Kunak Jaya - Final - 14 - 4 - 08

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.
1

CDM Executive Board

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CLEAN DEVELOPMENT MECHANISM
PROJECT DESIGN DOCUMENT FORM (CDM-PDD)
Version 03.1 - in effect as of: 28 July 2006

CONTENTS

A. General description of project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

D. Environmental impacts

E. Stakeholders comments

Annexes

Annex 1: Contact information on participants in the project activity

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring plan

Annex 5: Calculation of heating values of biomass fuel and fuel needs for the plant

Annex 6: Measurement of heating value for EFB

Annex 7: Details of leakage calculation

Annex 8: Cost-benefit analysis of using EFB for mulching

Annex 9: Illustration of technical barriers in EFB combustion

Annex 10: Weighted average cost of capital calculation

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03.1

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SECTION A. General description of project activity

A.1. Title of the project activity:
KUNAK JAYA BIO ENERGY PLANT, MALAYSIA
Version 2.0 25/02/2008

A.2. Description of the project activity:
The project activity involves the installation of a new biomass energy plant at the new palm oil refinery
and kernel crushing plant of TSH-Wilmar Sdn Bhd located at Kunak Jaya (the Refinery). The biomass
energy plant will utilise, biomass waste, a renewable biomass that is produced from palm oil mills to
generate steam and power. The project activity will reduce the energy systems dependency on fossil fuel
resources and the emissions of GHG emissions.
Under the baseline situation, the electricity and steam required by the Refinery would be imported from
the power grid and produced in a biomass boiler respectively. The biomass boiler in the baseline would
use only mesocarp fibre, and palm kernel shell (PKS) and a small amount of palm kernel cake (PKC) as
fuel and no empty fruit bunches (EFB) would be use as EFB is well known to be a difficult fuel to
handle.
In the project situation, the biomass energy plant on site will use biomass waste to generate useful power
and steam. The biomass waste used in the project activity will be sourced from palm oil mills and is
made up of EFB, PKS, mesocarp fibre and PKC. There is a significant contribution in reducing the
methane emission from the landfills previously used for deposition of EFB.
The project activity consists of two parts:
1) Production of CO
2
-neutral electricity that will replace conventional electricity generation based
on fossil fuel and thereby reducing GHG emission in the electricity production.
2) Start of utilisation of EFB as a fuel and that will lead to avoided methane emissions from landfill
sites where EFB was deposited.
Other expected benefits from the project activity include:
Sustainable development
The project activity will contribute to the use of sustainable renewable energy sources in the
power generation system and support the countrys fifth fuel policy that promotes the use of
renewable energy.
Environmental sustainability
The project activity will have a positive impact on the environment as it will reduce power
production based on fossil fuels and lead to an increased sustainability in the power generation
sector. Furthermore, the power plant will be equipped with high-efficient technologies that

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reduce the fuel consumption per unit output and increase the combustion efficiency. Pollution
control equipment will be installed in order to ensure minimum emissions of particulates and
other pollutants from the plant.
The project activity will lead to reduced disposal of waste products from the palm oil mill and
increase the utilisation of the energy content in waste products.
Social sustainability
The project activity will generate new jobs for people from the surrounding area since the
biomass energy plant is more labour intensive than buying power from grid. The workers will
need to be trained in using the state of the art machinery.
Economic spill over of the Kunak Jaya Bio Energy Project will also increase business
opportunities for local suppliers in transportation, maintenance and repair, parts supply, food
and other services.
Economic sustainability
The project activity will lead to economic sustainability as the fuel sources are sustainable,
indigenous resources, which reduces fuel imports and negative impact on foreign exchange. The
project activity will also have a positive impact on the economic performance of the Refinery, as
energy production will be more reliable and efficient, leading to a more reliable production at
the Refinery.

Additional to a business-as-usual scenario
The project activity is additional to a business-as-usual scenario as it will be among the first
cogeneration plants in Malaysia fired mainly with EFB from palm oil mills, to supply electricity and
steam to a palm oil refinery. The business-as-usual scenario for power generation is to purchase power
from the grid and to produce steam with use of the same types of biomass as in the project activity.

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A.3. Project participants:

Table A.1: Project participants
Name of Party involved (*)
((host) indicates a host Party)
Private and/or public
entity(ies) project
participants (*)
(as applicable)
Kindly indicate if the Party
involved wishes to be
considered as project
participant
(Yes/No)
Malaysia (Host) Private entity TSH-Wilmar
(BF) Sdn Bhd (TSH-Wilmar)
No
United Kingdom Private Entity: EnergiMidt
Handel A/S
No
(*) In accordance with the CDM modalities and procedures, at the time of making the CDM-PDD
public at the stage of validation, a Party involved may or may not have provided its approval. At the
time of requesting registration, the approval by the Party (ies) involved is required.

A.4. Technical description of the project activity:

A.4.1. Location of the project activity:
The Kunak Jaya Bio Energy Project is located at KM 1, Kampung Kunak Jaya, 91207 Kunak, Sabah.

A.4.1.1. Host Party(ies):
Malaysia

A.4.1.2. Region/State/Province etc.:
Sabah
A.4.1.3. City/Town/Community etc:
Kunak Jaya

A.4.1.4. Detail of physical location, including information allowing the
unique identification of this project activity (maximum one page):


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Figure A.1 : Location Map of Project Activity.

A.4.2. Category(ies) of project activity:

The project activity falls under Sectoral Scope 01: energy industries (renewable - / non-renewable
sources) as per the sectoral scoped related to approved methodologies and Designated Operational
Entities (DOEs).

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A.4.3. Technology to be employed by the project activity:

The project activity, cogeneration plant involves the installation of two new biomass fired steam boilers
and a new condensing steam turbine. To further improve the use of EFB as a source of energy, a fuel
preparation system will be established to prepare the EFB as a fuel. The fuel preparation system consists
mainly the shredding of the very bulky EFB into fibres and a reduction of moisture content to obtain
better combustion properties.

The two new boilers are:

Boiler 1

Vickers boiler producing 48 bar (g) super heated steam at 450C at a capacity of 52 tonnes per hour
using biomass waste as fuel. It has an automatic combustion control system that ensures the effectiveness
of biomass combustion and control of emission. Emission is mitigated using multi-cyclone system and
the emission control complies with the prevailing emission regulation standards in Malaysia.

Boiler 2

Another biomass boiler is a 30t/hour steam generation boiler supplied by Mc Kenzie. This boiler is
designed to produce 20 bar saturated steam for the needs of the Refinery.

The steam generated in the Boiler 1, will be used to run the 10 MWh full condensing and multi stage
Siemens steam turbine detailed below:

o Turbine Type : SIEMENS GK 26/40
o Turbine Speed : 10,673 rpm
o Generator Speed : 1,500 rpm
o Main Steam Pressure : 43 bar (abs)
o Main Steam Temp. : 425 Deg C
o Pressure at Exhaust : 0.2 bar (abs) Fully Condensing

The plant is constructed to supply at least 65,700 MWh of electricity for consumption of the Refinery
every year.

The commissioning programme for the new installation will include adequate training and
familiarisation of the new technology among the relevant operators and maintenance staff. This is
important as it will minimise the maintenance costs and dependency on the foreign technical support for
the aforesaid equipment.

The Kunak Jaya Bio Energy Project plant requires a steady supply of biomass. The sources of fuel
comprise 70% of EFB, 15% mesocarp fibre, 10% PKS and 5% PKC (on weight basis).


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A.4.4. Estimated amount of emission reductions over the chosen crediting period:

Table A.3: The total GHG emission reductions in tCO2-e over the crediting period
Years Annual estimation of emission
reductions in tonnes of CO
2
e

Year 1 42,018
Year 2 45,669
Year 3 49,195
Year 4 52,599
Year 5 55,887
Year 6 59,061
Year 7 62,126
Total estimated reductions (tonnes of CO
2
e) 366,555
Total number of crediting years 7
Annual average over the crediting period of
estimated reductions (tonnes of CO
2
e) 52,365

A.4.5. Public funding of the project activity:

No public funding from parties included in Annex I of convention is involved in the project activity.

SECTION B. Application of a baseline methodology

B.1. Title and reference of the approved baseline methodology applied to the project activity:

ACM0006 (version 06): Consolidated baseline methodology for grid-connected electricity generation
from biomass residues version 06 (ACM0006 (version 06).

The methodology refers to the following tools for specific parts of the calculations:

Tool to determine methane emissions avoided from dumping waste at a solid waste disposal
site; (version 02)
Tool to calculate project or leakage CO
2
emissions from fossil fuel combustion (version 01);
and
Tool to calculate project emissions from electricity consumption (version 01)
ACM0002 (Consolidated baseline methodology for grid-connected electricity generation from
renewable sources); The reference to the ACM0002 is according to the EB 35
1
ACM002 has
been replaced with the Tool to calculate emission factors for electricity system (version 01)

1
The Board in approving the above tool, requested the secretariat to amend all the approved
methodologies and tools that refer to ACM0002, replacing the reference to ACM0002 by a reference to
the above approved tool. This will constitute a revision of the methodologies and these revisions shall
come into effect 2 November 2007, 17:00 GMT

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Finally the methodology refers to the Combined tool to identify the baseline scenario and demonstrate
additionality. The latest version of the tool is version 02.1 (Combined Additionality Tool).

B.2. Justification of the choice of the methodology and why it is applicable to the project
activity

This consolidated methodology covers a number of different project types for power generation with
biomass residues. This methodology is applicable to biomass residue fired electricity generation projects
activities, including cogeneration plants.

The consolidated methodology ACM0006 (version 06) has a number of applicability criteria discussed in
the table set out in Section B.2 below.

Applicability criterion Project compliance with the criterion
The methodology is applicable for biomass
residue fired electricity generation project
activities, including cogeneration plants
Since the project activity is a cogeneration plant
using biomass residues for generating power and
heat, thus it meets the criteria.
Biomass residues are defined as biomass that is a
by-product, residue or waste stream from
agriculture, forestry and related industries. This
shall not include municipal waste or other wastes
that contain fossilized and/or non-biodegradable
material
The biomass residues used as fuel in the project
activity include EFB, mesocarp fibres, PKS and
PKC from palm oil mills. None of these wastes
contains fossilized waste or municipal solid waste.
The installation of a new biomass residue fired
power plant at a site where currently no power
generation occurs (greenfield power projects);
There was no power production at the site before
the project activity it is a greenfield power
project.
No other biomass types than biomass residues, as
defined above, are used in the project plant and
these biomass residues are the predominant fuel
used in the project plant (some fossil fuels may be
co-fired)
There will not be other types of biomass used other
than biomass from oil palm mills as covered by the
definition of biomass residue. Small amounts of
fossil fuels may be used as back up fuel. This use
will be monitored and calculated as project
emissions.
For projects that use biomass residues from a
production process (e.g. production of sugar or
wood panel board), the implementation of the
project shall not result in an increase of the
processing capacity of raw input (e.g. sugar, rice,
logs, etc) or in other substantial changes (e.g.
product range) in this process;
The utilisation of the biomass residues does not
affect the production process of the palm oil mills
as the production of crude palm oil is guided by the
harvesting and demand in the market. The project
activity will not result in any change in the
processing capacity or product.
The biomass residues used by the project facility
should not be stored for more than one year;
The biomass fuel will typically only be stored for
one week. There is a good supply over the whole
year of biomass residues so seasonal storage is not
necessary and not possible either
No significant energy quantities, except from
transportation or mechanical treatment of the
biomass residues, are required to prepare the
There is only simple mechanical treatment of the
biomass residues before they are used as fuel
shredding of the EFB. The energy used for these

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Applicability criterion Project compliance with the criterion
biomass residues for fuel combustion, i.e. projects
that process the biomass residues prior to
combustion (e.g. esterification of waste oils)
activities are included in the project emissions

As discussed in the table the Kunak Jaya Bio Energy Project clearly falls within the application criteria
of ACM0006 (version 06). A further application criterion is that the project activity must fall under one
of the approved baseline scenarios. This will be discussed and documented below.

B.3. Description of how the sources and gases included in the project boundary

Table B.1: Sources and gasses included in the project boundary

Source

Gas

Justification / Explanation
CO
2
Included By using the calculations prescribed by
the ACM0006.
CH
4
Excluded For the purpose of simplification this is
conservative.
Grid electricity
generation
N
2
O Excluded For the purpose of simplification this is
conservative.
CO
2
Excluded Emissions are not included as biomass is
the baseline for the heat production.
CH
4
Excluded For the purpose of simplification this is
conservative.
Heat generation
N
2
conservative.
CO
2
Excluded Biomass is considered carbon neutral.
CH
4
Included Methane emissions from previously land-
filled biomass waste products are
calculated and considered part of the
B
a
s
e
l
i
n
e

Disposal of biomass
N
2
conservative.

CO
2
Excluded CO
2
emissions from biomass are
considered carbon neutral.
CH
4
Included Methane emissions from the utilisation of
the biomass as fuel are calculated and
included in the project emissions.

P
r
o
j
e
c
t

Combustion of biomass
residues for renewable
electricity and/or heat
generation
N
2
O Excluded For the purpose of simplification.


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Source

Gas

Justification / Explanation
CO
2

Included Emissions from using fossil fuels for
start-ups or when biomass humidity is too
high at the project site.
CH
4

Excluded For the purpose of simplification. It is
assumed that CH
4
emissions to be very
small.
On-site fossil fuel and
electricity consumption
due to the project
activity (stationary or
mobile)

N
2
O Excluded For the purpose of simplification. It is
assumed that N
2
O emissions to be very
small.
CO
2
Included Emissions from transportation of biomass
residues to the project plant by vehicles.
CH
4
assumed that CH
4
Transportation of
biomass and ash
N
2
assumed that N
2
CO
2

Excluded
CH
4

Storage of biomass
N
2
O

The biomass will only be stored for a
short period of time up to one week.

CO
2

Excluded
CH
4

Waste water from the
treatment of biomass
residues

N
2
O
Wastewater from the preparation of EFB
will be sent to Kunak Palm Oil Mill
biogas plant (Methane Recovery and
Utilisation Project at TSH Kunak Oil
Palm Mill, Reg. No. 0916) for treatment.
The methane is collected and used in gas
engines for power production. There is no
project emission from the water as
emission in relation to the biogas plant
will be handled in relation to that project.
CO
2
Included Emissions from transportation of waste
water from the project plant to Kunak
Palm Oil Mill biogas plant by vehicles.
CH
4
assumed that CH
4
small.
Transportation of waste
water
N
2
assumed that N
2
small.


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B.4. Description of how the baseline scenario is identified and description of the identified
baseline scenario:

The identification of the baseline scenario is in accordance to ACM0006 (version 06) with
demonstration of additionality using steps prescribed in the latest version of the Combined
Additionality Tool.

The Combined Additionality Tool prescribes four steps to establish the baseline scenario and
demonstrate additionality:

STEP 1. Identification of alternative scenarios
STEP 2. Barrier analysis
STEP 3. Investment analysis (if applicable)
STEP 4. Common practice analysis

These four steps will be undertaken in the following.

STEP 1. Identification of alternative scenarios

Step 1a. Define alternative scenarios to the proposed CDM project activity

Pursuant to the Combined Additionality Tool, project proponent shall identify all alternatives scenarios
that are available to the project proponent and that provide outputs or services with comparable quality,
properties and application areas as the proposed CDM project activity.

In applying Step 1 of the Combined Additionality Tool, ACM0006 (version 06) requires realistic and
credible alternatives should be separately determined regarding:

How power would be generated in the absence of the CDM project activity;
What would happen to the biomass residues in the absence of the project activity; and
In case of cogeneration projects: how the heat would be generated in the absence of the project
activity.

The plausible baseline scenarios for power generation identified in ACM0006 (version 06) are set out in
Table B2 with comments and conclusion for each plausible baseline scenario discussed in the
corresponding right columns.

Table B.2: Realistic and credible alternatives for power generation:

Plausible
baseline
scenarios for
power
generation
Description Comments Realistic and
credible
alternative?
(Yes/No)
P1

The proposed project activity
not undertaken as a CDM
This is a realistic and credible
alternative.
Yes

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Plausible
baseline
scenarios for
power
generation
credible
alternative?
(Yes/No)
project activity.

P2 The continuation of power
generation in an existing
biomass residue fired power
plant at the project site, in the
same configuration, without
retrofitting and fired with the
same type of biomass residues
as (co-)fired in the project
activity.
Continuation of power
generation is not applicable as
the project activity is a
greenfield project where no
prior energy production took
place. This is not a realistic and
credible alternative.

No
P3 The generation of power in an
existing captive power plant,
using only fossil fuels.

Generation of power in an
existing captive power plant is
not applicable as the project
activity is a greenfield project
where no prior energy
production took place. This is
not a realistic and credible
alternative.
No
P4 The generation of power in the
grid.
In absence of the project
activity, the equivalent power
generated by the project activity
would be purchased by refinery
from the grid. Hence this is a
realistic and credible
alternative.
Yes
P5 The installation of a new
plant, fired with the same type
and with the same annual
amount of biomass residues as
the project activity, but with a
lower efficiency of electricity
generation (e.g. an efficiency
that is common practice in the
relevant industry sector) than
the project plant and therefore
with a lower power output
than in the project case.

The project activity is not
claiming to be more efficient
than other projects options.
There is no common practice of
installing lower efficiency
electricity generation in palm
oil mills. Thus the installation
of a lower efficiency power
plant at the site would not be a
alternative.
No

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Plausible
baseline
scenarios for
power
generation
credible
alternative?
(Yes/No)
plant that is fired with the
same type but with a higher
annual amount of biomass
residues as the project activity
and that has a lower efficiency
of electricity generation (e.g.
an efficiency that is common
practice in the relevant
industry sector) than the
project activity. Therefore, the
power output is the same as in
the project case.
claiming to be more efficient
than other projects options.
There is no common practice of
installing lower efficiency
electricity generation in palm
oil mills. Thus the installation
of a lower efficiency power
plant at the site would not be a
alternative.
No
P7 The retrofitting of an existing
biomass residue fired power,
fired with the same type and
with the same annual amount
of biomass residues as the
project activity, but with a
lower efficiency of electricity
generation (e.g. an efficiency
that is common practice in the
relevant industry sector) than
the project plant and therefore
with a lower power output
than in the project case.

Retrofitting of an existing
biomass residue fired power is
not applicable as the project
activity is a greenfield project
involving construction of a new
plant. This is not a realistic and

No
P8 The retrofitting of an existing
that is fired with the same type
but with a higher annual
amount of biomass residues as
the project activity and that
has a lower efficiency of
electricity generation (e.g. an
efficiency that is common
industry sector) than the
project activity.
Retrofitting an existing biomass
residue fired power is not
applicable as the project activity
is a greenfield project involving
construction of a new plant.
This is not a realistic and
No

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Plausible
baseline
scenarios for
power
generation
credible
alternative?
(Yes/No)
fossil fuel fired captive power
plant at the project site.
Installation of new fossil fuel
fired captive power plant at the
project site would be
economically unattractive. In
addition it would also lead to
higher baseline emissions. Thus
it is a conservative assumption
to eliminate this alternative.
Therefore this is not a realistic
and credible alternative.
No

Pursuant to Table B2, the realistic and credible alternatives identified for power generation are:-
P1; and
P4.

The plausible baseline scenarios for generation of heat identified in ACM0006 (version 06) are set out in
Table B3 with comments and conclusions for each plausible baseline scenario discussed in the
corresponding right columns.

Table B.3: Realistic and credible alternatives for heat generation

Plausible
baseline
scenarios for
heat
generation
credible
alternative?
(Yes/No)
H1 The proposed project activity
not undertaken as a CDM
project activity
alternative
Yes
H2 The proposed project activity
(installation of a cogeneration
power plant), fired with the
but with a different efficiency
of heat generation (e.g. an
efficiency that is common
industry sector)
increasing the efficiency of heat
production compared to the
baseline. This is not a realistic
No
H3 The generation of heat in an
existing captive cogeneration
plant, using only fossil fuels
Generation of heat in an
plant is not applicable because
No

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Plausible
baseline
scenarios for
heat
generation
credible
alternative?
(Yes/No)
H4 The generation of heat in
boilers using the same type of
biomass residues
The biomass of the same type
could also have been used for
the generation of heat in the
baseline. This is a realistic and
Yes
H5 The continuation of heat
generation in an existing
biomass residue fired
cogeneration plant at the
project site, in the same
configuration, without
retrofitting and fired with the
as in the project activity
Generation of heat in an
plant is not applicable because
No
H6 The generation of heat in
boilers using fossil fuels
Installation of new fossil fuel
fired captive power plant at the
project site would have been
one of the realistic and credible
alternative.
Yes
H7 The use of heat from external
sources, such as district heat
There is no district heating
system in the region. This is not
a realistic and credible
alternative.
No
H8 Other heat generation
technologies (e.g. heat pumps
or solar energy)
Other renewable energy
technologies are not available
for generation of steam at the
required temperature and
pressure. This is not a realistic
No

Pursuant to Table B3, the realistic and credible alternatives identified for heat generation are:-

H1;
H4; and
H6.


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In accordance to type and specifications of boiler discussed in Section A.4.3, four types of biomass fuel
specified for use in the Kunak Jaya Bio Energy Project are:

a) EFB
b) PKS
c) Mesocarp fibre
d) PKC

Pursuant to ACM0006 (version 06), which reads:

Where the project activity uses different types of biomass residues, the baseline scenario should be
identified for each type of biomass residue separately. Biomass residues from different sources should be
considered as different types of biomass residues k. Similarly, biomass residues with different uses in the
absence of the project activity should be considered as different types of biomass residues k,

Each type of biomass residues are explained and documented in separate tables i.e. Table B.4A to Table
B.4D.

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Table B.4A: Realistic and credible alternatives for use of EFB

Plausible
baseline
scenarios for
use of EFB
credible
alternative?
(Yes/No)
B1 The biomass residues are
dumped or left to decay under
mainly aerobic conditions.
This applies, for example, to
dumping and decay of biomass
residues on fields.
Use of EFB for mulching is
economically unattractive
especially in Sabah where the
land is dominated by hilly
terrain.
2

Besides that, there are
innumerable problems
associated with EFB application
as a mulch
3
such as:
Distance of the field
from mill,
Heavy traffic causing
damage to field roads
Harvesting paths
requiring frequent
upgrading, which can
be costly,
Field inaccessibility to
light vehicles during
rainy months,
Mulching field close to
workers quarters can
encourage breeding of
flies and rhinoceros
beetle,
Insufficient vehicles
during peak cropping
months as vehicles are
given priority for FFB
evacuation
Settlers are not given
benefit to mulch their
field in the case of
Government land
scheme.
No

2
Calculated value of EFB as fertilizer is MYR10.33 /ton and the costs of distribution are calculated as
MYR9.50/ton. See Annex 8 for more details.
3
Dr, Chow Mee Chin, MPOB, 2006: An Assessment Of Potential And Availability Of Palm Biomass For
Bioconversion To Bioethanol page 35-36. Downloaded from www.eib.ptm.org.my

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Plausible
baseline
scenarios for
use of EFB
credible
alternative?
(Yes/No)

Mulching is only done by
bigger plantation
4
.There are
still companies that dispose the
empty fruit bunches using
landfill method particularly mill
with smaller plantations or
estates
5
.

The EFB used in this project
activity will be sourced from
palm oil mills using landfills
and such actual landfills can be
verified during validation.

Thus this is not a realistic and
credible alternative following
the barriers discussed above.

clearly anaerobic conditions.
deep landfills with more than
5 meters. This does not apply
to biomass residues that are
stock-piled or left to decay on
fields.
Landfill is the common practice
in the region due to abundant
EFB supply. The EFB used in
this project activity will be
sourced from palm oil mills
using landfills and such actual
landfills can be identified
during validation.

alternative.

Yes
B3 The biomass residues are burnt
in an uncontrolled manner
without utilizing it for energy
purposes.
Open burning of biomass
residues is prohibited according
to the Malaysian Legislation
Environmental Quality Act
1974 (amended 2000).This is
alternative.
No

4
Ludin, N., et. Al, Palm Oil Biomass for Electricity Generation in Malaysia,
(http://www.biogen.org.my/bris/Biogen/Tech/(d)Documents/technology(d)7.pdf) accessed 4 January 2008
5
Ludin, N., et. Al, Palm Oil Biomass for Electricity Generation in Malaysia,
(http://www.biogen.org.my/bris/Biogen/Tech/(d)Documents/technology(d)7.pdf) accessed 4 January 2008

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Plausible
baseline
scenarios for
use of EFB
credible
alternative?
(Yes/No)
B4 The biomass residues are used
for heat and/or electricity
generation at the project site
EFB is a difficult fuel to handle
as it has high silica and
moisture content. As such, both
the costs of EFB fuel
preparation and associated risks
involved are high. Therefore,
EFB will not be used for heat
and/or electricity generation at
the project site. This is not a
alternative.
No
for power generation,
including cogeneration, in
other existing or new grid-
connected power plants.
EFB is a difficult fuel to handle.
Costs of EFB fuel preparation
and associated risks involved
are big and rendering such
projects not commercially
feasible. (See results of
calculations set out in Step 3
below).

Furthermore, there has not been
any project in Malaysia using
EFB as fuel for electricity
production except for CDM
projects. Thus this is not a
alternative.
No
for heat generation in other
existing or new boilers at other
sites
EFB is a difficult fuel to handle.
Costs of EFB fuel preparation
and the associated risks
involved are big and rendering
such projects not commercially
feasible. (See results of
calculations set out in Step 3
below).

There has not been any project
in Malaysia using EFB as fuel
for heat production except for
CDM projects. Thus this is not
a realistic and credible
alternative.
No

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Plausible
baseline
scenarios for
use of EFB
credible
alternative?
(Yes/No)
for other energy purposes,
such as the generation of
biofuels
The technology to convert EFB
into biofuels is still in a
laboratory scale
6
and can thus it
is not a realistic and credible
alternative for the project
proponent.

No
for non-energy purposes, e.g.
as fertilizer or as feedstock in
processes (e.g. in the pulp and
paper industry)
EFB is not used for non-energy
purposes like fertilizer due to
eco-conditions in this region
mainly due to adverse field
conditions such as like hilly
areas and steep terrain. (See
comments in scenario B1 of this
Table B.4A)

Use of EFB in the production of
pulp and paper is relatively a
new technology in this region
and hence would not be
financially attractive without
registration as a CDM project
activity. Therefore this is not a
alternative.
No

Pursuant to Table B.4A, the realistic and credible alternative identified for use of EFB is:-

B2

Table B.4B: Realistic and credible alternatives for use of PKS

Plausible
baseline
scenarios for
use of PKS
credible
alternative?
(Yes/No)

6
Danish Technical University, 2006: Ethanol potential for Empty Fruit Bunches pre-treated by Wet-Explosion
downloaded from www.eib.ptm.org.my


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Plausible
baseline
scenarios for
use of PKS
credible
alternative?
(Yes/No)
mainly aerobic conditions.
residues on fields.
PKS is a useful resource and is
not dumped or left to decay.
Hence it cannot be taken as a
alternative.
No
deep landfills with more than
5 meters. This does not apply
to biomass residues that are
stock-piled or left to decay on
fields.
not dumped or left to decay.
Hence it cannot be taken as a
alternative. It is also a
conservative assumption to rule
out this alternative.
No
purposes.
not burnt in an uncontrolled
manner.

Further, open burning of
biomass residues is prohibited
according to The Malaysian
Legislation Environmental
Quality Act 1974 (amended
2000). This is not a realistic and
No

In the absence of the project
activity, PKS would have been
used for heat generation at
project site. This is a credible
and realistic alternative.
Yes
B5

The biomass residues are used
for power generation,
including cogeneration, in
other existing or new grid-
connected power plants

in Malaysia for use of PKS as
fuel for grid connected
electricity production
7
except
for CDM projects. This is not a
alternative.

No

7
EPU, 2006: 9
th
Malaysia Plan 2006-2010: p 401: Under the Small Scale Renewable Energy Power Programme
(SREP) two projects with a combined grid connected capacity of 12 MW were implemented during the 8
th
Plan
from 2000-2005. These were the Kunak Biomass Power Plant (10 MW) and a landfill gas project (2 MW)

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Plausible
baseline
scenarios for
use of PKS
credible
alternative?
(Yes/No)
sites
PKS is to a certain extent used
as fuel in palm oil mills. It is
estimated that around 50% of
the available PKS is used for
energy in palm oil mills.
8
There
is thus a large excess of PKS in
the palm oil mill that can be
used for other purposes.
However, there are only a few
other industries in East Sabah.
Thus there is no demand for the
excess PKS. This is thus not a
alternative.
No
for other energy purposes,
such as the generation of
biofuels
The technology to convert PKS
into biofuels is still in a
laboratory scale and the yields
from PKS are not attractive
compared to other sources of
biomass
9
. Thus, this is not a
realistic and credible alternative
for the project proponent.
No
for non-energy purposes, e.g.
as fertilizer or as feedstock in
paper industry)
No technology exists currently
to use PKS for non-energy
purposes. Thus this is not a
alternative.
No

Pursuant to Table B.4B, the realistic and credible alternative for use of PKS is:-

B4

8
Anders Evald et all. 2005: Renewable Energy resources. Pages 19-20 Downloaded from www.eib.ptm.org.my
9
Table p 11. Downloaded from www.eib.ptm.org.my


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Table B.4C: Realistic and credible alternatives for use of mesocarp fibre

Plausible
baseline
scenarios for
use of
mesocarp
fibre
credible
alternative?
(Yes/No)
mainly aerobic conditions. This
applies, for example, to
residues on fields.
Mesocarp fibre are a useful
resource and are not dumped
or left to decay. Hence this is
alternative.
No
deep landfills with more than 5
meters. This does not apply to
biomass residues that are stock-
piled or left to decay on fields.
Mesocarp fibre are a useful
resource and are not dumped
or left to decay. Hence this is
alternative. It is a conservative
assumption to rule out this
alternative.
No
purposes.
Mesocarp fibre is a useful
resource and is not burnt in an
uncontrolled manner.

In addition, open burning of
2000). This is not a realistic

No
In the absence of the project
activity, mesocarp fibre would
have been used for heat
generation at project site. This
is the most realistic and

Yes
for power generation, including
cogeneration, in other existing
There have not been any
projects in Malaysia for using
mesocarp fibre as fuel for grid
No

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Plausible
baseline
scenarios for
use of
mesocarp
fibre
credible
alternative?
(Yes/No)
or new grid-connected power
plants
3

connected electricity
production
10
except for
CDM projects. This is not a
alternative.

sites
4

Mesocarp fibre is used as fuel
in palm oil mills. However,
there are only a few other
industries in East Sabah. Thus,
there is no demand for the
excess mesocarp fibre. This is
thus not a realistic and

No
for other energy purposes, such
as the generation of biofuels
The technology to convert
mesocarp fibre into biofuels is
still in a laboratory scale and
the yields from mesocarp fibre
are not attractive compared to
other sources of biomass
11
.
This is thus not a realistic and
credible alternative for the
project proponent.
No
for non-energy purposes, e.g. as
fertilizer or as feedstock in
paper industry)
No technology exists currently
to use mesocarp fibre for non-
energy purposes. Thus this is
alternative.
No

Pursuant to Table B.4C, the realistic and credible alternative for use of mesocarp fibre is:-

B4

10
EPU, 2006: 9
th
th
Plan
11


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Table B.4D: Realistic and credible alternatives for use of PKC

Plausible
baseline
scenarios for
use of PKC
credible
alternative?
(Yes/No)
mainly aerobic conditions. This
applies, for example, to
residues on fields.

PKC is a useful resource and
is not dumped or left to decay.
Hence this is not a realistic
No
deep landfills with more than 5
meters. This does not apply to
biomass residues that are stock-
piled or left to decay on fields.

is not dumped or left to decay.
Hence this is not a realistic
and credible alternative. It is
also a conservative assumption
to rule out this alternative.
No
purposes.
is not burnt in an uncontrolled
manner.

In addition, open burning of
2000). This is not a realistic

No

PKC is a useful resource with
a high commercial value
12
by-
product produced by the
Refinery. PKC has high net
calorific value and is a more
economical supplement (to
other biomass fuel discussed
in Table B.4A to Table B.4C)
Yes

12
PKC has a cost of MYR27.80/GJ compared to the other biomass fuels with a price between MYR1.50 and
MYR5.70 /GJ
Source: Financial spreadsheet for the Kunak Jaya Bio Energy Project.

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Plausible
baseline
scenarios for
use of PKC
credible
alternative?
(Yes/No)
as compared to conventional
fossil fuel e.g. Medium Fuel
Oil (MFO). Thus, the use of
PKC is a realistic and credible
alternative.

B5

The biomass residues are used
for power generation, including
cogeneration, in other existing
or new grid-connected power
plants

in Malaysia using PKC as fuel
for grid connected electricity
production
13
except for
CDM projects. This is not a
alternative

No

sites
PKC is a useful resource with
a high commercial value and
therefore would not be
normally use by other project
proponent a source of energy
in other existing or new boiler
at other sites. This is not a
alternative.
No
for other energy purposes, such
as the generation of biofuels
The technology to convert
PKC into biofuels is still in its
laboratory stage and the yields
from PKC are not attractive as
compared to other sources of
biomass
14
. Thus, this is not a
alternative for the project
proponent.
No
for non-energy purposes, e.g. as
fertilizer or as feedstock in
The use of PKC as animal feed
is not an alternative as the
PKC will be used in the
baseline as a source of energy
No

13
EPU, 2006: 9
th
th
Plan
14


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page 27

Plausible
baseline
scenarios for
use of PKC
credible
alternative?
(Yes/No)
paper industry) and also to compensate for any
shortage in other biomass fuel
in the absence of the project
activity (as discussed in
scenario B4in Table B.4D).
This is not a realistic and

Pursuant to Table B.4C, the realistic and credible alternative for use of PKC is:-

B4

Sub-step 1b. Consistency with mandatory applicable laws and regulations

Baseline scenarios B3 in Table B.4A to Table B.4D refers to uncontrolled burning of biomass residues.
These baseline scenarios are not in compliance with existing Malaysia legislation. Open burning of
biomass residues is prohibited according to The Malaysian Legislation Environment Quality Act 1974
(amended 2000). Thus these baseline scenarios have thus been disregarded as realistic and credible
alternatives. Other realistic and credible alternatives discussed in Table B.4A to Table B.4D are all in
compliance with Malaysia legislation.

Following Step 1 of the Combined Additionality Tool i.e. Identification of alternative scenarios, the
following realistic and credible alternatives are identified:

For power: P1 and P4

For steam: H1, H4 and H6

For biomass residues- (i) EFB: B2
(ii) PKS: B4
(iii) Mesocarp fibre: B4
(iv) PKC: B4

Based on the above discussions, the most credible combinations of baseline scenarios are as follow:-

1. Generation of power in the grid (P4), the generation of heat in boilers using biomass residues
(H4) from PKS, mesocarp fibre and PKC (B4) and dumping or leaving EFB to decay under
anaerobic conditions in deep landfills (B2), which is consistent with Scenario 3 of Table
2:Combinations of project types and baseline scenarios applicable to this methodology
prescribed in ACM0006 (version 06) (Alternative 1);

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2. Generation of power in the grid (P4), the generation of heat in boilers using fossil fuels i.e.
medium fuel oil (MFO), (H6) and dumping or leaving EFB to decay under anaerobic
conditions in deep landfills (B2), which is consistent with Scenario 2 of Table
2:Combinations of project types and baseline scenarios applicable to this methodology
prescribed in ACM0006 (version 06) (Alternative 2); and

3. The proposed project activity not undertaken as a CDM project activity (P1 and H1)
(Alternative 3)

STEP 2. Barrier analysis

This step serves to identify barriers and to assess which alternatives are prevented by barriers discussed
in Sub-step 2a below.

As prescribed in ACM0006 (version 06), the barrier analysis consists of two sub-steps namely:

Sub-step 2a: Identify barriers that would prevent the implementation of alternative scenarios
identified in Step 1 above.

Sub-step 2b: Eliminate alternative scenarios which are prevented by the identified barriers

Sub-step 2a. Identify barriers that would prevent the implementation of alternative scenarios

Sub-step 2a requires the establishment of a complete list of realistic and credible barriers that may
prevent alternative scenarios to occur.

The complete list of realistic and credible barriers that may prevent implementation of alternative
scenarios are analysed as follows:

Investment barriers

Technology barriers

Lack of prevailing practice

Market barriers

Sub-step 2b. Eliminate alternative scenarios which are prevented by the identified barriers

This step identifies alternative scenarios which are prevented by at least one of the barriers listed in Sub-
step 2a above and eliminate those alternative scenarios from further consideration.

Alternatives to power generation:

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Out of the nine (9) alternatives to power generation analysed in Sub-step 1a and Sub-step 1 b above, only
alternative P1 and P4 can be considered as realistic and credible baseline scenarios and are subjected to
barrier analysis prescribed in Step 2.

Table B.5: Barrier analysis for alternatives to power generation

Alternatives to power generation Barrier
P1: Proposed project activity not
undertaken as a CDM project
activity.

P4: Generation of power in the
grid.
Investment Power production based on biomass and
specifically EFB has meet strong
investment barriers in Malaysia. The
barriers are mainly the following
15
:
1. Tariff not meeting market IRR
expectations;
2. Lack of long term fuel supply;
3. Lack of financing; and
4. Certain provisions in Renewable
Energy Power Purchase Agreement
(REPPA) unacceptable to SREP
developers.

The only biomass power projects that
have been implemented has been
registered as CDM projects or are in the
application process:
Lahad Datu Edible Oil (Reg. No.
395)
Sandakan Edible Oil (Reg. No. 402)
Sahabat Empty Fruit Bunch Biomass
(Reg. No. 288); and
Kunak Bio Energy Project (in
process for registration as a CDM
project activity)
No investment barriers

15
Erik Dugstad et al 2007: Options for implementation of the RE target in 9th Malaysia Plan. Page 3 Summary
Downloaded from www.eib.ptm.org.my

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activity.

grid.
Technology The formation of clinker and slag in the
boiler and this has the following
effects
16
:-
Damage to boiler tubes by direct
abrasion;
Damage to boiler tubes due to
impact of dropping large mass of
clinker/slag; and
Reduction in boiler efficiency due to
formation of slag/clinker layer on
boiler tubes

Difficulties in the fuel preparation of
EFB
17

The EFB is very bulky and with high
moisture content. Therefore it is
necessary to press the EFB and shred the
EFB to obtain a particular size that is
acceptable for use in the boiler.
Furthermore the equipment used in the
preparation of the EFB fuel will
generally experience significant wear and
tear which is due to the high presence of
silica content in the EFB resulting in an
increase in the maintenance cost.

Risk of technological failure: The project
activity faces significant risks in
performance of the technology illustrated
by the low availability of the Kunak Bio
Energy Project (in process for registration
as a CDM project activity), which only
had an availability of 25% in the first year
and 50% in the second year after
commissioning.
No technology risk

16
Experience from Kunak Bio Energy Project see photos in Annex 9
17
Experience from Kunak Bio Energy Project

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activity.

grid.
Lack of
prevailing
practice
The experience with biomass power is
very limited in Malaysia and the negative
perceptions of the major players is one of
the major barriers according to Minister
for Energy, Lim Keng Yaik
18
: What can
we do to tap the high potential of
renewable energy in our country? While
there are barriers that need to be ironed
out, I strongly believe that the biggest
barrier is our mindset and perceptions.
In this instance, all of us are victims to
the old way of thinking
Power from the grid is the prevailing
practice
Market There are significant market barriers in
utilising EFB as fuel for biomass power
plant. In a major study for the EFB supply
chain
19
one of the conclusions is as
follows:
The demand of EFB fuel is subjected to
various barriers such as accessibility of
fuel due to high transportation costs,
uncertainty of EFB fuel prices
difficulty in handling as well as
fluctuation of supply due to cropping
seasons (peak/off peak)

Power readily available

It may be observed in Table B.5 that there are very significant barriers for the proposed project activity
to be undertaken not as a CDM project activity (P1) as compared to generation of power in the grid (P4)
as the use of power from the grid is well known and has low technology risk.

18
Speech by The Minister for Energy Water and Communication Y.B. Dato' Sri Dr. Lim Keng Yaik at the National
Renewable Energy Forum 21/09/2006. Downloaded from www.ktak.gov.my
19
Eco-Ideal Consulting & Mensilin Holdings, 2005: Barrier Analysis for the Supply Chain of Palm Oil Processing
Biomass (Empty Fruit Bunch) as Renewable Fuel. Page 43 Downloaded from www.eib.ptm.org.my


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Alternatives to heat generation:

Among the nine (9) alternatives to heat generation analysed in Sub-step 1a and Sub-step 1b above, only
alternatives H1, H4 and H6 can be considered as realistic and credible baseline scenarios and are subject
to barrier analysis prescribed in Step 2.

Table B.6: Barrier analysis for alternatives to heat generation

Alternatives to heat generation Barrier
H1: Proposed
project activity
not undertaken
as a CDM
project activity.

H4: Generation of
heat in boiler
using the same
type of biomass
residues i.e.
mesocarp fibre,
PKS and PKC.
H6: Generation of
heat in boiler
using fossil fuels
i.e. MFO
Investment Similar barriers as for P1
(discussed in Table B.5)
but less pronounced as
steam production requires
lower temperature and
pressure of the boiler and
therefore less investment.
Investment in fuel
preparation equipment is
not commercially
practical due to low use
for steam boiler.

No investment barrier No investment barrier
Technology Similar barriers as for P1
boiler pressure. Thus
there is less risk of
corrosion

No technology risk No technology risk
Lack of
prevailing
practice
Similar barriers as for P1
boiler pressure.

No barrier No barrier

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Alternatives to heat generation Barrier
H1: Proposed
project activity
not undertaken
as a CDM
project activity.

H4: Generation of
heat in boiler
using the same
type of biomass
residues i.e.
mesocarp fibre,
PKS and PKC.
H6: Generation of
heat in boiler
using fossil fuels
i.e. MFO
Market Similar barriers as for P1
No barrier No barrier

As discussed in Table B.6, there are significant barriers for H1 Proposed project activity not
undertaken as a CDM project activity for heat generation using biomass residue from EFB, whilst there
are no significant barriers for alternatives H4 and H6- as baselines for the project activity.

For the four biomass types (EFB, PKS, mesocarp fibre and PKC) identified in Sub-step 1a and Sub-step
1b, only one alternative was identified for each biomass type as discussed in Sub-step 1b. Thus, no
barrier analysis was conducted in relation to these alternatives.

Outcome of Step 2b

From Sub-step 2a and Sub-step 2b, it is observed that Alternative 3 (P1 and H1) identified in Step 1
experiences significant barriers.

Following Sub-step 2b, alternatives scenarios to the project activity that are not prevented by any barriers
are as follow:-

P4: The generation of power in the grid

H4: The generation of heat in boilers using the same type of biomass residues

H6: The generation of heat in boilers using fossil fuels

B4: The biomass residues i.e. mesocarp fibre, PKS, and PKC are used for both heat and
electricity generation and

B2: The biomass residues i.e. EFB are dumped or let to decay under clearly anaerobic
conditions.

Following Sub-step 2a and Sub-step 2b, there are still several alternative scenarios i.e.:

1. P4, H4, B4 and B2 (i.e. Alternative 1); and

2. P4, H6 and B2 (i.e. Alternative 2)


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remaining, but do not include the proposed activity undertaken without being registered as a CDM
project activity (i.e. P1 and H1).

Thus, explanations using qualitative and quantitative arguments on how the registration of the CDM
project activity will alleviate the barriers that prevent the proposed project activity from occurring in the
absence of the CDM are set out below. This is in line with the Combined Additionality Tool which
reads:

If there are still several alternative scenarios remaining, but which do not include the proposed
project activity undertaken without being registered as a CDM project activity, explain using qualitative
and quantitative arguments how the registration of the CDM project activity will alleviate the barriers
that prevent the proposed project activity from occurring in the absence of the CDM.

Qualitative arguments

As set out briefly in Step 2, the project activity experiences financial and technological barriers and
risks. Details of the technological barriers and risks are further discussed in Annex 9. The registration of
the project activity as a CDM project activity allows the project proponent to accept the inherent risks of
the power plant arising from technological risks of utilization EFB as a primary biomass fuel. This
contribution from sale of CERs may also assist in overcoming the barriers posed by employment of new
technology to ensure the project activity is reasonably viable from commercial perspective.

In addition, it can be justified that CDM will help to overcome the major barriers based on the financial
contribution to the project activity. The income from sale of CERs can be calculated as 0.044 MYR/kWh
as average for the first 7-years crediting period. This can be compared with the cost of purchasing power
from the grid of 0.20 RM/kWh. Thus, the sale of CERs gives an increase of 22% in the value of the
power produced. This argument will be further developed in the investment analysis process described in
Step 3.

Additional income from sale of CERs assists to overcome investment barriers of the project activity.
Such additional revenue also enables the project proponent to accept risks associated with low
availability of the power plant due to the inherent technological risks arising from use of EFB as biomass
fuel. Finally, this extra incentive also assists to overcome perceived barriers posed by the new
technology employed in the project activity

Quantitative arguments

From the quantitative viewpoint, the financial indicator set out below has been identified as most
suitable for the project type and decision making context:

Project internal rate of return (Project IRR)

In demonstrating how registration of the project activity as a CDM project activity will alleviate the
barriers that prevent the proposed project activity from occurring in the absence of the CDM, the Project
IRR of the project activity is set out in Table B.7 for further discussion:


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Table B.7: Project IRR of the project activity without and with CDM registration

Financial indicator Project activity without CDM
registration
Project activity with CDM
registration
Project IRR 5.6%
20
11.9%
21

As observed from the above table, registration of the project activity as a CDM project activity is critical
to ensure a commercially reasonable return of 11.9%, which is relatively close to the weighted average
cost of capital
22
of the company of 11.4%
23
.

STEP 3. Investment analysis

Step 3 involving investment comparison analysis is also conducted to determine if Alternative 1,
Alternative 2 or Alternative 3 shortlisted in Step 1 is the most economically or financial attractive.

Similar financial indicator i.e. Project IRR is applied and computed for Alternative 1, Alternative 2 and
Alternative 3.

In undertaking the investment comparison various variables and input data for project cost, revenues,
operating and maintenance cost have been included.

Outcome of Step 3

The investment comparison analysis yielded the following results in Table B.8:-

Table B.8: Project IRR of Alternative 1, Alternative 2 and Alternative 3

Financial indicators Alternative 1 Alternative 2 Alternative 3
Project IRR 28.1%
24
-
25
5.6%
26

20
Please refer to column C34, worksheet Proj NPV_without CERs, filename Copy of Copy of Kunak Jaya-IRR
080308 (TAS)_DNV (Old basis).
21
Please refer to column C36, worksheet Proj NPV_with CERs, filename Copy of Copy of Kunak Jaya-IRR 080308
(TAS)_DNV (Old basis).
22
Prescribed in Sub-step 2b Option III, para 4C of Tools for the demonstration and assessment of additionality,
Version 04 (EB36).
23
Please refer Annex 10 for detailed calculation
24
Please refer to column C33, worksheet Proj NPV-Baseline1(Grid&B.mass), filename Copy of Copy of Kunak Jaya-
IRR 080308 (TAS)_DNV (Old basis).
25
Please refer to column C33, worksheet Proj NPV-Baseline2(Grid&MFO), filename Copy of Copy of Kunak Jaya-
IRR 080308 (TAS)_DNV (Old basis).
26
Please refer to column C34, worksheet Proj NPV-without CERs, filename Copy of Copy of Kunak Jaya-IRR
080308 (TAS)_DNV (Old basis).

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As observed from the above results, Alternative 1 is the economically or financially more attractive
alternative scenario and can be concluded as the baseline scenario.

Sensitivity analysis

A sensitivity analysis is also included to assess whether the conclusion regarding the financial
attractiveness identified in Table B.8 is robust to reasonable variations in the critical assumptions applied
to all three baseline scenarios i.e. Alternative 1, Alternative 2 and Alternative 3.

The result of the sensitivity analysis is set out in Table B.9.

Table B.9: Result of sensitivity analysis on Alternative 1, Alternative 2 and Alternative 3.

Project IRR (%) Variables Sensitivity test range
Alternative 1 Alternative 2 Alternative 3
-5.0% 30.7 - 8.5
-2.5% 29.6 - 7.1
No change 28.1 - 5.6
+2.5% 27.4 - 4.1
Fixed and variable costs
+5.0% 26.3 - 2.3
-5.0% 24.0 - 4.2
-2.5% 26.1 - 4.9
+2.5% 30.0 - 6.3
Price per MT of steam
+5.0% 32.0 - 7.0
-5.0% 18.5 - 1.6
-2.5% 23.4 - 3.8
+2.5% 32.6 - 7.4
Running hours
+5.0% 37.1 - 8.9

Sensitivity analysis on the Project IRR taking into account reasonable variations in the assumptions of
the critical variables has been carried out.

Table B.9 sets out the results on sensitivity analysis performed on Project IRR, taking into account
variations in fixed and variable costs, running hours and price of steam per MT. The sensitivity analysis
result in Table B.9 further concludes that Alternative 1 is the most financially attractive scenario and is
the baseline scenario.


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In addition, the sensitivity analysis results on Project IRRs of Alternative 3 are in general well below the
11.4%
27
, which is the weighted average cost of capital
28
of the company. These results also support the
conclusion that the project activity is unlikely to be financially attractive without CDM registration.

Step 4: Common practice analysis

Sub-step 4a: Analyse other activities similar to the proposed project activity

Energy consumption in the industry accounts for close to 40% of total energy consumption in Malaysia.

A broad variety of fuels is used currently, by far dominated by fossil fuels, and only to a very small
extent less than 0.5%, and not accounted for in official energy statistics.

Figure B.1: Distribution of fuels used in the total industrial sector in Malaysia, 2003.
Source: National Energy Balance, PTM

Figure B.1 depicts that the energy use in the industry in Malaysia is dominated by the used of fossil
fuels. Very few companies have been using biomass residue as fuel. Most of the biomass fuel used is
PKS i.e. cement industry whereas the use of EFB has been very limited (and mainly confined to CDM
projects).

The statistics clearly set out that the use of biomass (what more EFB) in industrial application is very
limited in Malaysia i.e. outside palm oil mills.

27
Please refer Annex 10 for detailed calculation

28
Prescribed in Sub-step 2b Option III, para 4C of Tools for the demonstration and assessment of additionality,
Version 04 (EB36)

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There are in total 107 palm oil mills and 3 palm oil refineries in the state of Sabah. Out of this, only 4
29

projects in the region are of similar to the Kunak Jaya Bio Energy Project and are registered as CDM
projects. Thus the Kunak Jaya Bio Energy Project is additional to the business as usual scenario.

In addition, it could also be viewed that no other project activities similar to the Kunak Jaya Bio Energy
Project will be implemented without registration as CDM project activities which will assist to alleviate
and mitigate the inherent and associated risks involved in the implementation of such high efficient
biomass boilers for power production in Malaysia.

Sub-step 4b: Discuss any similar options that are occurring

Save and except for Kunak Jaya Bio Energy Project, there have not been other similar project ongoing in
Malaysia and thus no further discussion have been concluded.

Summary of choice of baseline scenario

The only remaining alternative identified following Step 1, Step 2 and Step 3 above is a combination of
baseline scenario as prescribed in Scenario 3, Table 2 of ACM0006 (version06) which reads:

The project activity involves the installation of a new biomass residue fired cogeneration plant at a site
where no power was generated prior to the implementation of the project activity. The power generated
by the project plant is fed into the grid or would in the absence of the project activity be purchased from
the grid. The biomass residues would in the absence of the project activity (a) be used for heat
generation in boilers at the project site and (b) be dumped or left to decay or burnt in an uncontrolled
manner without utilizing it for energy purposes. This may apply, for example, where the quantity of
biomass residues that was not needed for heat generation was dumped, left to decay or burnt in an
uncontrolled manner prior to the project implementation. The heat generated by the new cogeneration
plant would in the absence of the project activity be generated in boilers using the biomass residues that
are fired in the cogeneration plant.

The description fits precisely to the situation and circumstances in the project activity. The cogeneration
plant is built to supply electricity and heat to the Refinery, which is newly constructed. Thus, there was
no heat or power production at the site prior to the project activity. As discussed in the baseline, the
electricity requirement of the Refinery would have been met through purchase from the grid, whilst the
requirement for heat would have been fulfilled by a biomass steam boiler. The biomass residue would
either have been used in the baseline steam boiler as prescribed in the baseline (in the case of PKS, PKC
and mesocarp fibre) or been dumped in deep or shallow landfills (in the case of EFB).

29
See barrier analysis for power above for the list of projects

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page 39

B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below
those that would have occurred in the absence of the registered CDM project activity (assessment
and demonstration of additionality):

This section elaborates the additionality of this project activity. The basic demonstration of additionality
is handled in the previous section by means of the Combined Additionality Tool. Two elements included
in the argument are:

1) The timeline of the related documents of the project activity indicate that CDM was seriously
considered in the decision to proceed with the project activity.

2) The financial impact of sale of CERs on commercial viability of the project activity.

Timeline

The Kunak Jaya Bio Energy Project was submitted previously to the CDM Executive Board and was
rejected after a series of reviews.
A chronology of the previous submission discussed earlier is set out below:
1. January 2006: A Board meeting was convened by the project proponent, TSH-Wilmar
resolved to proceed with the project activity taking into consideration
that the project activity i.e. Kunak Jaya Bio Energy Project shall qualify
as a CDM project activity.
2. July 2006: Engagement of a CDM project consultant.
3. August 2006: Initiation of work at site.
4. 17th January 2007: Site validation by DOE i.e. Det Norsket Veritas.
5. 21
st
March 2007: National approval from Designated National Authority of Malaysia was
obtained.
6. 17
th
April 2007: Submission of Kunak Jaya Bio Energy Project to CDM Executive Board
for registration.
7. 27
th
July 2007: The CDM Executive Board accepted information provided during
review of the project activity and agrees to register the project with
correction i.e. the project participant and DOE to submit a revised PDD
containing an investment comparison analysis that the project activity is
less financially attractive than at least one alternative, and a
corresponding revised validation report (EB 33; Point 70b).
8. 5
th
September 2007: Initial trial run of the project activity.
9. 19
th
October 2007: The CDM Executive Board could not register the project activity as the
project participant and DOE failed to provide an investment comparison
of the two separate alternatives presented in the PDD that could be used

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page 40

to determine whether the project activity scenario was more or less
financially attractive than the baseline scenario presented (EB 35; Point
76b.
This PDD represent the fourth version (including all PDD previously submitted to CDM Executive
Board) for registration. The project activity remains identical despite the different version of PDD. As
CDM registration was seriously considered (as shown in the above chronology of events) prior to
proceeding with the Kunak Jaya Bio Energy Project, the project activity thus clearly fulfils with the
requirements in the additionality tool which reads:
Provide evidence that the incentive from the CDM was seriously considered in the decision to proceed
with the project activity. This evidence shall be based on (preferably official, legal and/or other
corporate) documentation that was available at, or prior to, the start of the project activity.
Thus, it is clear from the above chronology events, that the project proponent has emphasized and taken
into account CDM registration as a key factor prior to initiation of the Kunak Jaya Bio Energy Project
and the project activity only commenced operation after the project activity was submitted for
registration as a CDM project activity.

The financial impact of sale of CERs on commercial viability of the project activity

The approval and registration of the Kunak Jaya Bio Energy Project as a CDM project activity will assist
the project activity to overcome the associated and related barriers (as discussed in Section B.4 and
further detailed in Annex 9) in implementation and completion of the project activity and other
company(ies) in Malaysia that decides to embark on to the similar project activity in the future.

The benefits arising from successful implementation, completion and registration of the project activity
as a CDM project activity by the CDM Executive Board are as follow:

The project activity will unquestionably reduce anthropogenic greenhouse emissions by
generating electricity supply via clean energy source;

The income derived from the sale of CERs to Annex 1 party will assist to overcome the barriers
as demonstrated in Section B.4 above as it will the additional revenue coming from the sale of
CERs will also helps to mitigate the extra costs arising from the related technological barriers,
rendering the project activity to be reasonably and commercially viable; and

The investment cost involved for development of clean technologies project is considerably
high presently. In general, this poses difficulties for companies to embark on similar project as
Kunak Jaya Bio Energy Project without the project activity being registered as a CDM project
activity. As mentioned in Section B.4, Kunak Jaya Bio Energy Project is one of the few
biomass fired power plants in Malaysia (using EFB as fuel), which have not been registered as
a CDM project activity. Registration of the project activity as a CDM project activity does not
only open a new funding possibility solely for the Kunak Jaya Bio Energy Project, but also
encourages new entrant(s) to participate in similar project activity in the country.


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B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

The first methodological choice is to decide on the appropriate baseline methodology. In this PDD,
ACM0006 (version 06) was applied as the appropriate baseline methodology based on justification
discussed in Section B.2.

The second choice is the baseline scenario described in detail in Section B.4 above. The conclusion is
that this project should be evaluated under Scenario 3 of Table 2 of ACM0006, (version 06).

This scenario is relevant since Kunak Jaya Bio Energy Project is a greenfield project where the baseline
scenario established in Section B.4 is Scenario 3 ,Table 2 of ACM0006, (version 06) i.e.:

Power would have been purchased from the grid
Heat would have been generated from biomass
Biomass could have been left to decay in dumpsites of more than five (5) meters depth.

According to the applied methodology, the project boundary encompasses:
The power plant at the project site;
The means for transportation of biomass residues to the project site (e.g. vehicles);
All power plants connected physically to the electricity system that the CDM project power plant
is connected to. The spatial extent of the project electricity system, including issues related to
the calculation of the build margin (BM) and operating margin (OM), is further defined in the
Consolidated baseline methodology for grid-connected electricity generation from renewable
sources(ACM0002)
30
.
The site where the biomass residues would have been left for decay or dumped. This is
applicable only to cases where the biomass residues would in the absence of the project activity
be dumped or left to decay.
The physical site is the bio-energy plant itself, including a fuel feeding system, boiler system and steam
turbine and generation system. The first interface of the project boundary is at the fuel feeding system, so
fuel storage system is excluded. Another interface is the ash and waste water disposal. The actual plant
layout is shown in figure B.2, while a schematic presentation is in Figure B.3.

30
The reference to the ACM0002 is according to the EB 35
30
ACM002 has been replaced with the Tool to
calculate emission factors for electricity system (Version 1)

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Figure B.2: Site plan for Kunak Jaya Bio Energy Project and the Refinery

Figure 4: Project Boundary (just check image)
Figure B.3 : Project Boundary


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Figure B.3: Schematic presentation of Kunak Jaya Bio Energy Project

Figure B.3 : Project Boundary

The emission reductions in the year, y, will be calculated using the formula (1) in the ACM0006 (version
06):
ER
y
= ER
heat, y
+ ER
electricity, y
+ BE
biomass, y
PE
y
L
y
(1)

Where:

ER
y
= Emissions reductions of the project activity during the year y in tons of CO
2
,

ER
electricity,y
= Emission reductions due to displacement of electricity during the year y in tons
of CO
2

ER
heat,y
= Emission reductions due to displacement of heat during the year y in tons of
CO
2
,

BE
biomass,y
= Baseline emissions due to natural decay or burning of anthropogenic sources of
biomass during the year y in tons of CO2 equivalents,

PE
y
= Project emissions during the year y in tons of CO2, and

L
y
= Leakage emissions during the year y in tons of CO
2
.

Transport of
biomass fuel
Biomass fuel
preparation
Bio energy
plant
Electricity
generation
Steam to
process
Ash Electricity
to process
Transport
of waste
water
Project Boundary

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page 44

Project emissions

The emissions generated within the project boundary occur from the combustion of the biomass fuel,
which comprises EFB, PKS, PKC and mesocarp fibre. As all of these are renewable energy sources the
CO
2
emissions are defined as being zero. Biomass energy sources emit an amount of CO
2
, which equals
the amount of CO
2
taken up during the growing of the biomass source and CO
2
emission is therefore
neutral. Only emissions of methane from the combustion are considered as project emissions.

Project emissions include CO
2
emissions from transportation of biomass to the project site (PET
y
) and
CO
2
emissions from on-site consumption of fossil fuels due to the project activity (PEFF
y
) and, where
this emission source is included in the project boundary and relevant, CH
4
emissions from the
combustion of biomass (PE
Biomass,CH4,y
). It also includes electricity used for preparation of the biomass:

PE
y
= PET
y
+ PEFF
CO2, y
+ PE
EC,y
+ GWP
CH 4
( PE
Biomass,CH 4, y
+ PE
ww,CH4,y
) (2)

Where:

PET
y
= CO
2
emissions during the year y due to transport of the biomass to the project
plant in tons of CO
2
,

PEFF
CO2,y
= CO
2
emissions during the year y due to fossil fuels co-fired by the generation
facility in tons of CO
2
,

PE
EC,y
= CO
2
emissions during the year y due to electricity consumption at the project
site that is attributable to the project activity (tCO
2
/yr)

GWP
CH4
= Global Warming Potential for methane valid for the relevant commitment
period,

PE
Biomass,CH4,y
= CH
4
emissions from the combustion of biomass during the year y.

PE
ww,CH4,y
= CH
4
emissions from waste water generated from the treatment of biomass
residues in year y (tCH
4
/yr)

Biomass fuel transportation:
The bio energy plant will consume EFB, PKS, PKC and mesocarp fibre, which are a waste products
obtained and purchased from palm oil mills in the surroundings. The fuel will be transported from a
number of palm oil mills with an average distance to Kunak Jaya Bio Energy Project of 60 km.
The formula to calculate the emissions from the transport is
y CO km y
y
k
y k T
y
EF AVD
TL
BF
PET
, 2 ,
, ,
=
(2a)


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page 45

Where,
PET
y
= CO
2
emissions during the year y due to transport of the biomass residues to the
project site (t CO
2
/year)
TL
y
= Average truck load of the trucks used (tons) during the year y
BF
T,k,y
= Quantity of biomass residue type k transported to the project site during the year
y (tons)
AVD
y
= Average round trip distance (from and to) between the biomass residue fuel
supply sites and the site of the project site during the year y (km)
EF
km,CO2,y
= Average CO
2
emission factor for the trucks measured during the y (t CO
2
/km)

The project activity is expected to use 109,067 tons of biomass waste, EFB
31
as fuel annually (BF
EFB,k,y
)
and average 20 ton per truck (TL
y
), it will be 5,453 trips to bring fuel to the project site. The average
distance to the palm oil mills is 60 km, so the round trip will be 120 km. (AVDy = 120 km). With an
efficiency of 39 litre diesel per 100 km then the fuel use per km will be 0.39 litre. The emission of CO
2

from one litre of diesel is 2.7 kg CO
2
/litre (calculated from IPCC default values for diesel). That leads to
an emission factor of 1.053 kg/km (EF
km,CO2,y
= 0.001053 t/km)
PET
EFB,y
= 109,067/20 *120*0.001053 t CO
2
/year = 689 t CO
2
/year.
The project activity is expected to use a further 25,051 tons of biomass waste, PKS as fuel annually
(BF
PKS,,k,y
) and average 20 ton per truck (TL
y
), it will be 1,253 trips to bring fuel to the project site. The
average distance to the palm oil mills is 60 km, so the round trip will be 120 km. (AVDy = 120 km).
With an efficiency of 39 litre diesel per 100 km then the fuel use per km will be 0.39 litre. The emission
of CO
2
2
/litre (calculated from IPCC default values for diesel). That
leads to an emission factor of 1.053 kg/km (EF
km,CO2,y
= 0.001053 t/km)
PET
PKS,y
= 25,051/20 *120*0.001053 t CO
2
/year = 158 t CO
2
/year.
The project activity is expected to use a further 57,841 tons of biomass waste, mesocarp fibre as fuel
annually (BF
fibre,,k,y
) and average 20 ton per truck (TL
y
), it will be 2,892 trips to bring fuel to the project
site. The average distance to the palm oil mills is 60 km, so the round trip will be 120 km. (AVDy = 120
km). With an efficiency of 39 litre diesel per 100 km then the fuel use per km will be 0.39 litre. The
emission of CO
2
2
/litre (calculated from IPCC default values for
diesel). That leads to an emission factor of 1.053 kg/km (EF
km,CO2,y
= 0.001053 t/km)
PET
Fibre,y
= 57,841/20 *120*0.001053 t CO
2
/year = 365 t CO
2
/year.

31
The ACM0006 prescribes to use the dry weight for the calculation of transport emissions footnote 9 on page 24
however it is chosen to use the wet weight in this calculation as it gives a more correct picture of what is
happening and it is more conservative than using the wet weight.

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page 46

Transportation of wastewater from fuel preparatory system
Waste water from the fuel preparatory system is produced when the EFB is pressed and shredded to
reduce the moisture content. The waste water is collected in a holding tank before its pumped into
tankers and transported to off-site waste water treatment system in Kunak Palm Oil Mill, located 30km
from the site of Kunak Jaya Bio Energy Project. The waste water will be used to generate biogas in the
off-site treatment facility and thus will not contribute to any project emissions.
Project emission here is considered for transportation of the waste water from Kunak Jaya Bio Energy
Project to Kunak Palm Oil Mill.
The project activity is expected to release approximately 34,902T/yr of waste water and average 32 ton
per truck (TL
y
), it will be 1,091 trips to bring fuel to the off-site treatment facility. The distance to Kunak
Palm Oil Mill is 30 km, so the round trip will be 60 km. (AVD
y
= 60 km). With an efficiency of 39 litre
diesel per 100 km then the fuel use per km will be 0.39 litre. The emission of CO
2
from one litre of diesel
is 2.7 kg CO
2
/litre (calculated from IPCC default values for diesel). That leads to an emission factor of
1.053 kg/km (EF
km,CO2,y
= 0.001053 t/km)
PET
ww,y
= 34,902/32 *60*0.001053 t CO
2
/year = 69 t CO
2
/year.
Transportation of ash:
Ash is a waste product from the bio energy plant and is to be transported back to the plantations as
potash for application to the field. This will be done by trucks and result in emission of CO
2
from the
combustion of diesel oil. These emissions are handled in the preceding calculations because the transport
of the fuel is calculated as return trips. The ash will be brought back to the plantations in these return
trips. There will much less ash than EFB so the transport needs will be even less than the return trips.
Total transport emissions
The total emissions (PETy) from transport will this be (689 + 158 + 365 + 69 =) 1,281 t CO
2
/year.
Use of fossil fuels
Fossil fuels are expected to be used for the following processes in the Kunak Jaya Bio Energy Project:
1) MFO as start-up fuel for the biomass boiler
2) MFO as backup fuel for the steam boiler
3) Diesel for a diesel generator set used as backup for the biomass power plant.
After the implementation of the Kunak Jaya Bio Energy Project the diesel consumption will be
monitored and the project emissions will be calculated based on the prescriptions following the Tool to
calculate project or leakage CO
2
emissions from fossil fuel combustion Version 1.


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page 47

CO
2
emissions from combustion of respective fuels are calculated as follows:

PE
FC,j,y
= FC
i.j.y
x COEF
i,y

Where:

PE
FC,j,y
= The CO
2
emissions from fossil fuel combustion in process j during the year y
(tCO
2
/ yr);

FC
i,j,y
= The quantity of fuel type i combusted in process j during the year y (mass or
volume unit / yr);

COEF
i,y
= The CO
2
emission coefficient of fuel type i in year y (tCO
2
/ mass or volume
unit);

i = The fuel types combusted in process j during the year y.

Table B.10: The fuel types and combustion processes on the Kunak Jaya Bio Energy Project

i = MFO i = Diesel
j = Start up fuel for biomass
steam boiler
N/A 480 l
j = Start up fuel for biomass
power boiler
N/A 240 l
j = Back up fuel for biomass
steam boiler
900,000 l N/A
j = Generator set for back up for
power production
N/A 599,280 l
Total amount of fuel type used 900,000 l 600,000 l


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page 48

Because of the lack of more detailed data the project emissions are calculated based on Option B in the
Tool:
COEF
i,y
= NCV
i,y
x EF
CO2,i,y

The following values has been used for the calculations
Table B.11: Calculations of COEF
i,y

NCV EF
CO2
COEF
MFO 41.4996 GJ/ton 78 kg/GJ 3.24 t CO
2
/ton
Diesel 42.4960 GJ/ton 74 kg/GJ 3.14 t CO
2
/ton

The NCV values have been obtained from the Malaysian National Energy Balance. The latest published
version is from 2005.
The total project emissions can thus be calculated as follows
Table B.12: Total CO
2
emissions from use of fossil fuel
Total annual use in ton COEF Total emissions
MFO 882 T/yr
32
3.24 t CO
2
/ton 2,855 tCO
2
/yr
Diesel 504 T/yr
33
3.14 t CO
2
/ton 1,585 tCO
2
/yr
Total 4,440 tCO
2
/yr
Electricity consumption at the project site
According to ACM0006 (version 06) CO
2
emissions from on-site electricity consumption (PE
EC,y
) should
be calculated using the latest approved version of the Tool to calculate project emissions from
electricity consumption. In applying the tool, the project plant as well as any other biomass-fired power
plants at the project site should not be considered as captive power plants.

As there is no on site fossil fuel fired power plant this means that all electricity consumption on site in
relation to the project should be calculated as project emissions based on import at electricity from the
grid. The on-site electricity consumption attributable to the project activity (EC
PJ,y
) should include all
electricity consumption that is consumed by the project activity (e.g. for mechanical treatment of the
biomass), except for auxiliary electricity consumption by the project plant (e.g. for pumps, vans, etc.).

32
MFO density of 0.98kg/l IPCC default value
33
Diesel Density of 0.84 kg/l IPCC default value

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page 49

The power consumption for the pre-treatment of EFB at the project site is expected to be 22 kWh/ton of
EFB. Based on an annual consumption of 109,067 t EFB the expected power consumption for fuel
preparation can be calculated as 2,379 MWh/year.

Project emissions from consumption of electricity from the grid are calculated based on the power
consumed by the project activity and the emission factor of the grid, adjusted for transmission losses,
using the following formula:

PE
EC,y
= EC
PJ,y
x EF
grid,y
x (1 + TDL
y
)

Where:
PE
EC,y
= The project emissions from electricity consumption by the project activity
during the year y (tCO
2
/ yr);

EC
PJ,y
= The quantity of electricity consumed by the project activity during the year y
(MWh);

EF
grid,y
= The emission factor for the grid in year y (tCO
2
/MWh)

TDL
y
= The average technical transmission and distribution losses in the grid in year y
for the voltage level at which electricity is obtained from the grid at the project
site
TDL is estimated from the annual Statistics of electricity supply Industry in Malaysia
34
from the
Malaysian Energy Commission. The transmission losses are not reported directly but the production,
purchase and sales of electricity for the Sabah Electricity Sdn. Bhd. (SESB) was reported as follows
Table B.13: Production, purchase, sales and losses of electricity for the Sabah Electricity Sdn.
Bhd.
MWh/year 2002 2003 2004
Production 1252 1401 1394
Purchase 1457 1583 1863
Total available 2709 2984 3257
Sales 2182 2332 2557
Losses 527 652 700
Losses in percent 19% 22% 21%

34
The latest version available from the homepage of the Energy Commission (www.st.gov.my) on 17 December
2007 was for 2005.

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page 50

The average losses for SESB for the last three years reported are 21% (see Table B.13). The data
reported by the Energy Commission includes both technical and commercial losses. This means that it
will be conservative to use the default value of 20% from the Tool to calculate project emissions from
electricity consumption.
The project emissions from use of electricity can thus be calculated in the following table
Table B.14: Project emissions from use of electricity
EC
PJ,y
EF
grid,y
TDL
y
PE
EC,y

2,379 MWh 0.8 t CO
2
/MWh 0.20 2,284 t CO
2
/year

Methane emissions from burning of biomass
The combustion of biomass can lead to methane emissions. The formula for calculating the emissions is:
PE
Biomass,CH 4, y
= EF
CH 4,BF
x BF
k,y
x NCV
k
(2c)

Where:

BF
k,,y
= Quantity of biomass type k used as fuel in the project plant during the year y in
a volume or mass unit,

NCV
k
= Net calorific value of the biomass type k in terajoules (TJ) or MWh per mass or
volume of biomass,

EF
CH4,BF
= CH
4
emission factor for the combustion of biomass in the project plant tons CH
4

per TJ or MWh.
The amount of methane emission from energy production based on biomass is set at a level of 30 kg/TJ
according to the default value in the 2006 IPCC Guidelines (quoted from ACM0006). According to the
ACM0006 (version 06), the level of uncertainty for such emissions is larger than 100% and therefore a
conservativeness factor of 1.37 is used. The value used in the formula will thus be 41.1 kg CH
4
/TJ. The
additional energy used in for the power production in the plant will be 1,230 TJ and this will amount to a
total of 1,062 tonnes CO
2eqv
/year.
The emission of N
2
O is assumed to be minor and is not considered in the calculations.
Project emissions of methane from waste water treatment (PE
WW,CH4,y
)
There are no project emissions from wastewater treatment in this project. Wastewater from the
preparation of the EFB for the Kunak Jaya Bio Energy Project is done at the Kunak Palm Oil Mill where
the waste water is treated in a biogas plant. The biogas plant is in the process of being registered as a
CDM project activity and all emission in relation to the plant will be monitored and due account will be
taken of the emissions in the biogas monitoring system. So there are no emissions at the site of the
Kunak Jaya Bio Energy Project.

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page 51

If there in the future will be fuel preparation at the site the emissions should be calculated as follows:
PE
WW,CH4,Y
= V
WW,y
x COD
ww,y
x B
o,ww
x MCF
ww

Where:
PE
WW,CH4,y
= CH
4
emissions from waste water generated from the treatment of biomass
residues in year y (tCH
4
/yr)

V
WW,y
= Quantity of waste water generated in year y (m/yr)

COD
WW,y
= Average chemical oxygen demand of the waste water in year y (t COD/m)

B
o,WW
= Methane generation potential of the waste water (t CH
4
/t COD)

MCF
WW
= Methane correction factor for the waste water

Emission Reductions from electricity production
The emission reductions from electricity production to the refinery are calculated from the following
formula:
ER
electricity, y
= EG
y
x EF
electricity, y
(4)
Where:

ER
electricity,y
of CO
2

EG
y
= Net quantity of increased electricity generation as a result of the project activity
(incremental to baseline generation) during the year y in MWh

EF
electricity,y
= CO
2
emission factor for the electricity displaced due to the project activity
during the year y in tons CO2/MWh
The Sabah electricity grid system consists of two major grids; the West Coast Grid and East Coast Grid.
This is also the delineation used by a study published by the Malaysian Energy Center (PTM) on power
sector baselines in Malaysia.
Pusat Tenaga Malaysia (The Malaysian Energy Centre) has been producing a report on power sector
baselines in Malaysia. The base years for the calculation are 2002-04
35
, for which the latest statistics are
available. Information in the report has been obtained from Sabah Electricity Sdn Bhd (SESB).

35
PTM is in process of updating the report for 2005 and 2006, but it is still not available (as of 17. December 2007).
No substantial changes have happened in the East Sabah grid in the two years. (personal communication with En
Azman, PTM)

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page 52

Table B.15: Data for power generation in Sabah
No Area
Technolog
y
Fuel
Type
Capacity
[MW]
Annual
Generation
[GWh]
CO
2
-emission [tCO
2
]
1
1. Tawau DG/GT Diesel 64.5 110 88,000
2. Sandakan DG/GT Diesel 73 12 9,600
3. Kunak DG Diesel 6.6 17 13,600
4 Lahad Datu DG Diesel 31.6 138 110,400
5. Kota
Kinabatangan
DG Diesel 3.5 9 7,200
6. Sandakan DG MFO 60 290 232,000
7. Sandakan DG MFO 34 126 100,800
Total 273 702 561,600
1
Since actual fuel use data has not been available the emission coefficient for the grid system is obtained
from Table I.D.1 in AMS I.D, which prescribes emission factors for diesel generator systems. The system
is supplied by power plants with a capacity higher than 200 kW and the table prescribe an emission
coefficient of 0.8 kgCO
2
/kWh.

The Table B.15 above shows that all units connected to the transmission grid are either diesel or medium
fuel oil fired. It is considered that all or some of these units will be in operation for at least the crediting
period and that the project activity will displace diesel fired units throughout the crediting period. The
baseline is therefore static for the crediting period using an emission coefficient of 0.8 kg CO
2eqv
/kWh.
The project proponent has chosen to use ex-ante calculation of the power baseline (in accordance with
Tool to calculate the emission factor for an electricity system version 01) based on the latest 3 years of
available data.

EG
y
corresponds to the net quantity of electricity generation produced for onsite use at the Refinery from
the project activity (EG
y
= EG
project plant,y
). The baseline is that this electricity would have been imported
from the grid.

Baseline emissions due to natural decay of the biomass in a dumpsite
The EFB used as fuel in the Kunak Jaya Bio Energy Project would have been deposited in a landfill as
described in B4 above. The Tool to determine methane emissions avoided from dumping waste at a
solid waste disposal site (version 02)has been used for the calculations. The method below is used to
evaluate the yearly methane generation potential in the landfill. The quantity of methane projected to be
formed during a given year is estimated using a first order decay model based on the discrete time
estimate method proposed in the IPCC Guidelines:

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) 1 (
12
16
) 1 (
) (
1
, 4 , , 4
kj x y kj
j
y
x j
x j f CH y SWDS CH
e e DOC W MCF DOC F GWP f BE

=

Where:
BE
CH4,SWDS,y
= Methane emissions avoided during the year y from preventing waste disposal at
the solid waste disposal site (SWDS) during the period from the start of the
project activity at the end of the year y (tCO
2
e)
= Model correction factor to account for model uncertainties (0.9)
f = Fraction of methane captured at the SWDS and flared, combusted or used in
another manner
GWP
CH4
= Global Warming Potential (GWP) of methane, valid for the relevant
commitment period
OX = Oxidation factor (reflecting the amount of the methane from SWDS that is
oxidised in the soil or other material covering the waste)
F = Fraction of methane in the SWDS gas (volume fraction) (default 0.5)
DOCj = Fraction of degradable organic carbon (by weight) in the waste type j
DOCf = Fraction of DOC that can be decompose (IPCC default 0.5)
MCF = Methane Correction Factor (fraction see table below)
Wj,x = Amount of organic waste type j prevented from disposal in the SWDS in the
year x (tonnes)
k j = Decay rate for the waste type j
j = Waste type distinguished into the waste categories as illustrated in the table
below
x = Year during the crediting period: x runs from the first year of the first crediting
period (x-1) to the year y for which avoided emissions are calculated (x=y)
y = Year for which methane emissions are calculated
The MCF is determined from the IPCC 2006 guidelines for waste according to the following Table B.16:
Table B.16: IPCC default values for the methane correction factor (MCF)
Type of site Methane correction factor (MCF) default values
Managed 1.0

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Type of site Methane correction factor (MCF) default values
Unmanaged deep (5m waste) 0.8
Unmanaged shallow (<5m waste) 0.4
Default value uncategorised SWDSs 0.6

In the present case the landfills are unmanaged and >5 meters deep. Therefore the MCF to be used is 0.8.
For determining the decay constant k, the guidance from IPCC 2006 is suggested as described in the
Table B.17 below.

Table B.17: IPCC (2006) Default values for the decay factor
Boreal and Temperate
(MAT<20C)
Tropical (MAT>20C) Waste type j
Dry
(MAP/PET<1)
Wet
(MAP/PET>1)
Dry
(MAP<1000mm
)
Wet (MAP>
1000mm)
Pulp,
paper,
cardboard
(other than
sludge),
textiles
0.04 0.06 0.045 0.07 Slowly
degrading
Wood,
wood
products
and straw
0.02 0.03 0.025 0.035
Moderately
degrading
Other
(non-food)
organic
putrescible
garden and
park waste
0.05 0.10 0.065 0.17
Rapidly
degrading
Food, food
waste,
beverages
and
tobacco
(other than
sludge)
0.06 0.185 0.085 0.40


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Malaysia clearly qualifies under the tropical, moist and wet conditions. The Mean Annual Temperature
(MAT) is around 26 degrees Celsius and the Mean Annual Precipitation (MAP) is 2000-4000 mm
depending on location, both above the benchmarks of MAT of 20 degrees and MAP of 1000 mm.
The Tool to determine methane emissions avoided from dumping waste at a solid waste disposal site
(version 2)prescribes that values for wood waste should be used for EFB for both k
j
and DOC
j
.
The project proponent will undertake field tests to allow a better quantification of the decay constant (k
j
)
to be reported in the monitoring report and thus revise the estimate of the baseline emissions of methane
based on the calculations.

Table B.18: IPCC (2006) Default values for DOC
j

Waste type j

DOC
j

(% wet waste)
DOC
j

(% dry waste)
Wood and wood products

43 50
Pulp, paper and cardboard (other than sludge) 40 44

Food, food waste, beverages and tobacco
(other than sludge)

15 38

Textiles 24 30

Garden, yard and park waste 20 49

Glass, plastic, metal, other inert waste 0 0

The parameters for wood waste are chosen to the consistent with the requirements of the Tool to
determine methane emissions avoided from dumping waste at a solid waste disposal site (version 02).

Assessment of leakage:
No significant leakages are foreseen as a result of the project activity. All the equipment for the Kunak
Jaya Bio Energy Project is new and is not transferred from another project activity and do not result in
any leakage.
The methodology ACM0006 (version 06) prescribes that an assessment of the risk of leakage from
diversion of the use of biomass from existing use towards the CDM project activity. Three methods are
suggested:
L1 is only applicable when all biomass fuel originates from the project entity. This
approach is not applicable in this case since the project activity will import part of
the biomass fuel.
L2 should demonstrate that there is produced at least 25% more biomass waste in the
region than is used by the CDM project activity.

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L3 should demonstrate that producers of biomass waste are not able to sell their product.
Here it is chosen to follow approach L2 because more direct data are available for this approach.
The total processing of FFB in Sabah was in 2005 was 24,993,135 tonnes FFB
36
. The official statistic
does not provide a breakdown on districts therefore the breakdown has to be calculated. Table B.19
shows the number of palm oil mills and their aggregated approved capacity for districts in Sabah in
2005
37
. The total approved capacity in 2005 was slightly lower (22,466,600 t FFB) than the actual
processed amount of FFB. This is quite normal that the Malaysian Palm Oil Board (MPOB) approved
capacity may be marginally lower than the actual processing.

Table B.19: Palm oil processing in Sabah in 2005

District
No.
District No. of palm
oil mills
Approved
capacity
t FFB/year
Estimated
production
t FFB/year
Is it part
of East
Sabah?
(Yes/No)
1 Kinabatangan 26 4,578,000 5,092,830
2 Kunak 8 1,358,000 1,510,717 Yes
3 Semporna 3 512,000 569,578 Yes
4 Labuk/Sugut 16 3,063,800 3,408,347
5 Lahad Datu 25 6,440,000 7,164,226 Yes
6 Pantai Barat 1 96,000 106,796
7 Pendalaman 1 216,000 240,291
8 Sandakan 13 2,628,000 2,923,538
9 Tawau 10 2,070,800 2,303,677 Yes
10 Keningau 2 1,264,000 1,406,146
11 Tenum 1 96,000 106,796
12 Beaufort 1 144,000 160,194
Total 107 22,466,600 24,993,135
Total FFB processed
in East Sabah
11,548,198

In the TableB.19, the actual amount of FFB processed has been distributed on the districts based on the
approved capacity.

The project is located in District No.2 i.e. Kunak. District No.3 i.e. Semporna, District No.5 i.e. Lahad
Datu and District No. 9 i.e. Tawau had been chosen in the analysis as these districts are directly
bordering District No.2 i.e. Kunak ). This means that areas within 100-200 km from the project activity

36
MPOB 2006: Malaysian Oil Palm Statistics 2005 p. 39
37
Chow Mee Chin, 2006: An Assessment Of Potential And Availability Of Palm Biomass For Bioconversion To
Bioethanol. Table 8, page 19. Downloaded from www.eib.org.my

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site are included. (See map in Annex 7). Based on the Table B.19, the total amount of FFB processed in
Districts No. 2, 3, 5 and 9 which are relevant to this analysis is estimated at 11,548,198 ton.

There are no official statistics on the production and use of EFB, so the total available amount of EFB
has to be calculated. This is done based on the common assumption that 23 % of the FFB processed will
be EFB. Further it is assumed that the annual increase in FFB processed in Sabah will be 3.5% p.a.
38
.
Based on the FFB projection and the percentage of EFB in FFB, the annual supply of EFB can be
calculated.

The demand for EFB is estimated through the number of potential CDM projects in the region. The
CDM projects considered are derived from the UNEP CDM-pipeline
39
. The CDM Pipeline contains a
list of all CDM projects that have either been uploaded for Global Stakeholder Process under validation
or has been submitted for registration at the UNFCCC. The list is updated monthly and provides thus a
good overview of the projects under development.

The list of projects located in the relevant part of Sabah and their corresponding data on consumption of
EFB have been identified and obtained from the related PDDs. The list is likely to overestimate the
amount of EFB consumption, as some of the projects in Table B.20 may not be implemented due to non
registration as CDM project activities or other unforeseen circumstances.

In addition, save and except for consumption by CDM projects activities, there is not any known use for
EFB in the region.

Table B.20 sets out the balance between the available amount of EFB and consumption in East Sabah for
2008 assuming that all CDM project activities will use their required amount of EFB in that year. This
is a very conservative assumption as some of the projects will not be fully operational from 1 January
2008.

Table B.20: EFB in East Sabah Production and consumption

Details t
Total processed FFB in East Sabah
(Projection for 2008)
12,801,429
Total EFB 23 % of FFB (23% x 12,801,429)
2,944,329
less: EFB consumption

Kunak Bio Energy Project
92,015
Kunak Jaya Bio Energy Project
109,067
Eko Pulp and Paper Pulp production plant
180,000
Polar Vertix Bio energy plant
10,126
Lahad Datu Edible Oils Sdn Bhd Bio energy plant
122,500
Felda Sahabat Bio energy plant
246,000

38
Anders Evald et al 2005: Renewable Energy Resources (in Malaysia) Recalculated based in table 2.2 p 10
39
CDM pipeline downloaded from www.cdmpipeline.org 12/01/2008

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Golden Hope Merotai Composting project
99,360
Timura Samling POM Composting project
48,000
Leluasa Edible Oil Refinery Biomass steam plant
40,000
Asia POM Composting project
104,480
Takon POM Composting project
78,080
Total EFB consumption
1,129,628
Excess of EFB
1,814,701
Percentage of excess
61.6%

Table B.20 conservatively affirms that there is approximately 62 % of unconsumed EFB in the region
after deducting all the volume consumed by the CDM projects activities set out in Table B.20. This
percentage exceeded the 25% unconsumed EFB benchmark required as the criteria to rule out leakage.
Furthermore, there is still excess EFB to accommodate other minor uses such as mulching without
changing the conclusion.

B.6.2. Data and parameters that are available at validation:

ID No. A
Data / Parameter: GWP
CH4
Data unit: t CO
2e
/t CH
4
Description: Global Warming Potential (GWP) of methane, valid for the relevant commitment
period
Source of data: Decisions under UNFCCC and the Kyoto Protocol (a value of 21 is to be applied
for the first commitment period of the Kyoto Protocol)
Value applied: 21
Justification of the
choice of data or
description of
measurement methods
and procedures
actually applied :
21 for the first commitment period. This value shall be updated according to any
future COP or MOP decision.
Any comment:

ID No. B
Data / Parameter: NCV
i,
Data unit: GJ/t
Description: Weighted average Net caloric value of fossil fuel, is this project, diesel and MFO
used in the base line
Source of data used: National Energy Balance Malaysia, 2005
Value applied: NCV
diesel
= 42.4960
NCV
MFO
= 41.4996
choice of data or
description of
measurement methods

The net-emissions from fossil fuel are expected to be relatively small. The
uncertainty incurred by using default values will thus be minimal and not justify
spending resources on measurements

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and procedures
actually applied :
Any comment:

ID No. C
Data / Parameter:
Data unit: -
Description: Model correction factor to account for model uncertainties
Value applied: 0.9
choice of data or
description of
measurement methods
and procedures
actually applied :

Any comment: Oonk et el.(1994) have validated several landfill gas models based on 17 realized
landfill gas projects. The mean relative error of multi-phase models was assessed
to be 18%. Given the uncertainties associated with the model and in order to
estimate emission reduction in a conservative manner, a discount of 10% is
applied to the model results.

ID No. D
Data / Parameter: OX
Data unit: -
Description: Oxidation factor (reflecting the amount of methane from SWDS that is oxidized
in the soil or other material covering the waste)
Source of data used: Tool to determine methane emissions avoided from dumping waste at a solid
waste disposal site; (version 2)
Value applied: 0
choice of data or
description of
measurement methods
and procedures
actually applied :
The dumpsite is not managed and thus not covered with oxidizing material
Any comment:

ID No. E
Data / Parameter: F Fraction of methane in landfill gas
Data unit: Fraction
Description: Fraction of methane in the SWDS gas (volume fraction)
Source of data used: IPCC 2006 Guidelines for National Greenhouse Gas Inventories
Value applied: 0.5
choice of data or
description of
measurement methods
and procedures actually
The value is used as this is prescribed in the Tool to determine methane
emissions avoided from dumping waste at a solid waste disposal site; (version 2)

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applied :
Any comment: This factor reflects the fact that some degradable organic carbon does not degrade
or degrades very slowly under anaerobic conditions. A default value of 0.5 is
recommended by IPCC.

ID No. F
Data / Parameter: DOCf
Data unit: Fraction
Description: Fraction of degradable organic carbon (DOC) that can decompose.
Source of data used: IPCC 2006 Guideline for National Greenhouse Gas Inventories.
Value applied: 0.5
choice of data or
description of
measurement methods
applied :
The value is used as this is prescribed in the Tool to determine methane
emissions avoided from dumping waste at a solid waste disposal site; (version 2)
Any comment:

ID No.
G
Data / Parameter:
MCF
Data unit: Fraction
Description: Methane Correction Factor
Source of data used: IPCC
Value applied: 0.8
choice of data or
description of
measurement methods
and procedures
actually applied :
Default value for unmanaged landfills of more than 5 meters depth. The landfills
used for EFB in East Sabah are more than 5 meters depth.
Any comment: The methane correction factor (MCF) accounts for the fact that unmanaged
SWDS
produce less methane from a given amount of waste than managed SWDS,
because a larger fraction of waste decomposes aerobically in the top layers of
unmanaged
SWDS

ID No.
H
Data / Parameter:
DOC
j
per cent of degradable organic carbon (by weight) in the waste type j
Data unit: Fraction
Description: Weight fraction of the organic carbon that is degradable. The fraction is used in
the calculation of the avoided methane emissions from burning of the biomass.
Source of data used: IPCC 2006 Guidelines for National Greenhouse Gas Inventories (adapted from

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Volume 5, Tables 2.4 and 2.5)
Value applied: 0.5
choice of data or
description of
measurement methods
and procedures
actually applied :
The value dry weight for wood waste is used as this is prescribed in the Tool to
determine methane emissions avoided from dumping waste at a solid waste
disposal site; (version 2)
Any comment:

ID No. I
Data / Parameter: f Fraction of methane captured and flared
Data unit: Fraction
Description: Fraction of methane captured at the SWDS and flared, combusted or used in
another manner
Source of data used: Tool to determine methane emissions avoided from dumping waste at a solid
waste disposal site; (version 2)
Value applied: 0
choice of data or
description of
measurement methods
and procedures
actually applied :
The landfill sites where the EFB had been dumped are unmanaged and there is no
capture and flaring of methane
Any comment:

ID No. J
Data / Parameter: EF
CH4,BF

Data unit: Kg/TJ
Description:
Source of data used: IPCC 2006
Value applied: 41.1 kg methane/TJ (calculated as the original 30 kg methane/TJ *
conservativeness factor of 1.37)
choice of data or
description of
measurement methods
applied :
The methane emission is relatively uncertain, and thus a high conservativeness
factor is used in calculating the annual emissions. Despite this, the emissions are
very low compared to the total amount of CERs generated in the project (less
than 1%) and it is not deemed necessary to measure the amount.
Any comment:

ID No. K
CO2,FF,i

Data unit: Kg CO
2
/litre
Description: CO
2
Emission factor for fossil fuel type I, in the case, diesel
Source of data used: IPCC 2006 Guidelines (Volume 2, Table 2.2)
Value applied: 74 kg CO
2
/GJ
Justification of the The emission coefficient of diesel is calculated from standard values and

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page 62

choice of data or
description of
measurement methods
and procedures
actually applied :
therefore there is no need to make measurement of it at the site.

The value is used in the calculation of the emission coefficient of diesel:

COEF
i,y
= NCV
i,y
x EF
CO2i,y
x

diesel
= 2.7kg CO
2
/litre

Where
NCV
i,y
= Net Calorific Value of diesel = 42.496 GJ/ton
40

EF
CO2i,y
= Emission Factor for diesel = 74kg/GJ
41

diesel
= Density of diesel = 0.849 kg/l
42

Any comment:

ID No. L
CO2,BL,heat,I
CO
2
Emission factor for Medium fuel Oil
Data unit: Kg CO
2
/GJ MFO
Description: The emission of CO
2
from burning of one GJ of MFO
Source of data used: IPCC 2006 Guidelines (Volume 2, Table 2.2)
Value applied: 78 kg CO
2
/GJ
choice of data or
description of
measurement methods
and procedures
actually applied :
The emission factor for MFO is a standard value and therefore there is no need to
make measurement of it at the site.
Any comment:

ID No. M
grid,y

Data unit: kg CO
2
/kWh
Description: The average Operational Margin is allowed to be used as baseline for the
emissions from the power grid as the project is less than 15 MW
Source of data used: Study by the Malaysian Energy Centre (Pusat Tenaga Malaysia)
Value applied: 0.8 kg CO
2
/kWh
choice of data or
description of
measurement methods
and procedures
actually applied :
The data was collected from the best available source the local utility company
Any comment: The base years for the calculation are 2002-04
43
, for which the latest statistics are
available. Information in the report has been obtained from SESB

40
Taken from PTM Report on National Energy Balance 2005
41
Taken from IPCC 2006 Guidelines (Volume 2, Table 2.2)
42
Taken from IPCC 2006 Guidelines (Volume 2, Table 2.2)

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ID No. N
Data / Parameter: boiler

Data unit:
Description: Average net energy efficiency of heat generation in the boiler that would generate
heat in the absence of the project activity

Source of data: Manufacturers data for the installed
Value applied: 80%

choice of data or
description of
measurement methods
and procedures
actually applied :
The biomass boiler used for steam production at the project site is expected to
have the same efficiency as the boiler that would have been used in the baseline.
This is a conservative assumption as the biomass boiler installed could have a
higher efficiency than would have been the case without the CDM project.
Any comment:

ID No. O
Data / Parameter: AVD
Y

Data unit: Km
Description: Average round trip distance (from and to) between project site and waste water
treatment facility in Kunak Bio Energy Project.
Source of data: Direct measurement of distance between the project site and treatment facility.
Value applied: 60

choice of data or
description of
measurement methods
and procedures
actually applied :
The waste water generated from fuel preparatory system in Kunak Jaya Bio
Energy Project is transported to Kunak Palm Oil Mill where the waste water will
be treated in a biogas plant.
The distance between the two mills is 30km. It is not expected that the waste
water will be transported anywhere else.
Any comment:

B.6.3. Ex-ante calculation of emission reductions:

The calculations of emission reductions include the following components:

ER
y
= ER
heat, y
+ ER
electricity, y
+ BE
biomass, y
PE
y
L
y

Where:

43
PTM is in process of updating the report for 2005 and 2006, but it is still not available (as of 17. December 2007).
No substantial changes have happened in the East Sabah grid in the two years. (personal communication with En
Azman, PTM)

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ER
y
= Emissions reductions of the project activity during the year y in tons of CO
2
,

ER
electricity,y
of CO
2

ER
heat,y
= Emission reductions due to displacement of heat during the year y in tons of
CO
2
,

BE
biomass,y
= Baseline emissions due to natural decay or burning of anthropogenic sources of
biomass during the year y in tons of CO
2
equivalents,

PE
y
= Project emissions during the year y in tons of CO
2
, and

L
y
= Leakage emissions during the year y in tons of CO
2
.

Of these L
y
are estimated to be zero.

ER
heat,y
is zero as the baseline is that the steam would be produced in a biomass fired boiler.

ER
electricity,y
are calculated from the expected annual supply of electricity to the grid and the grid emission
factor. The electricity delivered (Max 9 MW) to the refinery and kernel crushing plant can be up to
72,000 MWh with a grid emission factor of 0.8 t CO
2
/MWh. This leads to a maximum emission
reduction from power production of 57,600 t CO
2
per year. For the further use in the calculations a lower
load factor of 6570 hours is used as a conservative estimate of the actual production. This leads to
estimated emission reductions of 47,304 t CO
2
per year. The actual supply of power delivered to the end
user will be measured and reported in the monitoring report and used in calculating the actual amount of
emission reductions achieved.

BE
biomass,y
is calculated by using the first order decay model. The main parameters in the model are fixed
as:
F = Fraction of methane in the SWDS gas (volume fraction) (default 0.5)
DOC
j
= Per cent of degradable organic carbon (by weight) in the waste type j
DOC
f
= Fraction of DOC that can decompose (IPCC default 0.5)
MCF = Methane Correction Factor (unmanaged dumpsite of more than 5 meters depth:
0.8)
A
j,x
= Amount of organic waste type j land filled in the year x
k
j
= Decay rate for the waste type j
Conservativeness factor: 0.9


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Table B.21: A summary of the parameters for EFB
A
j,x
Amount of
organic waste
dry weight
DOC
j
Per cent of
degradable
organic carbon
k
j
Decay rate

MCF methane
correction factor
EFB 43,627 0.50 0.035 0.8

Table B.22: Computation of the avoided methane emissions from EFB
Avoided methane
estimate
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Deposited year 1 4,201 4,057 3,917 3,783 3,653 3,527 3,406
Deposited year 2 4,201 4,057 3,917 3,783 3,653 3,527
Deposited year 3 4,201 4,057 3,917 3,783 3,653
Deposited year 4 4,201 4,057 3,917 3,783
Deposited year 5 4,201 4,057 3,917
Deposited year 6 4,201 4,057
Deposited year 7 4,201
Avoided methane 4,201 8,258 12,175 15,958 19,611 23,138 26,544
Conservativeness
adjusted 3,781 7,433 10,958 14, 363 17,650 20,824 23,889

Project emissions
The emissions of methane from the burning of biomass are calculated as 1,062 t CO
2
/year. This is based
on a use of 1,230 TJ of energy for the power plant and an emission factor of 41.1 kg methane/TJ
(including a conservativeness factor).

Emissions from the use of diesel and MFO as back up fuel are calculated be to 4,440 t CO
2
/year using
expectations from the Kunak Jaya Bio Energy Project. The use of MFO and diesel will be monitored and
the actual project emissions will be reported in the monitoring report and used for the calculation of
emission reductions.

The transport of biomass fuel to the site of the project activity has been calculated as 1,213 t CO
2
/year
based on an average distance to the palm oil mills supplying the fuel of 60 Km, 20 ton trucks and an
average fuel use of 0.39 litre diesel per km.

The transport of waste water from the fuel preparatory system to off-site treatment facility in Kunak
Palm Oil Mill is calculated as 69 t CO
2
/year based on average distance to Kunak of 60 km, 32 ton trucks
and an average fuel use of 0.39 litre diesel per km.

Power for the preparation of fuel is 22kWh/ton EFB and with the expected amount of EFB that leads to
an estimate of a power consumption of 2,379 MWh. With an emission factor for electricity of 0.8
kg/kWh and grid losses of 20% that becomes 2,284 t CO
2
/year.

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page 66

B.6.4. Summary of the ex-ante estimation of emission reductions:

Table B.23; Summary of the ex ante estimation of the emission reductions

Year Total Baseline
Emissions, E
BL
(t CO
2
e)
Total Project
Emissions, E
PA
(t CO
2
e)
Total Leakage
Emissions, E
LE
(t CO
2
e)
Emissions
Reduction, ER

(t
CO
2
e)
Year 1
51,085 9,067 0 42.018
Year 2
54,736 9,067 0 45,669
Year 3
58,262 9,067 0 49,195
Year 4
61,666 9,067 0 52,599
Year 5
64,954 9,067 0 55,887
Year 6
68,128 9,067 0 59,061
Year 7
71,193 9,067 0 62,126
TOTAL
430,024 63,469 0 366,555
Average
61,432 9,067 0 52,365

B.7. Application of the monitoring methodology and description of the monitoring plan:

B.7.1. Data and parameters monitored:

ID No. 01
Data / Parameter: BF
k,y

Data unit: Tonnes dry weight biomass/year
Description: The types of biomass combusted at Kunak Jaya Bio Energy Project are EFB,
PKS, PKC and mesocarp fibre.
Source of data to be
used:
Measurements at the weighing bridge of the palm oil refinery.
Value applied:
Wet weight Moisture content Dry weight
EFB 109,067 0.60 43,627
Mesocarp fibre
57,841 0.37 36,440
PKC 9,867 0.10 8,881
PKS 25,051 0.12 22,045

This is the expected biomass amount need of the power station to run 6570
operating hours per year.
Description of
measurement methods
and procedures to be
applied:
.The biomass waste products from palm oil mills will be weighed upon arrival at
the power plant. Incoming data from the weigh bridge are handled electronically
in the account system of the palm oil mill.
The measured amount (wet weight) should be adjusted for the moisture content

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to determine the quantity of dry biomass.
QA/QC procedures to
be applied:
Cross check the measurements with an annual energy balance that is based on
purchased quantities and stock changes.
Any comment: The amount of biomass can be cross checked with the electricity produced by
using values for energy content of the biomass and the efficiency of the boiler.

ID No. 02
Data / Parameter: BF
T,k,y

Data unit: Tonnes dry weight biomass/year.
Description: The amount of biomass fuel used in the boiler that is transported to the project
site. This is used to calculate the amount of project emissions from the transport
of biomass fuel. The types of biomass imported for Kunak Jaya Bio Energy
Project are EFB, mesocarp fibre and PKS. PKC is a by-product from the kernel
crushing plant and is produced on site and thus not transported.
used:
Measurements at the weighing bridge of the palm oil refinery.
Value applied:
Wet weight Moisture content Dry weight
EFB 109,067 0.60 43,627
Mesocarp fibre
57,841 0.37 36,440
PKS 25,051 0.12 22,045

This is the expected biomass amount need of the power station to run 6570
operating hours per year.

Description of
measurement methods
applied:
The biomass waste products from palm oil mills will be weighed upon arrival at
the power plant. Incoming data from the weigh bridge are handled electronically
in the account system of the palm oil mill.
QA/QC procedures to
be applied:
Cross check the measurements with an annual energy balance that is based on
purchased quantities and stock changes.
Since all biomass fuels except palm kernel cake are imported, this is expected to
be same as the total combusted amount of biomass above.

ID No. 03
Data / Parameter: Moisture content of the biomass residues
Data unit: % Water content.
Description: Moisture content of each biomass residue type k.
used:
On-site measurements.
Value of data applied
for the purpose of
calculating expected
emission reductions in
section B.5

Biomass Moisture Content %
EFB 60%
PKS 12%

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PKC 10%
Mesocarp fibre 37%
Generic values have been used at this point - for EFB, it is taken from the
experience of Kunak Palm Oil Mill.

Description of
measurement methods
applied:
Measurements are undertaken for representative samples of the incoming
biomass waste, mean values calculated at least annually.
QA/QC procedures to
be applied:
Comparison with other measurements and with default values from literature.
Any comment:

ID No. 04
Data / Parameter: AVD
Y

Data unit: Km.
Description: Average round trip distance (from and to) between biomass fuel supply sites and
the project sites.
Source of data: The distance to each biomass supplier is checked through measuring.
Invoices from the different biomass suppliers are used to give the amount of
biomass from each supplier.
Value applied: 120.
Description of
measurement methods
and procedures
actually applied :
The average distance can then be calculated as the weighted average of distance
to the mills. The sampling will be continuous.
QA/QC procedures: Check consistency of distance records provided by the truckers by comparing
recorded distances with other information from other sources (e.g. maps).
Any comment:

ID No. 05
Data / Parameter: TL
y

Data unit: Tons.
Description: Average load of the trucks used for the transportation of biomass.
Source of data: Data from the weighing of incoming trucks are used to calculate the average
weight of the truck loads arriving at the plant.
Value applied: 20.
Description of
measurement methods
and procedures
actually applied :
Determined by averaging the weights of each truck carrying biomass to the
project plant. Continuously, aggregated annually.
QA/QC procedures: Check consistency of the number of truck trips with the quantity of biomass
combusted, e.g. by the relation with previous years.
Any comment:


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ID No. 06
Data / Parameter: TL
Y,waste water

Data unit: Tons.
Description: Average load of the trucks used for the transportation of waste water generated
from fuel preparatory system to off-site treatment facility in Kunak Palm Oil
Mill.
Source of data: Data from the weighing of outgoing trucks are used to calculate the average
weight of the truck loads leaving at the plant.
Value applied: 32.
Description of
measurement methods
and procedures
actually applied :
Determined by averaging the weights of each truck carrying waste water to the
off site biogas plant at the Kunak Palm Oil Mill. Continuously, aggregated
annually.
QA/QC procedures: Check consistency of the number of truck trips with the quantity of EFB
combusted, e.g. by the relation with previous years.
Any comment:

ID No. 07
km,CO2,y

Data unit: tCO
2
/km.
Description: Average CO
2
emission factor for the trucks during the year y.
Source of data: Sample measurement of the fuel type, fuel consumption and distance travelled
for all truck types will be conducted. CO
2
emissions from fuel consumption shall
be calculated based on methodology. For NCV and EF
CO2,
reliable national
default values or IPCC default value values can be used.
Value applied: 0.001053.
Description of
measurement methods
and procedures
actually applied :
Annual monitoring.
QA/QC procedures: The results will be cross-checked with emission factors referred to in the
literature.
Any comment:

ID No. 08
Data / Parameter: FF
project plant,i,y
(As per ACM 0006 ver 06

)
or
FC
i,,j,y
(As per Tool to calculate project or leakage CO
2
emissions from fossil
fuel combustion )
Both data have the same definition.
Data unit: Litre of MFO and diesel/year.
Description: Fossil fuel, mainly diesel and MFO is used as backup and start up fuel.
used:
Measuring of the volume of fossil fuel used in the biomass power plant through
establishing of a flow meter at the places of use.

Value applied :

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i = MFO (litres) i = diesel (litres)
j = start up fuel for biomass
steam boiler
N/A 480
j = start up fuel for biomass
power boiler
N/A 240
j = back up fuel for biomass
steam boiler
900,000 N/A
j = generator set for backup
for power production
N/A 599,280
Total amount of fuel type
used
900,000 600,000

The numbers used is expected to be conservative and converted to tonnes based
on density of diesel and MFO.
Description of
measurement methods
applied:
Measurements will be continuous based on the flow of fuel from the storage
tank to the places of use.
QA/QC procedures to
be applied:
Cross check with the annual energy balance of the biomass power plant and with
the invoices for purchased fossil fuel.
Any comment: This should include fossil fuel co-fired in the project plant but not any other fuel
consumption at the project site that is attributable to the project activity (e.g. for
mechanical preparation of the biomass residue).

ID No. 09
Data / Parameter:
FF
project site, i,y

Data unit: Litre MFO and diesel/year.
Description: Quantity of MFO and diesel combusted at the project site for other purposes
that are attributable to the project activity during the year y.
used:
Measuring the difference in volume of actual fossil fuel purchased and used in
the biomass power plant through establishing of a flow meter at the places of
use.

Value applied : 0
Description of
measurement
methods and
procedures to be
applied:
Measurements will be continuous based on the flow of fuel from the storage
tank at the places of use and actual fuel purchased.
QA/QC procedures to
be applied:
Cross check with the annual energy balance of the biomass power plant and with
the invoices for purchased fossil fuel.
Any comment: This should not include fossil fuel co-fired in the project plant but any other fuel
consumption at the project site that is attributable to the project activity.


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ID No. 10
Data / Parameter: EG
project plant,y

Data unit: MWh/year.
Description: The sale of electricity to the Refinery.
used:
Direct measurement.
Value applied : The estimated sale to the industries is 59,130 MWh reflecting 6,570 full load
hours use of the 9 MW (net) biomass plant.
Description of
measurement methods
applied:
The measurement will be a power meter continuously measuring the transport of
electricity. The project owner will appoint the energy plant manager to record
the kWh supply of electricity monthly. The readings will follow the same
periods as the billing period in the agreement under which electricity is supplied
to the industries, meaning that the readings will be for each calendar month.

QA/QC procedures to
be applied:
The project owner and the Refinery will jointly read the main metering
equipment at the interconnection point within five business days after the end of
each calendar month.

Any comment: The data for power sales are part of a commercial agreement with the power
company and will thus be cross checked by the parties to the Power Purchase
Agreement (PPA).

ID No. 11
Data / Parameter: Q
project plant,y

Data unit: GJ
Description: Quantity of the steam generated for the Refinery.
Source of data: On-site measurement.
Value applied: 465,156 GJ.
Description of
measurement methods
and procedures
actually applied :
Continuously.
QA/QC procedures: Check consistency of the net heat generation by cross-checked with receipts
from sales (if available) and the energy balance for the plant
Any comment:

ID No. 12
Data / Parameter: NCV
k,
Data unit: GJ/ton of biomass residue
Description: Net caloric value of biomass fuel used, in this case, EFB, PKS, PKC and
mesocarp fibre.
Source of data: Measurements.
Value applied:
Biomass NCV (Wet)
MJ/kg
Moisture content
(%)
Recalculated
dry NCV
(MJ/kg)

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EFB 17 60% 5.3
PKS 20 12% 17.3
PKC 18 10% 16
Mesocarp fibre 19 37% 11.1

Description of
measurement methods
and procedures
actually applied :
Measurements shall be carried out at reputed laboratories and according to
relevant international standards. Measure the NCV based on dry biomass.
Measurements done at least every six months, taking at least three samples for
each measurement.
QA/QC procedures: Check the consistency of the measurements by comparing the measurement
results with measurements from previous years, relevant data sources (e.g.
values in the literature, values used in the national GHG inventory) and default
values by the IPCC. If the measurement results differ significantly from previous
measurements or other relevant data sources, conduct additional measurements.
Ensure that the NCV is determined on the basis of dry biomass.
Any comment:

ID No. 13
Data / Parameter: -
Data unit: Tons
Description: Quantity of EFB that are utilized (used for energy generation) in the defined
geographical region.
Source of data: Survey or statistics.
Value applied: 1,129,628
Description of
measurement methods
and procedures
actually applied :
Annually collection of data from small scale renewable energy projects and
CDM projects using EFB as fuel or feedstock in the districts of Lahad Datu,
Kunak, Tawau and Semporna.
If possible data on amount of used EFB is collected directly. Where only power
production data are available estimates of the fuel use are calculated by default
values from PDDs or generic information. See Annex 7 for details.
QA/QC procedures: Comparison with earlier data.
Any comment: Element in evaluation of the leakage based on approach L2.

ID No. 14
Data / Parameter: -
Data unit: Tons
Description: Quantity of available biomass residues type k in the region.
Source of data: Calculations are based on annual production statistics from MPOB on state level
recalculated to cover the districts of Lahad Datu, Kunak, Tawau and Semporna.
Value applied: 2,944,329.
Description of
measurement methods
and procedures
actually applied :
Annually calculations of the amounts of EFB is based on the default relation
between FFB and EFB of 23 %. See Annex 7 for details.
QA/QC procedures: Comparison with earlier data.
Any comment: Element in evaluation of the leakage based on approach L2.


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ID No. 15
Data / Parameter: EC
pj,y

Data unit: MWh.
Description: On-site electricity consumption for the biomass fuel preparatory system.
used:
Direct measurement.
Value applied : 2,379 MWh (The estimated use of electricity for biomass fuel preparatory
system based on 22 kWh/ton EFB).
Description of
measurement methods
applied:
The measurement will be a power meter continuously measuring the transport of
electricity. The project owner will appoint the energy plant manager to record
the kWh electricity used in the fuel preparatory system monthly. The readings
will be for each calendar month.

QA/QC procedures to
be applied:
The measurements of the use of electricity for fuel preparation will be compared
with the measurements of total production and sale to the refinery. It was also be
checked against specific consumption per unit of fuel prepared in previous
years.

Any comment:

ID No. 16
Data / Parameter: k
j
- Decay constant for the EFB
Data unit: Dimensionless.
Description: The rate of decay of the EFB is an important parameter in calculating the
avoided methane emissions from the dumping of the EFB in the baseline
scenario. Credible data from field conditions does not exist.
used:
Tool to determine methane emissions avoided from dumping waste at a solid
waste disposal site; (version 2).
Value applied:
0.035
Description of
measurement methods
applied:
The methods for measuring the decay constant will be decided in collaboration
with the scientific institution engaged for the purpose.
QA/QC procedures to
be applied:
The QA/QC procedure for the field test will be determined in collaboration with
the scientific institution.
Any comment: The decay constant will be measured before the first monitoring report will be
submitted and the new value will be used for the ex post calculation of the
avoided methane emissions in stead of the default value used in the ex ante
calculations.


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ID No. 17
Data / Parameter: W
j,x

Data unit: Tons
Description: Total Amount of Organic Waste type j, EFB prevented from disposal in a Solid
Waste Disposal Site in the year x.
used:
Amount of EFB used as fuel in the project site would have been disposed in a
landfill.

for the purpose of
section B.5
109,067 t / yr of EFB (wet weight) converted into 43,627 t dry weight.

Description of
measurement methods
applied:
The biomass waste products from Kunak Palm Oil Mills will be weighed upon
arrival at the power plant. Incoming data from the weigh bridge are handled
electronically in the account system of the palm oil mill.
QA/QC procedures to
be applied:
Since the data for the amount of biomass is part of a commercial transaction the
best effort will be done to establish the correct amount.

ID No. 18
Data / Parameter: TDL
y

Data unit: -
Description: Average technical transmission and distribution losses in the grid in the year y,
for the voltage level at which electricity is obtained from the grid at the project
site.
used:
For the calculation the default value from the Tool to calculate project
emissions from electricity consumption (version 1) has been used.

for the purpose of
section B.5
0.2

Description of
measurement methods
applied:
If the annual Statistics of electricity supply industry in Malaysia, Malaysian
Energy Commission shows lower values for losses in SESB area than 20% then
the actual value will be used. The above mentioned statistics include both
commercial and technical losses. Therefore the values from this source will be
conservative.
QA/QC procedures to
be applied:
Comparison with previous years data.
Any comment:


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ID No. 19
Data / Parameter: V
ww,y

Data unit: Tons / year
Description: Quantity of waste water generated from the fuel preparatory system in the year
y.
Source of data: Data from the weighing of outgoing trucks are used to calculate the average
waste water generated from the fuel preparatory system.
Value applied: 34,902.
Description of
measurement methods
and procedures
actually applied :
Determined by averaging the weights of each truck carrying the waste water
from project site to off site biogas plant at Kunak Palm Oil Mill.

QA/QC procedures: Check consistency of the number of truck trips with the quantity of EFB
processed in the fuel preparatory system.
Any comment:

Table B.24: Data prescribed in the monitoring plan of the ACM0006 but not relevant for this
project activity.

Data /
Parameter
Description Source Remarks
B
o,ww

tCH
4
/tCOD
Methane Generation
Potential of the waste water
ACM0006 (version
06)
This parameter is not monitored as
the waste water generated from
treatment of biomass is collected
in a tanker and sent to offsite
treatment facility for generation of
biogas. The biogas plant is being
registered as a CDM project and
all emissions from the plant will
be calculated in relation to that
project.
MCF,
ww

-
Methane Correction Factor
for the waste water
ACM0006 (version
06)
the waste water generated from
treatment of biomass is collected
in a tanker and sent to offsite
treatment facility for generation of
biogas. The biogas plant is being
registered as a CDM project and
all emissions from the plant will
be calculated in relation to that
project.
EG
total,y

MWh/yr
Net quantity of electricity
generated in all power
plants as the project site,
generated from firing the
same type(s) of biomass
ACM0006 (version
06)
This parameter is not applicable as
there is only one power plant
generating electricity at the
project site.

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Data /
Parameter
Description Source Remarks
residue as in the project
plant.
Q
total,y

GJ
Net quantity of heat
generated in all
cogeneration plants at the
project site, generated from
firing the same type(s) of
biomass residue as in the
project plant.
ACM0006 (version
06)
This parameter is not applicable as
there is only one cogeneration
power plant generating heat at the
project site.
EF
burning,CH4k,y
tCH
4
/GJ
CH
4
emission factor for
uncontrolled burning f the
biomass residue type k
ACM0006 (version
06)
there is no uncontrolled burning of
biomass.
p
n,j,x

-
Weight fraction of the waste
type j in the sample n
collected during the year x
Tool to determine
methane emission
from dumping
waste at a solid
waste disposal site
there is only one type of biomass
waste, EFB, prevented from
disposal.
EF
CO2,LE
CO2 emission factor of the
most carbon intensive fuel
used in the country
ACM0006 (version
06)
Monitoring of this parameter is
only applicable if the leakage
effect cannot be ruled out using
L1, L2 and L3. Option L2 is used
to rule out the leakage effect,
please refer to Annex 7 in PDD,
the supply of EFB is in excess of
25%.
N
y

Number of truck trips for
the transportation of
biomass.
ACM0006 (version
06)
TLy (Average load of truck ) is
monitored instead.
N
y, waste water

Number of truck trips for
waste water transportation

ACM0006 (version
06)
TLy (Average load of the trucks
used for the transportation of
waste water ) is monitored
instead.

B.7.2. Description of the monitoring plan:

This monitoring plan will set out a number of monitoring tasks in order to ensure that all aspects of
projected greenhouse gas (GHG) emission reductions for the proposed project are controlled and
reported.

This requires an on going monitoring of the project to ensure performance according to its design and
that claimed Certified Emission Reductions (CERs) are actually achieved.

The monitoring plan of the proposed project is a guidance document that provides the set of procedures
for preparing key project indicators, tracking and monitoring the impacts of the proposed project. The
monitoring plan will be used throughout the defined crediting period for the project to determine and

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provide documentation of GHG emission impacts from the project activity. This monitoring plan fulfils
the requirement set out by the Kyoto Protocol that emission reductions projects under the CDM have
real, measurable and long-term benefits and that the reductions in emissions are additional to any that
would occur in the absence of the certified project activity.

Key definitions
The monitoring plan will use the following definitions of monitoring and verification.

Monitoring: The systematic surveillance of the projects performance by measuring and recording of
performance-related indicators relevant in the context of GHG emission reductions.

Verification: The periodic ex-post auditing of monitoring results, the assessment of achieved emission
reductions and of the projects continued conformance with all relevant project criteria by a selected
DOE.

The monitoring plan provides the requirements and instructions for:
1. Establishing and maintaining the appropriate monitoring systems for electricity generated by the
project;
2. Quality control of the measurements;
3. Procedures for the periodic calculation of GHG emission reductions;
4. Assigning monitoring responsibilities to personnel;
5. Data storage and filing system;
6. Preparing for the requirements of an independent, third party auditor or verifier.

The process engineer is in charge of the implementation of this monitoring plan and summarizing the
results. The Plant Manager of the Kunak Jaya Bio Energy Project will check the results to ensure the
quality and accuracy of the data monitored .The monthly summary will be prepared by the Plant
Manager and calculate the emission reductions of the project activity and develop reports with the
support from their CDM consultant.

Responsibilities of key persons of the project activity Kunak Jaya Bio Energy Project .

1. Power & Utility Plant Manager
Overall management of the implementation of the monitoring plan and quality control of data and
records. To calculate emission reductions based on monthly summary.
To check the results of all data monitored and to ensure the quality and accuracy of the data
monitored.
2. Power & Utility Engineer
Overall in charge of implementation of the monitoring plan and summarizing the results.
3. Fuel Preparation Supervisor
To ensure the data of the biomass residues collection and transportation will be recorded by the
weighbridge attendant of Kunak Jaya Bio Energy Project, and stored in the power plant. The
summary of biomass consumption by the Kunak Jaya Bio Energy Project will be calculated by the
supervisor monthly.
4. Maintenance Supervisor

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Overall in charge of recording any down time and maintenance work in the Kunak Jaya Bio Energy
Project.
5. Electrical Supervisor
In charge of the monitoring of electricity meters and calibration, fossil fuel consumption within the
power plant (If any is used as back up) including boilers and fuel preparatory machines
6. Accounts and Admin Executive
Cross checking the monitoring records with receipt and procurement records.

The figure below outlines the operational and management structure that TSH-Wilmar will implement to
monitor emission reductions and any leakage effects generated by the project activity.

Monitoring reports will be forwarded to and reviewed by the general manager on a monthly basis in
order to ensure the Kunak Jaya Bio Energy Project follows the requirements of the monitoring plan.

____________________________________________________________________________________

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Power & Utility
P&U Manager
P&U Engineer
Utility
Supervisors
Fuel
Preparation
Supervisor
Electrical
Supervisor
Maintenance
Supervisor
Plant
Assistant
Operator
Utility
General
Workers
Drivers
Fuel
Preparation
Operator
E&I
E&I Wireman
Maintenance
Foreman
Fitter
Clerk
Figure B.4: Organisation Chart of Power & Utility Department in Kunak Jaya Bio Energy
Project.

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Table B.25: Monitoring plan by parameter and person In-charge

ID
No.
DATA /
PARAMETERS
UNIT MONITOR
ING BY
QA/QC
CROSS
CHECK
BY
COMMENT
1 BF
k,y
Amount of biomass
used in the Kunak
Jaya Bio Energy
Project.
Tons Plant
Supervisor
Plant
Engineer
Fuel purchase receipts need to
be attached, if available.
2 BF
T,k,y
Quantity of
biomass used as
fuel in the Kunak
Jaya Bio Energy
Project that is
imported..
Tons Plant
Supervisor
Plant
Engineer
Fuel purchase receipts need to
be attached, if available.
3 Moisture content
of the biomass
residues.

% water
content
Plant
Supervisor
Plant
Engineer
Compare lab measurements
against default values from
literature.
4 AVD
y
Average round trip
distance (from and
to).
km Plant
Supervisor
Plant
Manager
Check consistency of distance
records provided by the trucks
by comparing recorded
distances with other information
from other sources.
5 TL
y
Average truck load
of the trucks used
for transportation
of biomass.
tons Plant
Supervisor
Plant
Manager
Check the consistency of the
truck loads with the quantity of
biomass combusted.
6 TL
y
,
Average truck load
of the trucks used
for transportation
of waste water
from the fuel
preparatory system.

tons Plant
Supervisor
Plant
Manager
Check the consistency of the
truck loads with the quantity of
EFB processed in the fuel
preparatory system.
7 EF
km,CO2,y
Average CO
2

emission factor for
the trucks.
tCO
2
/km Plant
Engineer
Plant
Manager
Calculated based on IPCC
default values.
8 FF
project plant,i,y
Quantity of fossil
fuel combusted in
the biomass residue
fired power plant
t/year Plant
Supervisor
Plant
Engineer
Including fossil fuels co-fired in
the project plant.

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ID
No.
DATA /
PARAMETERS
UNIT MONITOR
ING BY
QA/QC
CROSS
CHECK
BY
COMMENT
during the year y.
9 FF
project site
Quantity of fossil
fuel combusted at
the project site for
other purpose that
are attributed to the
project activity.
t/year Plant
Supervisor
Plant
Engineer
To cross check with total fossil
fuel purchased and used in the
project plant.
10 EG
project plant,y
Net quantity of
electricity
generated in the
project plant during
the year y.
MWh/yr Plant
Engineer
Plant
Manager
Compare with receipts of
electricity sales (if available)
and the quantity of fuels fired.
11 Q
project plant,y
Net quantity of heat
generated from
firing biomass in
the project plant.
GJ Plant
Engineer
Plant
Manager
Check consistency of the net
heat generation by cross-
checked with receipts from sales
(if available) and the quantity of
the fuels.
12 NCV
k
Net caloric value of
biomass residue
type k, EFB, PKS ,
PKC and mesocarp
fibre
GJ/ton Plant
Engineer
Plant
Manager
Compare the measured data
with previous years data, values
used in national GHG inventory,
and IPCC default value.
13 Quantity of
biomass residue
that is utilized in
the defined
geographical
region.
tons Plant
Manager
General
Manager
Need information from survey
or statistics for rule out leakage.
14 Quantity of
available biomass
residues in the
region.
tons Plant
Manager
General
Manager
Survey or statistics data.
15 EC
pj,y
Power consumption
for project use.
MWh/yr Plant
Engineer
Plant
Manager
Compare to total production and
with receipts of electricity sales
to the refinery and kernel
crushing plant (if available) and
the quantity of fuels fired.
16 kj
Decay rate for the
waste type j.
Plant
Manager
General
Manager
The value for wood waste is
used as EFB seems to be closest
to wood waste in relation to the
decay properties. The value will

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ID
No.
DATA /
PARAMETERS
UNIT MONITOR
ING BY
QA/QC
CROSS
CHECK
BY
COMMENT
be measured and reported as
part of the ex post calculation of
the avoided methane emission.
17 W
j,x

Total amount of,
EFB prevented
from disposal in a
solid waste
disposal Site in the
year x.
Tons Plant
Supervisor
Plant
Manager
Cross check total amount of
biomass used in the biomass
power plant against electricity
production.
18 TDL,
y

Average technical
transmission and
distribution losses
in the grid.
Plant
manager
General
Manager
Comparison with previous year
data and available literature
from local statistics survey.
19 V
ww,y

Quantity of waste
water generated
from the fuel
preparatory system.
Tons Plant
supervisor
Plant
Manager
To cross check with amount on
EFB processed in the fuel
preparatory system.

2. Calibration of meters & metering

2.1 Electricity output meter

An agreement should be signed between the project proponent and the Refinery that defines the metering
arrangements and the required quality control procedures to ensure accuracy. The accuracy of the
ammeter will be 0.2s. The metering equipment will be properly calibrated and checked annually for
accuracy according to electrical meter specification guide.

The project proponent will prepare backup procedures to deal with any errors occurred to the meters. In
case of any errors happens, the electricity generated by the project activity shall be determined by the
project proponent and the Refinery jointly.

Calibration is carried out by the project proponent with the records being provided to the Refinery, and
these records will be maintained by the project proponent.

2.2 Biomass residues consumption

The project proponent will conduct an energy balance analysis to verify the amounts of biomass
residues, purchased at biomass procurement department of the power plant and combusted by the boilers.
If significant difference among the three sources identified, the project proponent will conduct further

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check the original records to find out reasons and correct. If the significant difference cannot be
resolved, the most conservative value of biomass utilized by the project activity will be applied as
monitoring results.

3. Monitoring

3.1 Electricity generated
Electricity generated by the project activity will be monitored through metering equipment at the
substation continuously .The data can also be monitored and recorded at the on-site control center using
a computer system. The meter reading will be readily accessible. Calibration tests records will be
maintained for verification.

3.2 Availability of biomass residues
The project proponent will provide evidence concerning with the availability of biomass residues
resource in East Sabah. This will be obtained from official information yearly. If it is not available, the
data will be calculated or estimated based on a survey conducted by project proponent yearly.

3.3 Biomass residues consumption of the Kunak Jaya Bio Energy Project
The quality and type of biomass residues burned by the Kunak Jaya Bio Energy Project will be
monitored during the operation of the project activity, including all the necessary parameters of the
biomass residues to be monitored according to Section B.7 of this PDD. All relevant records will be
maintained for verification.

3.4 Fossil fuel consumption by the boiler
Fossil fuel consumption by the boiler during the start up or other emergency purpose will be recorded
and monitored during the operation period of the project activity continuously. All relevant records will
be maintained for verification.

3.5 Transportation of biomass residues
The project proponent will structure a recording and monitoring system within the biomass residues
supply that is supplied from other places. The quantity and type of biomass, transportation vehicle and
transportation distance from origin of biomass residue will be recorded by company staffs at the sites
continuously. The receipts and records regarding with biomass purchase by the project activity will be
documented and summarized for verification.

The transportation of the biomass from the origin to the Kunak Jaya Bio Energy Project will be
monitored and documented by the project proponent to determine the fossil fuel consumption by the
biomass transportation activity. The transportation records will be documented and maintained for
verification.

3.6 Leakage
Amount of biomass types consumed and quantity of biomass types that is available in surplus in East
Sabah that is defined in Project Boundary will be monitored to check the leakage effect brought by the
operation of the project activity. This will be obtained from official information, such as MPOB statistics
and survey defined within Project Boundary that supply biomass residues to the project activity.

If any leakage occurs during the crediting period, the project proponent will determine the parameters in
terms of leakage effects according the definition in the PDD with the support from local government
entity.

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4. Quality assurance and quality control
The quality assurance and quality control procedures for recording, maintaining and archiving data shall
be improved as part of this CDM project activity. This is an on-going process that will be ensured
through the CDM in terms of the need for verification of the emissions on an annual basis according to
this PDD.

5. Data management system
This provides information on record keeping of the data collected during monitoring. Record keeping is
the most important exercise in relation to the monitoring process. Without accurate and efficient record
keeping, project emission reductions cannot be verified.

Below follows an outline of how project related records would be managed:-

1. Overall responsibility for monitoring of GHG emissions reduction will rest with the CDM
responsible person of the project activity. Procedures for tracking information from the primary
source to the end-data calculations in paper document format will be continuously enhanced.

2. It is the responsibility of the project proponent to provide additional necessary data and information
for validation and verification requirements of respective DOE.

3. Physical documentation such as paper-based maps, diagrams and environmental assessment will be
collated in a central place, together with this monitoring plan. All paper-based information will be
stored by the project proponent and kept at least one copy.

6. Verification and monitoring results
The verification of monitoring results of the project activity is a mandatory process required for all CDM
projects. The main objective of the verification is to independently verify that the project activity has
achieved the emission reductions as reported and projected in the PDD. It is expected that the
verification will be done annually.

Data archived will also be verified regularly by the DOE. The performance of the Kunak Jaya Bio
Energy Project will be reviewed and analyzed by the consultant on a regular basis.

B.8. Date of completion of the application of the baseline study and monitoring methodology
and the name of the responsible person(s)/entity(ies)
The baseline study and monitoring plan was completed 25 February 2008 and has been developed by:

Soeren Varming (Managing Director)
SV Carbon Sdn. Bhd.
609 Block E, Phileo Damansara
46350 Petaling Jaya
Malaysia
Email: sv@svcarbon.com
Phone: +601 9262 7970


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SECTION C. Duration of the project activity / crediting period

C.1. Duration of the project activity:

C.1.1. Starting date of the project activity:
The project activity started construction in August 2006.

C.1.2. Expected operational lifetime of the project activity:
The expected operational lifetime of the project is 21 years, which is equal to the electricity
purchase agreement entered with the electricity distribution company.

C.2. Choice of the crediting period and related information:

C.2.1. Renewable crediting period

C.2.1.1. Starting date of the first crediting period:
01/07/2008 orThe crediting period will only start after the project is registered

C.2.1.2. Length of the first crediting period:
7 years

C.2.2. Fixed crediting period:

C.2.2.1. Starting date:
Not applicable

C.2.2.2. Length:
Not applicable

SECTION D. Environmental impacts

D.1. Documentation on the analysis of the environmental impacts, including transboundary
impacts:
According to the Malaysian regulations, renewable energy projects are not required to prepare an
Environmental Impact Assessment (EIA). This has been confirmed by the Malaysian Department of
Environment. Thus, no EIA has been prepared.
The project activity must comply with the environmental regulations of the country and obtain the
necessary approvals before commissioning and during operation of the project.

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The project activity will apply modern, efficient technologies and the environmental impact will be
managed better than in the existing situation, as the biomass waste will be used for energy production to
the highest possible extent, which includes efficient combustion of the biomass.

D.2. If environmental impacts are considered significant by the project participants or the host
Party, please provide conclusions and all references to support documentation of an environmental
impact assessment undertaken in accordance with the procedures as required by the host Party:
Environmental sustainability
The project activity will have a positive impact on the environment as it will reduce power production on
fossil fuels and lead to an increased sustainability in the power generation sector. Furthermore, the power
plant will be equipped with high-efficient technologies that reduce the fuel consumption per unit output
and increase the combustion efficiency. Pollution control equipment will be installed in order to ensure
minimum emissions of particulates etc. from the plant.
The project activity will lead to reduced disposal and indiscriminate incineration of waste by
surrounding palm oil mills and increase the self-sufficiency of the power supply.
Social sustainability
The project activity will require more skilled staff than the existing plant. The workforce will be trained
to operate the new plant and new qualified staff will be employed.
Economic sustainability
The project activity will lead to economic sustainability as the fuel source is a sustainable, indigenous
resource, which reduces fuel imports and negative impact on foreign exchange. The project activity will
also have a positive impact on the economic performance of the Refinery as its energy production will
become more reliable and efficient, leading to a more reliable refined palm oil production in general.

SECTION E. Stakeholders comments

E.1. Brief description how comments by local stakeholders have been invited and compiled:

A stakeholder's meeting was held on the 19
th
December 2007 involving management and staff of TSH-
Wilmar and 7 external stakeholders. They represented local residents, a village head, planters, Head of
Kunak District Office, a representative of Kunak Forestry Office and a politician. Invitation letters with a
description of the project were sent out two weeks earlier to a total of 29 people with and a follow up
was done to confirm attendance. The stakeholder meeting was held at 9.30am at the premises of TSH-
Wilmar premises in Kunak Jaya, Sabah.

The following is a list of the attendees:


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Department/Organisation Representatives
Kunak District Forestry Office 1
Villagers 2
Planter 2
Kunak District Office 1
Politician 1
TOTAL 7

Written invitations for the stakeholder meeting were hand delivered to local residents. Local authorities
including the Department of Environment and non-governmental organisation (NGO) were mailed and
faxed.


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E.2. Summary of the comments received:

Presentation
Ms. Bhavna Khandhar first introduced participants to CDM as one of the mechanisms to address the
reduction of greenhouse gas emissions.

Mr. Boyd Linjungan explained on the project activity to the participants that the project activity was
intended to generate 10 MW electricity and which will then be supplied to the Refinery. The energy will
not be sold to SESB. They project activity expect to consumed approximately 112,000 tonnes of
biomass waste. The participants were further informed that the project activity is schedule to be
operational in September 2007. The benefits of the project activity were also explained in detail from
the environmental, social and economic aspects.

Summary of the comments received

The following issues were raised by the participants. They were addressed by Mr. Boyd Linjungan.
Questions were mainly posed on the environmental impact of the project and the traffic congestion in
Kunak Jaya.

From Question Response
1. Kunak District
Office
I notice that there are not many villagers
that attended this stakeholder meeting
today. My suggestion is that you should
invite all villagers to explain about this
CDM project so that they understand that
it will not affect their health. After
listening to your explanation, I am
convinced that CDM will benefit our
villagers.
We invited the head and representatives
of Kampung Jaya Baru, Kampung Kunak
Laut and Kampung Kunak Jaya.
Unfortunately, no representatives from
Kampung Jaya Baru and Kampung Kunak
Laut attended.
I suggest you should have an open day to
invite all villagers around this area to
explain the CDM project.
We agree with this suggestion and will
discuss with management for a possibility
of having an open day to invite all
villagers. This way, more villagers will be
involved and will understand about the
benefit of this project.
2. Politician This area has traffic problems. The traffic
problem is caused because there are other
palm oil mills that are using the same
route. Have you considered having an
alternate route from Kunak Jaya to Sabah
Port?
We have discussed this issue with Works
Department. According to Works
Department, an alternative route is
possible but that will not solve the traffic
at Kampung Kunak Jaya junction. After
discussion with Works Department, they
have recently expanded the road which
helps the traffic flow. We are ready to
help and will follow up with Works
Department implement an alternative

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route.
I am concern about the speed limit of
lorries and tanks. What has TSH-Wilmar
done to prevent accidents?
We have advised the responsible parties
to ensure that tank drivers do not exceed
the speed limit. We managed to get Works
Department to put safety signs in place at
necessary road sides to ensure heavy
vehicle drivers stay alert and drive slowly
at Kunak Jaya road. All of our tank
drivers are trained to be alert and drive
more carefully on the road. We have also
sent out memos to all transporters to
ensure their speed limit is within 20-30
km/hour while driving on Kunak Jaya
road.
I notice that there are many lorries that
drive close to each other. Could you
please ensure that they keep their distance
when driving? I notice that they always
drive in convoy.
Driving in convoy is part of their safety
plan. This is done in the case of any
breakdowns lorry drivers are able to help
each other. We will put this forward for
lorry drivers to keep their distance when
driving. We have discussed road safety
issue during a meeting with Works
Department.
Works Department will draw double lines
on the road so that there will be no more
overtaking allowed on Kunak Jaya road.
When burning biomass in the boiler, will
there be any smoke or dust emitted?

If EFB is too wet, the smoke is usually
thick due to incomplete burning. We have
changed our fuel composition from 80-
90% EFB to 70% EFB to solve this
problem. A multi-cyclone is installed in
our boilers to reduce particles emitted to
the environment to 0.4m
3
. In addition to
that, we do sampling every 6 months and
send samples to Department of
Environment. We also send our smoke
density chart to the Department of
Environment every month. We have
installed a smoke density recorder with an
alarm. Alarm will set off if smoke density
is above specification. We have also
installed a CCTV to look at our chimney.
This CCTV monitors the smoke emitted
24 hours to make sure it is okay.

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3. TSH-Wilmar
staff
Ramli added that there used to be very
loud noise because employees were not
experienced with the operation. There is a
silencer installed and if an operation is
not normal and noisy, the silencer is used
to control the noise. Plant operators are
now trained and experienced with the
operation.

Management is doing what they can to
plan the traffic. The plant is planned to
operate at a much higher capacity that it is
currently operating. The plant has the
capacity to service 300 vehicles during
full operation but currently we are only
servicing 30% of it. Management believes
that Kunak will develop as it is blessed
with a port.

The meeting was adjourned at 11.10am and participants were informed that they could also submit
questions on the project to TSH-Wilmar within a week.

General observation
Participants did not raise any objections to the project activity but wanted assurances about the traffic
issue.

E.3. Report on how due account was taken of any comments received:

Since there were no objections, there was no need to change the project activity or the project
implementation.

On the traffic problem, the company has set aside an area within the complex where the trucks can be
parked while waiting to unload the biomass. This will ensure that the heavy vehicles do not obstruct
traffic or pose threats to the pedestrians. Participants were satisfied with this measure.


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Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

Organization: TSH-Wilmar (BF) Sdn. Bhd. (TSH-Wilmar)
Street/P.O.Box: No.8, Jalan Semantan
Building: Level 12, Menara TSH
City: Kuala Lumpur
State/Region: Wilayah Persekutuan
Postfix/ZIP: 50490
Country: Malaysia
Telephone: +603-20840888
FAX: +603-20840808
E-Mail: limfookhin@tsh.com.my
URL: www.tsh.com.my
Represented by: Mr. Lim Fook Hin
Title: Director
Salutation: Mr.
Last Name: Lim
Middle Name:
First Name: Fook Hin
Department: Finance
Mobile: +6019-3206354
Direct FAX: +603-20840808
Direct tel: +603-20840803
Personal E-Mail:


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Organization: Energi Midt Handel A/S
Street/P.O.Box: Sndergade 27
Building:
City: Brdstrup
State/Region:
Postfix/ZIP: DK - 8740
Country: Denmark
Telephone: + 45 7658 1120
FAX: + 45 7658 1124
E-Mail:
URL: www.energimidt.dk
Represented by:
Title: Head of Trading
Salutation: Mr.
Last Name: Griem
Middle Name:
First Name: John
Department: Trading
Mobile: + 45 3092 4019
Direct FAX: + 457658 1111
Direct tel: + 45 7658 1121
Personal E-Mail: jkg@energimidt.dk


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Annex 2

INFORMATION REGARDING PUBLIC FUNDING

No public funding was involved.

Annex 3

BASELINE INFORMATION

See calculations in section B6.

Annex 4

MONITORING INFORMATION
See the monitoring plan in section B7.

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Annex 5
CALCULATION OF HEATING VALUES OF BIOMASS FUEL AND FUEL NEEDS FOR THE
PLANT

Most biomass wastes have similar heating value when measured as dry matter. Values are typically in
the order of 17-20 MJ/kg depending on the chemical properties of the specific waste type. (Danida 2005,
own measurements)

The variation of the experienced heating value can mostly be explained by the difference in moisture
content of waste. The moisture content will vary with the origin of the waste and on different forms of
storage and treatment the waste will undergo before it is used as fuel.

An analysis of gross calorific value has been carried out for EFB from the nearby Kunak Palm Oil Mill
see Annex 6. The gross calorific value was measured to 4,137 kcal/kg. The conversion is 1000 kcal =
4.19 MJ so the analysis result can be converted to 17 MJ/kg. This value is used in the following to
calculate the Net Calorific Value (NCV) of EFB.

The actual heating value can be calculated as dry matter heating value minus the energy needed to
evaporate the water content. The evaporation energy is 2.45 MJ/kg (Danida 2005). As example can be
used EFB with a measured heating value of 17 MJ/kg and an experienced moisture content of 60%. The
actual heating value can be calculated as

(Fraction of dry matter (1-moisure content) x heating value of dry matter moisture content x
evaporation energy of water)

0.4 x17 2.45 x0.6 = 5.3 MJ/kg

Based on this procedure the heating value has been recalculated for the moisture content experienced for
the Kunak Palm Oil Mill. The moisture content can be different between different palm oil mills
depending on specific treatment in the mill and the handling of the waste products.

In the Kunak Palm Oil Mill the moisture content and the corresponding calculated heating value is
shown in the table. The heating value calculated as described above, with dry heating value of EFB of 17
MJ/kg (measured), 20 MJ/kg for PKS and 19 MJ/kg for mesocarp fibre. The slightly higher heating value
for the two latter is based on their lower ash content than the EFB. PKC has 18 MJ/kg.

Table A.5.1: Heating values of biomass

EFB PKS Mesocarp
fibre
PKC
Dry matter heating value MJ/kg 17 20 19 18
Moisture content 60% 12% 37% 10%
In situ heating value MJ/kg 5.3 17.3 11.1 16

After the EFB has arrived to the power station it will be shredded and dried to a moisture content of
around 50% to improve the fuel quality. This leads to a heating value around 7.3 MJ/kg. For calculation
of the amount of EFB that would have been landfilled it is the raw EFB that is relevant however.


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Calculation of energy requirement of the Kunak Jaya Bio Energy Project

There are two boilers in the Kunak Jaya Bio Energy Project. A 45 barg boiler to produce steam for the
power production and a 20 barg boiler for process steam.

Table A.5.2: Energy requirement of Kunak Jaya Bio Energy Project

For power 45 barg
Steam capacity 52 Ton/hour
Full load hours 6,570 Hours/year
Annual steam production 341,640 Ton/year
Steam energy 2.88 GJ/t steam
Energy year 983,923 GJ/year
Boiler efficiency 0.80 %
Fuel use/year 1,229,904 GJ/year

For steam 20 barg
Steam capacity 30 Ton/hour
Full load hours 6,570 Hours/year
Annual steam 197,100 Ton/year
Steam energy 2.36 GJ/t steam
Energy year 465,156 GJ/year
Boiler efficiency 0.8 %
Fuel use/year 581,445 GJ/year

The total need for biomass fuels will this be 1,229,904 + 581,445 = 1,811,349 GJ/year.

Based on a fuel mix of 54/12/5/29 of EFB/PKS/PKC/mesocarp fibre the projected fuel consumption per
year will be as below

Table A.5.3 : Projected fuel consumption for Kunak Jaya Bio Energy Project

NCV Unit Fuel mix MT (wet) MT (dry)
EFB 5.3 GJ/tons 54% 109,067 43,627
PKS 17 GJ/tons 12% 25,051 22,045
PKC 18 GJ/tons 5% 9,867 8,881
Mesocarp fibre 11.1 GJ/tons 29% 57,841 36,440
Total 201,826 110,993


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Annex 6
MEASUREMENT OF HEATING VALUE FOR EFB


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Annex 7
DETAILS OF LEAKAGE ASSESSMENT FOR PALM OIL WASTE IN EASTERN SABAH

Methodology
The leakage assessment is based on approach L2 where a 25% excess of the biomass waste has to be
demonstrated.

First the total amount of available biomass waste in the relevant part of Sabah the Eastern part will
be calculated based on the total FFB processing capacity. The expected growth in FFB production will
be taken into account for the future availability of biomass waste.

To estimate demand for EFB the requirement for biomass waste by CDM projects under development
will be calculated.

Total amount of palm oil waste in East Sabah
The total processing of FFB in Sabah was in 2005 was 24,993,135 tonnes FFB
44
. The official statistic
does not provide a breakdown on districts therefore the breakdown has to be calculated. Table A 7.1
shows the number of palm oil mills and their aggregated approved capacity for districts in Sabah in
2005
45
. The total approved capacity in 2005 was slightly lower (22,466,600 t FFB) than the actual
processed amount of FFB. This is quite normal that the MPOB approved capacity may be marginally
lower than the actual processing.

Table A.7.1: Palm oil processing in Sabah in 2005

District
No.
oil mills
Approved
capacity
t FFB/year
Estimated
production
t FFB/year
Is it part
of East
Sabah?
(Yes/No)
1 Kinabatangan 26 4,578,000 5,092,830
2 Kunak 8 1,358,000 1,510,717 Yes
3 Semporna 3 512,000 569,578 Yes
4 Labuk/Sugut 16 3,063,800 3,408,347
5 Lahad Datu 25 6,440,000 7,164,226 Yes
6 Pantai Barat 1 96,000 106,796
7 Pendalaman 1 216,000 240,291
8 Sandakan 13 2,628,000 2,923,538
9 Tawau 10 2,070,800 2,303,677 Yes
10 Keningau 2 1,264,000 1,406,146

44
MPOB 2006: Malaysian Oil Palm Statistics 2005 p. 39
45
Chow Mee Chin, 2006: An Assessment Of Potential And Availability Of Palm Biomass For Bioconversion To
Bioethanol. Table 8, page 19. Downloaded from www.eib.org.my

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District
No.
oil mills
Approved
capacity
t FFB/year
Estimated
production
t FFB/year
Is it part
of East
Sabah?
(Yes/No)
11 Tenum 1 96,000 106,796
12 Beaufort 1 144,000 160,194
Total 107 22,466,600 24,993,135
Total FFB processed
in East Sabah
11,548,198

In the Table A.7.1, the actual amount of FFB processed has been distributed on the districts based on the
approved capacity.

The project is located in District No.2 i.e Kunak. District No.3 i.e. Semporna, District No.5 i.e. Lahad
Datu and District No. 9 i.e. Tawau had been chosen in the analysis as these districts are directly
bordering District No.2 i.e. Kunak ). This means that areas within 100-200 km from the project activity
site are included. (See map in Annex 7). Based on the Table A7.1, the total amount of FFB processed in
Districts No. 2, 3, 5 and 9 which are relevant to this analysis is estimated at 11,548,198 ton.

There are no official statistics on the production and use of EFB, so the total available amount of EFB
has to be calculated. This is done based on the common assumption that 23 % of the FFB processed will
be EFB. Further it is assumed that the annual increase in FFB processed in Sabah will be 3.5% p.a.
46
.

Based on the FFB projection and the percentage of EFB in FFB, the annual supply of EFB can be
calculated.

The demand for EFB is estimated through the number of potential CDM projects in the region. The
CDM projects considered are derived from the UNEP CDM-pipeline
47
. The CDM Pipeline contains a
list of all CDM projects that have either been uploaded for Global Stakeholder Process under validation
or has been submitted for registration at the UNFCCC. The list is updated monthly and provides thus a
good overview of the projects under development.

The list of projects located in the relevant part of Sabah and their corresponding data on consumption of
EFB have been identified and obtained from the related PDDs. The list is likely to overestimate the
amount of EFB consumption, as some of the projects in Table A7.2 may not be implemented due to non
registration as CDM project activities or other unforeseen circumstances.

In addition, save and except for consumption by CDM projects activities, there is not any known use for
EFB in the region.

Table A7.2 sets out the balance between the available amount of EFB and consumption in East Sabah for
2008 assuming that all CDM project activities will use their required amount of EFB in that year. This
is a very conservative assumption as some of the projects will not be fully operational from 1 January
2008.

46
Anders Evald et al 2005: Renewable Energy Resources (in Malaysia) Recalculated based in table 2.2 p 10
47
CDM pipeline downloaded from www.cdmpipeline.org 12/01/2008

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Table A.7.2: EFB in East Sabah Production and consumption

Details t
Total processed FFB in East Sabah
(Projection for 2008)
12,801,429
Total EFB 23 % of FFB (23% x 12,801,429)
2,944,329
less: EFB consumption

Kunak Bio Energy Project
92,015
Kunak Jaya Bio Energy Plant
109,067
Eko Pulp and Paper Pulp production plant
180,000
Polar Vertix Bio energy plant
10,126
Lahad Datu Edible Oils Sdn Bhd Bio energy plant
122,500
Felda Sahabat Bio Energy Plant
246,000
Golden Hope Merotai Composting project
99,360
Timura Samling POM Composting project
48,000
Leluasa Edible Oil Refinery Biomass steam plant
40,000
Asia POM Composting project
104,480
Takon POM Composting project
78,080
Total EFB consumption
1,129,628
Excess of EFB
1,814,701
Percentage of excess
61.6%

Table A7.2 conservatively affirms that there is approximately 62 % of unconsumed EFB in the region
after deducting all the volume consumed by the CDM projects activities set out in Table B.20. This
percentage exceeded the 25% unconsumed EFB benchmark required as the criteria to rule out leakage.
Furthermore, there is still excess EFB to accommodate other minor uses such as mulching without
changing the conclusion.


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First no. indicates district (Refer Table A.7.3 for name of district)
Second no. indicates no. of mills in the district (2005)
Source: Chow Mee Chin, 2006: An Assessment Of Potential And Availability Of Palm Biomass For
Bioconversion To Bioethanol. Downloaded from www.eib.org.my

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Annex 8
COST-BENEFIT ANALYSIS OF USING EFB FOR MULCHING

EFB has a low content of nutrients and can in principle be used as fertiliser in palm plantations. The
table below gives an estimate of the nutrient content in kg/ton fresh EFB

Table A.8.1: Nutrient content of EFB
Nutrient Nitrogen (N) Phosphorous
(P)
Potassium
(K)
Magnesium
(Mg)
Calcium
(Ca)
Percentage of
dry matter
0.44 0.144 2.24 0.36 0.36

The table is based on a paper from MPOB
48
and the fertiliser value of EFB (as of December 2002) is
calculated to be between 5.39 RM/ton to MYR11.47 /ton (depending on the variation in the nutrient
content in the EFB). The average value is MYR8.43 /ton.

The use of EFB for mulching would not allow the full replacement of inorganic fertiliser. It is thus
necessary to supplement with inorganic fertiliser. The MPOB
49
paper gives the following breakdown of
costs:

Table A.8.2: Comparison of normal fertiliser use with EFB

Normal estate fertilizer use EFB + supplement
MYR/ha MYR/ha
Fertiliser cost 355.20 126.80
EFB cost @ MYR 5/ton - 185.00
Application cost 35.00 196.50
Total cost 390.20 508.30

The paper only finds it attractive to use EFB for mulching if a 15% increase in yield can be included in
the calculation, but the paper also cautions:

In reality, it is very much doubtful whether it is possible to achieve an even distribution of EFB in the
field consistently. Besides that, the EFB generated by the mill can only cover a small area of the
plantation due to the high transport cost involved in making it available to all the palms. During high
crop periods, the tendency is to give priority to the FFB rather than the EFB with the result that EFB
evacuation and not mulching gets the priority. These are points to ponder when undue importance is
given to the benefits of EFB mulching.

In another paper on effects of mechanisation of palm oil mills the cost of distributing EFB to the fields
has been calculated for the year 1999
50
to between 6 MYR/ton and MYR11.55 /ton giving an average
cost of MYR8.78 /ton.

48
Ravi Menon et al 2003: Empty Fruit Bunches Evaluation: Mulch in Plantation vs. Fuel for Electricity Generation.
Palm Oil Industry Economic Journal Volume 3(2). Table 4 and Table 5
49
Ravi Menon et al 2003: Same paper as above from table 10

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The same paper concludes on mulching:

In view of rising cost in application and the difficulty to fully mechanise the field operation EPA
51
has
embarked on composting

In the calculation of the cost and benefits of mulching in the comparison of alternatives the average
saving in fertiliser (in 2002 prices) reported by Ravi Menon et al has been used. As cost of distribution
the cost from Teo Leng (in 1999 prices) has been used.

In order to compare the costs the prices has been recalculated to 2007 prices using the actual inflation
rate in Malaysia
52
.

Table A.8.3: Annual inflation rate in Malaysia

Year 2000 2001 2002 2003 2004 2005 2006 2007
Inflation 1.6% 1.4% 1.8% 1.2% 1.4% 3.0% 3.6% 2.5%

Based on the use of the updating on the values to 2007 the cost and benefits of numbers per ton of EFB
are as follows

Distribution costs of per ton EFB: MYR10.33 /ton
Saving in fertiliser per ton EFB: MYR 9.46 /ton

50
Teo Leng 2002: Mechanisation in oil palm plantations: Achievement and challenges. Malaysian Soil Science and
Technology Volume 11(2)
51
EPA Management is a plantation company that manages 28 estates in the state of Johor
52
Bank Negara Malaysia Annual Report

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Annex 9
ILLUSTRATION OF TECHNICAL BARRIERS IN EFB COMBUSTION

Combustion of fuels in boilers take into account the fuel calorific values, the fuel ash content, fuel size
and moisture content.

A complete combustion will in theory produce only water vapour, carbon dioxide and other by-products
such as nitrous oxides and non combustible minerals such as silica, potassium, calcium, etc in the form
of ash.

In a properly designed boiler that is run in a stable manner, the by-products of combustion will be
removed through the front de-ashing system (for heavier material such as silica and such minerals).
Lighter material or fly-ash will be removed through capture in the cleaning/scrubbing systems such as
cyclones, electrostatic precipitators or filter bags.

However, when the fuel has high moisture content (as is the case for EFB) liquid phases of the resultant
ash can precipitate on boiler parts, then clinker and slag can form.

Clinker

Low viscosity ash is molten and will readily coalesce to form a large molten mass or cause the
agglomeration of bed particles on the boiler grate. This is called clinker. Unlike pulverised fuel fired
boilers, stoker fired boilers have a longer residence time, which favours the formation of clinker.
Similarly, higher moisture content of the fuels will delay combustion and create composites of unburnt
materials and ash. As the molten mass is cooling, mineral phases can crystallise out of the melt, which is
the catalyst for the formation of hard clinkers. In contrast, a high viscosity, 'dry' ash does not coalesce
readily, thus restricting the formation of clinkers.

Slag

When a molten ash particle, transported by updrafts collides into the furnace wall, a slag deposit is
formed. Alternatively, if the heat transfer surface is covered with a molten sticky slag layer then it is
highly probable that 'dry' ash particle will also adhere to the surface.

A sintered deposit can also form when particles at high temperature impact on heat transfer surfaces.
Sintering is a complicated process, encompassing a variety of phenomena that take place when a powder
is transformed into a compact material.

Slag formation in biomass boilers are prevalent due to the presence of low melting point salts that
formed as a result of combustion. This is due to the presence of alkali-earth elements K, Ca, Mg and Na
which are organically bound to carbon structures.

Their products of combustion are largely composed of potassium, sulphates and chlorides which have a
relatively low melting point, causing deposits on cooler boiler surfaces.

Composition

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Analyses of the deposits had been carried out and the major components are:

Silicon 43%
Potassium 22%
Calcium 8%
Aluminium 6%
Chloride 4%
Sulphur 4%
Magnesium 4%
Others 9%

Following are photos are from Kunak Bio Energy Project to illustrate the technical barriers encountered
by similar biomass energy projects.

Picture 01 Shows the secondary air nozzles were surrounded by ash and clinkers.

Protection
plate
Affected
area
Secondary air
nozzle
Secondary air
nozzle

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Picture 02 Shows the wall tubes around the fuel feeding chute area were covered by clinkers deposit
on the surface of the tubes, seeing the secondary air nozzle was almost covered by the clinkers.

Secondary air
nozzle

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Picture 03: Slagging in superheater


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Picture 04: Clinker in the boiler


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Annex 10:
WEIGHTED AVERAGE COST OF CAPITAL CALCULATION

Risk Free Rate
4.59%
US MRP
Market Risk Premium 4.91%
+ Unlevered Equity Risk Premium 6.19% +
Levered Cost of Equity 7.24%

x Country Risk Premium
13.81% + BRI 1.28%
1.17
Unlevered Equity Risk Premium
Equity Contribution 7.24%
10.08%
Leverage Premium x Leverage
1.98% x 36.97%
1-Tax
74.00%
WACC
11.42% Equity % of Capital Leverage
73.01% 36.97%
+ Risk Free Rate
4.59%
Cost of Debt AT + Debt Risk Premium
4.97% 2.14%
Debt Contribution
1.34% x 1-Tax
74.00%
Debt % of Capital Leverage
26.99% 36.97%

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