas or ammonia to achieve sufficient tail gas temperatures and/or the right reducing environment inside the catalyst leading to comparably high operational costs. By being led through the absorption tower the gas mix has been cooled down to a temperature level below that required for NSCR abatement catalysts to function 30. Because of this, an NSCR abatement system would only work if the stack gas mix is re-heated. If even lower NO X levels were introduced the most economical option would be to upgrade the existing SCR NO X abatement units already installed at the plant instead. However, YARA Rostock is currently achieving NO X -emission levels far below the applicable limit so that such scenario is extremely unlikely, because the regulatory levels would need to be dropped most severely in order to enforce any additional adaptation requirements upon YARA Rostock. As the mentioned NO X catalyst devices are already very efficient, there would be no point in also installing NSCR, even if this technology was considered an alternative option. Last but not least, fitting an NSCR unit would halt production for a significant time, because tail gas heating systems needs to be installed in the stack 31. For all these reasons, the scenario alternative entailing the installation and operation of an NSCR unit faces significant investment barriers. While any baseline scenario alternatives that include the implementation of N 2 O abatement catalysts will entail considerable investment barriers, the mandatory application of TA Luft from October 2010 onwards will mean that the baseline alternative Modified Status quo should not be interpreted to face such barriers. This is, because the requirement to invest in some form of N 2 O abatement technology to be installed from October 2010 onwards is not connected to the proposed JI project activity. For the purpose of this PDD, the Modified Status Quo scenario is considered not to face an investment barrier. Technological barriers All of the available N 2 O abatement technologies have to be integrated in the nitric acid plant. Primary and secondary abatement technologies are installed inside the ammonia oxidation reactor where they may, if not correctly designed and installed, interfere with the nitric acid production process by causing a deterioration of product quality or a loss of production output. Tertiary measures require the installation of a complete reactor 30 NSCR abatement catalysts require a minimum gas mix temperature of at least 550 C in order to operate effectively; see the booklet no. 2 of the European Fertilizer Manufacturers Association (EFMA), published in the internet under (page 17 therein) for further information. 31 For other disadvantages of NSCR technology see an EFMA-booklet (also footnote 30) published in the internet under (page 18 therein).