vcs project 1016 - ce technology fuel switch

8/13/2019 VCS Project 1016 - CE Technology Fuel Switch

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PROJECT DESCRIPTION: VCS Version 3

v3.0 1

CE TECHNOLOGY FUEL SWITCH FOR

CLEANROOM GLOVE INDUSTRYPROJECT, TAIPING

CE Technology Berhad(586410-P)

Project Title CE Technology Fuel Switch for Cleanroom Glove Industry Project, Taiping

Version 3.0

Date of Issue 17/07/2013

Prepared By YTL-SV Carbon Sdn. Bhd.

Contact Level 4, Annex Block, Lot 10 Shopping Centre,

50, Jalan Sultan Ismail, 50250 Kuala Lumpur,

Malaysia


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Table of ContentsProject Details ............................................................................................................................................... 3

1.1 Summary Description of the Project.............................................................................................. 31.2 Sectoral Scope and Project Type .................................................................................................. 31.3 Project Proponent ......................................................................................................................... 31.4 Other Entities Involved in the Project ............................................................................................ 4

1.5 Project Start Date .......................................................................................................................... 41.6 Project Crediting Period ................................................................................................................ 41.7 Project Scale and Estimated GHG Emission Reductions or Removals ........................................ 41.8 Description of the Project Activity .................................................................................................. 51.9 Project Location............................................................................................................................. 61.10 Conditions Prior to Project Initiation .......................................................................................... 61.11 Compliance with Laws, Statutes and Other Regulatory Frameworks ....................................... 61.12 Ownership and Other Programs ............................................................................................... 7

1.12.1 Proof of Title .......................................................................................................................... 71.12.2 Emissions Trading Programs and Other Binding Limits ....................................................... 71.12.3 Participation under Other GHG Programs ............................................................................ 71.12.4 Other Forms of Environmental Credit ................................................................................... 71.12.5 Projects Rejected by Other GHG Programs ......................................................................... 8

1.13 Additional Information Relevant to the Project .......................................................................... 82 Application of Methodology .................................................................................................................. 9

2.1 Title and Reference of Methodology ............................................................................................. 92.2 Applicability of Methodology .......................................................................................................... 92.3 Project Boundary ......................................................................................................................... 132.4 Baseline Scenario ....................................................................................................................... 152.5 Additionality ................................................................................................................................. 152.6 Methodology Deviations .............................................................................................................. 18

3 Quantification of GHG Emission Reductions and Removals ............................................................. 183.1 Baseline Emissions ..................................................................................................................... 183.2 Project Emissions ........................................................................................................................ 193.3 Leakage ....................................................................................................................................... 223.4 Summary of GHG Emission Reductions and Removals ............................................................. 23

4 Monitoring ........................................................................................................................................... 24

4.1 Data and Parameters Available at Validation ............................................................................. 244.2 Data and Parameters Monitored ................................................................................................. 274.3 Description of the Monitoring Plan .............................................................................................. 31

5 Environmental Impact ......................................................................................................................... 336 Stakeholder Comments ...................................................................................................................... 33


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PROJECT DETAILS

1.1 Summary Description of the Project

The project is developed by CE Technology Berhad (a private entity hereafter referred as the

Project Proponent). The project proponent manufactures clean room gloves in Taiping in Perak

state, Malaysia. In the baseline scenario, a fossil fuel thermal oil heater was used to generate

heat in the production oven; therefore contributing to green house gas (GHG) emissions.

The project proponent intends to replace the current fossil fuel thermal oil heater with two units of

biomass based thermal oil heaters. Thus, the project proponent has opted to have an

environmentally sustainable solution for generating process heat by investing in biomass

combustion thermal oil heater, thereby reducing greenhouse gas emissions by avoiding the

consumption of Medium Fuel Oil (MFO).

The project activity is located in an area with plenty of saw mills which generate abundant amount

of wood waste. The project activity will use wood chips which will be sourced from within a

distance of 80km from the project activity. In the absence of the project, wood chips would have

been burnt in an uncontrolled manner or left to decay.

1.2 Sectoral Scope and Project Type

VCS program allows projects to use methodologies approved under VCS-approved GHGprograms such as the UN Clean Development Mechanism (CDM)

1. Accordingly, following

methodology approved under CDM has been used for the project:

Sectoral scope: 1-Energy Industries (renewable sources)

Methodology No: AMS I.C./Version 19

Title: Thermal energy production with or without electricity

1.3 Project Proponent

Project Proponent: CE Technology Berhad

Contact information: No.11528, Jalan Logam 4,

Kawasan Perindustrian Kamunting Raya,

34600 Taiping, Perak, Malaysia

Tel: +605-8910716

1http://www.v-c-s.org/faqs/what-methodologies-are-eligible-under-vcs-program
http://www.v-c-s.org/faqs/what-methodologies-are-eligible-under-vcs-programhttp://www.v-c-s.org/faqs/what-methodologies-are-eligible-under-vcs-programhttp://www.v-c-s.org/faqs/what-methodologies-are-eligible-under-vcs-program


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E-mail:[email protected]/[email protected]

Website:www.ceglobal.com.my

1.4 Other Entities Involved in the Project

EU-Malaysia Biomass Sustainable Production Initiative (Biomass-SP) contributes to thedevelopment of project activity as a VCS project. The associated costs for development of projectas VCS project will be borne by Biomass SP

2.

Contact information: EU-Malaysia Biomass Production Initiative20, Jalan Diplomatik,62050 Putrajaya, Malaysia

1.5 Project Start Date

01/08/2011, the date on which the first biomass thermal oil heater was commissioned.

1.6 Project Crediting Period

The length of the first crediting period is 10 years. The crediting period for the project activity shall

be -01/08-2011 to 31/07/2021

1.7 Project Scale and Estimated GHG Emission Reductions or Removals

Project

Mega-project

Years Estimated GHG emissionreductions or removals

(tCO2e)

Year 1 8,062

Year 2 16,107

Year 3 16,107

Year 4 16,107

Year 5 16,107

Year 6 16,107

Year 7 16,107

Year 8 16,107

Year 9 16,107

Year 10 16,107

2Biomass SP is not a project proponent for the project activity.
mailto:[email protected]/[email protected]:[email protected]/[email protected]:[email protected]/[email protected]://www.ceglobal.com.my/http://www.ceglobal.com.my/http://www.ceglobal.com.my/http://www.ceglobal.com.my/mailto:[email protected]/[email protected]


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Total estimated ERs 153,027

Total number of crediting years 10

Average annual ERs 15,302

1.8 Description of the Project Activity

The project proponent manufactures clean room gloves in Taiping, in Perak state, Malaysia. In

the baseline scenario, a fossil fuel thermal oil heater was used to generate heat in the production

oven; therefore contributing to green house gas (GHG) emissions.

The project proponent intends to replace the current fossil fuel thermal oil heater with two units of

biomass thermal oil heaters. Thus, the project proponent has opted to have an environmentally

sustainable solution for generating process heat by investing in biomass combustion thermal oil

heater, thereby reducing greenhouse gas emissions by avoiding the consumption Medium Fuel

Oil (MFO).

Working Principle of the biomass thermal oil heater3

The heaters are of a forced circulation coil type construction. The supplier of the heaters is

THERMAX. Thermal oil is circulated through the helical coil by a circulation pump. Wood chips

are burnt in the furnace to generate hot gases. A circulation pump installed in the oil line forces

the hot oil through the heater coil and process piping. The oil gets heated when it passes through

the coil. A common hot oil header receives the hot oil from the heater. Hot oil is supplied to the

utility header. The hot oil will give some of its heat to the process and will cool down a little. The

cooler oil returns to the return oil header on the unit. This return oil returned to the heater to be

heated again to the set value.

The project will thus use wood-chips to generate heat for production oven in the glove

manufacturing industry of CE Technology.

The project activity is located is an area with plenty of saw mills which generate abundant amount

of wood waste. The project activity will use wood chips which will be sourced within a distance of

80km from the project activity. In the absence of the project, wood chips would have been burnt in

an uncontrolled manner or stocked piled and left to decay.

The project activity shall be implemented in two phases. Implementation of the Phase 1 is

complete4and is under operation. Implementation of Phase 2 of the project is expected to

commence in the last quarter of 2013.

3Brochure for biomass thermal oil heater from THERMAX

4Commissioning report by THERMAX dated 01/08/2011


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1.9 Project Location

Figure 1: Map of Malaysia and of Perak state

The project activity is located at Taiping in the state of Perak in Malaysia. The address of theproject activity is as below:

No.11528, Jalan Logam 4,Kawasan Perindustrian Kamunting Raya,34600 Taiping, Perak,Malaysia

The GPS Coordinates of the project activity are 4.87N and 100.70E

1.10 Conditions Prior to Project Initiation

Prior to project initiation, the project proponent used a fossil fuel thermal oil heater. The thermal

oil heater used medium fuel oil (MFO) as fuel. The project activity uses woodchips as source of

fuel to generate renewable energy based heat in the production oven; thereby reducing Green

House Gas (GHG) emissions.

1.11 Compliance with Laws, Statutes and Other Regulatory Frameworks

The project activity is in compliance with all Malaysian Laws, statutes and other regulatoryframeworks. There are currently no regulatory requirements mandating reduction of GHG

emissions from thermal energy applications at facilities in Malaysia. The lists of approval received

are as below:


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1. Approval from Majlis Perbandaran Taiping (Local Municipality)5 Ref. No: Bil (45) dlm.

MPTpg F4/9/K

2. Approval from Jabatan Keselamatan dan Kesihatan Pekerjaan Malaysia (Department of

Occupational Safety and Health, Malaysia)6Ref. No: JKKP IS 127/453/1-200825247(4)

3. Approval from Jabatan Alam Sekitar Malaysia (Department of Environment Malaysia)7Ref.

No: AS(B)A 91/110/002/004 Jld. 23(54)

4. Approval from Lembaga Kemajuan Perindustrian Malaysia (Malaysian Industrial

Development Authority)8Ref. No: 220/40100/008732/000003ACI

1.12 Ownership and Other Programs

1.12.1 Proof of Title

The project proponent of this project is CE Technology Berhad9. Quotation for purchase of the

biomass thermal heater10, ownership of the land and premises11are registered under the same

entity.

1.12.2 Emissions Trading Programs and Other Binding Limits

The net GHG emissions reduction or removals generated by the project activity will not be used

for compliance under any other emissions trading program or to meet any binding limits on GHG

emissions.

1.12.3 Participation under Other GHG Programs

The project has not been registered, or is seeking registration under any other GHG programs.

1.12.4 Other Forms of Environmental Credit

The project neither has nor intends to generate any other form of GHG-related environmental

credit for GHG emission reductions or removals claimed under the VCS Program. The project

also is not availing any other form of environmental credit for the given monitoring period.

5

Approval letter from Majlis Perbandaran Taiping (Local Municipality)6Approval letter from Jabatan Keselamatan Dan Kesihatan Pekerjaan, Malaysia dated 09/09/2009

7Approval letter from Jabatan Alam Sekitar Malaysia (Department of Environment Malaysia dated 14/10/2010

8Approval letter from Lembaga Kemajuan Perindustrian Malaysia (Malaysian Industrial Development Authority

9Company registration under Companies Commission of Malaysia dated 14 February 2005

10Quotation from Thermotech to CE Technology Sdn. Bhd. for the purchase of biomass thermal oil heater

11Land Lease document with Perak document dated 15/10/2005


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1.12.5 Projects Rejected by Other GHG Programs

The project has not been rejected by any other GHG programs.

1.13 Additional Information Relevant to the Project

Eligibility Criteria

The project is not a group project thus this criteria is not applicable.

Leakage Management

The leakage management shall be discussed in detail in section 3.3 of this document

Commercially Sensitive Information

There is no commercially sensitive information that has been excluded from the public version of

the Project Description.

Further Information

The project will contribute to sustainable development in Taiping, Malaysia with respect to the

following aspects.Advantages of utilization of woodchips residues as energy source has threemain perspectives in Taiping, Malaysia:

a. Utilization of biomass thermal oil heater:

waste management: minimizing the environmental problems such as methane emission dueto natural decay of biomass (wood-chips) which are associated with the prevailing practice of itsunplanned disposal including dumping and/or burning in an uncontrolled manner;

energy security: utilization of woodchips in place of other fossil fuels (in this case, MFO)could reduce the rising demand for such fossil fuels as energy sources;

environmental benefits: avoidance of MFO will reduce potential GHG emissions associatedwith use of such fossil fuels.

b. Social and economic well-being: Biomass based thermal energy generation technologyrequires specialized expertise and good knowledge of the operational procedures.Implementation of such thermal oil heater technology thus comes with the need for trainedmanpower to operate and maintain the system. Thus, the local citizens from this area, which is adeveloping region, are employed by the project and will benefit from additional training andincreased job opportunity.

c. Technological well-being: As the technology used in the project was not available locally andwas imported; hence, there will be transfer of high quality technology to Malaysia.


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2 APPLICATION OF METHODOLOGY

2.1 Title and Reference of Methodology

Title and reference of baseline methodology: AMS I.C., Thermal energy production with or

without electricity, version 19

2.2 Applicability of Methodology

Methodology AMS I.C version 19 Applicability to Project Activity

Para 1

This category comprises renewable energytechnologies that supply users (defined asresidential, commercial or industrial) withthermal energy that displaces fossil fuel use.These units include technologies such as solar

thermal water heaters and dryers, solarcookers, energy derived from renewablebiomass and other technologies that providethermal energy that displaces fossil fuel.

Applicable

The project displaces fossil fuel usage fromexisting thermal oil heater and replaces it withtwo units of biomass thermal oil heater.

Para 2

Biomass-based co-generating systems thatproduce heat and electricity are included in thiscategory. For the purpose of this methodologycogeneration shall mean the simultaneousgeneration of thermal energy and electricaland/or mechanical energy in one process. Forexample, the project activity that produces heat

and power in separate element processes (forexample, heat from a boiler and electricity frombiogas engine) does not fit under the definitionof co-generation project.

Not applicable

The project is not a cogeneration system; onlythermal energy is produced in this system.There will be no electricity produced in theproject activity.

Para 3

Emission reductions from a Cogenerationsystem can accrue from one of the followingactivities:(a) Electricity supply to a grid;(b) Electricity and/or thermal energy (steam orheat) production for on-siteconsumption or for consumption by other

facilities;(c) Combination of (a) and (b).

Not applicable

This project activity does not involvecogeneration system. This is therefore notapplicable.

Para 4

The total installed/rated thermal energygeneration capacity of the project equipment is

Applicable

The thermal oil heaters design specification is4x10

6kCal/hr

12(two units). This corresponds to

12Brochure for thermal oil heater from THERMAX


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equal to or less than 45 MW thermal. 9.3MW thermal; which is below the applicablethreshold limit of 45MW thermal.

Para 5

For co-fired systems, the total installed thermal

energy generation capacity of the projectequipment, when using both fossil andrenewable fuel shall not exceed 45 MW thermal(see paragraph 6 for the applicable limits forcogeneration project activities).

Not applicable

The project activity only consumes biomass

residues (woodchips) which are combusted inthe furnace of the biomass thermal oil heater.

Para 6

The following capacity limits apply for biomasscogeneration units:

a. If the project activity includes emissionreductions from both the thermal andelectrical energy components, the totalinstalled energy generation capacity(thermal and electrical) of the projectequipment shall not exceed 45 MWthermal. For the purpose of calculatingthis capacity limit the conversion factorof 1:3 shall be used for convertingelectrical energy to thermal energy (i.e.,for renewable project activities, themaximal limit of 15 MW(e) is equivalentto 45 MW thermal output of theequipment or the plant);

b. If the emission reductions of thecogeneration project activity are solely

on account of thermal energyproduction (i.e., no emission reductionsaccrue from electricity component), thetotal installed thermal energyproduction capacity of the projectequipment of the cogeneration unitshall not exceed 45 MW thermal;

c. If the emission reductions of thecogeneration project activity are solelyon account of electrical energyproduction (i.e., no emission reductionsaccrue from thermal energy

component), the total installed electricalenergy generation capacity of theproject equipment of the cogenerationunit shall not exceed 15 MW.

Not applicable

The project activity is not a cogeneration

project.

Para 7

The capacity limits specified in the aboveparagraphs apply to both new facilities andretrofit projects. In the case of project activitiesthat involve the addition of renewable energy

Not applicable

The project activity does not involve addition ofrenewable energy unit at an existing renewableenergy. The project activity displaces fossil fuelbased thermal oil heater with biomass based


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units at an existing renewable energy facility,the total capacity of the units added by theproject should comply with capacity limits inparagraphs 4 to 6 and should be physicallydistinct from the existing units.

thermal oil heater. Hence, this condition is notapplicable.

Para 8

Project activities that seek to retrofit or modifyan existing facility for renewable energygeneration are included in this category.

Not applicable

The project activity is an installation of two newunits of 4x10

6kCal/hr

13biomass thermal oil

heater.

Para 9

New facilities (Greenfield projects) and projectsactivities involving capacity additions compared

to the baseline scenario are only eligible if theycomply with the related and relevantrequirements in the General Guidelines to SSCCDM methodologies

Not applicable

No, the project activity is not a Greenfieldproject. The glove manufacturing plant has

been operating for many years but was using afossil fuel thermal oil heater in the baseline.The project involves displacing the currentlyused fossil fuel thermal oil heater with biomassbased thermal oil heater. Hence, this conditionfor Greenfield projects is not applicable to theproject activity.

Para 10

If solid biomass fuel (e.g., briquette) is used, itshall be demonstrated that it has beenproduced using solely renewable biomass andall project or leakage emissions associated withits production shall be taken into account inemissions reduction calculation.

Not applicable

The project activity consumes biomassresidues (wood chips) which are not processedsolid fuels (e.g., briquette, pellets and cubes)and are a waste product from the saw mills inthe nearby region.

Para 11

Where the project participant is not theproducer of the processed solid biomass fuel,the project participant and the producer arebound by a contract that shall enable theproject participant to monitor the source of therenewable biomass to account for any emissionassociated with solid biomass fuel production.Such as contract shall also ensure that is nodouble counting of emission reductions.

Not applicable

The wood chips used in the project are the

waste product/residues from the saw mills and

is not a processed solid biomass fuel.

Woodchip is a residue from sawmills and is not

a processed fuel. The woodchips are

purchased from saw mills within 80km from the

project site. Therefore, as no processing of

solid biomass fuel is involved, this condition isnot applicable to the project activity.

13Brochure for thermal oil heater from THERMAX


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operating conditions such as ambienttemperature.

2.3 Project Boundary

As per AMS I.C, version 19, project boundary is the physical, geographical site where the fuel

combustion affected by the fuel-switching measure occurs. In this case the project boundary

refers to the fossil fuel thermal oil heater itself. The biomass plant supplies heat to the glove

manufacturing plant by combustion of biomass fuel. The waste product of the biomass boiler

plant will be ashes. An overview on emission sources included in or excluded from the project

boundary is tabulated below:

Item Spatial Extent as described in AMS

I.C version 19

Description of the project boundary

1 All plants generating power and/or heat

located at the project site, whether firedwith biomass, fossil fuels orcombination of both;

The project boundary includes the site where

the project equipment producing therenewable energy is located (i.e. the biomass

thermal oil heater).

2 All power plants connected physically tothe electricity system (grid) that theproject plants is connected to;

As per definition, the boundary shall includethe glove manufacturing plant. As per themethodology, the boundary also includes theproject power plant and all power plantsconnected physically to the electricity systemthat the CDM project power plant is connectedto. Therefore, although the project powerplant is not directly connected to the electricitysystem namely the peninsular grid of TenagaNasional Berhad (TNB) which is the grid fromwhich the glove manufacturing plant wouldconsume electricity in the absence of theproject, it is considered as a part of boundaryonly for determination of grid emission factor.

3 Industrial, commercial or residentialfacility, or facilities, consuming energygenerated by the system and theprocesses or equipment affected by theproject activity;

The project boundary includes the end user ofthe thermal energy produced by the projectactivity (i.e. the glove manufacturing plant).

4 The processing plant of biomassresidues, for the project activities usingsolid biomass fuel (e.g. briquette),unless all associated emissions areaccounted for as leakage emissions;

Woodchips used in the project activity is wasteproduct of a saw mill. Thus, this is not in theproject boundary.

5 The transportation itineraries, if thetransported over distances greater than

Would not be applicable here as the round tripbetween the project activity and the source of


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200 kilometres, unless all associatedemissions are accounted for as leakageemissions;

biomass is about160 kilometres (two way);less than 200 kilometres

14as indicated in the

methodology.

6 The site of the anaerobic digester in thecase of project activity that recovers

and utilizes biogas for power/heatproduction and applies thismethodology on a stand alone basis i.e.without using Type III component as aSSC methodology.

Would not be applicable as there is noanaerobic digestion system or biogas

production or utilization in the project activity.

Figure 2: Project boundary

The source and type of GHG included / excluded in the project boundary are given in table 1

below:

Table 1: Source and type of GHG gases included or excluded in the project

boundary

Source Gas Included? Justification/Explanation

Baseline

MFO as

fuel in

thermal

oil heater

CO2 Included Main baseline emissions.

CH4 Excluded Excluded for simplification. This is conservative.

N2O Excluded Excluded for simplification. This is conservative.

Other Excluded Excluded for simplification. This is conservative.

P Emissions CO2 Included Fossil fuel use for onsite equipment

14Survey report on wood waste availability in Malaysia by Thermotech Sdn. Bhd


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Source Gas Included? Justification/Explanation

due to

onsite

fossil fuel

use




Emissions

due to

onsite

electricity

use

CO2 Included Electricity use by equipment in the project activity




2.4 Baseline Scenario

The baseline scenario is depicted as per para. 16 of AMS I.C, version 19, whereby for renewable

energy technologies that displace technologies using fossil fuels, the simplified baseline is the fossilfuel consumption that would have been used in the absence of the project activity for the production

of heat

The project activity involves the installation of biomass thermal oil heater. In the absence of the

project activity, the heat was generated using a fossil fuel thermal oil heater; using Medium Fuel Oil

(MFO)which is also the baseline scenario.

2.5 Additionality

It has already been demonstrated in section 2.1 that the project meets the VCS methodology.

The additionality aspect of the project is discussed below as per paragraph 3.14 of the VCSstandard, version 3.3 Additionality. As per paragraph 3.14, Additionality shall be demonstratedand assessed in accordance with the requirements set out in the methodology applied to theproject. As per methodology AMS I.C., Thermal energy production with or without electricity,version 19, additionality shall be assessed as per Attachment A to Appendix B of the SimplifiedM&P for small scale CDM project activities which is now Guidelines on the demonstration ofadditionality of small-scale project activities, version9, annex 27, EB68. Accordingly, theadditionality of the project has been discussed below:

The project proponent has identified one barrier preventing the implementation of the project,namely, Investment barrier. The barrier has been analysed in detail in this section.

Investment Barrier

The additionality tool permits the project developer to choose the financial indicator, IRR todemonstrate the additionality of the project. The additionality tool provides an option to choosebetween project IRR and the equity IRR. Of the options, project developer has chosen projectIRR to demonstrate the additionality of the project actviity. Project IRR is used by the banks aswell as the investors alike to ascertain the advisability or otherwise of investing in a project. Sincein this instance the decision pertains to making an investment in the displacement of the existingfossil fuel based thermal oil heaters with new biomass based thermal oil heaters, project IRR isthe appropriate financial indicator to establish the additionality.


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The additionality tool provides an option to choose between investment comparison analysis andthe benchmark analysis to establish the additionality. The project developer has chosen thebenchmark analysis to demonstrate the additionality.

Guideline on the assessment of investment analysis (version 05) states that where the project

IRR is chosen as the financial indicator, commercial lending rate or WACC are the appropriatebenchmarks. Since project IRR has been chosen as the financial indicator, the project developerhas chosen commercial lending rate as the benchmark. The use of commercial lending rate as abenchmark is consistent with the Guidelines on the assessment of investment analysis (version05 paragraph 12, which suggested that ....Local commercial lending rates or weighted averagecost of capital (WACC) are appropriate benchmarks for a project IRR....

To evaluate the investment, the Project IRR is compared with the lending rates using the BankPembangunan Malaysia Berhad Renewable Energy loan Product at the time of initial financialdecision. The interest rate offered was the Bank effective cost of funds plus a spread of up to2.5%

15. The banks effective cost of funds in2011 was 6.27%.

16This would make the benchmark

for the project at 8.77%. The Project IRR for the project activity is thus calculated as 8.77%.

The main project costs and related data used for evaluating the financial status of the project areas shown in Table 2 below. The IRR of the project has been assessed over a period of 20 yearsas per the Guidelines on the assessment of investment analysis (version 05).

Table 2: Capital cost for the proposed project

Cost Value in Malaysian Ringgit(MYR)

Phase 1 5,697,854

Phase 2 3,,386,182

Total 9,084,036

The implementation of the project demands an investment of approximately RM 9,084,036. Thetechno-economic parameters and assumptions are based on quotations obtained. The projectalso involves annual operation and maintenance costs and other annual recurring costs whichhave been given in detail in the financial analysis spreadsheet for the project activity.

The revenue for the project activity is solely from the savings from MFO displaced.

Based on the costs and the revenues from the project activity, the IRR for the project has beencalculated to evaluate the financial viability of the project. The results of the calculations areshown in the following Table 3.

Table 3: Results of project IRR calculations for the project activity

Description Project IRR

Project IRR 6.18%

15http://www.bpmb.com.my/web/guest/rene_energy

16Bank Negara Annual Report 2010, published in March 2011, page 17
http://www.bpmb.com.my/web/guest/rene_energyhttp://www.bpmb.com.my/web/guest/rene_energyhttp://www.bpmb.com.my/web/guest/rene_energy


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As reflected below, the IRR for the project is much below the benchmark for the project. Thisreturn is certainly not viable for an entrepreneur to establish a new project. Therefore, the projectis additional and is not a business as usual scenario. The project can become financiallyattractive only with additional revenue from the VCUs in as much as the project IRR crosses thebenchmark of 8.77% and touches 9.42%.

Table 4: Results of project IRR calculations for the project activity with sale of VCU

Description Project IRR

Project IRR with VCU 9.42%

Sensitivity analysis

Guidance on investment analysis requires the project developer to subject critical assumptions toreasonable variation to ascertain the robustness of the conclusion drawn, that is, the project isadditional. As required a sensitivity analysis has been conducted to measure the impact, ofchanges in the chosen parameters.

The project developer has chosen two factors as critical to the operations of the project namelycapital cost, and Price of Biomass. These two factors were subjected to 10% variation on eitherside to ascertain the impact on the profitability and hence the IRR of the project. The results ofthe sensitivity analysis are given in Table 4 below:

Table 5: Project IRR without VCU revenues for various variations

S. No. Parameters Variation Project IRR for 20 years

1. Capital Cost+10% 5.77%

-10% 7.44%

3. Price of Biomass+10% -3.27%

-10% 12.99%

The sensitivity analysis reveals that even with significant changes in various parameters, theproject IRR does not cross benchmark rate except for decrease in the price of Biomass.However, this decrease in the price of biomass is highly unlikely considering that there has beenan increase in the price of biomass over the years. Recently, there is quite a number of biomasswaste to energy systems that have been implemented in Malaysia. As such, the price of biomasssuch as EFB, woodchips has increased substantially over the years.

Conclusion of the investment barrier

The investment analysis for the project clearly demonstrates that only with the savings from theMFO displaced, the project is not viable. The analysis also illustrates that the extra income fromsale of VCUs contributes significantly to improve the financial attractiveness of the projects andbrings the IRR well above the chosen benchmark.

It is clear from the calculations that only with the sales of VCUs, the project gets acceptablereturns whereas without VCUs revenue, the IRR assessed is at 6.18%, which is definitely notviable for any financial project to take off. With the additional revenue from the projected sale ofVCUs at a conservative forecasted price for a period of 20 years, the IRR at 9.42% becomesfinancially viable for consideration by the project proponent. The combined income from the sale


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of VCUs and MFO saving will allow the project to be attractive. Thus it can be concluded that thesuggested VCS project activity is additional to the baseline scenario.

2.6 Methodology Deviations

There is no deviation in the applied methodology

3 QUANTIFICATION OF GHG EMISSION REDUCTIONS AND REMOVALS

3.1 Baseline Emissions

As per paragraph 49 of AMS I.C, version 19, the emission reductions achieved by the project

activity are calculated as follows.

ERy = BEy - (PEy + LEy) (1)

Where,

Parameter Description Unit ValuePhase I Phase II

ERy Emission reductions in year y tCO2e 8,062 16,107

BEy Baseline emissions in year y tCO2e 8,732 17,464

PEy Project emissions in year y tCO2e 670 1,357

LEy Leakage emissions in year y tCO2e 0 0

* Here BEy= BEthermal,CO2,y

Basel ine emissions for h eat produc t ion

As per paragraph 22 of methodology AMS I.C., version 19, for heat produced using fossil fuel, thebaseline emissions (BEy) are calculated as:

BEthermal,CO2,y = (EGthermal,y/ BL,thermal) * EFFF,CO2 (2)

Where,

Parameter Description Unit Value

Phase I Phase II

BEthermal,CO2,y The baseline emissionsfrom heat displaced bythe project activity during

the year y(tCO2e),

tCO2 8,732 17,464

EGthermal,y The net quantity of heatsupplied by the projectactivity during the year y(TJ),

TJ 98.2 196.3

EFFF,CO2 The CO2 emission factor ofthe fossil fuel that wouldhave been used in thebaseline plant obtained

tCO2/TJ 77.4 77.4


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from reliable local ornational data if available(tCO2/TJ),

BL,thermal The efficiency of the plantusing fossil fuel that wouldhave been in the absence

of the project activity

% 87% 87%

Where,

EGthermal,yhas been calculated as follows:

EGthermal,y= (Heat capacity/heater* No. of Heaters* Efficiency of the project thermalheater* Operating hours per year*conversion factor)/1000


Phase I Phase II

EGthermal,y The net quantity of heatsupplied by the projectactivity during the year y(TJ),

TJ 98.2 196.3

Heat output/yr - Mil KJ/yr 98,152 196,304

Heat output/yr - Mil Kcal/yr 23,443 46,886

Heat output/hr - Mil Kcal/hr 2.96 5.92

Heatcapacity/heater - Mil Kcal/hr 4.00 4.00

No. of Heaters - 1 2

Efficiency ofthe projectthermal heater - % 74% 74%

Operating

hours per year - Hours/yr 7920 7920Conversionfactor - KJ/KCal 4.1868 4.1868

3.2 Project Emissions

As per paragraph 45 of methodology AMS I.C, version 19, the project emissions are calculated as

follows:

PEy = PEEC,y + PEy, transport + PEy, FC (3)

Where,


Phase I Phase II

PEy Project emissions in year y tCO2 e/year 670 1,357


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PEEC,y Emissions from the electricity

consumption in the year y

tCO2 e/year 652 1,305

PEy, transport Emissions from incremental

transportation in the year y

tCO2e/year 0 0

PEy, FC Emission from fossil fuel

combusted during the year y

tCO2e/year 17 52

As per approved methodology AMS I.C. / version 19, the project emissions due to the incremental

transportation distance from the woodchips supplier to the project activity need not be considered

if the distance is below 200km (round trip). Hence, PE y, transport has not been considered in the

project emissions calculation. However, the average distance between the two locations will be

monitored. If at any point at the time during the project activity, if the distance travelled by the

truck exceeds 200km, then the project emissions due to transportation shall be accounted for.

Thus, PEy = PEEC,y + PEy, FC (3a)

Emissions from electr ic i ty consum pt ion by the pro ject act iv i ty

As per AMS I.C., version 19, CO2emissions from electricity consumption by the project activity

shall be calculated using the latest version of the Tool to calculate baseline, project and/or

leakage emissions from electricity consumption Accordingly, version 01 of the tool has been

used to calculate the project emissions due to consumption of electricity.

The tool is only applicable if one out of the following three scenarios applies to the sources of

electricity consumption:

Scenario A: Electricity consumption from the grid. The electricity is purchased from the grid only.

Either no captive power plant is installed at the site of electricity consumption or, if any on-site

captive power plant exits, it is not operating or it can physically not provide electricity to the

source of electricity consumption.

Scenario B: Electricity consumption from (an) off-grid fossil fuel fired captive power plant(s). One

or more fossil fuel fired captive power plants are installed at the site of the electricity consumption

source and supply the source with electricity. The captive power plant(s) is/are not connected to

the electricity grid.

Scenario C: Electricity consumption from the grid and (a) fossil fuel fired captive power plant(s).One or more fossil fuel fired captive power plants operate at the site of the electricity consumption

source. The captive power plant(s) can provide electricity to the electricity consumption source.

The captive power plant(s) is/are also connected to the electricity grid.

Scenario Aapplies to the project activity electricity during start up to run the all the electrical

installations would be drawn from the National grid. Hence, the quantity of grid electricity imported

for use project will be calculated using this tool in the ex-post scenario.


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As per equation 1 of Tool to calculate baseline, project and/ or leakage emissions from electricity

consumption / version 01, the project emissions from electricity consumption shall be calculated

as follows:

PEEC,y = El imp* EFCO2,grid,y* (1 +TDLy) (4)

Where,


Phase I Phase II

PEEC,y Project emissions due toelectricity consumed from thegrid

tCO2e/year 652 1305

El imp Quantity of electricity imported fromthe grid for the project activity

MWh / year 927 1854

EFCO2, grid, y Baseline emission factor of the grid tCO2e/MWh

0.683 0.683

TDLy Average technical transmissionand distribution loses of the grid

% 3.04% 3.04%

As per the Tool to calculate baseline, project and/ or leakage emissions from electricityconsumption / version 01, the emission factor for electricity consumption from the grid can becalculated as per procedures in the latest approved version of the Tool to calculate the emissionfactor for an electricity system.

However, based on the Tool to calculate the emission factor for an electricity system, theMalaysia Green Technology Corporation (formerly known as Malaysia Energy Centre which is theMalaysias DNA secretariat) officially publishes the emissions factors for Malaysia. Hence, for thisproject, the emission factor has been taken from the most recent data

19available for Peninsular

Malaysia at the time when the PDD was submitted to the DOE for validation.

Also, ex ante option is chosen for the project activity and the emission factor is determined as0.683 tCO2/MWh as per the most recent official data published by Malaysia Green TechnologyCorporation and thus no monitoring and recalculation of the emissions factor during the creditingperiod is required. The calculation for grid emission factor has been provided in Annex 1 of theVCS PD.

Emissions from on-s i te consumpt ion of fossi l - fue ls due to the pro ject act iv i ty

The project involves consumption of fuel (diesel) for shovel and other machineries. As per

methodology AMS I.C., version 19, the CO2emissions due to the activity are calculated as per

latest Tool to calculate project or leakage CO2 emissions from fossil fuel combustion

Accordingly, as per version 02 of the tool, the emissions from fossil fuel combustion can be

calculated as follows:

17Study on Grid Connected Electricity Baselines in Malaysia, 2009; published in January 2011, Detailed

calculations given in Annex 118

Study on Grid Connected Electricity Baselines in Malaysia, 2009; published in January 2011, Detailedcalculations given in Annex 1

19 CDM Electricity Baseline 2008, accessed at

http://cdm.greentechmalaysia.my/up_dir/articles1052,article,1269596237,label_CDM_Baseline_2009.pdf


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PEFC,on-site,y = FCdiesel,on-site,y * COEFdiesel,y

(5)

Based on the Option B and equation (4) of Tool to calculate project or leakage CO2 emissions

from fossil fuel combustion/ Version 2, COEFi,y could be calculated using the following equation:

COEFdiesel,y = NCVdiesel,y EFCO2,diesel,y (6)

Therefore,

PEFCon-sitej,y = FCi,j,y * (NCVdiesel,y EFCO2,diesel,y)

(7)

Where,


Phase I Phase II

PEFC,on-site,y CO2emissions from fossil fuelcombustion on-site during theyear y (tCO2/yr)

ton CO2e/year

17 52

FCdiesel,on-site,y

Quantity of diesel combusted on-site during the year y (mass orvolume unit/yr)

litre/yr 6,574 19,721

NCVdiesel,y Weighted average net calorificvalue of the diesel in the year y(GJ/mass or volume unit)

TJ/Gg 42.496 42.496

EFCO2,diesel,y Weighted average CO2emissionfactor of diesel in the year y(tCO2/GJ)

tCO2/GJ 74.1 74.1

i Fuel types combusted in processj during the year y

Diesel - -

Density of diesel kg/litre 0.84 0.84

3.3 Leakage

As per Para 47 and 48 of AMS I.C version 19, the leakage for the project activity is to be

considered only if:

1. If the energy generating equipment currently being utilised is transferred from outside the

boundary to the project activity;

The energy generating equipment is not transferred from outside the project boundary; hence

this leakage condition is not applicable to the project activity.

2. In cases where the collection/processing/transportation of biomass residues is outside the

project boundary CO2emissions from the collection/processing/transportation.


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As the project activity involves transportation of biomass from within a radius of 80 kms (i.e.

160 kms round trip distance) which is less than 200 kms, emissions due transportation of

biomass have been neglected as per the paragraph 48, footnote 16 of the methodology

AMS.1C Version 19, which states that if the biomass residues are transported over a

distance of more than 200 kilometres due to the project activity, then this leakage source

attributed to transportation shall be considered, otherwise it can be neglected.

Leakage emiss ions as per Atachment C to appendix B - The guidance on leakage in

b iomass pro ject act iv i t ies

As per Table 1 of the general guidance on leakage in biomass project activities, Version 03

emission sources for biomass residues or wastes consists only of the emissions from competing

use of biomass.

Accordingly, emissions from shift of pre-project activities and emissions from biomass

generation/cultivation are not applicable to the project activity as the project involves use of

biomass residues (woodchips).

As per para 18 of the guidance, the project participant shall evaluate ex-ante if there is a surplus

biomass in the region of the project activity, which is not utilized. Survey for the availability of the

biomass was conducted to ascertain the quantity of biomass available to the project. As per

survey report, the availability of biomass is more than 25% the requirement. As per the report, the

total consumption of biomass including the project activity works out to be 208,028

Tones/annum20

as against a total availability of 282,432 Tones/annum21

. Thus, the total excess

availability of biomass after utilization in the project activity is 74,404 Tones/annum (which is

26.34% excess availability).

Thus availability of biomass (woodchips) is more than 25% than the requirement.

The availability of biomass would again be monitored ex-post at the beginning of the next two

crediting periods through similar surveys conducted by the project participant. Hence, as per the

guidance, this source of leakage has been neglected for ex ante calculations and for the first

crediting period.

Thus, there is no leakage associated with the project activity.

3.4 Summary of GHG Emission Reductions and Removals

The crediting period of the project activity shall be the date on which the first monitoring period

commences. The estimated ex-ante emission reductions of the project activity are given in the

Table 6 below.

Table 6: Estimated ex-ante emission reductions of the project activity

20Survey on wood waste availability in Malaysia conducted by THERMAX Sdn. Bhd (182664tonnes/annum sold to

industries for use + 25,364tonnes/annum required by the project activity. Hence the total consumption of biomass is208,028tonnes/annum.)

21Survey on wood waste availability in Malaysia conducted by THERMAX Sdn. Bhd


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Years Estimated

baseline

emissions or

removals (tCO2e)

Estimated

project

emissions or

removals (tCO2e)

Estimated

leakage

emissions

(tCO2e)

Estimated net

GHG emission

reductions or

removals (tCO2e)

Year 1 8,732 670 08,062

Year 2 17,464 1,357 0 16,107Year 3 17,464 1,357

016,107

Year 4 17,464 1,3570

16,107

Year 5 17,464 1,3570

16,107

Year 6 17,464 1,3570

16,107

Year 7 17,464 1,3570

16,107

Year 8 17,464 1,3570

16,107

Year 9 17,464 1,3570

16,107

Year 10 17,464 1,3570 16,107

Total 165,911 12,884 0 153,027

4 MONITORING

4.1 Data and Parameters Available at Validation

Data Unit / Parameter: EFMFO,CO2

Data unit: tCO2/TJ

Description: The CO2 emission factor of the MFO that would

been used in the baseline scenario

Source of data: IPCC Guidelines for National Greenhouse Gas

Inventories 2006

Value applied: 77.4

Justification of choice of data or description

of measurement methods and procedures

applied:

Reference will be made to default value as

defined in Table 1.4 of Chapter 1 of Vol.2

(Energy), IPCC 2006

Any comment: 77.4 apply for residual fuel oil. This is the closest

fuel oil that is available in Table 1.4 of Chapter 1

of Vol.2 (Energy), IPCC 2006. Hence, the same

has been considered for the calculation of MFO.

Data Unit / Parameter:yCOEF ,2

Data unit: tCO2/MWh

Description: CO2 emission factor for the grid


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v3.0 25

Source of data: Official sources: GreenTech Malaysia (CDM

Energy Secretariat, Malaysia), Study on Grid

connected Electricity Baselines in Malaysia,

prepared by CDM Energy Secretariat, for 2009.

Value applied: 0.683



applied:

In Malaysia, the grid emission factor is

determined by GreenTech Malaysia and made

publically available in order to facilitate the

development of renewable energy based CDM

projects in Malaysia.

At the time of submitting the CDM-PDD to DOE

for validation, the most recent data publically

available is the 2009. The same have been used

in the Calculation of Peninsular Grid Emission

Factor.

Any comment:yCOEF ,2 is same as EFgrid,CM,yand EFEL,j,y.

The tool to calculate emission factor allows OM

and BM to be determined once at validation

stage and fixed ex-ante for the entire crediting

period. The project proponent has accordingly

chosen the ex-ante vintage option for fixing the

OM and BM for the project activity. Accordingly,

since the calculation of EFgrid,CM,y is based on

calculation of OM and BM which are fixed for the

project activity, the value of EFgrid,CM,yis therefore

fixed for the entire crediting period.

Data Unit / Parameter: NCV diesel,y

Data unit: TJ/Gg

Description: Net calorific value of diesel used in year y

Source of data: National Energy balance of Malaysia22

Value applied: 42.496



applied:

The value is within the uncertainty range of the

IPCC default value which is 43.

Any comment: --

22Page 53,http://og.ssb.no/ogmeetings/sixthmeeting/Presentations_OG6/DAY_4_Aizah_National_Energy_Balance.PDF


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v3.0 26

Data Unit / Parameter: EFDiesel,CO2,y

Data unit: tCO2/TJ

Description: The CO2 emission factor of the diesel that would

been used in the project activity

Source of data: IPCC Guidelines for National Greenhouse GasInventories 2006

Value applied: 74.1



applied:

Reference will be made to default value as

defined in Table 1.4 of Chapter 1 of Vol.2

(Energy), IPCC 2006

Any comment: --

Data Unit / Parameter: BL,thermal

Data unit: %

Description: The efficiency of the plant using fossil fuel that

would have been used in the absence of the

project activity

Source of data: Manufacturer details

Value applied: 87%



applied:

The efficiency of the plant has been taken as per

the details from the manufacturer of the thermal

oil heater used in the baseline scenario.

Any comment: -

Data Unit / Parameter: TDLj,y

Data unit: %

Description: Average technical transmission and distribution

losses for providing electricity to the source j in

year y

Source of data: Index Mundi

www.indexmundi.com/facts/malaysia/electric-

power-transmission-and-distribution-losses

Value applied: 3.04%



applied:

The data has been taken from publicly available

website Index Mundi

www.indexmundi.com/facts/malaysia/electric-

power-transmission-and-distribution-losses. An

average for last 10 years has been used for
http://www.indexmundi.com/facts/malaysia/electric-power-transmission-and-distribution-losseshttp://www.indexmundi.com/facts/malaysia/electric-power-transmission-and-distribution-losseshttp://www.indexmundi.com/facts/malaysia/electric-power-transmission-and-distribution-losseshttp://www.indexmundi.com/facts/malaysia/electric-power-transmission-and-distribution-losseshttp://www.indexmundi.com/facts/malaysia/electric-power-transmission-and-distribution-losses


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v3.0 27

calculation purposes.

Any comment: -

Data Unit / Parameter: Density of diesel

Data unit: kg/litre

Description: Density of diesel

Source of data: Environmental Quality (Control of Petrol and

Diesel Properties) Regulations 2007, Ministry of

Environment, Government of Malaysia

Value applied: 0.84



applied:

As per data published by a government agency

of Malaysia and can be considered equivalent to

Regional or national default value which is

option (c) of the data source for the parameter.Any comment: -

Data Unit / Parameter: -

Data unit: %

Description: Moisture content of woodchips (wet-basis)

Source of data: On-site measurements

Value applied: 33%

Justification of choice of data or descriptionof measurement methods and procedures

applied:

Moisture content of the biomass of homogenousquality was monitored for a sample batch.

As the emission reductions are not based on

biomass energy input, hence the value for

moisture content has been fixed for the project

activity.

Any comment: -

4.2 Data and Parameters Monitored

Data Unit / Parameter: EGthermal,y

Data unit: TJ

Description: Net quantity of thermal energy supplied by theproject activity during the year y

Source of data: Plant records

Description of measurement methods and A heat meter will be installed. The heat meter


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procedures to be applied: displays the net quantity of heat (i.e. thedifference between the inlet and the outlettemperatures). As mand Cpis constant, the datalogger will compute the thermal energy generatedaccordingly using the formula:Heat = m * Cp* (T2T1)

The data logger will record the data and the samewill be used for calculation purposes.

Frequency of monitoring/recording: Continuous monitoring, aggregated annually

Value applied: Phase I:98.2Phase II:196.3

Monitoring equipment: Heat meter

QA/QC procedures to be applied: Heat meter shall be calibrated as per themanufacturer / suppliers recommendation or atleast once in three years.

Calculation method: Heat = m * Cp* (T2T1)

Where, m = mass of oilCp = Specific heat(T2T1) = difference in temperature

Any comment: Data will be archived electronically for 2 yearsafter the crediting period or the last issuance ofcredits for this project activity, whichever occurslater.

Data Unit / Parameter: FCdiesel,on-site,y

Data unit: Litres / year

Description: Quantity of diesel consumed on-site during the

year ySource of data: Plant records

Description of measurement methods and

procedures to be applied:

Amount of diesel will be recorded, wheneverdiesel is withdrawn from the diesel tank.

Frequency of monitoring/recording: Continuously monitored (i.e. whenever dieselwithdrawn from the tank and filled into thevehicles like shovel etc.)

Value applied: Phase I:6,574Phase II:19,721

Monitoring equipment: Tank gauge

QA/QC procedures to be applied: Quantity of diesel consumed will be cross

checked with the diesel purchase receipts andstock changes.

Calculation method: Not applicable



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Data Unit / Parameter: Bbiomass,y

Data unit: Tonnes

Description: Net quantity of woodchips consumed in year y




Trucks carrying woodchips will be weighed uponentry with the woodchips and exit after unloadingthe woodchips at the project site. The differencein between the two readings would be consideredas the net weight of the woodchips.

Frequency of monitoring/recording: Continuously (i.e. Data will be monitoredwhenever woodchips are transported to theproject activity site)

Value applied: Phase 1: 12,682 tonnesPhase 2: 25,364 tonnes

Monitoring equipment: Weighing bridge

QA/QC procedures to be applied: Weighbridge will be maintained/calibrated as per

supplier/manufacturers recommendation or atleast once in three years.

Data will be crossed checked with an annualenergy balance that is based on purchasequantities (sales receipts).



Data Unit / Parameter: NCVwoodchips

Data unit: GJ/tonnes

Description: Net calorific value of woodchips used in theproject activity.

Source of data: Laboratory report for the first year (average ofquarterly results for the first year)



Plant records

Frequency of monitoring/recording: Measured quarterly, taking at least three samplesfor each measurement. The average value wouldbe used for the year and for the rest of thecrediting period.

Value applied: 15.6

Monitoring equipment: Independent laboratory testing

QA/QC procedures to be applied: Cross check with values from literature such asIPCC values etc.


Any comment: Data will be archived electronically for 2 years


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v3.0 30

after the crediting period or the last issuance ofcredits for this project activity, whichever occurslater. For ex-ante calculations, the value hasbeen taken from IPCC Default value for NCV.

Data Unit / Parameter: ECPJ,j,y

Data unit: MWh/year

Description: Quantity of electricity consumed by the projectactivity in year y.




Electricity bills issued by Tenaga NasionalBerhad (TNB)

Frequency of monitoring/recording: Monthly with annual aggregation

Value applied: Phase I:927Phase II:1,854

Monitoring equipment: Meter installed by Tenaga Nasional Berhad(TNB)

QA/QC procedures to be applied: The meter is owned and maintained by the localutility company (TNB) as per their standards.



Data Unit / Parameter: DAF

Data unit: km/trip

Description: Average distance travelled per vehicle forbiomass transportation




A database of point of delivery (look up table) anddistance will be developed which can be used asa reference for calculating the project emissionsfrom transportation.

Frequency of monitoring/recording: Continuously

Value applied: 160km (round trip)

Monitoring equipment: Not applicable

QA/QC procedures to be applied: Distance will be cross checked with fuelconsumption

Calculation method: On-site measurement.

Distance travelled by each truck transporting

compost will be monitored and recorded in a


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v3.0 31

logbook on monthly basis.

Any comment: As the project activity involves transportation ofbiomass from within a radius of 80 kms (i.e. 160kms round trip distance) which is less than 200kms, emissions due transportation of biomasshave been neglected as per the paragraph 48

and footnote 16 of the Small Scale CDMMethodology AMS.1C Version 19, which statesthat if the biomass residues are transported overa distance of more than 200 kilometres due to theproject activity, then this leakage sourceattributed to transportation shall be considered,otherwise it can be neglected.

The distance will be monitored to ensure that thedistance travelled during each trip does notexceed 200km. If in any case should it exceed200km, then the leakage due to transportationshall be taken into consideration.

Data will be stored for 2 years after the creditingperiod or the last issuance of credits for this

project activity, whichever occurs later.

4.3 Description of the Monitoring Plan

The project participants will develop a monitoring plan containing monitoring methodologyincluding methods, indicators and frequencies to meet the requirement laid down in AMS.I.C.,version 19.

Figure 3: Organizational chart for monitoring

Monitoring ManagementCE Technology Bhd. will be overall responsible for implementation of the monitoring planincluding quality management of the monitoring. The supervisor at the project activity shallregularly report to the company management regarding the performance of project activity. Themanagement shall provide guidance and instruction regarding improvement of performance of theproject activity and develop the monitoring reports for the emission reductions for the projectactivity for the purpose of verification and certification of Voluntary Carbon Units (VCUs).


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Role Responsibilities

Plant In-charge - Monitor the whole activities at Biomass Thermal Oil heaterarea

- Handle the sale and purchase activity of carbon credit- Ensure the activities carried out at the plant comply with the

requirement of the VCU project

Project manager - In charge of the daily operations of Biomass Thermal oil heater- Ensure the activities carried out at the plant comply with the

requirement of the VCU project- Supervise the monitoring activities carried out by Facility

supervisor- In charge of in-house maintenance of the plant

Facility workers - Operate the Biomass Thermal Oil heater

Facilitysupervisor

- Carry out the monitoring activities as per the monitoring plan- Ensure that the workers operate the plant as per the

procedures

Projectsupervisor

- Compile and keep records of the monitoring data- Communicate with external parties such as consultant on the

project

- Update and discuss with plant manager and plant in-charge onmatters related to the project

Training

Training forms an integral part of the monitoring plan. Training will be conducted to all employeesinvolved in the VCS project. A Training Plan will be developed with the view of enabling eachemployee to have sufficient skills in the monitoring, storage and evaluation of the performance ofthe project activity. The training shall be so that each employee will acquire sufficient technicalknowledge in carrying out his duties and responsibilities. The training will include lectures and on-the-job training.

Standard Operating Procedures (SOP)

A set of SOP will be developed for the monitoring of the VCS project activity. It shall containprocedures for each task in the monitoring of emission reduction as well as data quality controlprocedures.

The SOP will also include procedures for emergency and unintended leakage. The technicians atsite will be trained to cope with emergency situation so that corrective actions could be takenimmediately to prevent any unintended event.

Site audits

The Management of CE Technology shall make periodic site audits to ensure that monitoring andoperational procedures are being observed in accordance with the Monitoring Plan. All findings

will be documented.

Data Storage

All data are to be stored in electronic form. The database shall be periodically updated and storedin CDs as a back-up. These CDs shall be checked annually and any defective one shall bereplaced by duplicate copy from other site.


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All monitoring records shall be kept for verification up to at least two years after the end of theproject activity or the last issuance of VCUs for this project activity, whichever occurs later.

5 ENVIRONMENTAL IMPACT

Under Malaysian Environmental Quality (Environmental Impact Assessment)(PrescribedActivities) Order 1987

23, a detailed Environmental Impact Assessment (EIA) study is not required

to be conducted for the project activity.

An application with all necessary details had been submitted to the Department of Environmentand approval has to be obtained for operating the project facility.

However a brief analysis due to the project is done in this section:

Impact on Air

There are some emissions to the atmosphere from the project activity. Small quantities ofparticles may be released from the chimney. However, necessary pre caution has been taken by

the project proponent and the technology provider to minimize the amount of particles released tothe atmosphere. Hence, there would be no significant impact on air due to project activity.

Impact on water

There is no wastewater produced from the project activity. Hence, there would be no significantimpact on water courses due to project activity.

Impact on land

The woodchips will stored under a covered roof and the woodchips will be consumed within a fewdays time. Hence, there would be no significant impact on land because of the project activity.

Impact due to odour

The will be no decaying/anaerobic digestion process involved in the project activity. Hence, therewould be no significant impact on odour because of the project activity.

Therefore, the impacts due to the project are very negligible.

6 STAKEHOLDER COMMENTS

A stakeholders meeting was held at the premise of CE Technology at 11.00 am on 06/10/201124

.An advertisement

25was published in a newspaper on 22/09/2011 inviting interested stakeholders

to attend the consultation process. Letters of invitation26

were also sent to relevant government

23

http://cp.doe.gov.my/pdf/Environmental%20Quality%20%28Prescribed%20Activities%29%20%28Environmental%20Impact%20Assessment%29.pdf

24Newspaper advertisement

25Newspaper advertisement dated 22/09/2011

26Copies of letter of invitations sent to the stakeholders


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v3.0 34

agencies and other local stakeholders. The residents and industrialist of local communities werepersonally invited.

At the stakeholders meeting, a description of current situation was first presented. This wasfollowed by the detailed explanation of new facilities to be installed under the project activity. Thebenefits of the project such as improvement of environmental quality and usage of renewable

technologies were explained. The implementation plan of the project was further explained to theparticipants. After the briefing, a question and answer session was held to clarify any queriesraised by stakeholders regarding the implementation of the project.

Table 7: Details of participants of the meetings27

Invited Stakeholders Representatives

Local residents/Neighbouring industries 9

Mill staffs 5

Consultants 2

European Union representatives 3

Government agencies 5

Technology providers 2

Total 26

27Attendance List


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Figure 4: Newspaper advertisement for the stakeholders meeting28

Photo 1: Plant visit by the stakeholders Photo 2: Welcome speech by the ManagingDirector of CE Technology Bhd

Photo 3: Presentation by the consultant Photo 4: Some of the stakeholders

Table 8: Summary of the comments received

Stakeholder Comments /Questions Response by the project activity

Louis Gnanapragasam How much is the ashgenerated per day?

The project activity generates about 20kgon daily basis.

Salehaton bt. Abdul Azam Would there be any proper

system installed to cater theemission requirement?

Dried woodchips are environment friendly

fuel. The project activity has a setup thatcollects almost total air emissions. Duringemergency situation, the in house SCADAsystem detects if there is excess particlesin the air emissions.

Dr. Mohamad Jamil What material is the heatingcoil made of?

The heating coil is made of mild steel.

28Newspaper advertisement dated 22/09/2011


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Dr. Mohamad Jamil How many Thermaxprojects are there in PerakState?

The project activity will be the secondThermax project in the state (in term ofbiomass thermal oil heater). The first onehas been implemented about 2 years ago.The previous client is very happy with theperformance of the system.

Dr. Mohamad Jamil What is the biomassrequirement for the projectactivity?

The project activity requires about 30,000tons of woodchips per annum

All queries were satisfactorily addressed during the stakeholders meeting.


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Annex 1

BASELINE GRID EMISSION FACTOR INFORMATION

The baseline of Peninsular Malaysia was depicted in a publically available publication byGreenTech Malaysia: Study on Grid Connected Electricity Baselines in Malaysia Year 2009,

published in January 201129

. GreenTech Malaysia is also the CDM Energy Secretariat ofMalaysia.

The electricity baseline is based on the data available in 2009 for the electricity sector. The dataobtained has been verified and confirmed by the main data providers which included Tenaga

Nasional Berhad (TNB), from CDM Baselines Colloquium which was held on 22 October 2010.

Table A: Grid Emission Factor based on GreenTech Malaysia study, 2009

Grid System OperatingMargin

(kgCO2/MWh)

Build Margin(kgCO2/MWh)

Combined Margin(kgCO2/MWh)

Peninsular Malaysia Grid 0.618 0.748 0.683

However, since the grid emission factor study was calculated based on Methodological tool to

calculate the emission factor for an electrical system Version 2 according to EB50, the study

was reanalyzed using the Tool to calculate emission factor for an electricity system / version

2.2.1 according to EB 63. The source data used shall be based on the Study on Grid ConnectedElectricity Baselines in Malaysia Year 2009.

The calculation consisted of six steps, presented below.

Step 1: Identify the relevant electricity systems.

The scope of this calculation includes the Peninsular Malaysia electricity grid system only. Thesystems of Sarawak and Sabah in East Malaysia are excluded.

Step 2: Choose whether to include off-grid power plants in the project electricity system

(optional)

The calculation only included grid connected power plants in the project electricity system.

Thus, Option 1 in the Tool was considered for this calculation.

Step 3: Select a method to determine the operating margin (OM)

The Simple OM is used because there is less than 50% of low-cost/must-run resource in the grid

generation in average of the 5 most recent years. The applying ex-ante option: the emission

29http://cdm.greentechmalaysia.my/up_dir/CDM%20Electricity%20Baseline%202009.pdf
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factor is determined once at the validation stage shall be applied. The summary of the last 5 yearsis shown in the Table B below.

Table B: Calculation of 5 year average of 'Low-cost/must run resources' generation30

Item Units 2005 2006 2007 2008 2009Generation

from fossil

fuel sources

*

GWh

82,605 85,421 89,241 90,215 92,244

Generationfrom Low-

cost/must-

run

resources *

GWh 4,188 5,529 5,888 6,839 5,021

Total grid

generation #

GWh 86,793 90,950 95,129 97,054 97,265

% of low-

cost/must-

runresources in

total grid

generation #

% 4.8 6.1 6.2 7.0 5.2

Average Must-run Generation/Total Generation between 2005 and 2009:= (4.8 + 6.1 + 6.2 + 7.0 + 5.2)/5 = 5.9%

Thus, the 5 year average of Low-cost/must run resources generation is 5.9% which is lessthan 50%

Step 4: Calculate the operating margin emission factor according to the selected method

The Simple OM factor is calculated as the generation-weighted emissions per electricity unit all

generating units serving the system, excluding low-operating and must-run power plants / units.

As per the tool, the vintage data option has been selected is the ex-ante approach, where 3 yearsaverage of Operating Margin (OM) is calculated. It may be calculated using the following

options:

Option A: Based on the net electricity generation and a CO2emission factor of each power unitor

Option B: Based on the total net electricity generation of all power plants serving the system and

the fuel types and total consumption of the project electricity system.

30Source for item *: Grid Emission Factor based on GreenTech Malaysia study, 2009. Item # has been calculatedbased on the information provided in item 1 and 2.


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Option A has been opted for this calculation. Under this option, the simple OM emission factor iscalculated based on the net electricity generation a CO2emission factor of each power unit and

an emission factor for each power unit, as follows:

(1-Tool)

Where:

EFgrid,OMsimple,y = Simple operating margin CO2 emission factor in year y(tCO2/MWh)

EGm,y = Net quantity of electricity generated and delivered to the grid by

powerunit m in yeary (MWh)

EFEL,m,y = CO2emission factor of power unit m in yeary (tCO2/MWh)

m = All power units serving the grid in yeary except low-cost/must-run

power units

y = The relevant year as per the data vintage chosen in Step 3

Simple OM three-year average emission factor has been tabulated in Table C below:

Table C: Simple Operating Margin for Peninsular Malaysia for 2009

Year Generation

(GWh)

CO2Emission

(tonnes)

Baselines

(tCO2 /MWh)

2007 89,241 53,938,845 0.604

2008 90,215 56,322,476 0.624

2009 92,244 57,772,606 0.626

Combined Margin for 3 years 0.618Source:Study on Grid Connected Electricity Baselines in Malaysia (2009) by GreenTech Malaysia

Following the equation and table above, EFgrid, OM,y= 0.618 tCO2e/MWh

Step 5: Calculate the built margin (BM) emission factor

As per the tool, ex-ante option (option 1), requiring built margin to be calculated and fixed for a

particular crediting period has been adopted. As per the tool, build margin emission factor is

calculated ex-ante based on the most recent information available on units already built forsample group m at the time of CDM-PDD submission to the DOE for validation.

According to the tool, the sample group of power units m used to calculate the build margin

should be determined as per the following procedure, consistent with the data vintage selected

above:


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a. Identify the set of five power units, excluding power units registered as CDM projectactivities, that started to supply electricity to the grid most recently (SET 5-units) and

determine their annual electricity generation (AEGSET-5-units, in MWh);

b. Determine the annual electricity generation of the project electricity system, excludingpower units registered as CDM project activities (AEGtotal, in MWh). Identify the set of

power units, excluding power units registered as CDM project activities, that started tosupply electricity to the grid most recently and that comprise 20% of AEG total (if 20%

falls on part of the generation of a unit, the generation of that unit is fully included in thecalculation) (SET20%) and determine their annual electricity generation (AEGSET-20%, in

MWh);

c. From SET5-units and SET20% select the set of power units that comprises the larger

annual electricity generation (SETsample);

Identify the date when the power units in SET sample started to supply electricity to the

grid. If none of the power units in SETsamplestarted to supply electricity to the grid morethan 10 years ago, then use SETsample to calculate the build margin. In this case, ignore

steps (d), (e) and (f) mentioned under step 5 of the tool.

The build margin (BM) factor can be calculated using the following formula:

(2-Tool)

Where:

EFgrid,BM,y = Build margin CO2 emission factor in yeary (tCO2/MWh)

EGm,y = Net quantity of electricity generated and delivered to the grid bypower

unit m in yeary (MWh)EFEL,m,y = CO2 emission factor of power unit m in year y

(tCO2/MWh)

m = Power units included in the build margin

y = Most recent historical year for which power generation data isavailable

Sui tabil ity to Step 5 of Tool to calculate emission factor for an electri city system Version

02.2.1for calculation of bui lt margin (BM ) for the project:

The power plants listed in Table D below are 5 most recently grid connected powerplants (SET 5-units) in Peninsular Malaysia. Further, these power plants have not beenregistered as CDM project activities. As per Table D below, AEGSET5-units =

43,767,630MWh

The power plants listed are the most recently grid connected and comprises more than20% of the total annual electricity generation.


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AEGtotal =97,265,000 MWh (Refer Table 12 above for total power generation in

year 2009)

AEG SET20%= 43,767,630MWh. Hence, AEG SET20%/ AEGtotal=45%, which is more than

20%.

For the project activity, SET5-units= SET20%. Therefore SETsample= SET5-units= SET20%.

All the power units in SETsample (as given in Table D below) started to supply electricityto the grid less than 10 years ago. Accordingly, as described under the step 5 of the

tool, SETsample(i.e. Table D) has been used for the calculation of built margin.

Table D: Build Operating Margin for Peninsular Malaysia for 2009

Name of Power

Plants/Fuel Types

Year of

Operation

Capacity

(MW)

Total Generation

(MWh)

CO2 Emission

(t CO2)

Jimah Power

Station2009 1,400 4,546,980 4,083,158

Tanjung Bin PowerStation/Coal

2006/2007 2,100 11,527,650 10,654,644

Tuanku JaafarPower Station/Gas

& Distillate

2005 1,423 9,960,120 4,012,542

Janamanjung Power

Station/Coal2003 2,100 12,499,000 11,911,203

Panglima Power

Station/Gas &Distillate

2003 720 5,233,880 2,083,950

Total 43,767,630 32,745,497Source: Study on Grid Connected Electricity Baselines in Malaysia (2009) by GreenTech Malaysia

The Build Margin for Peninsular Malaysia in 2009 is calculated as follows CO 2 emission divided

by the total generation i.e.

32,745,497 tonnes CO2

43,767,630 MWh

Or 0.748 tonnes of CO2/MWh

Hence, the calculated buil d margin for Peni

vcs project 1016 - ce technology fuel switch

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