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PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 03

CDM Executive Boardpage 1

CLEAN DEVELOPMENT MECHANISM

PROJECT DESIGN DOCUMENT FORM (CDM-PDD)

Version 03 - 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


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SECTION A. General description of project activity

A.1. Title of the project activity:

>>

Title: Guangdong Shenzhen Laohukeng Landfill Gas Utilization Project

Version: 2.2

Date: 14/03/2011

A.2. Description of the project activity:

>>

Guangdong Shenzhen Laohukeng Landfill Gas Utilization Project (hereinafter referred to as

the proposed project) is to collect and utilize the landfill gas (LFG) generated from

Laohukeng landfill site in Shenzhen City, Guangdong Province, P. R. China. Shenzhen

Laohukeng landfill started to receive municipal waste in December 2002, and it had anaverage reception of 1,033,059 tonnes

1of waste per year during 2003 to 2009. The landfill

will reach its maximum designed capacity by 2012.

The proposed project involves the installation of a gas collection system, flaring equipment

and electricity generation system at Laohukeng landfill site. A certain amount of methane in

the LFG will be combusted in the generators to produce electricity for local grid. The

excessive LFG and all the LFG collected during the period when electricity is not produced

will be flared. The generator technology employed is from GE, a world leading company in

manufacturing gas engines and generators. The proposed project will assist in transferring

advanced LFG utilization technology to China. Three GE gas engines (unit capacity of 1.063

MW) will be installed with a total capacity of 3.189 MW at the beginning and gradually

reduced to two generators and finally one generator due to diminishing LFG2. The annualoperational hour is 6750 hours and the annual electricity output is 19,373 MWh at the first

crediting period. The electricity generated by the proposed project will be sold to China

Southern Power Grid to replace certain capacity of coal-fired power plants. The annual

emission reduction is estimated to be 196,846 tonnes of CO2e for the first crediting period.

The purpose of the proposed project is to utilize landfill gas to generate power and

deliver it to China Southern Power Grid. For the proposed project,

(a) Prior to the start of implementation of the project activity, the LFG is released toatmosphere directly and there is no power generation unit at the site of the proposed

project, and the electricity was supplied by the China Southern Power Grid which isdominated by fossil fuel-fired power plants.

(b) The project scenario is the implementation of the proposed project, the installationand operation of 3 sets of LFG generators with a total capacity of 3.189MW which

will supply an average annual generation of 19,373MWh at the first crediting period

to China Southern Power Grid and replace the same amount of electricity generated

by fossil fuel-fired power plants connected to China Southern Power Grid. The LFG

which is not used in generators will be flared.

1Source: Statistics data from Urban Administration Bureau of Baoan District, which is the

management organization of Laohukeng landfill.

2

According to the ex-ante estimation, totally three generators will be reduced to two sets in the 11th

operational year, and then reduced to one set in the 17 th operational year. The actual generator

reduction year will be based on the actual LFG generation conditions.


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(c) The baseline scenario of the proposed project is the atmospheric release of LFG andthe electricity supply of equal amount as the proposed project from the China

Southern Power Grid. The baseline scenario of the proposed project is the same asthe scenario prior to the start of the implementation of the project activity.

The Project will have several positive social and environmental impacts as indicated in the

following:

1. GHG emission reduction

The proposed project will utilize methane for electricity generation. The electricity generated

by the proposed project will be sold to the China Southern Power Grid to replace the capacity

of fossil fuel power plants.

2. Contribution to environment protectionThe main social and environmental contribution of the proposed project will be a positive

effect on the health of people in local community. By managing this landfill properly the air

pollution in the local surroundings will decrease and odour nuisance and health risks of local

people will be reduced.

3. Clean energy demonstration

Advanced foreign technology will be employed, which will enhance technology transfer

activity. The proposed project will provide an example that can be used by others that may

want to develop advanced and more efficient clean electricity generation using landfill gas

throughout China.

4. Job opportunity creation

The newly installed capacity by the proposed project will directly benefit the local region by

creating new jobs and will increase the local resident income and improve their life quality.

In conclusion, the proposed project is consistent with Chinas national energy policy and

sustainable development strategy.

A.3. 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 projectparticipant (Yes/No)

Peoples Republic of

China (host)

Shenzhen Dongjiang Lisai

Recycled Power Co., Ltd.No

The NetherlandsE.ON Climate & Renewables

GmbHNo

(*) 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:


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A.4.1. Location of the project activity:

A.4.1.1. Host Party(ies):

>>

Peoples Republic of China

A.4.1.2. Region/State/Province etc.:

>>

Guangdong Province

A.4.1.3. City/Town/Community etc:

>>

Baoan District, Songgang Township, Shenzhen City

A.4.1.4. Detail of physical location, including information

allowing the unique identification of this project activity (maximum one page):

>>

The proposed project activity is located at Tangxiayong Laohukeng Landfill site, Songgang

Town, Baoan District, Shenzhen City, Guangdong Province, P. R. China. The geographical

coordinates of the center point of the landfill are east longitude 11350'28.28'' (113.8412) and

north latitude 2249'53.05'' (22.8314). The geographical coordinates of the factory building

are east longitude 11350'27.95'' (113.8411) and north latitude 2249'52.80'' (22.8313).

Geographical location of the project is showed in Figure 1 and Figure 2.


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Figure 1: The proposed project on the map of P. R. China

Figure 2: the proposed project on the map of Guangdong province

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

>>

Category: Renewable electricity in grid-connected applications

Sectoral Scope: 13 Waste Handling and Disposal

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

>>

The proposed project is to utilize landfill gas for electricity generation in Shenzhen City,

Guangdong Province, P. R. China. The proposed project is a grid-connected renewableenergy project.


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Prior to the start of implementation of the project activity, the LFG is released to atmosphere

directly and there is no power generation unit at the site of the proposed project, and theelectricity was supplied by the China Southern Power Grid. The baseline scenario of the

proposed project is the same as the scenario prior to the start of the implementation of the

project activity.

By replacing the electricity generated from fossil fuel-fired power plants dominated China

Southern Power Grid and the flare of unused landfill gas, the proposed project activity will

achieve considerable greenhouse gas (GHG) emission reductions by reducing CO2 and CH4emissions.

The proposed project consists of LFG recovery and utilization system, including LFG

collection, pre-treatment, electricity generation, flaring, monitoring and data recording.

Gas collection system

The proposed project will apply modern LFG collection system which will consist of newly

installed branch pipes, head pipes, and extraction wells for effective collection of the LFG.

The expected LFG capture efficiency is in the range of 40%~50% (40% when the landfill is

still accepting waste and 50% when the landfill is covered)3.

Gas pre-treatment system

Prior to flaring or combustion in generators, captured LFG must be pre-treated to remove its

impurities and moisture. For the LFG to the generator, the pretreatment includes primary filter,

blower and secondary filter. The primary filter can remove both the solid impurities and water

from LFG, and the particle size after treated by primary filter is less than 50m. The LFGafter treated by the secondary filter can meet the requirement of generators and the particle

size in it is less than 5m. For the LFG to the flare, it will go through a primary filter with

blower before it goes into the flare.

Electricity generation system

The proposed project will install 3 generators with capacities of 1,063kW each, which amount

to a total installed capacity of 3.189MW. The selected generators are GE Jenbacher gas

engines. The main technical specifications of the generators are provided in the following

table:

Table A-1, generator specifications4

Parameter Unit DataModel - JGS320 GS-L.L

Quantity set 3

Rated power kW 1,063

Rated voltage kV 0.4

Rated air input Nm3/h 605

Lifetime Hour 120,0005

3Source: Page 22, FSR.

4Source: generator purchase contract

5 According to the statement from power generator manufacture, the equipment lifetime is 60,000

hours based on standard maintenance schedule. According to the manufacturers maintenance manual,


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Load Factor % 776

Generator efficiency % 97.2

Furthermore, a 10kV substation will be constructed on the project site, connecting the

proposed project to Songbei substation via a 10kV line, and then the power produced by the

proposed project can be transmitted to the Guangdong Power Grid, which is an integral part

of the China Southern Power Grid.

The proposed project will use GE Jenbacher gas engines coming from the Europe, thus it

involves international technology transfer to the host party.

Flaring system

An enclosed LFG flaring system is directly connected to the LFG collection system. It is used

to combust the surplus collected LFG. The flaring system consists of tower and flareequipment. The main specifications of the flare are as follows:

Table A-2, flare specifications7

Parameter Unit Data

Flow rate Nm3/hr 300-3000

Combustion temperature 600-1200

Burn rate >99%

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

>>

A crediting period of 7 years (01/04/2011- 31/03/2018, renewable twice) is selected for the

project activity. An estimation of expected emission reductions over the crediting period is

provided in the table below.

the operational hours can be repeated with the overhaul after the 60,000 hours. Hence, the lifetime of

the generator is 120,000 hours.

6 Source: page 24, FSR. According to the FSR, the annual total power generation is 21,526MWh for 3

generators (3.189MW), 14,351MWh for 2 generators (2.126MW) and 7,175MWh for 1 generator

(1.063MW). The full load operational hour is 6750 hours. Hence, the plant load factor is 77%

(6750/8760=77%). Considering that the capacity of internal loads are about 450kW (page 44, FSR), it

is estimated that auxiliary consumption and transmission loss will account for 10% of the total power

generation. Hence, the net electricity supplied to the grid by the project is 19,373MWh, 12,915MWh

and 6,458MWh respectively. As the sums of the internal loads (450kW) are more than 10% of the

installed capacity (3.189MW), the 10% auxiliary consumption is conservative.

7Source: flare purchase contract


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A.4.5. Public funding of the project activity:

>>

There is no public funding for this project.

8According to FSR, methane generation from the landfill in each year is different, thus the emission

reduction is different in each year. Considering the start date of crediting period is 01/04/2011, soseparate calculations of emission reduction were applied for the first and last year of the crediting

period.

YearsAnnual estimation of emission reductions

in tonnes of CO2e8

01/04/2011- 31/12/2011 147,38201/01/2012-31/12/2012 211,316

01/01/2013-31/12/2013 279,416

01/01/2014-31/12/2014 225,134

01/01/2015-31/12/2015 186,640

01/01/2016-31/12/2016 158,869

01/01/2017-31/12/2017 138,416

01/01/2018-31/3/2018 30,746

Total estimated

reductions (tonnes of

CO2e)

1,377,923

Total number of the first crediting years 7Annual average over the crediting period

of estimated reductions (tonnes of CO2e)196,846


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SECTION B. Application of a baseline and monitoring methodology

B.1. Title and reference of the approved baseline and monitoring methodology

applied to the project activity:

>>

The approved methodology applied in the proposed project activity is ACM0001 (Version 11,

EB47) Consolidated baseline and monitoring methodology for landfill gas project

activities. For more information regarding the methodology please refer to

http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html

The methodology also refers to the latest version of the following tools:

Tool for the demonstration and assessment of additionality (Version 05.2, EB39)

Tool to determine methane emissions avoided from disposal of waste at a solid waste disposal

site (Version 05, EB55)Tool to determine project emissions from flaring gases containing methane (Version 01, EB28)

Tool to calculate the emission factor for an electricity system (Version 02, EB50)

Tool to calculate project or leakage CO2 emission from fossil fuel combustion (Version 02,

EB41)

Combined tool to identify the baseline scenario and demonstrate additionality (Version 02.2,

EB28)

Tool to calculate baseline, project and/or leakage emissions from electricity consumption

(Version 01, EB39)

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

project activity:

>>

The approved consolidated methodology: ACM0001 (Version 11) is applicable to landfill gas

capture project activities, where the baseline scenario is the partial or total atmospheric release

of the gas and the project activities include situations such as:

(a) The captured gas is flared; and/or(b) The captured gas is used to produce energy (e.g. electricity/thermal energy).(c) The captured gas is used to supply consumers through natural gas distribution

network. If emissions reductions are claimed for displacing natural gas, project

activities may use approved methodology AM0053.

The baseline scenario of the proposed project is the atmospheric release of LFG and the

electricity supply of equal amount as the proposed project from the China Southern PowerGrid. The baseline scenario of the proposed project is the same as the scenario prior to the

start of the implementation of the project activity.

As previously described, the proposed project is to collect LFG and utilize partial LFG for

power generation. The excessive LFG will be flared. The proposed project meets situation (a)

and (b) above and since the project does not involve natural gas it is not related to c) neither.

Therefore, ACM0001 is applicable.

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

>>

According to the methodology ACM0001, the project boundary is the site of the project

activity where the gas is captured and destroyed/used.


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If the electricity for project activity is sourced from grid or electricity generated by the LFG

captured would have been generated by power generation sources connected to the grid, the

project boundary shall include all the power generation sources connected to the grid to whichthe project activity is connected.

In this case, the electricity for the proposed project is sourced from China Southern Power

Grid and electricity generated by the LFG captured would have been generated by power

generation sources connected to China Southern Power Grid. So the project boundary

includes the whole LFG related system (e.g. LFG collection, LFG flaring, LFG power

generation system, auxiliary equipment, etc.) and all grid-connected power plants connected

to China Southern Power Grid.

According to the Tool to calculate the emission factor for an electricity system (version 02),

the delineation of grid boundaries as provided by the DNA of China9

is used. China Southern

Power Grid is the project electricity system. The transmission among China Southern PowerGrid and other grids (Central China Power Grid) is taken into account.

Source Gas Included? Justification / Explanation

CH4 Yes The major source of emissions in the

baseline.

N2O No N2O emissions are small compared to

CH4 emissions from landfills. Exclusion

of this gas is conservative.

Emissions

from

decomposition

of waste at the

landfill site

CO2 No CO2 emissions from the decomposition

of organic waste are not accounted

CO2 Yes Electricity may be consumed from thegrid or generated onsite/offsite in the

baseline scenario

CH4 No Excluded for simplification. This is

conservative.

Emissionsfrom

electricity

consumption

N2O No Excluded for simplification. This is

conservative.

CO2 No The thermal energy generation is not

included in the project activity.

CH4 No The thermal energy generation is not

included in the project activity.

Baseline

Emissions

from thermal

energy

generation

N2O No The thermal energy generation is not

included in the project activity.CO2 No The fossil fuel consumption is not

included in the project activity. But it

will be monitored if any.

CH4 No Excluded for simplification. This

emission source is assumed to be very

small.

On-site fossil

fuel

combustion

due to the

project

activity other

than for

electricity

generation

N2O No Excluded for simplification. This


small.ProjectActivity

Emissions CO2 Yes May be an important emission source.

9http://qhs.ndrc.gov.cn/qjfzjz/t20090703_289357.htm


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CH4 No Excluded for simplification. This


small.

from on-site

electricity use

N2O No Excluded for simplification. This


small.

The following figure shows the boundary of the baseline scenario and project activity.

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

identified baseline scenario:

>>

According to ACM0001, the procedures for the selection of the most plausible baseline

scenario are analyzed as follows:

Step 1: Identification of alternative scenarios

Alternatives for the disposal/treatment of the waste in the absence of the project activity, i.e.

the scenario relevant for estimating baseline methane emissions, to be analysed should include,

inter alia:

LFG1: The project activity (i.e. capture of landfill gas and its flaring and/or its use)

undertaken without being registered as a CDM project activity;

LFG2: Atmospheric release of the landfill gas or partial capture of landfill gas and destruction

to comply with regulations or contractual requirements, or to address safety and odour

concerns.

If LFG is used for generation of electric or heat energy for export to a grid and/or to a nearby

industry or used on-site, realistic and credible alternatives should also be separately

determined for:

Power generation in the absence of the project activity

Heat generation in the absence of the project activity.


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For power generation, the realistic and credible alternative(s) may include, inter alia:

P1: Power generated from landfill gas undertaken without being registered as CDMproject activity;

P2: Existing or construction of a new on-site or off-site fossil fuel fired cogeneration

plant;

P3: Existing or construction of a new on-site or off-site renewable based cogeneration

plant;

P4: Existing or construction of a new on-site or off-site fossil fuel fired captive power

plant;

P5: Existing or construction of a new on-site or off-site renewable based captive power

plant;

P6: Existing and/or new grid-connected power plants.

For heat generation,The proposed project doesnt involve thermal energy generation component. Therefore, all

the alternatives of heat generation are not considered.

Step 2: Identify the fuel for the baseline choice of energy source taking into account the

national and/or sectoral policies as applicable.

There is no existing fossil fuel power plant or plan to construct a new on-site or off-site fossil

fuel fired cogeneration plant or captive power plant. The comparable installed capacity of the

fossil fuel-fired plants with equivalent annual power supply as the project will be lower than

3.189 MW, while coal-fired plants with a capacity of 135 MW or less are prohibited from

development in large grid such as provincial girds

10

according to current regulations in China.So, alternative P2 and P4 are excluded.

There is no existing renewable based power plant or plan to construct a new on-site or off-site

renewable based cogeneration plant or captive power plant. Construction a new on-site or off-

site renewable based cogeneration plant or captive power plant needs additional investment

and technical efforts. Furthermore there is no hydro, wind11

or other renewable resource

available in the location of the proposed project for power generation. So, alternative P3 and

P5 are excluded too.

P3 and P5 are in compliance with all applicable legal and regulatory requirements in China.

As described above, plausible alternative scenarios for the proposed project are LFG1, LFG2for LFG utilization and P1, P6 for power generation.

For LFG1, it is in compliance with all mandatory applicable legal and regulatory requirements

in China.

10Notice on Strictly Prohibiting the Installation of Fuel-fired Generation with the Capacity of 135MW

or below issued by the General Office of the State Council, decree no. 2002-6

11

According to page 6 and 7, the FSR of the proposed project, there is no river at the project site, theannual average wind speed is 2.6m/s, its not likely to develop hydro power or wind power project at

the project site.


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For LFG2, Laohukeng landfill was built in 2002, when Technical code for municipal solid

waste sanitary landfill (CJJ17-1988, issued on 23 Dec 1998) and Standard for pollution

control on the landfill site for domestic waste (GB16889-1997, issued on 2 Jul 1997) wereavailable.

Both regulations specify safety limits for methane concentration in the air and buildings

around landfill sites and document the procedures of venting LFG to remove the gas from the

site and disperse it safely into the atmosphere. They also suggest that LFG should be flared or

where possibly utilized.

However, due to the significant financial and technical difficulties widely recognized in the

sector, the activities of methane recovery and flaring/utilization have not been widely

practiced in China. Although Chinese government encouraged the collection of LFG from

waste dumps in the past few years, but the fact was still that most of the landfills just vent the

gas to atmosphere without any exhaust and flaring system, even more than 90% of thousandlandfills in China just simply dump the waste without sanitation filling

12. It is still a blank

paper for landfill management to establish landfill gas recovery and utilization systems, as

quoted from China National Action Plan for Recovery and Utilization of landfill Gas which

is sponsored by China State Environment Protection Administration (SEPA), together with

UNDP and GEF.

Most recently, in Feb 2007, the Ministry of Construction issued a circular on the outcome of

nationwide inspection on hazard-free treatment of domestic waste landfill sites, concluding

that the inspection of 372 landfill sites located across 31 provinces, autonomous regions and

municipalities in China revealed that 92.76% of the landfills have no landfill gas recovery and

utilization facilities. Among the 372 landfill sites, a total of 237 were constructed after year200013

. Other landfills, which installed LFG recovery system, were supported by CDM or

other international supporting scheme.

On the basis of above evidence, it is justifiable to conclude that atmospheric release of the

landfill gas is still widespread in China.

Therefore, LFG2 is a plausible alternative and could be considered as a baseline scenario.

For P1, it is in compliance with all applicable legal and regulatory requirements in China.

For P6, it is in compliance with all applicable legal and regulatory requirements in China.

Outcome of step 2:

According to the analysis above, the possible combinations of baseline are as follows:

Table B-2: analysis of the possible baseline options and scenarios combinations

Power generation P1: Power generated from

landfill gas undertaken

without being registered as

P6: Electricity provided by

China Southern Power Grid

12

http://www.gzuda.gov.cn/news/view.asp?id=XW200302111552083224&fdID=CL2003021115192455

50&tbCo

13http://www.huanke.com.cn/08/article.asp?articleid=416


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LFG utilization CDM project activity

LFG1: The project activity

undertaken without beingregistered as a CDM project

activity

Combination Option 1:

The proposed projectundertaken without being

registered as a CDM project

activity

Not applicable.

If the LFG is utilized togenerate electricity and

replace the electricity from

the power grid, then this part

of electricity generation in

the grid is not necessary

LFG2: Atmospheric release

of the landfill gas

Not applicable.

If the LFG is directly

released to atmosphere, then

no electricity could be

generated.


Atmospheric release of LFG

and use the electricity from

grid

According to the analysis in the table above, the realistic and credible combination baseline

options can be combination Option 1 and 2:


The proposed project is undertaken without being registered as a CDM project activity (LFG1

+ P1).


To release LFG from landfill to atmospheric and use the electricity from grid, which is

business as usual (LFG2 + P6).

Step 3: Step 2 of the latest approved version of Tool for demonstration and assessment ofAdditionality shall be used to assess which of these alternatives should be excluded from

further consideration

Based on the financial analysis illustrated in the following Section B.5., without CER revenue

taken into account, the after-tax IRR of total investment of the proposed project is lower than

the benchmark IRR 8%, please see step 2 in B.5. for detailed information. Therefore, if not

undertaken as a CDM project, the proposed project is not financially attractive. Hence,

Combination Option 1 is excluded from further consideration.

Outcome of Step 3:

Only Combination Option 2 is remained as alternative.

Step 4: Where more than one credible and plausible alternative remains, project

participants shall, as a conservative assumption, use the alternative baseline scenario that

results in the lowest baseline emissions as the most likely baseline scenario.

This step is not selected due to Combination Option 2 is the only alternative left.

It can be concluded that the baseline scenario of the project activity is Combination Option 2

consisting of LFG2 and P6.

BaselineScenario

Landfill gas Electricity Heat

Description of situation

1 LFG2 P6 N/A The atmospheric release of

landfill gas or landfill gas


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is partially captured and

subsequently flared. The

electricity is obtained fromexisting and/or new grid-

connected power plants.

Hence, Combination Option 2 (LFG2 + P6), which is the same as the scenario 1 in the

methodology ACM0001 is considered as the baseline scenario of the proposed project.

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):

>>

The additionality of the proposed project is demonstrated and assessed by the approved Tool

for the Demonstration and Assessment of Additionality (Version 05.2). Following steps

include:

The following table is the timeline of the proposed project showing that the benefits of CDM

had been taken into account when making the decision to implement the proposed project.

Table B-6 Timeline of the proposed project

Date Key Events Comment

02/2008 Feasibility Study Report (FSR) developed In the FSR, the

implementation of CDM

and CDM revenue had

been taken intoconsideration to overcome

the finance

unattractiveness of the

project.

08/10/2008 CDM consultancy contract signed

05/12/2008 The prior consideration of CDM was

submitted to NDRC

08/12/200814

The notification of prior consideration of

CDM was approved by NDRC

17/08/2009 EIA was approved by Shenzhen

Environment Protection Bureau

23/09/2009 The project was approved by Shenzhen

Development and Reform Commission

08/03/2010 Emission Reduction Purchase Agreement

signed

10/03/2010 Pre-treatment and flare system contract

signed

Project starting date

18/03/2010 Power generator purchase contract signed

22/03/2010 Construction contract signed

24/03/2010 Loan contract signed

21/05/2010 Chinese LoA obtained

14 The date is quoted from project participant, although it is not indicated in the NDRC's approval

document.


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06/05/2010 Construction started

03/06/2010 Contract on validation signed

08/07/2010 The prior consideration of CDM form wassent to UNFCCC secretariat

03/08/2010 Dutch LoA obtained

Step 1. Identification of alternatives to the project activity consistent with current laws and

regulations

Sub-step 1a. Define alternatives to the project activities:

Alternatives for the disposal/treatment of the waste in the absence of the project activity,

i.e. the scenario relevant for estimating baseline methane emissions, to be analysed should

include, inter alia:

LFG1: The project activity (i.e. capture of landfill gas and its flaring and/or its use)

undertaken without being registered as a CDM project activity;

LFG2: Atmospheric release of the landfill gas or partial capture of landfill gas and

destruction to comply with regulations or contractual requirements, or to address safety

and odour concerns.

If LFG is used for generation of electric or heat energy for export to a grid and/or to a

nearby industry or used on-site, realistic and credible alternatives should also be separately

determined for:

Power generation in the absence of the project activity

Heat generation in the absence of the project activity.

For power generation, the realistic and credible alternative(s) may include, inter alia:

P1: Power generated from landfill gas undertaken without being registered as CDM

project activity;

P2: Existing or construction of a new on-site or off-site fossil fuel fired cogeneration

plant;

P3: Existing or construction of a new on-site or off-site renewable based cogeneration

plant;

P4: Existing or construction of a new on-site or off-site fossil fuel fired captive power

plant;

P5: Existing or construction of a new on-site or off-site renewable based captive powerplant;

P6: Existing and/or new grid-connected power plants.

For heat generation,

The proposed project doesnt involve thermal energy generation component. Therefore, all

the alternatives of heat generation are not considered.

Sub-step 1b. Enforcement of applicable laws and regulations:

As analyzed in Section B.4. Sub-step 2, the realistic and credible options can be alternative

Combination Option 1 and 2:


The proposed project undertaken without being registered as a CDM project activity.


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To release LFG from landfill to atmosphere, and use the electricity from grid, which isbusiness as usual.

Step 2. Investment analysis

The purpose of this step is to determine whether the proposed project activity is economically

or financially less attractive than other alternatives without an additional funding that may be

derived from the CDM project activities. The investment analysis was conducted in the

following steps:

Sub-step 2a. Determine appropriate analysis method

The three analysis methods suggested by Tools for the demonstration and assessment of

additionality are simple cost analysis (option I), investment comparison analysis (option II)

and benchmark analysis (option III). Since the proposed project will earn revenues fromnot only the CDM but also the electricity output the simple cost analysis method is not

applicable. Investment comparative analysis method is only applicable to the case that

alternative baseline scenario is similar to the proposed project, so that comparative

analysis can be conducted. The alternative baseline scenario of the proposed project is the

China Southern Power Grid rather than a new investment project. Therefore option II is

not an applicable method either. The proposed project will use benchmark analysis method

based on Project IRR.

Sub-step 2b. Apply benchmark analysis (Option III)

According to Clause 1.11, page 2 of theInterim Rules on Economic Assessment of Electric

Engineering Retrofit Projects, the financial benchmark IRR of Chinese power industries,including waste-to-energy project is 8% of the total investment, which has been used

widely for Feasibility Studies of the power project investments.

Sub-step 2c. Calculation and comparison of financial indicators

Based on the above-mentioned benchmark, the calculation and comparative analysis of

financial indicators for the proposed project are carried out in sub-step 2c.

(1) Basic parameters for calculation of financial indicators

Based on the Feasibility Study Report of the proposed project, basic parameters for

calculation of financial indicators are as follows:

Key parameters for the calculation of financial indicatorsBasic parameters Value Data source

Installed capacity (MW) 3.18915

FSR

Net power supply (MWh) 19,37316

FSR

15The installed capacity is 3.189 MW (3*1063kW) at beginning. It will be reduced to 2.126 MW

(2*1063kW) in the 11th operational year and to 1.063 MW (1*1063kW) in the 17 th operational year

due to the decrease of LFG generation.

16 According to the page 24 FSR, the annual total power generation is 21,526MWh for 3 generators

(3.189MW), 14,351MWh for 2 generators (2.126MW) and 7,175MWh for 1 generator (1.063MW).

Considering that the capacity of internal loads are about 450kW (page 44, FSR), it is estimated thatauxiliary consumption and transmission loss will account for 10% of the total power generation. The

net electricity generation is 19,373 MWh at beginning. It will reduce to 12,915 MWh in the 11th


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Tariff(Yuan/kWh) 0.689 (incl. VAT) in

the initial 15 years;

0.439 (incl. VAT)after the initial 15

years.

FSR17

Total static investment

(million Yuan)54.4852

FSR

Loan ratio 70% FSR

Loan interest rate 5.94%Government

document18

Depreciation year 13 FSR

Depreciation rate 7.31%19

FSR

Residual value rate 5%20

FSR

Project lifetime(year)21 (1 year forconstruction and 20

years for operation)

FSR

Average annual O&M

(million Yuan)21

6.02

FSR

Tax FSR

VAT (%) 17% FSR22

City tax 7% FSR23

Education tax 3% FSR24

Income tax (%) 25% FSR25

operational year and reduce to 6,458 MWh in the 17th

operational year due to the decrease of power

generator units. As the sums of the internal loads (450kW) are more than 10% of the installed capacity

(3.189MW), the 10% auxiliary consumption is conservative.

17 Based on Tentative Management Measures for Price and Sharing of Expense for Electricity

Generation from Renewable Energy. The nearby projects include (1) Shenzhen Xiaping Landfill Gas

Collection and Utilization Project (Ref. 0887), the tariff of which is 0.63Yuan/kWh; (2) Meizhou

Landfill Gas Recovery and Utilization as Energy (Ref. 0176), the tariff of which is 0.55Yuan/kWh.

18http://www.pbc.gov.cn/publish/zhengcehuobisi/631/1269/12693/12693_.html, the interest rate

changed from 7.83% (FSR) to 5.94% when the project started.

19

http://www.chinatax.gov.cn/n8136506/n8136593/n8137537/n8138532/8233864.html, which saysthe depreciation year for equipments is no less than 10 years. Industrial enterprises have the right to set

a number in this range.

20 Industrial Enterprise Financial Regulation issued by Ministry of Finance, in which the residual rate is

between 3%-5% (Page 5). Industrial enterprises have the right to set a number in this range.21

Annual O&M includes Water fee, maintenance, salary and welfare, landfill gas utilization fee, repairfee and miscellaneous cost.

22 The data is from FSR, which is the same as the value in the active regulation - Provisional

Regulations on Value Added Tax (Ref. State Council Order 538)

23http://www.gov.cn/banshi/2005-08/19/content_24817.htm

24http://www.gov.cn/jrzg/2005-09/24/content_69824.htm

25 The data is from FSR, which is the same as the value in the active regulation - Income Tax Law (Ref.

President of P.R China Order [2007] No. 63)


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CER

Expected CERs Price

(Euro/tCO2e)

8.7 Estimated

Exchange Rate (Yuan/Euro) 9.32 Estimated

(2) Comparison of IRR for the proposed project and the financial benchmark

In accordance with the benchmark analysis (Option III), the proposed project will not be

considered as financially attractive if its financial indicators (such as IRR) are lower than

the benchmark rate.

As shown in Table 1, without the CDM revenue, the IRR of total investment is lower than

the benchmark rate 8%. Thus the proposed project does not look financially attractive to

the investors. However, with the CDM revenue, IRR of the Project is significantly

improved and exceeds the benchmark rate. Therefore, the proposed project with the CDMrevenue can be considered as financially viable to the investors.

Table 1 Financial indicators of the Shenzhen Laohukeng Landfill Gas project

Project IRR (benchmark = 8%)

Without CDM revenue -4.14%

With CDM revenue 27.98%

Sub-step 2d. Sensitivity analysis (only applicable to options II and III):

In accordance with the Tool for demonstration and assessment of additionality (Version

05.2), the objective of sensitivity analysis is to examine whether the conclusion regarding the

financial attractiveness is robust to reasonable variations in the critical assumption. Theinvestment analysis provides a valid argument in favor of additionality only if consistently

supports (for a realistic range of assumptions) the conclusion that the project activity is

unlikely to be the most financially attractive or is unlikely to be least financially attractive.

According to Guidance on the Assessment of Investment Analysis (Version 03.1), only

variables, including the initial investment cost, that constitute more than 20% of either total

project costs or total project revenues should be subjected to reasonable variation. Therefore,

four parameters of the total static investment, annualO&M cost, net power supply and

tariffwere identified as the main variable factors for the proposed project.

The critical factors that influence the Project IRR are mainly as follows:

1) Total static investment;

2) Annual O&M cost;

3) Net power supply;

4) Tariff

Table 2 Fluctuation rates of parameters when the project IRR reaches to 8%

Total static investment O&M cost Tariff Net power supply

-43.1% -38.3% 34.8% 34.8%


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For all four parameters, it is unlikely to increase or decrease to the point the project IRR reach

the benchmark. The detail analysis is as follows:

Total static investment

The total static investment needs to decrease by 43.1% when the project IRR meets the

benchmark of 8%. However, the contracted investment by July 2010 has summed up to

70.60%26

of total static investment. Therefore, the total static investment is not likely to

decrease by 43.1% to exceed benchmark.

O&M cost

The O&M cost needs to decrease by 38.3% when the project IRR meets the benchmark of 8%.

According to the FSR of the proposed project, the O&M cost is the sum of the repair cost,

maintenance cost, material charge, salary and welfare, LFG utilization fee and miscellaneouscost, each of the above cost is calculated by some fixed parameters such as the installed

capacity, the normal standard for utilization of equipments etc. Furthermore, according to the

China Statistic Yearbook 2009 (http://www.stats.gov.cn/tjsj/ndsj/2009/indexch.htm), the

Producer Price Index for Manufactured Goods from the year 2004 to 2008 was 106.1, 104.9,

103.0, 103.1 and 106.9 respectively, which indicated that the operation and maintenance cost

is always increasing. So annual O&M cost is unlikely to decrease by more than 38.3%.

Tariff

The tariff needs to increase by 34.8% when the project IRR meets the benchmark of 8%.According to the Tentative Management Measures for Price and Sharing of Expense for

Electricity Generation from Renewable Energy issued by the NDRC on 05/01/2006, the

electricity tariff for landfill gas utilization power plant is fixed to be the provincial

desulphurization coal-fired power plant benchmark tariff in 2005 plus the subsidy tariff,

which is 0.25RMB/kWh during the initial 15 years. And the subsidy tariff will be cancelled

after 15 years.

The desulphurization coal-fired power plant benchmark tariff in Guangdong province in 2005

was 0.439RMB/kWh (source: http://china.em51.com/news/shownews.asp?id=1848). So, the

tariff of the proposed project is 0.689 RMB/kWh (0.439+0.25=0.689) during the initial 15

years and 0.439RMB/kWh after the initial 15 years. In addition, the tariff of similar LFG

projects shown in Table 3 ranges in 0.42-0.63 RMB/kWh27

. Therefore, the tariff of theproposed project is unlikely to reach that high level.

Net power supply

26The contracted investment has summed up to be 38.47 million RMB by the day of onsite interview,

July 19, 2010. The contracts have been provided to DOE for validation.

27http://cdm.unfccc.int/Projects/DB/DNV-CUK1135170125.82/view(Ref. 0176);

http://cdm.unfccc.int/Projects/DB/SGS-UKL1169636952.02/view(Ref. 0887);http://cdm.unfccc.int/Projects/DB/JCI1175576815.21/view(Ref.1075);

http://www.netinform.net/KE/files/pdf/Huizhou_Landfill_Gas_CDM_PDD_ACM0001.pdf


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The net power supply needs to increase by 34.8% when the project IRR meets the benchmark

of 8%, which puts the annual operating hour as high as 9099 hours. Considering that there are

totally 8760 hours in one year, this increase is impossible to happen. Hence, the net powersupply is impossible to increase by 34.8% to make the project IRR reach the 8% benchmark.

The auxiliary consumption and power loss was estimated to be 10% of the total power

generation. As the sums of the internal loads (450kW)28

were more than 10% of the installed

capacity (3.189MW), the 10% auxiliary consumption is conservative. Moreover, even

assuming that the auxiliary consumption and power loss was 0, the project IRR is 1.59%, still

much lower than the 8% benchmark.

In conclusion of the sensitive analysis, as the financial indicators vary within reasonable range,

the proposed project remains financially unattractive without CDM support and the proposed

project is additional. Hence, the Scenario 1) is not a realistic alternative.

Step 3: Barrier analysis

Not applicable (Only Step 2 is selected).

Step 4. Common practice analysis

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

In China, the investment climate (e.g. with regards to taxes, loan policy and electricity tariffs)

is only similar and comparable in the same province. Therefore, the common practice region

and comparable framework is provincial and the proposed project is compared to other

projects in Guangdong Province.

In April 2002, China implemented the policy "Separate power plants from network and

compete in price to enter network29

The objective of this power sector reform is to establish a

more commercialized power market in China. Power project investment has to be under a

more commercialized condition and considers project investment return more seriously. Since

market condition for power generation project development changes much since April 2002,

this common practice analysis starts from April 2002.

For the proposed project, LFG is collected and used to produce electricity energy, the similar

activities including those LFG collection and destruction (for power generation, thermal

energy production or simply flared) projects.

According to Summary of Urban Garbage Disposal Industry Development in 2007, Tentative

Study on Future Market of Power Generation by Landfill Gas (LFG)30 and other related

sources, the similar projects are list in the following table:

Table 3 similar LFG utilization projects in Guangdong province

No. Project title Remark

1 Guangzhou Datianshan Landfill Gas Utilization Project31

Sino-foreign

28Source: page 44, FSR of the proposed project.

29China implemented the policy "Separate power plants from network and compete in price to enter

network"

30Huang Xi, Nonferrous Metals Engineering & Research, 2009 (12): 80-83


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cooperative project &

Built and operated in

1999.2 Meizhou Landfill Gas Recovery and Utilization as Energy CDM

(Ref. 0176)

3 Shenzhen Xiaping Landfill Gas Collection and Utilization

Project

CDM

(Ref. 0887)

4 Guangzhou Xingfeng Landfill Gas Recovery and Electricity

Generation CDM Project

CDM

(Ref. 1075)

5 Huizhou Landfill Gas Recovery and Utilization Project32 CDM

(Under validation)

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

Based on the table above, there are totally five similar projects, four of which are CDM

project activities with 3 registered (No. 2 - 4) and one under validation (No. 5). These projects

are not to be included in this analysis.

The Guangzhou Datianshan Landfill Gas Utilization Project (No. 1) was the first LFG

utilization project in China and was a sino-foreign cooperative project operated by foreign

company in 199933. It was a public funding assistance project and project built and operated

before April 2002, enjoying advantage in access to financing and faced different investment

climate.

In a word, landfill gas utilization project is not common practise in Guangdong province.

In conclusion, the proposed project is additional and the project owner considered applying

for CDM project to overcome the difficulties before the construction of the proposed project.

B.6. Emission reductions:

B.6.1. Explanation of methodological choices:

>>

According to ACM0001, the emission reduction of the proposed project is calculated as

follows:

Baseline emissions

yBLtheryLFGyBLelecyLFGCHyBLyprojecty CEFETCEFELGWPMDMDBE ,,,,,,4,, ** (1)

Where:

BEy = Baseline emissions in yeary (tCO2e)

MDproject,y = The amount of methane that would have been destroyed/combusted

during the year, in tonnes of methane (tCH4) in project scenario

31 http://solidwaste.chinaep-tech.com/landfill-gas-power/33196.htm

32

http://cdm.unfccc.int/Projects/Validation/DB/FPXFSQIQTJDSN5X0QLJX13RZ55K8RW/view.html

33 Reference: Comprehensive Utilization of Landfill Gas by Huang Xiaowen and Wu Sanda,

Environmental Sanitation Engineering, 2006 (8):9 - 11


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MDBL,y = The amount of methane that would have been destroyed/combusted

during the year in the absence of the project due to regulatory

and/or contractual requirement, in tonnes of methane (tCH4)GWPCH4 = Global Warming Potential value for methane for the first

commitment period is 21 tCO2e/tCH4

ELLFG,y = Net quantity of electricity produced using LFG, which in the

absence of the project activity would have been produced by power

plants connected to the grid or by an on-site/off-site fossil fuel

based captive power generation, during year y, in megawatt hours

(MWh)

CEFelec,BL,y = CO2 emissions intensity of the baseline source of electricity

displaced, in tCO2e/MWh. This is estimated as per equation (9)

below

ETLFG,y = The quantity of thermal energy produced utilizing the landfill gas,

which in the absence of the project activity would have beenproduced from onsite/offsite fossil fuel fired boiler, during the year

y in TJ

CEFther,BL,y = CO2 emissions intensity of the fuel used by boiler to generate

thermal energy which is displaced by LFG based thermal energy

generation, in tCO2e/TJ. This is estimated as per equation (10)

below

Step 1: Calculation of MDBL,y

In cases where regulatory or contractual requirements do not specifyMDBL,y or no historic

data exists for LFG captured and destroyed an Adjustment Factor (AF) shall be used andjustified, taking into account the project context:

AFMDMD yprojectyBL *,, (2)

LFG utilization to energy is not common practice in South China until very recently.

According to ERMs survey, currently less than 5% landfill sites in China have LFG

collection and flaring schemes and even less have gas utilization facilities34

.

Based on the description above, the LFG recovery and utilization is not common in South

China. They are mainly released to atmosphere without any treatment.

Hence, the value of AF is set as 0% according to ACM0001 that no quantity of methane

would be destroyed without the project activity and will be monitored during the whole

crediting period. Consequently, MDBL,y is zero according to equation (2).

Step 2: Calculation of MDproject,y

The methane destroyed by the project activity (MDproject,y) during a year is determined by

monitoring the quantity of methane actually flared and gas used to generate electricity and/or

produce thermal energy and/or supply to end users via natural gas distribution pipeline, if

applicable, and the total quantity of methane captured.

34

Reference: CDM Umbrella Guidelines for MSW in China(http://www.frankhaugwitz.info/doks/cdm/2004_05_19_China_CDM_MSW_Guidelines_Final_Draft_

WB.pdf ).


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The sum of the quantities fed to the flare(s), to the power plants(s), to the boiler(s) and to the

natural gas distribution network (estimated using equation (3)) must be compared annuallywith the total quantity of methane generated. The lowest value of the two must be adopted as

MDproject,y.

The following procedure applies when the total quantity of methane generated is the highest.

The working hours of the energy plants(s) and the boiler(s) should be monitored and no

emission reduction could be claimed for methane destruction in the energy plant or the boiler

during non-operational hours.

yPLythermalyyelectricityflaredyproject MDMDMDMDMD ,,,,, (3)

Where:

MDflared,y = Quantity of methane destroyed by flaring (tCH4)MDelectricity,y = Quantity of methane destroyed by generation of electricity (tCH4)

MDthermal,y = Quantity of methane destroyed for the generation of thermal energy

(tCH4)

MDPL,y = Quantity of methane sent to the pipeline for feeding to the natural gas

distribution network (tCH4)

According to the proposed project activity, in the case that the power generation units are

under maintenance and/or landfill gas captured exceed the demand for power generation, the

remaining part of the landfill gas will be fed into a flare to be destructed. Therefore, the

annual amount of methane destruction by flaring can be estimated by the following formula:

4,4,4,, /** CHyflareCHyCHyflareyflared GWPPEDwLFGMD (4)Where:

LFGflare,y = Quantity of landfill gas fed to the flare(s) during the year measured in

cubic meters (m3)

wCH4,y = Average methane fraction of the landfill gas as measured during the year

and expressed as a fraction (in m3

CH4/m3

LFG)

DCH4 = Methane density expressed in tonnes of methane per cubic meter of

methane (tCH4/m3CH4)

PEflare,y = Project emissions from flaring of the residual gas stream in year y

(tCO2e) determined following the procedure described in the Tool to

determine project emissions from flaring gases containing Methane. If

methane is flared through more than one flare, the PEflare,yshall bedetermined for the flare using the tool

According to the description in Tool to determine project emissions from flaring gases

containing Methane, the project emission from flaring gases is calculated as follows:

1000)1( 4,

,

8760

1

,CH

hflare

hRGh

yflare

GWPTMPE

(5)

Where:

PEflare,y = Project emissions from flaring of the residual gas stream in yeary

(tCO2e)

TMRG,h = Mass flow rate of methane in the residual gas in the hourh (kg/h)flare,h = Flare efficiency in hourh


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GWPCH4 = Global Warming Potential of methane valid for the commitment period

According to tool to determine project emissions from flaring gases containing methane, incase of enclosed flares and use of the default value for the flare efficiency, the flare efficiency

in the hour h (flare,h) is 90%, if the temperature in the exhaust gas of the flare (Tflare) is

above 500 for more than 40 minutes during the hour h and the manufacturers

specifications on proper operation of the flare are met continuously during the hour h.

According to the technical specifications provided by the manufacture of the flare equipment,

the combustion temperature of the flare ranges from 600 to 1200, which is above 500

. Hence, the default value of 90% is selected. The quantity of methane flow rate in the

residual gas flowing into the flare is calculated as following:

nCHhRGCHhRGhRG fvFVTM ,4,,4,, (6)

Where:

TMRG,h = Mass flow rate of methane in the residual gas in the h (kg/h)

FVRG,h = Volumetric flow rate of the residual gas in dry basis at normal conditions in

hourh (m3/h)

fvCH4,RG,h = Volumetric fraction of methane in the residual gas on dry basis in hourh

CH4,n = Density of methane at normal conditions (0.716 kg/m3)

The volumetric fraction of the methane in the residual gas is equal to the volumetric fraction

of the methane measured in gas analyzer G.

For the ex-ante estimation of proposed project, the values ofFVRG,handfvCH4,RG,h are constant

yearly ignoring the hourly change.

The annual amount methane destruction in power plant can be estimated by the following

formula:

4,4,, CHyCHyyelectricityyelectricit DwLFGMD (7)

Where:

MDelectricity,y = Quantity of methane destroyed by generation of electricity

wCH4,y = Volumetric fraction of methane in LFG

LFGelectricity,y = Quantity of landfill gas fed into electricity generator

DCH4 = Density of methane at normal conditions

According to FSR, the methane fraction of the same kind of landfill gas in China ranges in

40%-60%, with mostly greater than 50%. Therefore, the wCH4,y of the proposed project is set

to be 50% . According to Tool to determine methane emissions avoided from disposal of

waste at a solid waste disposal site, DCH4 is 0.0007168 tCH4/m3CH4 at 0 and 1013 bar.

The proposed project doesnt involve heat generation component and feeding to the natural

gas distribution network component, therefore MDthermal,y and MDPL,y is set as 0.

Ex-ante estimation of the amount of methane that would have been destroyed/combusted

during the year, in tonnes of methane (MDproject,y)

The ex-ante estimation of the amount of methane that would have been destroyed/combusted

during the year, in tonnes of methane (MDproject,y) will be done with the latest version of the


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approved Tool to determine methane emissions avoided from disposal of waste at a solid

waste disposal site, considering the following additional equation:

4,,4, / CHySWDSCHyproject GWPBEMD (8)

Where:

BECH4,SWDS,y = Methane generation from the landfill in the absence of the project

activity at year y (tCO2e), calculated as per the Tool to determine

methane emissions avoided from disposal of waste at a solid waste

disposal site. The tool estimates methane generation adjusted for, using

adjustment factor (f) any landfill gas in the baseline that would have been

captured and destroyed to comply with relevant regulations or

contractual requirements, or to address safety and odor concerns. As this

is already accounted for in equation 2, f in the tool shall be assigned avalue 0

Furthermore the following guidance should be taken into account:

In the tool x will refer to the year since the landfill started receiving wastes [x

runs from the first year of landfill operation (x=1) to the year for which

emissions are calculated (x=y)];

Sampling to determine the different waste types is not necessary, the waste

composition can be obtained from previous studies.

The efficiency of the degassing system which will be installed in the project activity should

be taken into account while estimating the ex-ante estimation.

The landfill gas collection system will not collect 100% of the gas from the landfill site.According to the FSR, 40% of the landfill gas will be collected when the landfill is open and

50% when it is closed. Therefore, as a conservative measure we will use this collection

efficiency for the emission reduction estimations.

The amount of methane that would in the absence of the project activity be generated from

disposal of waste at the solid waste disposal site (BECH4,SWDS,y) is calculated with a multi-phase

model. The calculation is based on a first order decay (FOD) model recommended by the

Revised 2006 IPCC Guideline for National Greenhouse Gas Inventory. The model

differentiates between the different types of wastej with respectively different decay rates kj

and different fractions of degradable organic carbon (DOCj). The model calculates the

methane generation based on the actual waste streams Wj,x disposed in each yearx, starting

with the first year after the start of the project activity until the end of the yeary, for which

baseline emissions are calculated (years x with x = 1 to x = y).

According to the Tool to determine methane emissions avoided from disposal of waste at a

solid waste disposal site, the amount of methane produced in the yeary (BECH4,SWDS,y) is

calculated as follows:

y

x j

kxyk

jxjfCHySWDSCH

jj eeDOCWMCFDOCFOXGWPfBE1

)(

,4,,4 )1(12

16)1()1(

(9)

Where:BECH4,SWDS,y = Methane emissions avoided during the yeary from preventing waste


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disposal at the solid waste disposal site (SWDS) during the period from

the start of the project activity to the end of the year y (tCO2e)

= 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

GWPCH4 = Global Warming Potential (GWP) of methane, valid for the relevant

commitment period

OX = Oxidation factor (reflecting the amount of 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) (0.5)

DOCf = Fraction of degradable organic carbon (DOC) that can decompose

MCF = Methane correction factor

Wj,x = Amount of organic waste typej prevented from disposal in the SWDS in

the yearx (tons)

DOCj = Fraction of degradable organic carbon (by weight) in the waste typej

kj = Decay rate for the waste typej

j = Waste type category (index)

x = Year during the crediting period: x runs from the first year of the firstcrediting period (x = 1) to the year y for which avoided emissions arecalculated (x = y)

y = Year for which methane emissions are calculated

Step 3: Determination of CEFelec,BL,yIn case the baseline is electricity generated by plants connected to the grid the emission factor

should be calculated according to Tool to calculate the emission factor for an electricity

system.

Therefore,

yCMgridyBLelec EFCEF ,,,, (10)

This methodological tool Tool to calculate the emission factor for an electricity

system(version 02) determines the CO2 emission factor for the displacement of electricity

generated by power plants in an electricity system, by calculating the operating margin

(OM) and build margin (BM) as well as the combined margin (CM). The operating

margin refers to a cohort of power plants that reflect the existing power plants whose

electricity generation would be affected by the proposed CDM project activity. The buildmargin refers to a cohort of power units that reflect the type of power units whose

construction would be affected by the proposed CDM project activity.

The Tool to calculate the emission factor for an electricity system provides procedures to

determine the following parameters:

Parameter SI Unit Description

EFgrid,CM,y tCO2/MWh Combined margin CO2 emission factor for the project electricity

system in year y

EFgrid,BM,y tCO2/MWh Build margin CO2 emission factor for the project electricity system in

year yEFgrid,OM,y tCO2/MWh Operating margin CO2 emission factor for the project electricity


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system in year y

The following seven steps are applied to calculate the emission factor for an electricity system:STEP 1: Identify the relevant electricity system.

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

(optional)

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

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

STEP 5: Identify the group of power units to be included in the build margin (BM).

STEP 6: Calculate the build margin emission factor.

STEP 7: Calculate the combined margin (CM) emissions factor.

Step 1: Identify the relevant electricity system

The DNA of the host country has published a delineation of the project electricity system and

connected electricity systems, this delineation is used. Following the DNA delineation, the

project electricity system is the China Southern Power Grid (SCPG), which consists of

Guangdong Province, Guangxi Autonomous Region, Yunnan Province and Guizhou Province

Power Grids.

For the purpose of determining the operating margin emission factor, use one of the following

options to determine the CO2 emission factor(s) for net electricity imports (EFgrid,import,y) from

a connected electricity system within the same host country(ies):

(a) 0 tCO2/MWh, or

(b) The weighted average operating margin (OM) emission rate of the exportinggrid, determined as described in step 4 (d) below; or

(c) The simple operating margin emission rate of the exporting grid, determinedas described in step 4 (a), if the conditions for this method, as described in

step 3 below, apply to the exporting grid; or

(d) The simple adjusted operating margin emission rate of the exporting grid,determined as described in step 4 (b) below.

The option (c) is selected to calculate the CO2 emission factor for net electricity imports

(EFgrid,import,y) from other power grid.

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

(optional)

According to the Approval of electricity connection to China Southern Power Grid, all the

power generated by the project activity will be supplied to the power grid company. Thus, the

proposed project does not include off-grid power plants in the project electricity system

referred in apply to Tool to calculate the emission factor for an electricity system.

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

The calculation of the operating margin emission factor (EFgrid,OM,y) is based on the

following methods:

(a) Simple OM, or


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(b) Simple adjusted OM, or

(c) Dispatch Data Analysis OM, or

(d) Average OM.

Any of the four methods can be used, however, the simple OM method (option a) can only be

used if low-cost/must-run resources constitute less than 50% of total grid generation in: 1)

average of the five most recent years, or 2) based on long-term averages for hydroelectricity

production.

SCPG only possesses 26.726% of its total electricity generation that comes from renewable

energy sources in 2007, 26.292% in 2006, 30.938% in 2005, 29.912% in 2004, 41.752% in

2003, 32.938% in 2002 and 33.705% in 200135

.Hence, the low operating cost/must run

sources is much less than 50% of the total grid generation, which accords with the definedcondition of Option (a), but not Option (d). Consequently, Option (a) is selected to calculate

the operating margin emission factor of the proposed project.

For the simple OM, the simple adjusted OM and the average OM, the emissions factor can be

calculated using either of the two following data vintages:

Ex ante option: If the ex ante option is chosen, the emission factor is determinedonce at the validation stage, thus no monitoring and recalculation of the

emissions factor during the crediting period is required. For grid power plants,

use a 3-year generation-weighted average, based on the most recent data

available at the time of submission of the CDM-PDD to the DOE for validation.

For off-grid power plants, use a single calendar year within the 5 most recentcalendar years prior to the time of submission of the CDM-PDD for validation

Ex post option: If the ex post option is chosen, the emission factor is determinedfor the year in which the project activity displaces grid electricity, requiring the

emissions factor to be updated annually during monitoring. If the data required to

calculate the emission factor for year y is usually only available later than six

months after the end of year y, alternatively the emission factor of the previous

year (y-1) may be used. If the data is usually only available 18 months after the

end of yeary, the emission factor of the year proceeding the previous year (y-2)

may be used. The same data vintage (y, y-1 or y-2) should be used throughout all

crediting periods.

The data vintage chosen should be documented in the CDM-PDD and not be changed during

the crediting periods.

The ex-ante option is selected for the proposed project and the three most recent years

available at the time of submission of the CDM-PDD to the DOE for validation are 2005-

2007.EFgrid,OM,y is fixed during the first crediting period.

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

The Simple OM emission factor is calculated as the generation-weighted average CO2

emissions per unit net electricity generation (tCO2/MWh) of all generating power plants

35China Electric Power Yearbook, 2002-2008


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serving the system, not including low-cost / must-run power plants / units. The simple OM

may be calculated:

Option A: Based on the net electricity generation and a CO2 emission factor of eachpower unit, or

Option B: Based on the total net electricity generation of all power plants servingthe system and the fuel types and total fuel consumption of the project electricity

system.

For the proposed project activity, the required data for the exercise of Option A is not

available and those of Option B can be obtained from official sources, and off-grid power

plants are not included in the calculation, therefore, Option B is chosen to calculate the

operating margin emission factor:

For Option B, the Simple OM emission factor is calculated based on the net electricity

supplied to the grid by all power plants serving the system, not including low-cost / must-run

power plants / units, and based on the fuel type(s) and total fuel consumption of the project

electricity system.

Option B Calculation based on total fuel consumption and electricity generation of the

system

Under this option, the simple OM emission factor is calculated based on the net electricity

supplied to the grid by all power plants serving the system, not including low-cost / must-run

power plants / units, and based on the fuel type(s) and total fuel consumption of the projectelectricity system, as follows:

y

yiCOyi

i

yi

yOMsimplegridEG

EFNCVFC

EF,,,,

,,

2

(11)

Where:

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

FCi,y = Amount of fossil fuel type i consumed in the project electricity system

in yeary (mass or volume unit)

NCVi,y = Net calorific value (energy content) of fossil fuel type i in yeary (GJ /mass or volume unit)

EFCO2,i,y = CO2 emission factor of fossil fuel type i in yeary (tCO2 /GJ)

EGy = Net electricity generated and delivered to the grid by all power sources

serving the system, not including low-cost / must-run power plants /

units, in yeary (MWh)

i = All fossil fuel types combusted in power sources in the project

electricity system in yeary

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

Step 5. Identify the group of power units to be included in the build margin

The sample group of power units m used to calculate the build margin consists of either:

(a) The set of five power units that have been built most recently, or


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(b) The set of power capacity additions in the electricity system that comprise 20%

of the system generation (in MWh) and that have been built most recently.

Project participants should use the set of power units that comprises the larger annual

generation.

However, it is very difficult to obtain the data of the five power plants built most recently

because these data are considered as confidential information by the company itself and the

Grid in China. Therefore, a deviation36

approved by the EB is applied here in the calculation

that is to calculate the new capacity additions and the proportion of each technology of power

generation. Then the weighing of capacity additions of different technologies will be worked

out. Finally the emission factor will be calculated by employing the efficiency factor

representing the best technology commercially available.

In terms of vintage of data, project participants can choose between one of the following two

options:

Option 1. For the first crediting period, calculate the build margin emission factor ex-ante

based on the most recent information available on units already built for sample group m at

the time of CDM-PDD submission to the DOE for validation. For the second crediting period,

the build margin emission factor should be updated based on the most recent information

available on units already built at the time of submission of the request for renewal of the

crediting period to the DOE. For the third crediting period, the build margin emission factor

calculated for the second crediting period should be used. This option does not require

monitoring the emission factor during the crediting period.

Option 2. For the first crediting period, the build margin emission factor shall be updated

annually, ex-post, including those units built up to the year of registration of the project

activity or, if information up to the year of registration is not yet available, including those

units built up to the latest year for which information is available. For the second crediting

period, the build margin emissions factor shall be calculated ex-ante, as described in option 1

above. For the third crediting period, the build margin emission factor calculated for the

second crediting period should be used.

For the proposed project, Option 1 is chosen to calculate build margin emission factor.

Step 6. Calculate the build margin emission factorThe build margin emission factor is the generation-weighted average emission factor

(tCO2/MWh) of all power units m during the most recent yeary for which power generation

data is available, calculated as follows:

m

ym

m

ymELym

yBMgridEG

EFEG

EF,

,,,

,, (12)

Where:

36Source: http://cdm.unfccc.int/Projects/Deviations/index.html?p=3


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

EGm,y = Net quantity of electricity generated and delivered to the grid by power unit m in yeary

(MWh)EFEL,m,y = CO2 emission factor of power unit m in yeary (tCO2/MWh)

m = Power units included in the build margin

y = Most recent historical year for which power generation data is available

No matter which options for calculating BM factor mentioned in Step 5 was adopted for the

proposed project; the same issue on data availability must be addressed. Currently, it is very

difficult to get the capacity margin data of power plants in China, since these data as well as

net quantity of electricity generated and delivered to the grid and fuel consumption data in

power unit m are regarded as commercial secrets or only for internal usage. The following

deviation was adopted to calculate the Build Margin emission factor.

Sub-step 1: With the energy balance sheet in China Energy Statistical Yearbook for the

most recent year, calculating the respective percentages of CO2 emissions from coal fired

power generation, oil fired power generation, and gas fired power generation against total

CO2 emissions from fossil fuel fired power generation:

ji

yiCOyiyji

jCOALi

yiCOyiyji

yCoalEFNCVF

EFNCVF

,

,,,,,

,

,,,,,

,

2

2

(13)

ji

yiCOyiyji

jOILi

yiCOyiyji

yOilEFNCVF

EFNCVF

,

,,,,,

,

,,,,,

,

2

2

(14)

ji

yiCOyiyji

jGASi

yiCOyiyji

yGasEFNCVF

EFNCVF

,

,,,,,

,

,,,,,

,

2

2

(15)

Where:

Fi,j,y = The amount of fuel i (in a mass or volume unit)consumed in provincej in year y;

NCVi,y = Net calorific value (energy content) of fossil fuel type i (GJ/mass or volume unit) in

year y;EFCO2,i = CO2 emission factor of fossil fuel typeIin year y (tCO2/GJ)

COAL, OIL and GAS are aggregation of various kinds of coal, oil and gas as fossil fuels.

Sub-step 2: Calculation of emission factor of relevant thermal power

yAdvGasGasyAdvOilOilyAdvCoalCoalyThermal EFEFEFEF ,,,,,,, (16)

Where:

EFCoal,Adv,y, EFOil,Adv,y and EFGas,Adv,y refer to the emission factors representing best

technologies commercially available for coal, oil and gas fired power plants, respectively.(See Annex 3 for detailed calculation).


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i,

, , 6,

3.6

10

y

Coal Adv ybest coal

NCV OXIDEF

GENE

(17)

i,

, , 6, /

3.6

10

y

Oil Adv ybest oil gas

NCV OXIDEF

GENE

(18)

i,

, , 6, /

3.6

10

y

Gas Adv ybest oil gas

NCV OXIDEF

GENE

(19)

Where:

,best coalGENE and , /best oil gasGENE refer to the optimum commercial, coal, oil and gas fired

power supply efficiency.

OXID refers to Carbon Oxidation Factor of fossil fuel type i consumed by the power plantsin the China Southern Power Grid.

Use the share of different type of capacity in total capacity addition as weight, the weighted

average of emission factors of different type capacity is calculated as the Build Margin

emission factorEFgrid,BM,y of China Southern Power Grid(see Annex 3 for detailed calculation):

Sub-step 3: Calculation of BM of the Grid

yThermal

yTotal

yThermal

yBMgrid EFCAP

CAPEF ,

,

,

,, (20)

Where:

CAPTotal,y = The total newly added electricity generation capacity (MW)

CAPThermal,y = The newly added electricity generation capacity of thermal power (MW)

Step 7. Calculate the combined margin emission factor

The combined margin emission factor is calculated as follows:

BMyBMgridOMyOMgridyCMgrid wEFwEFEF ,,,,,, (21)

Where:

EFgrid,BM,y = Build margin CO2 emission factor for the project electricity system in yeary

(tCO2/MWh)

EFgrid,OM,y = Operating margin CO2 emission factor for the project electricity system in yeary(tCO2/MWh)

wOM = Weighting of operating margin emissions factor (%)

wBM = Weighting of build margin emissions factor (%)

For the proposed project, the default values of wOM and wBM are:

wOM = wBM = 0.5 for the first crediting period.

The default weights are adopted for the proposed project, the baseline emission factor is:

BMyBMgridOMyOMgridyCMgrid wEFwEFEF ,,,,,,

= 0.9987 0.5 + 0.5772 0.5 = 0.78795tCO2/MWh

Step d: Calculation of ETLFG,yBecause the proposed project doesnt involve heat component, ETLFG,y is assumed to be zero.


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Project Emissions

Considering when electricity generators will be under regular maintenance and sometimesshut down, the electricity will be purchased form the SCPG during this period of time.

Therefore, there will be project emissions and calculated following the latest version of Tool

to calculate project emissions from electricity consumption.

yjFCyECy PEPEPE ,,, (22)

Where:

PEEC,y = Emissions from consumption of electricity in the project case. The project emissions

from electricity consumption (PEEC,y) will be calculated following the latest version

of Tool to calculate baseline, project and/or leakage emissions from electricity

consumption. If in the baseline a part of LFG was captured then the electricityquantity used in calculation is electricity used in project activity net of that

consumed in the baseline.

PEFC,j,y = Emissions from consumption of heat in the project case. The project emissions from

fossil fuel combustion (PEFC,j,y ) will be calculated following the latest version of

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

For this purpose, the processes j in the tool corresponds to all fossil fuel combustion

in the landfill, as well as any other on-site fuel combustion for the purposes of the

project activity. If in the baseline part of a LFG was captured then the heat quantity

used in calculation is fossil fuel used in project activity net of that consumed in the

baseline.

In the project design stage, the electricity consumption of electricity in the proposed project(PEEC,j,y) is very small and can be neglected, so it is set

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