development of cdm projects in the indonesian palm oil...
TRANSCRIPT
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Development of
CDM projects in the
Indonesian
Palm Oil SectorErik Tjia
September 2006
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Climate change
Example of the impact of global warming and climate change
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Palm Fruit
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Palm oil : Vegetable oil extracted from the mesocarp
or outer pulp beneath the outer skin of the
oil palm fruit
Palm kernel oil: Vegetable oil extracted from the kernel of
the oil palm fruit
MesocarpPalm fruit
Kernel
Palm Fruit
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PK MILL ± 2.4%
Evaporation 10 %
Fruit 67%
Empty Bunch 23%
Crude Oil 43 %
Bunch ash 0.5 %
Nuts 10 %
Pericarp 13 %
Solid 2 % (Animal feed/Fertilizer )
Water Evoration 17 %
Pure Oil 21 %
Kernel ± 4 %
Moisture 1 %
Shell ± 6 %
PKO ± 1.6%
Water Evaporation 2 %
Dry Fibre Fuel 11 %
Palm Fruit
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CDM projects of Wilmar Group
Two 9.7 MW electricity unit (boiler and a steam turbine
running on biomass (palm kernel shell and empty fruit
bunches) replacing power from the electricity grid and
diesel generators
MNA in Kuala Tanjung (North Sumatra)
MSS in Petintung (near Dumai in the Riau Province)
More projects in development
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Planning
Feasibilitycheck
(Nov 2004)
Preparation of the PDD(April 2005)
Registration(July 2006)
First contact with KPMG (May 2004)
Validation(Aug 2005 –
Apr 2006)
Think about CDM from the very beginning of the project
Start of the construction
works(January 2005)
Start-upof the plant (July 2006)
Engineering(2004)
CDM development
Engineering and realisation of the project
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Lessons learnt
Consider CDM in an early stage of project development
Integrate thinking about CDM in the project planning
Many potential project opportunities (much biomass)
Few project ideas that meet all CDM criteria
Significant investments at the beginning
Significant revenues on the longer term
Positive and constructive attitude of the Indonesian
authorities for CDM (National Designated Authorities)
Much enthusiasm for CDM in the management
Win-win-win situation
Environment – financial benefits – image of the company
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CDM Project Cycle
A process in six stages:
1. Project identification, feasibility check and preparation of
Project Idea Note (PIN)
2. Preparation of a Project Design Document (PDD)
3. Validation and assessment
4/5. Monitoring and verification
6. CER transfer
During stage 2 and 3 a contract with a buyer of the CER is negotiated.
KPMG can assist clients during all stages including selection of
potential buyers and negotiations (in which case validation and
verification will be performed by others).
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Stage 1: Project identification and feasibility check
Project identification
Feasibility check;
Preparation of a Project Idea Note;
Obtaining a “Letter of Endorsement” for the development
of a project;
CDM Project Cycle
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Stage 2: Make a Project Design Document (PDD)
CDM Project Cycle
Develop PDD
Descriptions
Additionality tests
Monitoring Plan
Current situation
Project
Estimated reduction
Stakeholder consultation
Environmental Impact
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Baseline scenario (emissions without the project)
Project scenario (emissions with the project)
Emission reductionsTonnes
of CO2
per year
Validation of
baselineVerification of emission reductions
2006 2008 2010 2012 2014 2016
CDM Project Cycle
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Eligibility criteria
Additional
Boundary setting
Conservative baseline
Leakage identified
Transparent Baseline Report
Accurate data
Host country ratification of the KP
Host country project approval
Designated National Authorities
CDM Project Cycle
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Project sponsors must have strong enough balance sheet
Will project sponsor still be in business in 2012?
The project must be additional
No Business-as-Usual projects
Project must be of reasonable size
Small projects will have large overheadVery large projects (in MWs) may have difficulty obtaining positive validation250 000 CO2-e (total CER’s over ten years) is often used as the minimum size
There must be a market for the product
For example, growing electricity demand
Supplier must posses the technical capacity to execute the project
Look at experience of the project partners
Important aspects for consideration
CDM Project Cycle
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Additionality
Identify similar activities;
Were they not subject to same
limitations?
Common Practice analysis
Identify barriers that limit execution
of project activities
Barriers analysis
Compare alternatives and projectFinancial test
Can you generate other options to
achieve the same result?
Generate alternatives
Has the project started already?
Was CDM taken into account?
Prescreening
CDM Project Cycle
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Stage 3: Project validation and assessment
The validator (an accredited auditing firm) carries out a
validation of the project to confirm that the project meets
the CDM rules.
The project is then assessed by the CDM Executive Board a
Letter of Approval is issued;
CDM Project Cycle
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Validation
Validation
First checks
Additionality
Environmental Impact
Complete
Methodology OK?
Stakeholder consultation
Opinion
Check local
Organize international
CDM Project Cycle
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Stage 4-5: Monitoring and verification
Project Proponent responsible for
monitoring
Emission report verified by DOE
After verification, emission reductions
can be issued
CDM Project Cycle
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Stage 6: CERs transfer
The verified emissions reductions are transferred
through the national registry of the host country
CDM Project Cycle
