Jandarata Validation Report v01 2006-08-09

8/13/2019 Jandarata Validation Report v01 2006-08-09

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VALIDATION REPORT

JENDARATA STEAM &

POWER PLANTPROJECTIN MALAYSIA


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DETNORSKEVERITAS

VALIDATION REPORT

DETNORSKE VERITAS AS

DNV Certification

Veritasveien 1,1322 HVIK, NorwayTel: +47 67 57 99 00Fax: +47 67 57 99 11http://www.dnv.comOrg. No: NO 945 748 931 MVA

Date of first issue: Project No.:

2006-06-19 45010022Approved by: Organisational unit:

Michael Lehmann

Technical Director

DNV Certification, International

Climate Change Services

Client: Client ref.:

Danish Energy Management Henrik Rytter Jensen

Summary:

Det Norske Veritas Certification Ltd. (DNV) has performed a validation of the Jendarata Steam &

Power Plant project in Teluk Intan, Perak, Malaysia, on the basis of UNFCCC criteria for the CDM,

as well as criteria given to provide for consistent project operations, monitoring and reporting.

UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and procedures, the

simplified modalities and procedures for small-scale CDM project activities and the subsequent

decisions by the CDM Executive Board. The validation report summarizes the findings of the

validation.The validation consisted of the following three phases: i) a desk review of the project design, baseline

and monitoring plan, ii) follow-up interviews with project stakeholders and iii) the resolution of

outstanding issues and the issuance of the final validation report and opinion.

In summary, it is DNVs opinion that the project, as described in the project design document of 29

June 2006, meets all relevant UNFCCC requirements for the CDM, is eligible as category I.C small-

scale CDM project activity and correctly applies the approved simplified baseline and monitoring

methodology AMS-I.C (Version 08). Hence, DNV requests the registration of the Jendarata Steam

& Power Plant project as a CDM project activity.

Report No.: Subject Group:

2006-1020 Environment Indexing termsReport title: Key words Service Area

Verification

Market Sector

Jendarata Steam & Power Plant Project in

Malaysia.

Climate Change

Kyoto Protocol

Validation

Clean Development

MechanismProcess Industry

Work carried out by:

Lai Chee Keong, Michael Lehmann

Work verified by:

Anu Chaudhary

No distribution without permission from the

client or responsible organisational unit

free distribution within DNV after 3 years


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Table of Content Page

1 INTRODUCTION........................................................................................................ 1

1.1 Validation Objective 1

1.2 Scope 1

1.3 Description of Proposed CDM Project 1

2 METHODOLOGY....................................................................................................... 2

2.1 Review of Documents 3

2.2 Follow-up Interviews 4

2.3 Resolution of Clarification and Corrective Action Requests 5

3 VALIDATION FINDINGS ......................................................................................... 5

3.1 Participation Requirements 5

3.2 Project Design 5

3.3 Baseline Determination 6

3.4 Additionality 7

3.5 Monitoring Plan 7

3.6 Calculation of GHG Emissions 8

3.7 Environmental Impacts 8

3.8 Comments by Local Stakeholders 8

4 COMMENTS BY PARTIES, STAKEHOLDERS AND NGOS ................................ 9

5 VALIDATION OPINION ......................................................................................... 10

REFERENCES......................................................................................................................... 11

Appendix A Validation Protocol


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Abbreviations

CAR Corrective Action Request

CDM Clean Development Mechanism

CEF Carbon Emission Factor

CER Certified Emission Reduction

CH4 MethaneCL Clarification request

CO2 Carbon dioxide

CO2e Carbon dioxide equivalent

DNV Det Norske Veritas

DNA Designated National Authority

EFB Empty Fruit Bunch

GHG Greenhouse gas(es)

GWP Global Warming Potential

IPCC Intergovernmental Panel on Climate Change

MF Mesocarp Fibres

MP Monitoring Plan

N2O Nitrous oxide

NGO Non-governmental Organisation

ODA Official Development Assistance

PKS Palm Kernel Shell

PDD Project Design Document

UNFCCC United Nations Framework Convention on Climate Change


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1 INTRODUCTION

Danish Energy Management has commissioned Det Norske Veritas Certification Ltd. (DNV) to

perform a validation of the Jendarata Steam & Power Plant project in Teluk Intan, Perak,

Malaysia (hereafter called the project). This report summarises the findings of the validation of

the project, performed on the basis of UNFCCC criteria for CDM projects, as well as criteria

given to provide for consistent project operations, monitoring and reporting.

The validation team consists of the following personnel:

Mr Michael Lehmann DNV Certification Norway Team leader, Energy sector expert

Mr Lai Chee Keong DNV Certification Malaysia GHG auditor

Ms Anu Chaudhary DNV Certification India GHG auditor, Technical reviewer

1.1 Validation ObjectiveThe purpose of a validation is to have an independent third party assess the project design. In

particular, the project's baseline, monitoring plan, and the projects compliance with relevant

UNFCCC and host Party criteria are validated in order to confirm that the project design, as

documented, is sound and reasonable and meets the identified criteria. Validation is a

requirement for all CDM projects and is seen as necessary to provide assurance to stakeholders

of the quality of the project and its intended generation of certified emission reductions (CERs).

1.2 ScopeThe validation scope is defined as an independent and objective review of the project designdocument (PDD). The PDD is reviewed against the criteria stated in Article 12 of the Kyoto

Protocol, the CDM modalities and procedures as agreed in the Marrakech Accords and the

relevant decisions by the CDM Executive Board, including the simplified modalities and

procedures for small-scale CDM project activities and the approved simplified baseline and

monitoring methodology for Type I category C (thermal energy for the user) small-scale CDM

project activities (AMS-I.C) /6/. The validation team has, based on the recommendations in the

Validation and Verification Manual /5/, employed a risk-based approach, focusing on theidentification of significant risks for project implementation and the generation of CERs.

The validation is not meant to provide any consulting towards the project participants. However,

stated requests for clarifications and/or corrective actions may have provided input for

improvement of the project design.


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Emission reductions are claimed from displacing steam produced by fuel oil fired boilers at the

Unitata refinery and by reducing the grid electricity consumption of the Unitata refinery, leading

to reduced fossil fuel consumption and GHG emissions in the grid connected power plants. The

project is estimated to reduce 8 851 tCO2e (tonnes of carbon dioxide equivalent) per year for the

duration of the project activity.

2 METHODOLOGYThe validation consisted of the following three phases:

I a desk review of the project design, baseline and monitoring planII follow-up interviews with project stakeholdersIII the resolution of outstanding issues and the issuance of the final validation report and

opinion.

In order to ensure transparency, a validation protocol was customised for the project, according

to the Validation and Verification Manual /5/. The protocol shows in transparent manner criteria(requirements), means of verification and the results from validating the identified criteria. The

validation protocol serves the following purposes:

It organises, details and clarifies the requirements a CDM project is expected to meet;

It ensures a transparent validation process where the validator will document how a particularrequirement has been validated and the result of the validation.

The validation protocol consists of three tables. The different columns in these tables are

described in Figure 1.

The completed validation protocol for the Jendarata Steam & Power Plant project is enclosed

in Appendix A to this report.

Findings established during the validation can either be seen as a non-fulfilment of validation

protocol criteria or where a risk to the fulfilment of project objectives is identified. Corrective

Action Requests (CAR) are issued, where:

i) mistakes have been made with a direct influence on project results;ii) validation protocol requirements have not been met; oriii) there is a risk that the project would not be accepted as a CDM project or that emission

reductions will not be certified.

The term Clarification may be used where additional information is needed to fully clarify an

issue.


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Validation Protocol Table 1: Mandatory Requirements for CDM Project Activities

Requirement Reference Conclusion Cross reference

The requirements the

project must meet.

Gives reference to the

legislation or

agreement where the

requirement is found.

This is either acceptable

based on evidence provided

(OK),a Corrective Action

Request (CAR)of risk or non-

compliance with statedrequirements or a request for

Clarification (CL)where

further clarifications are

needed.

Used to refer to the relevant

checklist questions in Table

2 to show how the specific

requirement is validated.

This is to ensure atransparent Validation

process.

Validation Protocol Table 2: Requirement Checklist

Checklist Question Reference Means of

verification (MoV)

Comment Draft and/or Final

Conclusion

The various

requirements in Table 1

are linked to checklist

questions the project

should meet. The

checklist is organised in

seven different sections.

Each section is then

further sub-divided. The

lowest level constitutes achecklist question.

Gives

reference to

documents

where the

answer to

the checklist

question or

item is

found.

Explains how

conformance with

the checklist

question is

investigated.

Examples of means

of verification are

document review

(DR) or interview

(I). N/A means notapplicable.

The section is

used to elaborate

and discuss the

checklist question

and/or the

conformance to

the question. It is

further used to

explain the

conclusionsreached.

This is either acceptable

based on evidence

provided (OK),or a

Corrective Action Request(CAR)due to non-

compliance with the

checklist question (See

below).A request for

Clarification (CL)is used

when the validation teamhas identified a need for

further clarification.

Validation Protocol Table 3: Resolution of Corrective Action Requests and Requests for Clarification

Draft report corrective

action requests andrequests for clarifications

Ref. to Table 2 Summary of project

participants response

Final conclusion

If the conclusions from the

draft Validation are either

a Corrective Action

Request or a Clarification

Request, these should be

listed in this section.

Reference to the

checklist question

number in Table 2

where the Corrective

Action Request or

Clarification Request is

explained.

The responses given by

the project participants

during the

communications with the

validation team should

be summarised in this

section.

This section should summarise

the validation teams

responses and final

conclusions. The conclusions

should also be included in

Table 2, under Final

Conclusion.


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2.2 Follow-up Interviews

In the period of 24-25 May 2006, DNV performed interviews with project stakeholders to

confirm selected information and to resolve issues identified in the document review.

Representatives of United Plantations Bhd and the Malaysian DNA were interviewed. The main

topics of the interviews are summarised in Table 1.

Table 1 Interview topics

Interviewed organisation Interview topics

Jendarata Steam and

Power Plant Project-

United Plantations Berhad

- Provisions for training and maintenance for this project.

- Procedures for project management, monitoring and recording,including day-to-day record handling

- Construction/ operating permits

- Baseline determination

- The difference in terms of fuel input in the estimation ofbaseline (oil-fired) and project scenarios (Biomass)

- The amount of biomass needed to sustain the project (Totalquantity of palm fibres, shells and EFB)

- Sustainable supply of biomass

- Exemption of from Environmental Impact Assessment

- Minutes of meeting from the local stakeholder consultation

- The feasibility study of the project and project lifetime

- Date of commissioning for the project.

- Suppliers of the technology and technology for other similargeothermal plants

- Additionality and barriers to the project

- Retention period of records

- Letter of Approval from DOE to erect boilers

- Status of Annex I Party participation

- Letter of Approval (LoA) from the Malaysian DNAMinistry of Natural

Resources and

Environment Designated

National Authority (DNA)

- Incentive for renewable energy project such as the JendarataSteam and Power Plant project

- The process of Host Party Approval for CDM projects inMalaysia and the status for the current project

- Sustainable development priorities of Malaysia


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neighbouring sister company, Unitata refinery. Emission reductions are claimed from displacing

steam produced by fuel oil fired boilers at the Unitata refinery and by reducing the grid

electricity consumption of the Unitata refinery.

The technology based on new biomass fired water tube boiler constitutes current good practice

and is not likely to be replaced during the crediting period. The project improves the boiler

efficiency with higher production of steam and electricity with the same amount of biomass fuel

incinerated. This will translate to reduction of fossil fuel usage and grid electricity consumption

in the neighbouring refinery, which currently produces steam with oil-fired boilers and imports

electricity from the grid.

Biomass used are the biomass wastes generated by the Jendarata Palm Oil Mill from the palm oil

milling process. There are three types of solid biomass waste, namely fibres, shells and Empty

Fruit Bunches (EFB).

The starting date of the project was 15 August 2005, and the project is expected to have an

operational lifetime of 20 years. A renewable crediting period of 7 years is selected starting on 1

January 2007.

Social and other environmental effects than the reduction of GHG emissions are described, and

the project is expected to improve the environmental and social conditions in the region. By

promoting renewable energy and by using biomass residues from the palm oil industry, the

project is likely to contribute to sustainable development in Malaysia. The 9th

Malaysian Plan

describes various renewable energy sources in the energy sector, and the project is thus in line

with the country priorities. The DNA of Malaysia has confirmed that the project assists in

achieving sustainable development.

Project management authority and responsibility have been clearly described. The project will be

managed by United Plantation Engineering Division. A training plan has been provided by the

boiler manufacturer to United Plantation, which includes training on safety, general plant

operation and maintenance practices.

3.3 Baseline Determination

The proposed small-scale project activity correctly applies the simplified baseline methodology

for type I.C small-scale CDM project activities, i.e. thermal energy for the user (AMS-I.C). Asstipulated in AMS-I.C, the grid emission factor is calculated as per AMS-I.D for the electricity

displacement component of the project.

The project is within the eligibility requirements of the baseline methodologies since the total

installed capacity is only 25 MWthermal, which is below the stipulated 45 MWthermallimit.

The selected baseline scenario is that the steam supplied to the Unitata refinery would in the


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refinerys existing boilers. For the displacement of grid electricity the simplified baseline is the

electricity supplied to the Unitata refinery times an emission factor calculated as described in

AMS-I.D.

The following are considered baseline emissions:

o CO2emissions from burning fuel oil for steam generation at the Unitata refinery

o CO2emissions from producing electricity with fossil fuel in the national grid.

CH4 emissions from burning fossil fuel, decay of the biomass, in the absence of the project

activity, as well as emissions from fuel transport are not accounted for. This is conservative and

in line with AMS-I.C.

CH4 and N2O emissions from burning biomass are excluded because these are considered

negligible. Emissions from biomass transport are excluded because a comparison of the transport

emissions in the project and baseline scenario shows that the transport emissions are slightly

higher in the baseline scenario. Therefore, the exclusion of transport emission is deemed

reasonable and conservative.

It has been confirmed during the interviews that the total biomass available in Malaysia and also

specifically in the state of Perak is much more than the total amount required for this project

activity.

3.4 Additionality

The projects additionality has been demonstrated through various barriers which the project

faces in the absence of CDM revenues:a) Investment barrier: It has been argued that the project faces an investment barrier as there

are no special finance schemes available for such new projects. It is not possible to attract

any project finance or a loan based on collaterals in the plant for such a project, but has to

be financed through corporate financing. Thus, the project faces an investment barrier.

b) Technology barrier: It has been argued that the EFB combustion and utilizationtechnology of water tube boilers is relatively new in Malaysia and not fully developed

yet. DNV was able to confirm this and that the project is likely to face higher risks

pertaining to performance and costs.

c) Barrier due to prevailing practice: It has been confirmed that the use of EFB for energyproduction is a relatively new practice in Malaysia and not very commonly adopted by

palm oil refineries.

d) Other Barriers: Other barriers include limitation in information pertaining to the new


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for real measurements of achieved emission reductions. Steam and electricity will be monitored

through meters installed both at the production and receiving ends. Readings shall be taken on a

daily basis by the technicians and verified by the senior operational/management staff. The

readings will be recorded in both hard copy and entered into the computer. Equipment used will

be calibrated according to relevant national and international standards, as commonly practiced

in the industry.

The responsibility of project management lies with the United Plantation Engineering Division.

Detailed responsibilities and authorities for project management, monitoring procedures and

QA/QC procedures are not yet described, but will need to be developed prior to start of the

projects crediting period and need to be verified during the first verification.

3.6 Calculation of GHG Emissions

The calculations are transparently documented and conservative assumptions regarding expected

amounts of steam and electricity generation have been made.

Project emissions are considered zero in line with the IPCC guidelines which stipulate thatbiomass combustion is assumed to equal its re-growth.

Baseline emissions from steam generation are calculated based on the historic fuel oil

consumption at the Unitata refinery (IPCC default emission factors for fuel oil are applied). For

the determination of the baseline emissions from displacing grid electricity an emission

coefficient of 0.63 tCO2e/MWh is applied. This emission coefficient is determined in accordance

with AMS-I.D using data on the Peninsular electricity grid system of Malaysia.

Since biomass is available within the plant, no leakage effects from biomass transports areexpected to occur.

The project is expected to reduce 61 957 tCO2emissions over a period of seven years.

3.7 Environmental ImpactsThe project is not listed as one of the prescribed activities as required by EQ (EIA) regulations in

Malaysia. The project was exempted from the EIA regulations. It has been confirmed that

according to the Environmental Quality Act 1974, Section 34A EIA is only required for fossil

fuel power plants with a capacity exceeding 10 MW.Environmental impacts have been described and appropriate mitigation measures taken such as

installation of a multi cyclone to minimize contaminants in the exhaust air. Emission levels are

expected to comply with the Malaysian emission standards.

The ash will be transported back to the plantation as potash for land application.


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4 COMMENTS BY PARTIES, STAKEHOLDERS AND NGOS

The PDD (Version 03 of 24 April 2006) was made publicly available on DNVs climate change

website (www.dnv.com/certification/climatechange) and Parties, stakeholders and NGOs were

through the CDM website invited to provide comments during a 30 days period from 27 April

2006 to 26 May 2006.

No comments were received.


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5 VALIDATION OPINION

Det Norske Veritas Certification Ltd. (DNV) has performed a validation of the Jendarata Steam

& Power Plant project in Malaysia. The validation was performed on the basis of UNFCCC

criteria for the Clean Development Mechanism and Host country criteria, as well as criteria

given to provide for consistent project operations, monitoring and reporting.

The review of the project design documentation and the subsequent follow-up interviews have

provided DNV with sufficient evidence to determine the fulfilment of stated criteria.

The project participants are United Plantations Berhad and the Royal Danish Ministry of

Foreign Affairs. The host Party, Malaysia, and the participating Annex I Party, Denmark, meet

the requirements to participate in the CDM. Letters of Approval from the DNAs of Malaysia and

Denmark, including authorization of the project participants and the Malaysian DNAs

confirmation that the project assists in achieving sustainable development in Malaysia, have

been obtained.The project involves the replacement of the existing low efficient biomass fuel, fire-tube boilers

with a more efficient water-tube boiler in the palm oil mill. The total capacity will be 25

MWthermal. The higher efficiency of the new boiler will produce steam and electricity to not only

meet the energy demand of the palm oil mill, but will also allow the palm oil mill to export

surplus steam and electricity to the neighbouring sister company, Unitata refinery.

Having an installed capacity of less than 45 MWthermal, the project is eligible as type I small-

scale CDM project activity.

The project correctly applies the simplified baseline and monitoring methodology AMS-I.C.

By generating renewable energy which will displace grid electricity, the project results in

reductions of CO2 emissions that are real, measurable and give long-term benefits to the

mitigation of climate change. It is demonstrated that the project is not a likely baseline scenario.

Emission reductions attributable to the project are hence additional to any that would occur in

the absence of the project activity.

The total emission reductions from the project are estimated to be on the average 8 851 tCO 2e

per year over the selected 7 year crediting period. The emission reduction forecast has beenchecked, and it is likely that the stated amount is achieved given that the underlying assumptions

do not change.

Adequate training and monitoring procedures have been implemented.

In summary, it is DNVs opinion that the project, as described in the project design document of


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REFERENCES

Documents provided by the project proponent that relate directly to the project:

/1/ Danish Energy Management: CDM-SSC-PDD of the Jendarata Steam & Power

Plant. Version 03 of 24 April 2006 and version 04 of 29 June, 2006.

/2/ DNA of Malaysia: Letter of approval for the Jendarata Steam and Power Plantproject, 4 July 2006

/3/ DNA of Denmark: Letter of approval for the Jendarata Steam and Power Plant

project, 18 July 2006

/4/ Department of Environment and Sustainable Development, Ministry of Foreign Affairs:

Letter of Affirmation regarding no Diversion of Official Development Assistance, 21

June 2006.

Background documents related to the design and/or methodologies employed in the design or

other reference documents:

/5/ International Emission Trading Association (IETA) and the World Banks Prototype

Carbon Fund (PCF): Validation and Verification Manual. http://www.vvmanual.info

/6/ CDM Executive Board: Indicative simplified baseline and monitoring methodologies

for selected small-scale CDM project activity categories - I.C. Thermal energy for the

user. Version 08 of 3 March 2006

Persons interviewed during the validation, or persons who contributed with other information

that are not included in the documents listed above:

/7/ Dr. Nadzri Yahaya, Deputy Undersecretary, Ministry of Natural Resources and

Environment

/8/ Ir. NP Thorairaj, c/o United Plantations Berhad

/9/ Mr. Vincent Williams, United Plantations Berhad

/10/ Mr. Thirupathi Rao, Danish Energy Management, Malaysia.

- o0o -


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APPENDIX A

VALIDATION PROTOCOL

FOR SMALL-SCALE CDM PROJECT ACTIVITIES


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Page A-2SSC CDM Validation Protocol - Report No. 2006-1020, rev. 01

Requirement Reference Conclusion Cross Reference/Comment

result in a diversion of official development assistanceand is separate from and is not counted towards thefinancial obligations of these Parties.

2 project, Denmark has provided anaffirmation that such funding does notresult in a diversion of officialdevelopment assistance and isseparate from and is not countedtowards the financial obligations ofDenmark.

8. Parties participating in the CDM shall designate anational authority for the CDM

CDM Modalities andProcedures 29

OK The DNA of Malaysia is theDepartment of Environment MOSTE.

The DNA of Denmark is the DanishMinistry of the Environment.

9. The host Party and the participating Annex I Partyshall be a Party to the Kyoto Protocol

CDM Modalities andProcedures 30, 31b

OK Malaysia ratified the Kyoto Protocolon 04 September 2002. Demarkratified it on 31 May 2002.

10. The participating Annex I Partys assigned amountshall have been calculated and recorded

CDM Modalities andProcedures 31b OK Denmarks assigned amount is 92%of the emissions in 1990.

11. The participating Annex I Party shall have in place anational system for estimating GHG emissions and anational registry in accordance with Kyoto ProtocolArticle 5 and 7

CDM Modalities andProcedures 31b

OK Denmark has in place a nationalsystem for estimating GHG emissionsand reports on an annual basis itsmost recent GHG inventory.

12. The proposed project activity shall meet the eligibilitycriteria for small scale CDM project activities set out in

6 (c) of the Marrakesh Accords and shall not be adebundled component of a larger project activity

Simplified Modalities andProcedures for Small

Scale CDM ProjectActivities 12a,c

OK Table 2, Section A.1

13. The project design document shall conform with theSmall Scale CDM Project Design Document format

Simplified Modalities andProcedures for SmallScale CDM ProjectActivities, Appendix A

OK

14. The proposed project activity shall confirm to one ofthe project categories defined for small scale CDM

Simplified Modalities andProcedures for Small

OK Table 2, Section A.1.3, B and D


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Requirement Reference Conclusion Cross Reference/Comment

project activities and uses the simplified baseline andmonitoring methodology for that project category

Scale CDM ProjectActivities 22e

15. Comments by local stakeholders are invited, and asummary of these provided

Simplified Modalities andProcedures for SmallScale CDM ProjectActivities 22b

OK Table 2, Section G

16. If required by the host country, an analysis of theenvironmental impacts of the project activity is carriedout and documented

Simplified Modalities andProcedures for SmallScale CDM ProjectActivities 22c

OK Table 2, Section F

17. Parties, stakeholders and UNFCCC accredited NGOshave been invited to comment on the validationrequirements and comments have been made publiclyavailable

Simplified Modalities andProcedures for SmallScale CDM ProjectActivities 23b,c,d

OK DNV published the PDD of 24 April2006 on the DNV Climate Changewebsite(http://www.dnv.com/certification/ClimateChange) and Parties, stakeholders

and NGOs were, through theUNFCCC CDM web site, invited toprovide comments during the periodfrom 27 April 2006 to 26 May 2006.No comments were received.


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* MoV = Means of Verification, DR= Document Review, I= Interview Page A-4SSC CDM Validation Protocol - Report No. 2006-1020, rev. 01

Table 2 Requirements Checklist

Checklist Question Ref. MoV* CommentsDraft

Concl.Final

Concl.

A. Project Description

The project design is assessed.

A.1. Small scale project activit y

It is assess whether the project qualifies as smallscale CDM project activity.

A.1.1. Does the project qualify as a small scaleCDM project activity as defined inparagraph 6 (c) of decision 17/CP.7 onthe modalities and procedures for theCDM?

/1/ DR Yes, the project is a 25 MWthermalco-generationsystem and qualifies to use the simplifiedmethodology type I.C Thermal energy for theuser.

OK

A.1.2. The small scale project activity is not a

debundled component of a larger projectactivity?

/1/ DR No, the proposed project activity is not a debundled

component of any larger project activity.

OK

A.1.3. Does proposed project activity confirm toone of the project categories defined forsmall scale CDM project activities?

/1/ DR Yes, the project falls under AMS-I.C.. OK

A.2. Project Design

Validation of project design focuses on thechoice of technology and the design

documentation of the project.

A.2.1. Are the projects spatial (geographical)boundaries clearly defined?

/1/ DR Yes. The Jendarata Steam & Power Plant projectis located in Teluk Intan, the state of Perak,Malaysia.

OK

A.2.2. Are the projects system (components andfacilities used to mitigate GHG's)boundaries clearly defined?

/1/ DRI

The projects system boundary is limited to theproject site and the neighbouring Unitata refinery towhich Jendarata Steam & Power Plant project

OK


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Concl.Final

Concl.

exports steam and electricity using biomass as fuel.

A.2.3. Does the project design engineeringreflect current good practices?

/1/ DRI

The technology used is called the Bi Drum WaterTube Boilers (reciprocal grade furnace). Withhigher efficiency in combustion.

OK

A.2.4. Will the project result in technologytransfer to the host country?

/1/ DR Yes, technology is imported from UK andmanufactured/assembled by a local subsidiary(Vickers Hoskins (M) Sdn Bhd).

OK

A.2.5. Does the project require extensive initialtraining and maintenance efforts in orderto work as presumed during the projectperiod? Does the project make provisionsfor meeting training and maintenance

needs?

/1/ DR

I

A formal training plan for the operational andmaintenance activities should be established.

CL 1 OK

A.3. Contribution to Sustainable Development

The projects contribution to sustainabledevelopment is assessed

A.3.1. Will the project create other environmentalor social benefits than GHG emissionreductions?

/1/ DR No. No significant social and environmentalimpacts are expected from the project as theproject is located within the existing boundary andinvolves up-grading of current boilers with proper

air pollutant abatement techniques.

OK

A.3.2. Will the project create any adverseenvironmental or social effects?

/1/ DR No OK

A.3.3. Is the project in line with sustainabledevelopment policies of the host country?

/1/ DR Yes, the project is in line with the 9thMalaysianPlan on Sustainable Energy.

OK

A.3.4. Is the project in line with relevantlegislation and plans in the host country?

/1/ DR

I

Yes. It has been confirmed that according to theEnvironmental Quality Act 1974, Section 34A EIA

CL 2 OK


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Concl.Final

Concl.

is only required for fossil fuel power plants with acapacity exceeding 10 MW.

Documented evidence(s) of exemption for thesubmission of EIA shall be provided

B. Project Baseline

The validation of the project baseline establishes

whether the selected baseline methodology isappropriate and whether the selected baselinerepresents a likely baseline scenario.

B.1. Baseline Methodology

It is assessed whether the project applies anappropriate baseline methodology.

B.1.1. Is the selected baseline methodology in

line with the baseline methodologiesprovided for the relevant project category?

/1/ DR The project correctly applies the baseline

methodology Thermal energy for the user TypeI.C as per appendix B of the Simplified modalitiesand procedures for small-scale CDM projectactivities. The project also correctly applies theapproach for determining a grid emissioncoefficient in accordance with AMS-I.D as per therequirements of AMS-I.C.

OK

B.1.2. Is the baseline methodology applicable tothe project being considered?

/1/ DR Yes OK

B.2. Baseline Determination

It is assessed whether the project activity itself isnot a likely baseline scenario and whether theselected baseline represents a likely baselinescenario.

B.2.1. Is it demonstrated that the project activityitself is not a likely baseline scenario due

/1/ DRI

The projects additionality has been demonstratedthrough various barriers which the project faces in

OK


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Concl.Final

Concl.

to the existence of one or more of thefollowing barriers: investment barriers,technology barriers, barriers due toprevailing practice or other barriers?

the absence of CDM revenues:

a) Investment barrier: It has been argued that theproject faces an investment barrier as there are nospecial finance schemes available for such newprojects. It is not possible to attract any projectfinance or a loan based on collaterals in the plantfor such a project, but has to be financed throughcorporate financing. Thus, the project faces aninvestment barrier.

b) Technology barrier: It has been argued that theEFB combustion and utilization technology isrelatively new in Malaysia and not fully developedyet. DNV was able to confirm this and that theproject is thus likely to face higher risks pertainingto performance and costs.

c) Barrier due to prevailing practice: Use of EFB forenergy production is a relatively new practice inMalaysia and not very commonly adopted by palmoil refineries.

d) Other Barriers: Other barriers include limitationin information pertaining to the new technology,managerial resources, organisational capacity etc.

The registration of the project as a CDM activity will

alleviate the identified barriers through diversion ofrisk to other CDM partners and revenue gainedfrom the sales of CERs.

B.2.2. Is the application of the baselinemethodology and the discussion anddetermination of the chosen baselinetransparent and conservative?

/1/ DR

I

The baseline was calculated based on publishedinformation. However, further details on thedetermination of the grid electricity emissioncoefficient of 0.63 tCO2e/MWh need to be includedin the PDD.

CL 3

CL 4

OK


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Concl.Final

Concl.

It is assumed that the project will continue to meetthe steam and electricity demand of the palm oilmill and emission reductions are only claimed fromsupplying steam and electricity to the Unitatarefinery. However, the project participants arerequested to demonstrate how it is ensured that thenew steam boiler and steam turbine will primarily

cover the steam and electricity demand of the palmoil mill and that only excess energy is exported tothe Unitata refinery.

B.2.3. Are relevant national and/or sectoralpolicies and circumstances taken intoaccount?

/1/ DRI

Yes, the Fifth Diversification Policy and the 9thMalaysian Plan are considered.

OK

B.2.4. Is the baseline selection compatible withthe available data?

/1/ DRI

Yes OK

B.2.5. Does the selected baseline represent themost likely scenario describing whatwould have occurred in absence of theproject activity?

/1/ DR Yes. OK

C. Duration of the Project / Crediting Period

It is assessed whether the temporary boundaries of theproject are clearly defined.

C.1.1. Are the projects starting date andoperational lifetime clearly defined?

/1/ DR Yes. The project started on 18 August 2005, andthe expected operational lifetime of the project is 20years.

OK

C.1.2. Is the assumed crediting time clearlydefined (renewable crediting period ofseven years with two possible renewals orfixed crediting period of 10 years with norenewal)?

/1/ DR Yes. The project chooses a renewable creditingperiod of seven years starting on 01 January 2007.

OK


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Concl.

D. Monitoring Plan

The monitoring plan review aims to establish whetherall relevant project aspects deemed necessary tomonitor and report reliable emission reductions areproperly addressed.

D.1. Monitoring MethodologyIt is assessed whether the project applies anappropriate monitoring methodology.

D.1.1. Is the selected monitoring methodology inline with the monitoring methodologiesprovided for the relevant project category?

/1/ DR Yes, the selected monitoring methodology is in linewith AMS-I.C. Thermal energy for the user. Thefollowing parameters will be measured:

o the steam supplied to the Unitata refinery

o the electricity supplied to the Unitata refinery

OK

D.1.2. Is the monitoring methodology applicableto the project being considered?

/1/ DR Yes. OK

D.1.3. Is the application of the monitoringmethodology transparent?

/1/ DRI

Yes. The monitoring methodology of AMS I.C iscorrectly applied and calculation of emissionreductions will use data based on electricityexported (energy meter) and steam (steam flowmeter) to the neighbouring Unitata refinery. Thereadings will be taken on a daily basis by thetechnician and verified on a monthly basis by the

operational or management staff.

OK

D.1.4. Will the monitoring methodology giveopportunity for real measurements ofachieved emission reductions?

/1/ DR Yes. OK


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Concl.

D.2. Monitoring of Project Emissions

It is established whether the monitoring planprovides for reliable and complete projectemission data over time.

D.2.1. Does the monitoring plan provide for thecollection and archiving of all relevantdata necessary for estimation ormeasuring the greenhouse gas emissionswithin the project boundary during thecrediting period?

/1/ DRI

Project emissions are considered zero in line withAMS-I.C and the IPCC guidelines, which stipulate

that biomass combustion is assumed to equal itsre-growth, i.e. to be climate neutral.

OK

D.3. Monitoring of Leakage

If applicable, it is assessed whether themonitoring plan provides for reliable andcomplete leakage data over time.

D.3.1. Does the monitoring plan provide for thecollection and archiving of all relevantdata necessary for determining leakage?

/1/ DR No significant leakages are foreseen as a result ofthe project. All the equipment for the bio energyplant is new and not transferred from anotheractivity.

OK

D.4. Monitoring of Baseline Emissions

It is established whether the monitoring planprovides for reliable and complete project

emission data over time.

D.4.1. Does the monitoring plan provide for thecollection and archiving of all relevantdata necessary for determining baselineemissions during the crediting period?

/1/ DR Yes. The baseline was calculated based on thepublished information (Appendix 3 of the PDD). Forthe determination of the baseline emissions fromdisplacing grid electricity an emission coefficient of0.63tCO2e/MWh is applied. This emissioncoefficient is determined in accordance with AMS-I.D using data on the Peninsular electricity grid

CL 3 OK


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Concl.Final

Concl.

D.5.5. Are procedures identified for calibration ofmonitoring equipment?

/1/ DR Calibration of steam and electricity meters are theresponsibility of the Jendarata Palm Oil Mill and theUnitata refinery.

OK

D.5.6. Are procedures identified for maintenanceof monitoring equipment and installations?

/1/ DR Yes CL 5 OK

D.5.7. Are procedures identified for monitoring,

measurements and reporting?

/1/ DR Project management authority and responsibility

are not clearly described.

CL 5 OK

D.5.8. Are procedures identified for day-to-dayrecords handling (including what recordsto keep, storage area of records and howto process performance documentation)

/1/ DR The daily recording of steam and electricitygeneration will be carried out by the technician andon a monthly basis the records will be checked bythe management.

OK

D.5.9. Are procedures identified for dealing withpossible monitoring data adjustments anduncertainties?

/1/ DR Yes, Refer D.5.7 CL 5 OK

D.5.10. Are procedures identified for internalaudits of GHG project compliance withoperational requirements as applicable?


D.5.11. Are procedures identified for projectperformance reviews?


D.5.12. Are procedures identified for correctiveactions?



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Concl.

E. Calculation of GHG emission

It is assessed whether all material GHG emissionsources are addressed and how sensitivities and datauncertainties have been addressed to arrive atconservative estimates of projected emissionreductions.

E.1. Project GHG Emissions

The validation of ex-ante estimated project GHGemissions focuses on transparency andcompleteness of calculations.

E.1.1. Are all aspects related to direct andindirect project emissions captured in theproject design?

/1/ DR The emissions generated due to combustion ofbiomass fuel are considered carbon neutral andhence not considered.

OK

E.2. Leakage

It is assessed whether there leakage effects, i.e.change of emissions which occurs outside theproject boundary and which are measurable andattributable to the project, have been properlyassessed and estimated ex-ante.

E.2.1. Are leakage calculation required for theselected project category and if yes, are

the relevant leakage effects assessed?

/1/ DR No leakage was anticipated as the biomass to beused is readily available from the plant. Moreover,

all the equipment for the bio energy plant is newand not transferred from another activity.

OK

E.3. Baseline GHG Emissions

The validation of ex-ante estimated baselineGHG emissions focuses on transparency andcompleteness of calculations.

E.3.1. Are the baseline emission boundaries /1/ DR The baseline emission boundary is related to the OK


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Concl.

clearly defined and do they sufficientlycover sources for baseline emissions?

biomass cogeneration plant and the electricity grid.

E.3.2. Are all aspects related to direct andindirect baseline emissions captured inthe project design?

/1/ DR The baseline emissions are the emissions that willbe generated in the absence of the supply of steamenergy and electricity supplied from the highefficiency boiler plant to the Unitata refinery.

OK

E.3.3. Have all relevant greenhouse gases andsources been evaluated?

/1/ DR Yes. The following are considered baseline

emissions:

o CO2emissions from burning fossil fuel

o CO2 emissions from producing electricitywith fossil fuel

CH4 emissions from burning fossil fuel, decay ofthe biomass and fuel transport as well as emissionsfrom fuel transport are not accounted for, which isconservative and in line with AMS-I.C

OK

E.3.4. Do the methodologies for calculatingbaseline emissions comply with existinggood practice?

/1/ DR Yes. OK

E.3.5. Are the calculations documented in acomplete and transparent manner?

/1/ DR Yes. OK

E.3.6. Have conservative assumptions beenused?

/1/ DR Yes. OK

E.3.7. Are uncertainties in the baselineemissions estimates properly addressed?

/1/ DR Yes. OK

E.4. Emission Reductions

Validation of ex-ante estimated emissionreductions.

E.4.1. Will the project result in fewer GHG /1/ DR Yes. The project is expected to reduce CO2 OK


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Concl.

emissions than the baseline case? emissions to the extent of 61 957 tCO2e (8,851tCO2e / year on average) over the first 7 yearscrediting period.

F. Environmental Impacts

It is assessed whether environmental impacts of theproject are sufficiently addressed.

F.1.1. Does host country legislation require ananalysis of the environmental impacts ofthe project activity?

/1/ DRI

Jendarata was exempted from the EQ (EIA)Regulations on the submission of an EIA as theproject was not listed as one of the prescribedactivities under the said law.


CL 2 OK

F.1.2. Does the project comply withenvironmental legislation in the hostcountry?

/1/ DRI

Yes. EQ (Clean Air) Regulations, 1978. OK

F.1.3. Will the project create any adverseenvironmental effects?

/1/ DRI

No significant environmental impact is anticipatedfrom the project.

OK

F.1.4. Have environmental impacts beenidentified and addressed in the PDD?

/1/ DRI

The project is not expected to cause any significantenvironmental impacts. Environmental impacts arebriefly described, but the discussion of theenvironmental impacts should be elaborate withregard to measures taken to reduce air emissionsand measures taken to mitigate environmental

impacts from disposal of ash..

CL 6 OK

G. Comments by Local Stakeholder

Validation of the local stakeholder consultationprocess.

G.1.1. Have relevant stakeholders beenconsulted?

/1/ DR Local stakeholders were invited, through thepublication of an advertisement for a stakeholders

OK


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Table 3 Resolution of Corrective Action and Clarification Requests

Draft report cor rective action requestsand requests for clarifi cation

Ref. toTable 2

Summary of project participantsresponse

Final conclusion

CAR 1

Prior to the submission of this validationreport to the CDM Executive Board, DNV willhave to receive confirmation by the DNA of

Malaysia that the project assists it inachieving sustainable development.. Also thewritten approval from the DNA of Denmark isrequired.

Table 1.2 The process of obtaining Letter ofApproval from DNA is in progress. It willbe provided when obtained fromMalaysian and Danish DNA.

Copies of the LoAs from both theMalaysian and Danish DNAs have beensubmitted to DNV.

The CAR is closed.

CAR 2

Since public funding by the Royal DanishMinistry of Foreign Affairs will be used topurchase CERs of the project, Denmark shallprovide an affirmation that such funding does

not result in a diversion of officialdevelopment assistance and is separate fromand is not counted towards the financialobligations of Denmark

Table 1.7 Affirmation letter obtained from RoyalDanish Ministry of Foreign Affairs thatno diversion of ODA.

A copy of the Affirmation letter from theRoyal Danish Ministry of Foreign Affairshas been provided and the Correctiveaction request has been satisfactorilyclosed.

The CAR is closed

CL 1

A formal training plan for the operational andmaintenance activities should be established.

A.2.5D.5.3

Training plan was provided by the boilermanufacturer to United Plantation,which includes adequate training onsafety, general plant operation andmaintenance practices.

The response provided to theClarification raised is consideredsatisfactory.

The CL is closed

CL 2


A.3.4F.1.1

According to Environmental Quality Act1974, section 34A EIA is onlyrequired for fossil fuel power plants witha capacity exceeding 10 MW.

The project has a power generatingcapacity of 1.85 MW and is usingbiomass as fuel. Thus EIA is not

It has been confirmed that according tothe Environmental Quality Act 1974,Section 34A EIA is only required forfossil fuel power plants with a capacityexceeding 10 MW.

Since the project has a powergenerating capacity of 1.85 MW and is


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Ref. toTable 2


Final conclusion

required

(Ref: PDD Section F.1)

using biomass as fuel, a formal EIA isnot required.

The CL is closed

CL 3

Further details on the determination to thegrid electricity emission coefficient of 0.63tCO2e/MWh need to be included in the PDD.

B.2.2D.4.1E.1.1E.3.1

We have included the reference to themethodology of grid emission factorcalculation and source of data. Thedetailed electricity emission coefficient

calculations have been submitted toDNV. (Ref :PDD Annex 3)

The reference document has beenprovided for Electricity grid emissionfactor calculation. The responseprovided is deemed acceptable and the

CL is closed.

CL 4

The project participants are requested todemonstrate how it is ensured that the newsteam boiler and steam turbine will primarilycover the steam and electricity demand of thepalm oil mill and that only excess energy is

exported to the Unitata refinery.

B.2.2 The boiler capacity is 40t/h and themaximum steam demand for the palmoil mill is 30t/h. The extra 10t/h will beexported to the refinery. The steam tothe mill will always be given priority asthere are no other boilers supplyingsteam to the palm oil mill. It is possiblenot to supply steam to the refinery inthe worst case as the refinery canoperate their old oil fired boilers.

There is a reserve margin of 300kW(1.85 MW - 1.2 MW - 0.35 MW ) andthe underground cable transmissionnetwork from mill to refinery has amaximum designed capacity of 450kW.This will ensure palm oil mill will alwaysmeet the electricity demand as therewill be a balance of 1.4 MW in thesystem after supplying max 450 kW tothe refinery.

(1.85 MW 0.45 MW = 1.4 MW > 1.2MW)

(Ref :PDD section A.4)

The response provided is deemedacceptable and the CL is closed.


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Ref. toTable 2


Final conclusion

CL 5

Project management authority andresponsibility are not clearly described.

D.5.1 The project will be managed by UnitedPlantation Engineering Division. All thedata will be recorded by standardUnited Plantation practices. Thecompiled data will be verified by thepalm oil mill Engineer and approved bythe Engineering Manager before stored

in softcopy and hardcopy files for CERpurposes. All the data will be kept for 2years after the crediting period.

(Ref : PDD Section D.5)

The response provided is deemedacceptable and the CL is closed.

CL 6

Environmental impacts are briefly described,but the discussion of the environmentalimpacts should be elaborate with regard tomeasures taken to reduce air emissions andmeasures taken to mitigate environmentalimpacts from disposal of ash.

F.1.4 Multicyclone is installed to minimizecontaminants in the exhaust air.Emission levels will comply withMalaysian Emission Standards.

(Ref : PDD Section F.1)

The ash will be transported back to theplantation as potash for landapplication.

(Ref : PDD Section B.4)

Environmental impacts have beendescribed and appropriate mitigationmeasures taken such as a Multicyclone is installed to minimizecontaminants in the exhaust air.

Emission levels will comply with theMalaysian Emission standards.

The ash will be transported back to theplantation as potash for landapplication.

The CL is closed.

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