cd4cdm - national workshop on pdd cairo, 14-15 june 2004 1 capacity development for cdm fourth...

CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 1

Capacity Development for CDM

Fourth National WorkshopCairo, 14-15 June 2004

PDD Preparation for CDM PDD Preparation for CDM ProjectsProjects

Vale Do Rosario Bagasse Vale Do Rosario Bagasse Cogeneration (VRBC) Project - Cogeneration (VRBC) Project -

BrazilBrazilSamir Amous, APEX, TunisiaSamir Amous, APEX, Tunisia

Regional Centre for North Africa and Middle-EastRegional Centre for North Africa and Middle-EastTel : +216 71 848 094 --- Fax : +216 71 843 453 Tel : +216 71 848 094 --- Fax : +216 71 843 453 amous.apex@gnet.tn

Cogeneration Bagasse - Brazil

The first CDM Project to be submitted to the EB (NM0001)

The fourth to get approved by the EB (AM0004)

Unilateral CDM Project: Fund raised through the traditional Banking system in Brazil

Crediting Period: 7 years to be renewed twice

670,000 tCO2e for he whole Crediting Period

PDD available at the cdm.unfccc.int Web Site

PDDrevised once, final version : July 2003

105 pages including annexes Very comprehensive PDD, fits entirely

the PDD Format

VRBC PDD StructureA. General description of project activity

B. Baseline methodology

C. Duration of the project activity/crediting period

D. Monitoring methodology and plan

E. Calculation of GHG emission by sources

F. Environmental impacts

G. Stakeholder comments

Annex 1. Contact information on project participants

Annex 2. Information regarding public funding

Annex 3. New baseline methodology

Annex 4. New monitoring methodology

Annex 5. Table of baseline data

A. General Descriptionof the Project Activity

(15 Pages)

A.1 - Title: Vale Do Rosario Bagasse Cogeneration (VRBC)

A.2 – Description: Expansion of the mill’s cogen system in order to

increase its efficiency and to add value to the bagasse originating from its sugar milling process

Bagasse: the residus of the sugar cane that is left after juice extraction

Expansion made twice in 2 phases: Phase 1 (1990-1994) and Phase 2 (1995-1997)

A.2 – Description: VR has still enough bagasse to supply its

internal needs and to sell a small portion to the grid, but needs to shift to higher pressure boilersbeyond the profitability boundaries

CDM can allow for substantial revenuesa higher economic performance of the project

A.2 – Description: Decision:

Phase 3 (2001)15 MW +4 MW (standing-by) Cogen

Phase 4 (2003)50 MW + 8 MW (standing-by) Cogen

Contribution to use a sustainable source of energy (bagasse)

Source of Revenue for the Sugar Industry Preservation of the jobs (1Mo) in this

sector

A.3 – Project Participants: Vale Do Rosario Sugar Mill:

Founded in 1964 104 Shareholders 4 Mo tons of Sugarcane/yr

Project Developer: ECONERGY Brazil: Technical, Financial and Policy

Consultant

A.4 – Technical Description:

Location: Sao Paulo, Brazil,

City: Morro Agudo

2 figures showing the exact location of the Project

Category : Renewable Energy Supply-side grid-

connecteddisplace fuel combustion in energy industries

Technology: Steam-Rankine cycle: Direct combustion of

biomass in a boiler to generate Steamexpanded through a Turbine

Waste-heat from the steam turbine recovered to meet industrial-process heat needs

1 figure showing the process involved by the Cogen

A.4 – Technical Description: Technology:

1 table showing detailed components of Phase 3 and Phase 4 equipments

1 table showing detailed data on the equipments, including power delivered and total capacity to export to the grid

3 other figures showing the process

Description of how the GHG are to be reduced

Public Funding: Funding raised through the traditional

banking system (13% to 15% interest Rate)

Advance negotiation with Swedish to sell CERs

B. Baseline Methodology(9 Pages)

B.1 - Title of the BL Meth.: « Econergy Methodology for Emission

Reductions from grid-connected bagasse cogeneration projects »

B.2 & B.3 - Justification of the use of the Meth. And description

Assumptions : Cogeneration using bagasse comes in

substitution to fossil fuels and hydroelectricity utilized for power generation in the reference scenario or BL

Future development of the electrical sector in Brazilincreasing quantities of fossil fuels (mainly Nat Gas)utilisation of bagassepartly replace marginal power plant that use mainly Nat Gas

Four question to justify Additionality: Would the project be initiated within the

public sector in the absence of CDM ?

Would the project be initiated within the private sector in the absence of CDM ?

Would VR initiate the project in the absence of the CDM ?

Would public-sector policies and/or programs to promote the use of such RE ?

Reasons justifying Additionality: The economic performance of the projects

without CERs are insufficientunable to remove technical, institutionnal, and financial barriers: Brazil is currently intensively investing on the

development of Nat Gas. The thermal electricity will reach 17% in 2004 (vs 9% in 2001)

Brazil is not investing on bagasse campaniesthere is a need to envisage new spirit towards liberalization of the Elec. sector

Reasons justifying Additionality: Cost for cogénération: US$ 35 to US$ 105/MWh

Marginal cost for electricity in Brazil : US$ 33/MWh

Investment on cogeneration should be compared against other investment opportunities with equal risks

Internal Rate of Return 2004-201116% (without CERs), and 22% (with CERs=US$5)

Reasons justifying Additionality: High transaction costs bureaucracy to obtain

agreements for Environmental impact assessmentInstitutional burdens

No standard conractual agreements for selling electricity to the grid (guaranty of duration, guarantee of effective payment, etc.)Regulatory burdens

Presidentiel Decree to develop cogeneration waited since 1997, never published Regulatory burdens

No guarantee of performances of Bagasse CogeneratorTechnical burdens

Baseline: Emission factors for the South-South-

East and Midwest grid to which VR is connected and which will receive the electricity from the cogeneratoravoid thermal emissions of the related grid

Conservative assumption: Bagasse would have been burned instead of getting landfilled (CH4 - emissions)

Baseline Emission Factor: Total System Average 275 tCO2/GWh

Operating Margin 1 (System Average minus low cost/must run)719 tCO2/GWh

Operating Margin 2 (System Average minus 92% of Hydro, based on contribution of Hydro to the baseload)550 tCO2/GWh

Build Margin 569 tCO2/GWh

Combined Margin: 604 tCO2/GWh

B.5 – Project Boundaries:- Baseline energy grid: the South-South-East

and Midwest Subsystem

- Bagasse cogeneration Plant

B.6 – Details of the BL Development:- Date: July 16, 2003

- Entity : ECONERGY

C: Duration/CreditingPeriod

(1 Page)

Duration: Starting Date: 09/06/2001

Expected Operational Lifetime: 25y-0m

Crediting Period: 7 yrs Renewable Starting Date of the first CP: 09/06/2001

Length of the first CP: 7y-0m

D: MonitoringMethodology and Plan

(13 Pages)

D.1 - Name: « Two Party Monitoring plan for bagasse

cogeneration projects »

D.2 – Justification Only a couple of short sentences

Explanations are provided in Annex 4

D.3-D.4-D.5 tables duly described: D.3 – Data to monitor Emissions from the project:

Monthly recording of energy produced before after the project

Measured energy produced before the project

D.4 – Other relevant data: Mass of bagasse previoulsy marketed

Fossil fuel burned by the former bagasse buyer

Efficiency of the bagasse Cogen.

Efficiency of the fossil fuel plant used by the former bagasse buyer.

D.5 – Other relevant data: Energy generated by Fossil-fueled plants

connected to the Brazialian grid Emission factors (tCO2/MWh) Net Calorific values of fuels used Etc.

D.6 – QA/QC Metering Equipment: a figure is shown,

Accuracy class I, calibrated in 2001

• A camera is also used to monitor the Meter equpment, can be wired to the internet for continuous monitoring by stakeholders

D.6 – QA/QC Certificate of invoice for the electricity sold to

the grid

• An alternative meter is also available

• Two figures are also provided showing the meter location and the technical specifications

D.7 – Person/Entity determining the MM• Econergy

E: Calculation of GHGEmissions(10 Pages)

E.1 – Description of the Formulae for GHG calculation:

E.2 - Description of the Formulae for Leakage calculation:

Certificates from the 3 former bagasse clients on their new energy practices

E.3 – Sum of E1 and E2

E.4 – Description of the Formulae for GHG calculation of the BL and the Emission reductions:

Detailed calculations on how OM and BM have been calculated

E.5 – Table providing detailed values along the 7 yrs of the Crediting Period

F: EnvironmentalImpacts

(7 Pages)

F.1 – F.2 - Env. Impact Study undertaken according to the National RegulationsEnvironmental Licences were finally delivered by the Authorities:

Copies of the Licences are shown in the report

G: StakeholderComments(5 Pages)

G.1 – Description of the Process: Calls for comments were published in the

Newspaper

Figures of the announcements are shown in the report

G.2 – No Comments were received

References(2 Pages)

17 Brazilian and International References listed

ANNEX 1: Contact Information(2 Pages)

Econergy Contact Information

VR Contact Information

ANNEX 2: Informationregarding Public

Funding(1 Page)

Description of the funding resources for the project: the traditional banking system

No contribution from any other ODA resources

ANNEX 3: New Baseline Methodology

(18 Pages)

Comprehensive description of the Baseline Methodology, involving 10 sections

1. TITLE OF THE PROPOSED METHODOLOGY

2. DESCRI PTI ON OF THE METHODOLOGY

2.1. GENERAL APPROACH

2.2. OVERALL DESCRI PTI ON

3. KEY PARAMETERS/ ASSUMPTI ONS, AND DATA SOURCES CONSI DERED AND USED

4. DEFI NI TI ON OF THE PROJECT BOUNDARY RELATED TO THE BASELI NE METHODOLOGY

5. ASSESSMENT OF UNCERTAI NTI ES

6. DESCRI PTI ON OF HOW THE BASELI NE METHODOLOGY ADDRESSES THE CALCULATI ON OF

BASELI NE EMI SSI ONS AND THE DETERMI NATI ON OF PROJECT ADDI TI ONALI TY

7. DESCRI PTI ON OF HOW THE BASELI NE METHODOLOGY ADDRESSES ANY POTENTI AL LEAKAGE

OF THE PROJECT ACTI VI TY

8. CRI TERI A USED I N DEVELOPI NG THE PROPOSED BASELI NE METHODOLOGY, I NCLUDI NG AN

EXPLANATI ON OF HOW THE BASELI NE METHODOLOGY WAS DEVELOPED I N A TRANSPARENT AND CONSERVATI VE MANNER

9. ASSESSMENT OF STRENGTHS AND WEAKNESSES OF THE BASELI NE METHODOLOGY

10. OTHER CONSI DERATI ONS, SUCH AS A DESCRI PTI ON OF HOW NATI ONAL AND/ OR SECTORAL

POLI CI ES AND CI RCUMSTANCES HAVE BEEN TAKEN I NTO ACCOUNT

ANNEX 4: New Monitoring

Methodology(12 Pages)

Comprehensive description of the New Monitoring Methodology, involving 7 sections

1. BRI EF DESCRI PTI ON OF NEW METHODOLOGY

2. DATA TO BE COLLECTED OR USED I N ORDER TO MONI TOR EMI SSI ONS FROM THE PROJECT

ACTI VI TY, AND HOW THI S DATA WI LL BE ARCHI VED*

3. POTENTI AL SOURCES OF EMI SSI ONS WHI CH ARE SI GNI FI CANT AND REASONABLY

ATTRI BUTABLE TO THE PROJECT ACTI VI TY, BUT WHI CH ARE NOT I NCLUDED I N THE PROJECT

BOUNDARY, AND I DENTI FI CATI ON I F AND HOW DATA WI LL BE COLLECTED AND ARCHI VED ON

THESE EMI SSI ON SOURCES*

4. ASSUMPTI ONS USED I N ELABORATI NG THE NEW METHODOLOGY

5. PLEASE I NDI CATE WHETHER QUALI TY CONTROL (QC) AND QUALI TY ASSURANCE (QA)

PROCEDURES ARE BEI NG UNDERTAKEN FOR THE I TEM MONI TORED

6. WHAT ARE THE POTENTI AL STRENGTHS AND WEAKNESSES OF THI S METHODOLOGY?

7. HAS THE METHODOLOGY BEEN APPLI ED SUCCESSFULLY ELSEWHERE AND, I F SO, I N WHI CH

CI RCUMSTANCES?

ANNEX 5: Baseline Data

(1 Page)

Description of Key Elements used to determine the Baseline (Energy, Emission Factor, Calorific Value, Oxidation rate)

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