documento de diseño del proyecto cambio de combustible

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 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

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 2 SECTION A. General description of project activity A.1. Title of the project activity: >> Paramonga Bagasse Boiler Project Version: 1 – Nov 8, 2011 A.2. Description of the project activity: >> Agro Industrial Paramonga S.A. - AIPSA, the project proponent, is one of the largest sugar companies in Peru, producing approximately 110 thousand metric tonnes of sugar annually, which represents an 11% share of the total national sugar production. AIPSA’s output is produced on 10,453 hectares of sugar cane; 6,717 of their own and 3,736 leased from different land owners. AIPSA is situated approximately 205 kilometres north of Lima. Its climatic conditions allow AIPSA to produce continuously throughout the 12 months of the year. AIPSA was one of the first sugar refineries established in Peru. When the company was set up in the late 1800s, it was conceived with two principal production activities: sugar and paper. The company was initially designed so that the bagasse generated by the milling of cane from the sugar production activity was transferred directly to the paper plant to produce pulp. The energy and steam requirements for the joint production activities were supplied by boilers that operated mainly with Bunker fuel and complemented on a minor scale with pith (a residual of the pulp process) and leftover bagasse. In 1974 the company was nationalized and divided into two independent companies by the government of Peru. The power plant was physically and legally divided into two side-by-side components. Supreme Decree 016 of 1974 assigned the power plant with all the boilers to the paper company (Sociedad Paramonga Ltda, now known as QUIMPAC) under the commitment that they would supply all the electric energy and steam required by the sugar company (Cooperativa Agraria Azucarera Paramonga LTDA, now known as AIPSA). In 1990, a long term agreement (Resources Exchange Agreement and Boiler’s Usufruct Agreement) was signed by the two firms to give the sugar company the right to use QUIMPAC’s main boiler and a secondary boiler to generate the electrical energy and steam for its production processes. The agreement gives AIPSA the right to use part of QUIMPAC’s power plant, including the largest petroleum boiler, for 30 years. These included agreements by which QUIMPAC would provide Bunker fuel1 to AIPSA in exchange for bagasse and residual pith. In 1998, the sugar company was privatized, creating today’s AIPSA sugar company. The paper company was also privatized and its name today is PANASA (formerly QUIMPAC). Currently, the two companies continue to supply each other with bagasse (AIPSA to QUIMPAC), and with Bunker fuel and pith (QUIMPAC to AIPSA), based on the Resource Exchange Agreements (REA). AIPSA’s steam requirements are produced by the boilers using Bunker fuel, complemented by residual pith and bagasse as fuel inputs. The standing 30 year agreement between AIPSA and QUIMPAC to use

1 All references to “Oil” in this document refer to Bunker Fuels No. 6 and No. 500, produced by Petro Peru

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 3 the main boiler for the long term, the favourable economics of continuing to use the existing arrangement, and recent investments by AIPSA to refurbish the petroleum boilers for long term use, establish the baseline scenario – continued use of the existing thermal production system. In 2000, AIPSA was contacted by CONAM, the national environmental authority of Peru, and was invited to participate as a case study in the National Strategy Study (NSS) for Implementation of the CDM. AIPSA agreed to evaluate the economics of converting to a new residual biomass boiler and displacing the use of Bunker fuel, under the possibility of receiving income from certificates of emission reduction (CERs) to co-finance the new investment. The project was included in the NSS, and AIPSA worked closely with CONAM to learn about the potential benefits of applying the CDM2. The main objective of the project is to generate the financial resources necessary to finance the reconversion of the energy generation system of Agro Industrial Paramonga S.A. – AIPSA, from the Residual Fuel Oil based energy generation system, to a new energy system based on biomass residues. The project has been developed on the basis of a sequence of activities that are designed to result in the maximization of biomass residues use for heat and steam generation. These include: Phase I: Research and development in use of biomass residues for heat generation.

a. Determination of biomass residues available amounts during several year long periods b. Determination of Low Heating Values (LHV) and High Heating Values (HHV) of

biomass residues fluxes in order to calculate the potential to generate heat under a set of probable weather scenarios

c. Determination of the technology to gather residual foliage from the sugar cane fields. The common practice in the industry is to burn foliage in the field in order to prepare soil conditions for the next harvest.

d. Determination of the means to transport foliage to the sugar mill e. Determination of the optimal size of foliage particles to be fed into a new boiler f. Determination of the characteristics of the new boiler that fires only biomass residues g. Determination of the means to feed the new sources of biomass into the new boiler h. Determination of the efficiency of the new boiler fed with new sources of biomass i. Determination of the measures and changes in the sugar production process in order to

adapt steam production to the sugar mill requirements Phase II: Investment decision towards an increased use of biomass residues to generate heat

j. Investments in various types of chopping machines to determine appropriate size of foliage particles to be fed in the boiler

k. Investment in a grinding system to reduce particle size and texture at the outlet of the chopping machines

l. Investment in conveyor systems to feed the boiler with biomass residues m. Investment in a new boiler able designed for biomass residues available in the sugar mill

(bagasse, pith and foliage) n. Start up of the boiler firing the available biomass residues

Phase III: Modification of practices for using biomass residues

2 World Bank-CONAM, National Strategy Study for Implementation of the CDM in Peru, 2003.


o. Modification of harvesting practices in order to gather foliage efficiently from the sugar cane growing fields

p. Modification of transport practices in order to transport, weigh and deliver foliage to the plant

q. Fine tuning of the chopping and grinding systems in order to prepare physical characteristics of biomass residues in optimal size and texture

r. Determine correct mixture of biomass residues in order to maximize efficiency of the boiler and to generate the required steam flow to operate the sugar production process

In summary, the former phases are the steps that AIPSA is implementing to modify current practices for the modification of their harvesting and production system for the use of biomass residues, to replace the existing boilers with a new biomass boiler, and to displace the use of Residual Fuel Oil with renewable energy and zero net greenhouse gas emissions from heat generation. The use of foliage for heat generation is new in Peruvian sugar cane production and has required extensive research as well as trial and error. The following table summarizes the baseline scenario and the project scenario:

Table 1. Baseline and CDM Project Scenarios. Characteristics Baseline Scenario Project Scenario Operating boilers Foster Wheeler (120 ton/hr; 31,6

KGF/CM2, 371 0C) Edge Moore (17,5 ton/hr; 31,6 KGF/CM2; 371 0C)

CBS/MEIC (120 ton/hr; 42 KGF/CM2 ; 4300C)

Fuel input Bunker Fuel Residual Pith Residual Bagasse

Residual Pith Residual Bagasse Residual Foliage

Machinery to adapt foliage characteristics to boiler’s requirements

Chopping machines with Electric rotating blades. 2,4 ton/h current effective capacity in total, plate capacity 6 ton/h (2 units. It is expected AIPSA will purchase 1 more unit to enhance overall capacity to 10 t/h) Electric Foliage hammer Grinder (1 unit)

Prior to the implementation of the project, two types of biomass residues were used: bagasse and pith. Bagasse is a by-product of the sugar production process and is generated on-site by the project participant. The amount of bagasse available depends on the amount of sugar cane harvested and milled throughout the year. Similarly, the amount of pith depends on the amount of bagasse sold by AIPSA to QUIMPAC, as it is a by-product of the paper production process and is part of the Resources Exchange Agreement between the two companies. Table 3 presents fuels use at AIPSA. Due to QUIMPAC’s market and production crisis, in February 2005 QUIMPAC’s demand for bagasse fell from 220,910 ton in 2004 to 10,850 in 2005, creating a huge residual bagasse stock at AIPSA’s facilities. Although AIPSA’s residual biomass based boiler was conceived in 2003, installation of the boiler concluded in late 2006 and its start up was in January 2007. It was not possible to sell the excess bagasse to other buyers since the nearest buyer is 200 km away from Paramonga, and transportation costs made it unfeasible to provide bagasse to potential buyers at commercial rates. Therefore, during 2005 and 2006, AIPSA was forced to make additional investments in retrofitting the Foster Wheeler Boiler in order to use the excess bagasse not received by QUIMPAC.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 5 In the mean time, until QUIMPAC’s bagasse demand is restored to 2004 levels, bagasse is considered as the main source of biomass residues for this VCS project activity. Due to QUIMPAC’s crisis and AIPSA’s investment in the Foster Wheeler boiler, investments and decisions required for foliage use was slowed down until late 2006, when efforts were reactivated along with the final construction phase of the new CBS boiler. Since the Resources Exchange Agreement is fundamental to determine the bagasse and bunker fuel flows between the two parties, which were seriously distorted during the period of Quimpac’s internal crises in 2005 and 2006, we considered 2002, 2003 and 2004 as the baseline years to calculate future CO2 emission reductions because they represent the conditions prior to the project’s initiation between these two firms in the absence of the CDM project activity. In addition, these were the baseline years utilized in the initial presentation of this project to UNFCCC.

Table 2. Time Lines of AIPSA CDM Program and Project Activity. TIME LINE OF CDM PROGRAM AT AIPSA

2000 2001 2002 2003 2004 2005 2006 2007 2008

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AIPSA CDM PROJECT ACTIVITY DEVELOPMENT TIMELINE 2000 2001 2002 2003 2004 2005 2006 2007 2008


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SA

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Table 3. Time Line of the Use of Fuels

TIME LINE OF THE USE OF FUELS AT THE AIPSA PLANT

2002 2003 2004 2005 2006 2007 2008 2009 2010

2011-2020 each

year Bunker fuel use in AIPSA’s boilers (Ton)

30,367 30,647 30,234 9,852 10,335 207.9 0 0 1.043 0

Bagasse sold to Quimpac (Ton)

240,411 223,765 220,910 10,850 24,829 20,837 10,960 0 13,553 0

Bagasse used at AIPSA (Ton)

20,619 67,668 85,973 245,383 255,931 286,237 283,912 316,590 356,850 372,028

Pith used in AIPSA’s boilers (Ton)

90,044 78,275 77,006 3,801 8,741 478 0 0 0 0

The project activity will contribute to sustainable development because it will displace a fossil fuel system with a biomass based renewable energy system, generating benefits not only by reducing greenhouse gases, but by also reducing other local air pollutants and environmental impacts associated with the burning of Bunker fuel which have deteriorated the local environment. A.3. Project participants: >>

Name of Party involved (*) ((host) indicates a host Party)

Private and/or public entity(ies) project participants (*) (as applicable)

Contact information

PERU (host) Agro Industrial Paramonga S.A.A. (AIPSA)

Project Director: Hugo Ayon Address: Avenida Ferrocarril


212 Paramonga -Barranca, Lima Telephone: 2021111 ext 106 Email: [email protected]

A.4. Technical description of the project activity: A.4.1. Location of the project activity: >>

A.4.1.1. Host Party(ies): >> PERU A.4.1.2. Region/State/Province etc.: >> LIMA Department, Barranca Province A.4.1.3. City/Town/Community etc.: >> District of Paramonga A.4.1.4. Details of physical location, including information allowing the unique identification of this project activity (maximum one page): >> The project takes place in the main processing facilities of AIPSA, specifically in the heat generation building. AIPSA production facilities are located in the District of Paramonga, Peru, at the following address: Avenida del Ferrocarril 212. The District of Paramonga is located approximately 205 Kilometres north the city of Lima. The main access road is the North Panamerican Highway, the most important thoroughfare of Peru, which runs along the Pacific Coast and joins the northern and southern regions of the country. The following are the geographical coordinates of the location of the project activity: Latitud: 10º40’20’’ Longitud: 77°49’00’’ Altitude: 11,65 above sea level. The following map shows the location of the project activity, in Paramonga, Perú.


Graphic 1. Map of Peru including Paramonga

Paramonga, Perú

Lima, Perú

Paramonga, Perú

Lima, Perú

A.4.2. Category(ies) of project activity: >> Project activity consists of the implementation of a new biomass boiler and the generation of steam from biomass residues, classified under UNFCCC CDM sectoral scope 1, “Energy industries (renewable sources)”. This project activity is an individual GHG mitigation project. The project is considered a renewable energy project because the new boiler will switch from fossil fuel use to biomass residues—residual bagasse, pith and foliage from sugar cane production and processing-- as the only fuels. According to the indicative list provided by the CDM Executive Board, “biomass combustion” as well as “power and heat production from waste” project activities are considered within the renewable energy project type. A.4.3. Technology to be employed by the project activity: >> The technology employed by the project activity is the new biomass boiler that will generate the heat requirements of AIPSA sugar production plant, the chopping and grinding machines to reduce size of foliage and the modification of the current practices to gather and transport foliage. The boiler specifications are: Name of Manufacturer: CBS/MEIC Type of Equipment: Aqua tubular Boiler Reference: CBS/MEIC Output Capacity/System rating for primary boiler: Steam production capacity 120 Ton/h Temperature: 4300C Pressure: 42 KGF/CM2 ; 4300C

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 9 The chopping and grinding system will deliver foliage of the correct size to be fed into the CBS boiler. The chopping machinery consists of a set of electrical rotating blade choppers specially designed to process sugar cane foliage. Several arrangements have been tried until the present but the final specifications and arrangement are yet to be determined. The following alternatives are under evaluation for placement of the system:

1. Placement near the biomass boiler amid the sugar mill and the growing fields. The main objectives are that the chopper not suffers any stress due to transportation, the reduction in maintenance and the screening and separation of the foliage from stones and soil that may damage the chopper, the hammer mill or the boiler. Transportation costs of the foliage from the field to the plant are high due to the light weight of foliage and must be optimized. The first chopper was installed in 2005 and placed within the bagasse storage open warehouse. The chopper resulted under-dimensioned to deal with the incoming foliage. Stones and soil entering the chopper were a major problem.

2. Fixed placement of the chopper system near the mill, which requires civil engineering works to ground the machine, on the one hand, and continuous supervision to avoid thieves or damage of the machine by third parties. This arrangement is under evaluation.

3. A moveable platform: The chopper is paced on a mobile platform pulled by a truck or tractor. The chopper is taken to the field being harvested and crosses the fields along with harvest activities. A lorry is placed at the outlet of the chopper and filled with the chopped foliage. Once the storing capacity of the lorry is met, the lorry is pulled across the field towards the sugar mill and the chopped foliage is unloaded into a screening machine to remove stones and soil. This arrangement permits reduced transportation costs, however maintenance of the chopper increases in cost. This arrangement is currently in place in a trial period.

At present, an additional inconvenience is occurring: human labour to cut the cane is becoming a scarce resource since better wages are paid for the same activity in northern cities like Trujillo (200 km away) or in other activities like mining in the southern part of the country. Therefore, it is expected that in future mechanized gathering of cane will be needed for the industry. This will have implications for the management and operation of the chopping and grinding system. Several tests were performed with chopped foliage which resulted in problems in the feeding system to both the Foster Wheeler boiler and subsequently to the CBS boiler. Problems also resulted within the combustion chamber given that, due to the weight of the foliage particles, they combusted at an inappropriate level in the combustion chamber which reduced efficiency. Therefore, a hammer mill to reduce particle size of foliage was purchased. The hammer mill was placed in a fixed place within the bagasse storage open warehouse. The test performed demonstrated that size and humidity properties of the chopped and hammered foliage are improved resulting in very similar material properties to the bagasse processed in the sugar mill. When QUIMPAC’s suffered its internal crisis, research and development of full scale foliage processing was slowed down because of AIPSA’s need to manage the large amounts of excess bagasse not purchased by QUIMPAC. As QUIMPAC’s bagasse demand has slowly returned to 2004 levels, AIPSA has focused anew on the research and field trials for the efficient transportation, preparation and burning of foliage.


A.4.4. Estimated amount of emission reductions over the chosen crediting period: >> The fuel switch project has a baseline determined by the lifetime of the Resources Exchange Agreement and Boiler’s Usufruct Agreement with nearby industry QUIMPAC, by which AIPSA receives Bunker fuel No. 6 to generate heat and steam from its existing boilers. This contract expires in 2020. The chosen crediting period for this VCS project activity is 14 years, starting on 1 January 2007 and ending on 31 December 2020. The estimated total emission reductions from switching from fossil fuel to biomass residues to produce heat and steam are 2,064,362 Ton CO2e as presented in the following table. The chosen 14 years crediting period may be shortened if AIPSA decides to apply for UNFCCC accreditation of the project. Table 4 presents the emission reduction estimates during the crediting period. Emission reductions for 2008 are split in two: before and after DNV’s VCS validation visit. In 2010, this project was verified. 370,392 VCUs was issued for period between 1st January 2007 and 30th November 2009.

The estimated amount of emissions reductions over the chosen crediting period of the project activity is:

Table 4. Estimated amount of emissions reduction over the chosen crediting period

Year

Annual estimation of emission reductions in tonnes of CO2 e

Ton CO2 Eq 2007 124,339 2008 119,377 2009 140,590 2010 149,259 2011 161,161 2012 152,241 2013 152,238 2014 152,165 2015 152,165 2016 152,165 2017 152,165 2018 152,165 2019 152,165 2020 152,165

Total estimated reductions (tonnes of CO2 e)

2,064,362

Total number of crediting years 14 Annual average over the crediting

period of estimated reductions (tonnes of CO2 e)

147,454

A.4.5. Public funding of the project activity: >> No public funding is considered for the project activity.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 11 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: >> This project used the Approved baseline and monitoring methodology AM0036 v.2.1, named “Fuel switch from fossil fuels to biomass residues in boilers for heat generation”. B.2. Justification of the choice of the methodology and why it is applicable to the project activity: >> The project activity complies with scenario 2 of the type of project activities covered by the UNFCCC methodology AM0036 v.2.1 as follows: Scenario 2 of project activities eligible for use of UNFCCC AM0036 methodology

Compliance with project activity:

Replacement of existing boilers. The project activity involves the replacement of (an) existing fossil fuel boiler(s) by (a) new boiler(s) that fire(s) mainly or solely biomass residues (some fossil fuels may be co-fired). The replacement shall (a) enable the use of biomass residues or (b) enable an increase in the use of biomass residues beyond historical levels, which would not be technically possible in any of the existing boilers without a retrofit or replacement of the boilers.

The project activity will replace the existing Foster Wheeler and Edge Moore boilers with a new CBS/MEIC boiler that fires only biomass residues (bagasse and pith, and foliage from the sugar cane growing fields). The replacement enables an increase in the use of biomass residues for meeting the requirements of steam production to the plant, beyond historical levels, which is not technically possible in the Foster Wheeler boiler without a major retrofit or its replacement as shown in Table 3 below.

The project activity displaces a thermal energy system which employed boilers built for fossil fuels which had burned a mixed baseline, which was comprised primarily of bunker fuel and mixed with bagasse and pith. The project activity is based on the installation and operation of biomass boilers in an agro-industrial plant (sugar) generating the biomass residues (bagasse, pith, and foliage from the sugar cane growing fields), used in the activity. AM0036 specifically provides for fuel switching from a mixed baseline of fossil and biomass to a project activity using only residual biomass.

Table 5. Maximum steam production of boilers Efficiency with

biomass fuel (Ton Steam/Ton Biomass)

Maximum amount of biomass residues available (Tons)

Maximum amount of steam that can be generated using only biomass fuel (Tons)

Steam requirements for sugar production (Tons)

Existing Boiler: Foster Wheeler

1.8 305,813 549,722 644,326

New Boiler: CBS/MEIC

2.3 305,813 702,423 644,326

The project activity complies with the applicability conditions of the baseline methodology, as follows:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 12 The heat generated in the boiler(s) is, if power is generated with heat from the boilers, not increased as a result of the project activity, i.e.

(a) site, the power generation capacity installed remains unchanged due to the implementation of the project activity and this power generation capacity is maintained at the pre-project level throughout the crediting period; and

(b) The annual power generation during the crediting period is not more than 10% larger than the highest annual power generation in the most recent three years prior to the implementation of the project activity.

This condition is currently satisfied by the project activity, heat generated in CBS boiler is not increased due to the project activity. Electricity generation is not increased due to the implementation of the project activity. Please see section 3.3 variable MWh electricity generation per year. Increasing the use of biomass residues beyond historical levels is technically not possible at the project site without a significant capital investment in either the retrofit or replacement of existing boilers or in the installation of new boilers. This condition is satisfied. In order to increase the use of biomass residues and generate all heat from biomass only, the replacement of the existing Foster Wheeler and Edge Moore boilers with a new biomass boiler was required, a major new capital investment. Existing boilers at the project site have used no biomass or have used only biomass residues (but no other type of biomass) for heat generation during the most recent three years prior to the implementation of the project activity. This condition is satisfied because existing boilers at Paramonga have used only biomass residues (bagasse and pith), for heat generation during the most recent three years prior to the implementation of the project activity. All biomass residues are co-fired with fossil fuels following CASE B under the section “baseline emissions from fossil fuel combustion in boiler(s) for heat generation (BEHG,y) of the approved UNFCCC AM0036 v.2.1 methodology”. Bagasse fired in the Foster Wheeler boiler is considered a biomass residue since it is leftover bagasse not purchased neither by QUIMPAC nor other bagasse buyers in the nearby region and not possible to sell at commercial rates to other buyers in the country because of high transport costs; the nearest buyer is 200 kms away from Paramonga thus making transportation costs an excessive share of the final bagasse price. No biomass types other than biomass residues, as defined above (in the UNFCCC AM0036v2.1 methodology), are used in the boiler(s) during the crediting period This condition is satisfied because the residual bagasse, foliage and pith comply with the definition of biomass residues. They all are residual by-products of the sugar growing and processing agro industry (in the case of bagasse and foliage) and the pulp and paper industry (in the case of pith). For projects that use biomass residues from a production process (e.g. production of sugar or wood panel boards), the implementation of the project shall not result in an increase of the processing capacity of raw input (e.g. sugar, rice, logs, etc.) or in other substantial changes (e.g. product change) in this process; This condition is satisfied because the implementation of the project activity will not result in an increase of the processing capacity of sugar or paper or in other substantial changes in this process as the project is limited to the replacement of heat boilers with similar capacity;

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 13 The biomass residues used at the project site, site where the project activity is implemented, should not be stored for more than one year; This condition is satisfied because all the biomass residues used will be produced at the project site and used soon afterwards. They will not be stored for more than one year. Stocks of all biomass residues will be monitored for verification of this requirement. No significant energy quantities, except from transportation or mechanical treatment of the biomass residues, are required to prepare the biomass residues for fuel combustion, i.e. projects that process the biomass residues prior to combustion (e.g. esterification of waste oils) are not eligible under this methodology. This condition is satisfied because no significant energy quantities, except from transportation and mechanical treatment of foliage, pith, and residual bagasse, are required to prepare the biomass residues for fuel combustion in the Paramonga project. The biomass residues are directly generated at the project site or transported to the project site by trucks. Bagasse and pith are directly generated at the project site. Foliage is produced in surrounding sugar cane fields and transported to the project site by trucks along with the harvested cane. In case of project activities that involve the replacement or retrofit of existing boiler(s), all boiler(s) existing at the project site prior to the implementation of the project activity should be able to operate until the end of the crediting period without any retrofitting or replacement, i.e. the remaining technical lifetime of each existing boiler should at the start of the crediting period be larger than the duration of the crediting period. The existing boilers (Foster Wheeler and Edge Moore) at the project site prior to the implementation of the project activity are able to operate until the end of the crediting period without any retrofitting or replacement. The useful life is dictated by the resource exchange agreement contract between Quimpac and Paramonga that permits the use of the baseline boiler, which expires in 2020.

Table 6. Characteristics of Existing Boilers Technical Characteristics

Foster Wheeler Edge Moore

Manufacturer Foster Wheeler Edge Moore Initial date of operation in AIPSA

Dec 1990 Jan – 2004

Estimated remaining life time

Until 2020, dictated by use contract

Until 2020, dictated by use contract

B.3. Description of the sources and gases included in the project boundary: >> According to the UNFCCC AM0036 v.2.1 baseline and monitoring methodology, the project boundary includes the following sources and gases:

Table 7. GHG Sources and Gases Source Gas Included

In Methodology Included in Project boundary


Baseline Fossil fuel combustion in boilers for heat generation

CO2 Yes Yes CH4 No No N2O No No

Electricity consumption for processing sugar canes


Uncontrolled burning or decay of the biomass residues

CO2 No No CH4 To be decided by

PPs Yes

N2O No No Project Activity On-site fossil fuel and Electricity consumption


Electricity production due to increase in power capacity beyond historical levels

CO2 CO2 Yes CH4 CH4 No N2O N2O No

Off-site transportation of biomass residues


Combustion of biomass residues for heat generation

CO2 No No CH4 To be decided by

PPs Yes

N2O No No Biomass storage

CO2 No No CH4 No No N2O No No

B.4. Description of how the baseline scenario is identified and description of the identified baseline scenario: >> Baseline emissions are the CO2 emissions from fossil fuel co-fired in the existing boilers. In 1990, a long term agreement (Resources Exchange Agreement and Boiler’s Usufruct Agreement) was signed by the two firms to give the sugar company the right to use QUIMPAC’s main boiler and a secondary boiler to generate the electrical energy and steam for its production processes. The agreement gives AIPSA the right to use part of QUIMPAC’s power plant, including the largest petroleum boiler, for 30 years. These included agreements by which QUIMPAC would provide Bunker fuel3 to AIPSA in exchange for bagasse and residual pith. In 1998, the sugar company was privatized, creating today’s AIPSA sugar company. The paper company was also privatized and its name today is QUIMPAC. Currently, the two companies continue to supply

3 All references to “Oil” in this document refer to Bunker Fuels No. 6 and No. 500, produced by Petro Peru

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 15 each other with resources. AIPSA supplies bagasse to QUIMPAC), and QUIMPAC provides AIPSA with Bunker fuel and pith, based on the resource exchange agreements. AIPSA’s steam requirements are produced by the boilers using Bunker fuel, complemented by residual pith and bagasse as fuel inputs. The standing 30 year agreement between AIPSA and QUIMPAC to use the main boiler for the long term, the favourable economics of continuing to use the existing arrangement, and recent investments by AIPSA to refurbish the petroleum boilers for long term use, establish the baseline scenario – continued use of the existing thermal production system. Physical delineation The physical delineation of the project boundary encompasses the existing boilers generating steam for sugar refining process. The physical, geographical site where the new bagasse boiler will operate, is within the facilities of AIPSA’s power plant. At the moment, AIPSA uses two boilers (Foster Wheeler, Edge Moore) that generate steam for the production process, both of them located in the power plant. The Edge Moore and Foster Wheeler boilers deliver steam at 450 psi to the steam distributor. The steam distributor supplies the steam for the mill and the turbine generators, which supply both electricity and steam at 125 and 45 psi to the production process. The Edge Moore boiler uses only bagasse as fuel, and the Foster Wheeler uses residual oil, bagasse and pith. The Distral boiler was a fossil fuel fired 10tSteam/h boiler operated during the period June 2003 - September 2004. It was fired in order to allow the retrofitting of the EM boiler, thus avoiding further needs for steam. In September 2004 it was decommissioned and sold. Manufacturer’s specification’s and all Distral boiler’s technical literature was handed out to the boiler’s buyer. Table 8presents the technical characteristics of the existing boilers Edge Moore boiler and the Foster Wheeler.

Table 8. Technical Characteristics of the Existing Boilers Technical Characteristics

Foster Wheeler Edge Moore

Manufacturer Foster Wheeler Edge Moore Reference FW – 22.6 Capacity (MCR) (Ton steam/hr)

120 * 17.5

Operating pressure (Kgf/CM2)

31.6 31.6

Temperature (oC) 371 371 Type of fuel Bunker fuel,

residual bagasse and pith

Residual bagasse and pith

Initial date of operation in AIPSA

Dec 1990 Jan – 2004

* Operated only with Bunker fuel.

The project activity’s main objective is to replace the existing boilers with a single new biomass residues based one. The new boiler will supply all the steam required by the production process through the

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 16 steam distributor. The project boundary of the project activity is defined as the area of the Power Plant Building of AIPSA which includes the actual boilers as well as the area where the new boiler will be located. Diagram 1 shows the flows of energy and steam of the power plant under current conditions, and Diagram 2 shows the flows under the project activity.

FLUJO DE GENERACIÓN DE VAPOR Y ENERGÍA ELÉCTRICA FLUJO

EDGE MOORE

FOSTER WHEELER

TRAP

ICH

E

TURBO GENERADORES

EQUIPOS AUXILIARES

CABEZAL VAPOR 450 PSIG

FABRICA

RED.

V prV se

BAGAZO, POLVILLO

BAGAZO

VAPO

R 4

50 p

sig

VAPO

R 4

5 p

sig

450 psig

VAPOR 125 psig

VAPOR 15 psig

VAPOR 45 psig

VAPOR 15 psigQUIMPAC

AGUA CONDENSADA

CAL

ENTA

DO

R

CABEZAL

DESAEREADOR

VAPOR 450 psig

VAPOR 45 psig

VAPOR 45 psigQUIMPAC

AGUA PARAQUIMPAC

CONDENSADO

TAN

QU

ES

DE

AGU

A

FLOWS: GENERATION OF STEAM AND ELECTRICAL ENERGY FLOWS

FACTORY

TURBO GENERATORS

MIL

LIN

G E

QU

IPM

EN

T

WATER

TANKS

CONDENSED WATER

AUXILIARY EQUIPMENT

BAGASSE AND PITH

BUNKER FUEL

STEAM HEAD

BAGASSE, PITH

Diagram 1. Flows of Energy and Steam of the Power Plant and project boundary

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 17 Diagram 1:

FOLIAGE CHOPPING AND

GRINDING SYSTEM

CBS

BOILERFOLIAGE

BAGASSE AND PITH

450 PSG

Diagram 2. VCS project activity

According to UNFCCC AM0036 v.2.1 “Procedure for the selection of the most plausible baseline scenario”, the following analysis determines the most plausible alternatives to the project activity”. Alternatives for heat generation: Realistic and credible alternatives for heat generation available for AIPSA were analyzed taking into account specific conditions of the company and baseline scenarios in UNFCCC AM0036 v.2.1 approved methodology, as follows: H1 The replacement of the Foster Wheeler boiler with the biomass boiler not undertaken as a CDM

project activity (heat generation with bagasse, pith and foliage). This was a realistic and credible alternative considered but was not economically feasible without the sale of carbon credits

H2 Continued operation of Foster Wheeler boiler using the same fuel mix or less biomass residues as in the past. This was a realistic and credible alternative considered.

H3 Continued operation of the existing boiler(s) using a different fuel (mix): High additional investments are required to allow the Foster Wheeler boiler to meet the steam requirements of the plant without burning fuel oil, as in H2 alternative. Therefore this alternative is not realistic, and was not considered.

H4 Improvement of the performance of the Foster Wheeler and Edge Moore boilers: This alternative was already implemented by project participants as the Edge Moore boiler was recently refurbished. Since 2003, project participants also have increase the preventive maintenance of


Foster Wheeler boiler. Boilers performance is not possible to improve beyond current levels without a huge additional investment. Therefore this alternative was not considered.

H5 Continued operation of the Foster Wheeler boiler using the same fuel mix or less biomass residues as in the past AND installation of (a) new boiler(s) that is/are fired with the same fuel type(s) and the same fuel mix (or a lower share of biomass) as the existing boiler(s): This alternative was not considered as Foster Wheeler and Edge Moore boilers can produce the steam requirements of the plant, and therefore there is no need for installing an additional boiler.

H6 Replacement of the existing boiler(s) with new boiler(s): The type of boiler proposed by the project activity has the best available technology in the region and therefore this alternative is considered as in H1 alternative.

These conditions determine that at the present time AIPSA had two alternatives in the absence of the CDM: H1 The replacement of the Foster Wheeler and Edge Moore boilers with the biomass boiler not

undertaken as a CDM project activity (heat generation with bagasse, pith and foliage). H2 Continued operation of the Foster Wheeler boiler using the same fuel mix or less biomass

residues as in the past. Alternatives for the use of biomass Prior to the implementation of the project activity, two types of biomass residues were used: residual bagasse, and pith. Residual bagasse is a by-product of the sugar production process and is generated on-site by the project participant. The amount of bagasse available depends on the amount of sugar cane milled throughout the year. Similarly the amount of pith depends on the amount of bagasse sold by AIPSA to QUIMPAC, as it is a by-product of the paper production process and is part of the Resources Exchange Agreement between the two companies. The project activity aims to use foliage as a fuel for heat generation. Traditional practices at AIPSA and in the sugar industry leave foliage in the growing fields which is then burnt to clear out the fields and prepare them for the next crop yield.


Graphic 2. Burning of Foliage in the Field is Common Practice

As for this project activity foliage constitutes the main stream of biomass residues complemented with residual bagasse and pith historically used for heat generation at AIPSA. An exceptional case is due to QUIMPAC’s internal crisis. In 2005, QUIMPAC decreased bagasse demand drastically leaving excess bagasse at AIPSA. QUIMPAC’s change in bagasse consumption was due to a reduction in the price paid for paper that used bagasse as raw material. Under those circumstances, AIPSA was compelled to use the excess bagasse for energy purposes slowing down research and investments needed for use of foliage as the main fuel for heat generation. Through 2005, 2006, 2007 and 2008, AIPSA used bagasse as a biomass residue, given that the market situation did not allow AIPSA to sell bagasse at commercial rates. During 2006, QUIMPAC demand has slowly increased. It is expected that in the near future QUIMPAC’s demand will return to 2004 levels, restoring the resource transfer levels set by the Resources Exchange Agreement. Since AIPSA has continued research in foliage use, once the historical QUIMPAC’s demand is restored, AIPSA will be able to use foliage as fuel for heat generation needs. The alternative uses of biomass are: B1 Biomass residues are dumped or left to decay under mainly aerobic conditions. This applies, for

example, to dumping and decay of biomass residues on fields. This is not a realistic alternative for any of the biomass residues to be used in this project activity (residual bagasse, pith and foliage) since the growing fields need to be cleared of foliage before starting the next crop yield and the traditional practice has been to burn it in the fields for preparing soil for the next yield; residual bagasse and pith are used for heat generation. This is not a realistic and credible alternative.

B2 The biomass residues are dumped or left to decay under clearly anaerobic conditions. This applies, for example, to deep landfills with more than 5 meters. This is not a realistic alternative since this is not a common practice for none of the biomass residues used in this project activity.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 20 B3 The biomass residues are burnt in an uncontrolled manner without utilizing them for energy

purposes. This is a realistic alternative for foliage use. This is a common practice in the sugar industry. Residual bagasse and pith are mainly used for heat generation.

B4 The biomass residues are sold to other consumers in the market and the predominant use of the biomass residues in the region/country is for energy purposes (heat and/or power generation). This is not a realistic alternative for foliage since B3 is the common practice alternative in the sugar industry. Bagasse, on the other hand, is used for paper and cardboard production, however, AIPSA produces more bagasse than required in regional bagasse market and therefore excess bagasse not sold to the market remains at AIPSA’s facilities as a leftover and used within AIPSA for energy purposes.

B5 The biomass residues are used as feedstock in a process (e.g. in the pulp and paper industry). This is a realistic and credible alternative for residual bagasse. As explained above, the main use of bagasse is to produce paper and cardboard in the neighbouring company QUIMPAC. Residual bagasse results from the amount of bagasse that has not been possible to sell in the regional bagasse market due to the market size nor in country based markets due to transport costs.

B6 The biomass residues are used as fertilizer. This is not a realistic alternative since AIPSA’s core business is not the fertilizer industry which would require additional important capital investments. In case fertilizers were to be produced with AIPSA’s biomass residues, AIPSA would probably sell biomass residues to neighbouring companies. Actually, a branch of QUIMPAC (today PANASA) located a few block away from AIPSA’s sugar mill produces Chemical Fertilizers. .

B7 The proposed project activity not undertaken as a CDM project activity (use of the biomass residues for heat generation). This is technically a realistic and credible alternative, but is not financially viable.

B8 Any other use of the biomass residues. This is not a realistic alternative due to AIPSA’s core business. If the excess foliage were to be sold in the market for other uses this alternative is the same as B4, B5 and B6.

Baseline alternatives for heat generation are related to baseline alternatives for the use of biomass. Alternative H1 has associated alternative B7, meaning that the project is technically feasible but would need CDM financial resources to be carried out. On the other hand, alternative H2 has associated B3, B4, B5, B6 and occasionally B8, meaning that it is more profitable to sell biomass residues than to use them to cover heat generation need on site and displace fossil fuel consumption, which is also an alternative. 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): >> As the UNFCCC methodology AM0036 v.2.1 uses the tool for the determination and assessment of additionality, this section will present how the “Tool for the demonstration and assessment of additionality” V 05.2 UNFCCC was applied to the project activity. Step 1: Identification of alternatives to the project activity consistent with mandatory laws and regulations Sub-step 1a. Define alternatives to the project activity:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 21 As presented in the above section, baseline alternatives for steam generation in the absence of the CDM are:

1. Continue with the actual situation, generating energy and steam with fossil fuels and biomass in the existing boilers, and selling the excess biomass residues to the market when possible; or,

2. Fuel Switch and implement a new biomass residues boiler neither as a CDM project nor a VCS project. Although this alternative is technically viable, it is not financially viable without incomes from the sale of carbon credits.

Sub-step 1b: Consistency with mandatory laws and regulations: Both alternatives and the project activity are in compliance with prevailing laws and regulations and none of the alternatives are mandated/enforced by law. This is demonstrated by the national approval letter. Step 2. Investment analysis. Sub-step 2a. Determine appropriate analysis method The investment comparison analysis is the appropriate method for comparison of the baseline alternatives as the method analyzes the costs, revenues and financial indicators associated with both alternatives. Sub-step 2b. – Option II. Apply investment comparison analysis To demonstrate that alternative 2 would not have occurred in the absence of the incentive from carbon credits, due to an investment barrier, we undertake a financial analysis of both alternatives. The financial analysis is based on a documented cash flow analysis of all the costs and revenues related to each alternative. Alternative 1 For alternative 1, the costs include all those related to maintenance and fuel supply of the two existing boilers and the revenues include the sales of biomass residues to QUIMPAC and to others4. Depreciation costs are not included in the analysis because they do not imply cash demands. As mentioned in the description of the project activity, AIPSA signed a Resource Exchange Agreement with QUIMPAC that establishes the terms of exchange through 2020. AIPSA transfers bagasse to QUIMPAC for its pulp and paper processes, and QUIMPAC transfers two types of fuel to AIPSA in exchange: pith (polvillo) and Bunker fuel. The amount of bagasse received by QUIMPAC depends on its production requirements. The amount of Pith returned by QUIMPAC to AIPSA is constant relative to the amount of bagasse transferred because it is a by-product of the pulp process (approximately 34% of the quantity of the bagasse received). The Resource Exchange Agreement defines the terms of the exchanges of the three different fuels (bagasse, pith and Bunker fuel) based on their caloric potential. The terms of exchange of the current agreement are 46 Gallons of Bunker fuel from Quimpac per ton of

4 Financial documentation of the CDM project shows the historical costs associated with alternative 1 incurred by AIPSA during the period 1999 – 2004.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 22 bagasse delivered from AIPSA. The amount of pith returned to AIPSA represents 35% of the bagasse weight, and is equivalent to 10.5 gallons of Bunker fuel. This is deducted from the 46 gallon total exchanged, leaving 35.5 Gallons of Bunker fuel received per ton of bagasse delivered. For accounting purposes, both companies (AIPSA and QUIMPAC) register the resource exchanges as purchases and sales of fuels, valued by the price equivalent of oil. But in terms of cash flow, AIPSA has no cost because the revenue received from the sale of bagasse to QUIMPAC equals the cost of purchase of Pith and Bunker fuel. Also, AIPSA has the right to use QUIMPAC’s boilers at no cost. Likewise, the bagasse burned by AIPSA has no cash flow cost because the bagasse used is a by-product of its sugar production process. In conclusion, the existing conditions are quite favorable to AIPSA and the intentions of both firms in the absence of the CDM are to continue. The costs associated with the alternative 1 – continue with the current situation - are limited to the projected costs of maintenance of the existing generation units during the crediting period. The following table shows the costs as well as the net present value of alternative 1:

Table 9. Cash flow analysis for alternative 1: Continue with existing situation (figures in USD) 1 2 3 4 5 6 7 8 9 10

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenues

Sale of bagasse to QUIMPAC-PANASA 5.791.896 5.618.490 6.450.227 6.702.773 6.727.705 6.727.314 6.758.036 6.760.196 6.803.435 6.803.435

Sale of bagasse to others 410.620 398.326 457.293 475.197 476.965 476.937 479.115 479.268 482.334 482.334

Operation and Maintenance Costs

Fuel costs

Pith 1.271.499 1.233.431 1.416.023 1.471.464 1.476.938 1.476.852 1.483.596 1.484.070 1.493.563 1.493.563

Residual Fuel Oil 4.520.397 4.385.059 5.034.204 5.231.309 5.250.767 5.250.462 5.274.440 5.276.126 5.309.872 5.309.872

Costo Vapor compra a QUIMPAC-PANASA - - - - - - - - - -

Maintenance costs

Foster Wheeler 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603

Edge Moore 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456

Total Costs 6.248.955 6.075.549 6.907.286 7.159.832 7.184.764 7.184.373 7.215.096 7.217.256 7.260.495 7.260.495

Net Cash Flow (46.439) (58.733) 233 18.138 19.905 19.878 22.056 22.209 25.274 25.274

NPV (10%) $72.523

11 12 13 14 15 16 17 18 19 20

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Revenues




Fuel costs

Pith 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563



Maintenance costs

Foster Wheeler 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603

Edge Moore 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456

Total Costs 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495

Net Cash Flow 25.274 25.274 25.274 25.274 25.274 25.274 25.274 25.274 25.274 25.274

21 22 23 24 25 26 27 28 29 30

2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Revenues




Fuel costs

Pith 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563



Maintenance costs

Foster Wheeler 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603 410.603

Edge Moore 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456 46.456

Total Costs 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495 7.260.495

Net Cash Flow 25.274 25.274 25.274 25.274 25.274 25.274 25.274 25.274 25.274 25.274

(Figures in USD)

SOURCE: AIPSA Accounting Dept. Alternative 2

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 23 For alternative 2 – fuel switch and implement a new biomass residues boiler without CDM revenues, the cash flow analysis includes the additional investment costs and the maintenance costs, and the revenues from the net sale of bagasse to QUIMPAC. The results demonstrate that the project activity is not the baseline. The investment cost, US$ 7,876,103, includes all costs made in the period 2004-2008 associated with the purchase of the equipment, transport, and installation, the costs incurred in conditioning a location for the operation of the new boiler as well as the purchase of foliage transport, chopping, grinding and delivery systems. The costs of gathering, transporting, chopping and grinding of the residual foliage for delivery to the boiler are high: $2,774,679 USD. The maintenance cost of the new boiler (USD$377,499 per year) was estimated adjusting the projected cost of the Foster Wheeler Boiler, which is similar in type of operations. The adjustments include relevant personnel reductions, stoppage costs, and reduced maintenance. The maintenance cost of the foliage grinding system adds another $693,670 USD per year. With this alternative, AIPSA would have additional revenue from selling more residual biomass (bagasse) to QUIMPAC. For calculating the revenue, it was assumed that the total residual amount resulting from the bagasse produced and not burned in the new boiler, would be purchased by QUIMPAC or the market (other potential bagasse buyers). QUIMPAC will still return Pith and instead of supplying residual oil, will pay the equivalent value according with the terms of Resources Exchange Agreement. QUIMPAC will demand less Bunker Fuel from the refinery. The residual biomass is calculated by first estimating the total amount of bagasse produced by AIPSA according to its production projections. These projections also give the amount of steam required for the sugar process. With the amount of steam5 needed, we calculated the bagasse requirements of the new boiler to generate that steam based on its operating fuel efficiency. Finally, the residual bagasse is the difference between the total biomass produced and the biomass burned to produce the necessary steam. When the project begins to burn residual foliage in the boiler, the total residual biomass is increased by adding the amount of foliage. Then the amount of biomass necessary to generate needed steam is subtracted. This leaves the amount of bagasse available to trade to Quimpac or sell to the market. The sales value of the Bagasse to Quimpac is based on the average price of Bunker fuel for the period Jan-Sept of 2004. Taking into account the above costs and revenues, the following table shows the cash flow analysis for Alternative 2:

5 The final value of the bagasse burned takes into account the steam generated by the Pith received.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 24 Table 10. Cash flow analysis for alternative 2: Implement bagasse boiler without emission reduction crediting

(figures in USD) 1 2 3 4 5 6 7 8 9 10

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenues

Sales of Bagasse to QUIMPAC-PANASA 5.791.896 5.618.490 6.450.227 6.702.773 6.727.705 6.727.314 6.758.036 6.760.196 6.803.435 6.803.435

Costs

Initial investment 7.278.189

Initial investment in cbs 7.105.036 597.913,52

Initial investment in foliage grinding system 173. 153


Fuel costs

Pith 1.271.499 1.233.431 1.416.023 1.471.464 1.476.938 1.476.852 1.483.596 1.484.070 1.493.563 1.493.563

Foliage gathering cost 797.720 773.837 888.392 923.176 926.610 926.556 930.787 931.085 937.040 937.040

Foliage transportation cost 1.595.440 1.547.674 1.776.785 1.846.351 1.853.219 1.853.112 1.861.574 1.862.169 1.874.080 1.874.080

Foliage grinder electricity cost 208.101 201.871 231.755 240.828 241.724 241.710 242.814 242.892 244.445 244.445

labour to run the foliage grinder system 173.417 168.225 193.129 200.690 201.437 201.425 202.345 202.410 203.704 203.704

Maintenance costs

CBS/MEIC 98.129 202.186 377.499 377.499 377.499 377.499 377.499 377.499 377.499 377.499

Foliage Grinder 693.670 672.902 772.515 802.761 805.747 805.701 809.380 809.639 814.817 814.817

Total Costs - 4.837.976 4.800.125 5.656.097 5.862.771 5.883.174 5.882.854 5.907.996 5.909.763 5.945.148 5.945.148

Net Cash Flow (7.278.189) 953.919 818.365 794.130 840.003 844.531 844.460 850.041 850.433 858.287 858.287

NPV (10%) ($1.616.431)

IRR 5%

11 12 13 14 15 16 17 18 19 20

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Revenues


Costs

Initial investment

Initial investment in cbs

Initial investment in foliage grinding system


Fuel costs

Pith 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563





Maintenance costs

CBS/MEIC 1.123.745 838.745 838.745 1.743.745 988.745 838.745 1.123.745 1.638.745 838.745 1.743.745

Foliage Grinder 814.817 814.817 814.817 814.817 814.817 814.817 814.817 814.817 814.817 814.817

Total Costs 6.691.395 6.406.395 6.406.395 7.311.395 6.556.395 6.406.395 6.691.395 7.206.395 6.406.395 7.311.395

Net Cash Flow 112.040 397.040 397.040 (507.960) 247.040 397.040 112.040 (402.960) 397.040 (507.960)

21 22 23 24 25 26 27 28 29 30

2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Revenues


Costs

Initial investment




Fuel costs

Pith 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563 1.493.563





Maintenance costs

CBS/MEIC 838.745 988.745 1.123.745 838.745 838.745 1.743.745 838.745 1.638.745 1.273.745 838.745

Foliage Grinder 814.817 814.817 814.817 814.817 814.817 814.817 814.817 814.817 814.817 814.817

Total Costs 6.406.395 6.556.395 6.691.395 6.406.395 6.406.395 7.311.395 6.406.395 7.206.395 6.841.395 6.406.395

Net Cash Flow 397.040 247.040 112.040 397.040 397.040 (507.960) 397.040 (402.960) (37.960) 397.040

(Figures in USD)

Sub-step 2c. Calculation and comparison of financial indicators (only applicable to options II and III): As we can see comparing the results of Table 12 and Table 13, Alternative 1 has a Net Present Value of USD$72,563, which is a significantly higher value than Alternative 2, which has a negative NPV of USD$ (1,616,431). In the absence of the incentives from the sale of carbon credits, the more attractive option is alternative 1: to continue with the actual situation. Sub-step 2d: Sensitivity analysis (only applicable to Options II and III):

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 25 A realistic possibility for a change in the critical assumptions that affect the economic equation is the case when demand for bagasse from Quimpac is reduced due to falling production. This occurred in 2005, and bagasse stocks at AIPSA increased rapidly. Considering sales to other buyers of bagasse at historical levels, AIPSA would be faced with growing supplies of residual bagasse with no economic value other than burning it in the boiler. If Quimpac were to go out of business, sales to other buyers would be maintained at approximately 13,323 tons per year, and the rest would be consumed in the Paramonga biomass boiler. In this case, due to the excess bagasse available, the use of foliage at AIPSA is reduced to 10% of the available foliage to be chopped, and the costs of foliage gathering, transporting, grinding and use are reduced proportionally. Under this scenario the NPV is more negative than before at -$12,265,593, because incomes fall, investment costs are maintained and operating costs are reduced. Again, without emission reduction crediting, this alternative would not have taken place. The following table demonstrates the economics of this scenario.


Table 11. Cash flow analysis for alternative 2B: Implement bagasse boiler without emission reduction crediting nor bagasse purchased by Quimpac (figures in USD)

1 2 3 4 5 6 7 8 9 10

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenues

Sales of Bagasse to QUIMPAC-PANASA


TOTAL INCOME 410.620 398.326 457.293 475.197 476.965 476.937 479.115 479.268 482.334 482.334

Costs

Initial investment 7.278.189

Initial investment in cbs 7.105.036 597.913,52

Initial investment in foliage grinding system 173. 153


Fuel costs

Pith


Foliage transportation cost 159.544 154.767 177.678 184.635 185.322 185.311 186.157 186.217 187.408 187.408



Maintenance costs

CBS/MEIC 98.129 202.186 377.499 377.499 377.499 377.499 377.499 377.499 377.499 377.499

Foliage Grinder 69.367 67.290 77.252 80.276 80.575 80.570 80.938 80.964 81.482 81.482

Total Costs - 444.964 538.637 763.756 778.879 780.372 780.349 782.189 782.318 784.907 784.907

Net Cash Flow (7.278.189) (34.344) (140.310) (306.464) (303.682) (303.408) (303.412) (303.074) (303.050) (302.574) (302.574)

NPV (10%) ($12.265.593)

IRR #¡DIV/0!

11 12 13 14 15 16 17 18 19 20

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Revenues



TOTAL INCOME 482.334 482.334 482.334 482.334 482.334 482.334 482.334 482.334 482.334 482.334

Costs

Initial investment




Fuel costs

Pith





Maintenance costs

CBS/MEIC 1.123.745 838.745 838.745 1.743.745 988.745 838.745 1.123.745 1.638.745 838.745 1.743.745

Foliage Grinder 81.482 81.482 81.482 81.482 81.482 81.482 81.482 81.482 81.482 81.482

Total Costs 1.531.154 1.246.154 1.246.154 2.151.154 1.396.154 1.246.154 1.531.154 2.046.154 1.246.154 2.151.154

Net Cash Flow (1.048.820) (763.820) (763.820) (1.668.820) (913.820) (763.820) (1.048.820) (1.563.820) (763.820) (1.668.820)

21 22 23 24 25 26 27 28 29 30

2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Revenues



TOTAL INCOME 482.334 482.334 482.334 482.334 482.334 482.334 482.334 482.334 482.334 482.334

Costs

Initial investment




Fuel costs

Pith





Maintenance costs

CBS/MEIC 838.745 988.745 1.123.745 838.745 838.745 1.743.745 838.745 1.638.745 1.273.745 838.745

Foliage Grinder 81.482 81.482 81.482 81.482 81.482 81.482 81.482 81.482 81.482 81.482

Total Costs 1.246.154 1.396.154 1.531.154 1.246.154 1.246.154 2.151.154 1.246.154 2.046.154 1.681.154 1.246.154

Net Cash Flow (763.820) (913.820) (1.048.820) (763.820) (763.820) (1.668.820) (763.820) (1.563.820) (1.198.820) (763.820)

The exchange rate between Peruvian soles and American dollars is the most influencing variable for the above financial analyses. If the exchange rate takes the lower value in the period 1 January 2007 – 1 september 2009, as presented in the the Peruvian central bank webpage (http://estadisticas.bcrp.gob.pe/resultados.asp?sIdioma=1&sTipo=1&sChkCount=12&sFrecuencia=D), like in April 8 2008 when the exchange rate was set at S/.2,695 per 1USD$, Alternative 2 IRR=2% and NPV=-3,105,181 (negative). On the other hand, if the exchange rate takes the higher value in the same period (March 3 2009=S/.3,259 per 1USD$) Alternative 2 IRR=5% and NPV=-1,573,511 (negative). If the exchange rate takes a value 10% higher than the one used for the inicial financial analysis (i.e.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 27 Original ER=3.24; 10% Higher ER=3,564), Alternative 2 IRR=7% and NPV=-947,176 (negative). It is then demonstrated that none variation on the exchange rate would modify AIPSA’s choice to continue with Alternative 1: Continue with the existing situation. Other scenarios are not feasible: 1. Change in Bunker oil price is not feasible under this analysis due to the rules agreed in the

Resources Exchange Agreement (REA) signed between both firms. Additionally, resources are exchanged based on its Net Calorific Value. Incomes and costs presented in the above analyses are made for accounting purposes; however, no money is involved in the trade.

2. Change in prices of bagasse or pith are also fixed by the REA 3. Change in the amount of bagasse sold to other consumers, is not feasible since there’s no facilities

able to process the amount of bagasse produced by AIPSA in the nearest 200km. 4.

Step 4. Common practice analysis. Sub-step 4a: Analyze other activities similar to the proposed project activity: Common practice is to burn fossil fuels and in some cases varying amounts of bagasse. Burning foliage is not common practice, as is explained in the technology alternatives section of this VCS PD. Sub-step 4b: Discuss any similar Options that are occurring: There are no other projects burning residual foliage in Peru, and no other projects working with the systemic change to begin burning residual foliage in Peru. B.6. Emission reductions: B.6.1. Explanation of methodological choices: >> Baseline emissions Baseline emissions include CO2 emissions from fossil fuel combustion in the boilers in the absence of the project activity and, if included in the project boundary, CH4 emissions from the treatment of biomass residues in the absence of the project activity: (1) yBFyHG BEBEBEy ,, +=

Where: BEy = Baseline emissions during the year y (tCO2e/yr) BEHG,y = Baseline emissions from fossil fuel combustion for heat generation in the boiler(s) (tCO2 /yr) BEBF,y = Baseline emissions due to uncontrolled burning or decay of the biomass residues (tCO2e/yr) a) Baseline emissions from fossil fuel combustion in boiler(s) for heat generation (BEHG,y) Baseline emissions from fossil fuel combustion in the boiler(s) are determined by multiplying the heat generated with fossil fuels that are displaced by biomass residues with the CO2 emission factor of the least carbon-intensive fossil fuels that would be used in the absence of the project activity and by dividing by the average net efficiency of heat generation in the boiler(s), as follows:


(2)FFboiler

yCOFFybiomassPJyHG

EFHGBE

,

,,,,,

2

η⋅

=

Where: BEHG,y = Baseline emissions from fossil fuel combustion for heat generation in the boiler(s) (tCO2e /yr) HGPJ,biomass,y = Heat generated with incremental biomass residues used as a result of the project activity during the year y (GJ/yr) EFFF,CO2,y = CO2 emission factor of the fossil fuel type displaced by biomass residues (tCO2e /GJ)

ηboiler,FF = Average net efficiency of heat generation in the boiler(s) when fired with fossil fuels Case B: Use of some biomass residues for heat generation in the absence of the project activity In this case, only the use of biomass residues beyond historical levels should be attributed to the CDM project activity. Hence, HGPJ,biomass,y refers to the additional (i.e. additional to the baseline scenario) quantity of heat generated from the combustion of biomass residues, as a result of the CDM project activity. As the level of biomass residue use in the absence of the project activity is associated with significant uncertainty, the monitoring plan uses as a conservative approach, for HGPJ,biomass,y the minimum value among the following two options: 1 option

(3) { }2,,1,,,,,,,,, ;; −−−= nhisyoricbiomassnhistoricbiomassnhistoricbiomassytotalbiomassPJybiomassPJ HGHGHGMAXHGHG

Where: HGPJ,biomass,y = Heat generated with incremental biomass residues used in the project activity during the year y (GJ/yr) HGPJ,biomass,total,y = Total heat generated from firing biomass residues in all boilers at the project site during the year y (GJ/yr) HGbiomass,historic,n = Historical annual heat generation from firing biomass residues in boilers at the project site during the year n (GJ/yr) n = Year prior to the implementation of the project activity 2 option

(4)

⋅−=−

−

−

−

2,,

2,,

1,,

1,,

,,

,,,,,,,,, ;;

nhistorictotal

nhistoricbiomass

nhistorictotal

nhistoricbiomass

nhistorictotal

nhistoricbiomassytotalPJytotalbiomassPJybiomassPJ HG

HG

HG

HG

HG

HGMAXHGHGHG Where

: HGPJ,biomass,y = Heat generated with incremental biomass residues used as a result of the project activity during the year y (GJ/yr) HGPJ,biomass,total,y = Total heat generated from firing biomass residues in all boilers at the project site during the year y (GJ/yr) HGPJ,total,y = Total heat generated in boilers at the project site, using both biomass residues and fossil fuels, during the year y (GJ/yr) HGbiomass,historic,n = Historical annual heat generation from using biomass residues in boilers at the project site during the year n (GJ/yr)

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 29 HGtotal,historic,n = Historical annual total heat generation, from using biomass residues and fossil fuels, in boilers at the project site during the year n (GJ/yr) n = Year prior to the implementation of the project activity The historical fraction of heat generation with biomass residues can be determined based on the quantities of biomass residue types k and fossil fuel types i used historically in the boiler(s) at the project site, as follows:

(5)∑ ∑

∑⋅+⋅

⋅=

k iiniknk

kknk

nhistorictotal

nhistoricbiomass

NCVFCNCVBF

NCVBF

HG

HG

,,

,

,,

,,

b) Baseline emissions due to uncontrolled burning or decay of the biomass residues (BEBF,y) For this project BEBF, y is equal: (6)

, 4 , , , 4, ,BF y CH PJ k y k burning CH k yk

BE GWP BF NCV EF= ⋅ ⋅ ⋅∑

Where: BEBF,y = Baseline emissions due to uncontrolled burning or decay of the biomass residues (tCO2e/yr) GWPCH4 = Global Warming Potential of methane valid for the commitment period (tCO2e/tCH4) BF PJ,k,y = Quantity of biomass residue type k used for heat generation as a result of the project activity during the year y (tons of dry matter or liter) NCVk = Net calorific value of the biomass residue type k (GJ/ton of dry matter or GJ/liter) EF burning,CH4 k,y = CH4 emission factor for uncontrolled burning of the biomass residue type k during the year y (tCH4/GJ) Project boundary includes uncontrolled burning or decay of biomass residues within baseline emissions. (See Table 7) Project Emissions (7) yBFCHCHyTRCOyECCOyFFCOy PEGWPPEPEPEPE ,,,,,,,, 44222

⋅+++=

Where: PEy = Project emissions during the year y (tCO2/yr) PECO2,FF,y = CO2 emissions from on-site fossil fuel combustion attributable to the project activity (tCO2/yr) PECO2,EC,y = CO2 emissions from on-site electricity consumption attributable to the project activity (tCO2/yr) PECO2,TR,y = CO2 emissions from off-site transportation of biomass residues to the project site (tCO2/yr) PECH4,BF,y = CH4 emissions from combustion of biomass residues in the boiler(s) (tCH4/yr) a) CO2 emissions from on-site fossil fuel combustion (PECO2,FF,y) (8) ∑ ⋅⋅= −

iiFFCOiysiteonyFFCO EFNCVFCPE ,,,,, 22

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 30 Where: PECO2,FF,y = CO2 emissions from on-site fossil fuel combustion attributable to the project activity (tCO2/yr) FCon-site,i,y = Quantity of fossil fuel type i combusted at the project site for purposes other than heat generation as a result of the project activity during the year y (mass or volume unit)6 NCVi = Net calorific value of the fossil fuel type i (GJ / mass or volume unit) EFCO2,FF,i = CO2 emission factor for fossil fuel type i (tCO2/GJ) FCon-site,i,y should not include fossil fuels co-fired in the boiler(s) but should include all other fossil fuel consumption at the project site that is attributable to the project activity, such as for on-site transportation or treatment of the biomass residues. b) CO2 emissions from on-site electricity consumption (PECO2,EC,y) (9) ygridyPJyECCO EFECPE ,,,,2

⋅=

Where: PECO2,EC,y = CO2 emissions from on-site electricity consumption attributable to the project activity (tCO2/yr) ECPJ,y = On-site electricity consumption attributable to the project activity during the year y (MWh) EFgrid,y = CO2 emission factor for electricity used from the grid (tCO2/MWh). c) CO2 emissions from transportation of biomass residues to the project site (PETR,CO2,y) In cases where the biomass residues are not generated directly at the project site, project participants shall determine CO2 emissions resulting from transportation of the biomass residues to the project plant.

(10) yCOkmyy

kykPJ

yTRCO EFAVDTL

BFPE ,,

,,

,, 22⋅⋅=

∑

Where: PECO2,TR,y = CO2 emissions from off-site transportation of biomass residues to the project site (tCO2/yr) Ny = Number of truck trips during the year y AVD y = Average round trip distance (from and to) between the biomass fuel supply sites and the site of the project plant during the year y (km) EFkm,CO2,y Average CO2 emission factor for the trucks measured during the year y (tCO2/km) BFPJ,k,y = Quantity of biomass residue type k used for heat generation as a result of the project activity during the year y (tons of dry matter or liter)5 TLy = Average truck load of the trucks used (tons or liter) d) CH4 emissions from combustion of biomass residues in the boiler(s) (PECH4,BF,y) If this source has been included in the project boundary, emissions are calculated as follows:

(11) kk

ykPJBFCHBFCH NCVBFEFPE ××= ∑ ,,,4,4

Where: PECH4,BF,y = CH4 emissions from combustion of biomass residues in the boiler(s) (tCH4/yr) EFCH4,BF = CH4 emission factor for the combustion of the biomass residues in the boilers (tCH4/GJ)

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 31 BFPJ,k,y = Quantity of biomass residue type k used for heat generation as a result of the project activity during the year y (tons of dry matter or liter)5 NCVk = Net calorific value of the biomass residue type k (GJ/ton of dry matter or GJ/liter) Leakage Since use of biomass residues for paper production cause no leakage effects, QUIMPAC’s biomass residues consumption is ruled out according to AM0036 L3 approach. Given that other biomass residues buyers cannot be ruled out by no AM0036 leakage approach, leakage for biomass residues consumed by buyers other than QUIMPAC are calculated using AM0036 equation 17 (Eq. 12 below), as a conservative approach. (12) ∑ ⋅⋅=

nnynLELECOy NCVBFEFLE ,,,2

Where: LEy = Leakage emissions during the year y (tCO2/yr) EFCO2,LE = CO2 emission factor of the most carbon intensive fuel used in the country (tCO2/GJ) BFLE,n,y = Quantity of biomass residue type n used for heat generation as a result of the project activity during the year y and for which leakage can not be ruled out using one of the approaches L1, L2, L3 or L4 (tons of dry matter or liter) NCVn = Net calorific value of the biomass residue type n (GJ/ton of dry matter or GJ/liter) n = Biomass residue type n for which leakage can not be ruled out using one of the approaches L1, L2, L3 or L4 Emissions reductions (13) yyyy LEPEBEER −−=

Where: ERy = Emission reductions during the year y (tCO2/yr) BEy = Baseline emissions during the year y (tCO2/yr) PEy = Project emissions during the year y (tCO2/yr) LEy = Leakage emissions during the year y (tCO2/yr)

B.6.2. Data and parameters that are available at validation: (Copy this table for each data and parameter) Data / Parameter: ηηηηboiler

Data unit: -

Description: Average net efficiency of heat generation in the boiler(s) when fired with fossil fuels Source of data used: On-site measurements Value applied: 69% Justification of the choice of data or description of measurement methods and procedures actually applied :

The overall heat generation system efficiency was calculated as an average of the boilers performance in the 2002 – 2004 period. The result of the boiler’s efficiency performance on such period is presented in the following table:


2002 0.70 2003 0.69 2004 0.68

PeriodBoiler

Eficiency

Any comment: Templates will be archived during two years after verification.

Data / Parameter: Data#2: HGPJ,total,y

Data unit: GJ/yr Description: Total heat generated in all boilers at the project site, firing both biomass residues

and fossil fuels, during the year y Source of data used: Calculated

Value applied: Ex ante and ex post gross heat generation is presented below.

2005 2,785,085 2006 2,932,935 2007 2,737,003 2008 2,677,058 2009 3,060,036 2010 3,494,503 2011 3,644,015 2012 3,504,504 2013 3,504,504 2014 3,504,504 2015 3,504,504 2016 3,504,504 2017 3,504,504 2018 3,504,504 2019 3,504,504 2020 3,504,504

PeriodHG pj,total, y

(GJ/y)

Justification of the choice of data or description of measurement methods and procedures actually applied :

The gross heat generation is calculated by adding each fuel combusted which has been multiplied times its respective net calorific value, resulting in the gross available amount of heat generated to be used at AIPSA. Gross heat generation times the boiler efficiency equals the net heat generation useful for running all process activities.

Any comment: Records will be archived during two years after verification Data / Parameter: Data#2a: T1

Data unit: ºC Description: Boiler feed-water temperature Source of data used: Measured Value applied:

Year

Yearly Average of steam temperature

T1 2007 116.72 2008 115.46 2009 124.01 2010 105.68

Justification of the An instant temperature level digital signal is produced per second by the Type J

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 33 choice of data or description of measurement methods and procedures actually applied :

thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at 10 seconds intervals, transmitted continually, and remains in digital format in the control panel hard drive for one month. Hourly, the supervisor in charge of the boiler manually writes down the measurement on screen in a paper template specially designed for this objective. The template contains one day’s information of the tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2b: T2

Data unit: ºC Description: Boiler overheated steam temperature Source of data used: Measured Value applied:

Year


T2 2007 344.73 2008 362.57 2009 409.49 2010 396.24


An instant temperature level digital signal is produced per second by the Type K thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at 10 second intervals and remains in digital format in the control panel hard drive for one month. Hourly, the boiler supervisor in charge writes down the measurement from the screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2c: P1

Data unit: Bars Description: Boiler feed-water pressure Source of data used: Measured Value applied:

Year

Yearly Average feed-water pressure

P1 2007 34.87 2008 34.90 2009 41.29 2010 40.73

Justification of the choice of data or

An instant pressure level digital signal is produced per second by the gauge and transmitted to a central control panel that shows on screen the measurement taken by

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 34 description of measurement methods and procedures actually applied :

the instrument. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard drive for one month. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2d: P2

Data unit: Bars Description: Boiler overheated steam pressure Source of data used: Measured Value applied:

Year P2 2007 29.87 2008 29.90 2009 35.85 2010 35.73


An instant pressure level digital signal is produced per second by the gauge and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard drive for one month. Hourly, the boiler supervisor in charge writes down the measurement on screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2e: F

Data unit: Tn/h Description: Boiler steam flow Source of data used: Measured Value applied: Year F

2007 52,691.33 2008 49,256.07


An instant compensated mass flow digital signal is produced per second by the flowmeter and transmitted to a central control panel that shows on screen the measurement taken by the instrument. A mass flow totalizer aggregates mass flow. The integration time is 2-10 mseconds. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard dive for one month. Hourly, the boiler supervisor in charge writes down the measurement from the screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.


PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 35 Data / Parameter: BFk,y , BFPJ,k,y

Data unit: Tons of dry matter Description: Quantity of biomass residue type k fired in all boiler(s) at the project site during the

year y Source of data used: On-site measurements Value applied: Values used in calculation are presented in the following Table:

BF bagasse,y BF pith,y BF foliage, yTon Ton Ton

2005 245,383 3,801 - 2006 255,931 8,741 - 2007 286,237 478 1,640 2008 283,912 - 325 2009 316,590 - - 2010 356,850 - - 2011 372,028 - - 2012 372,028 - - 2013 372,028 - - 2014 372,028 - - 2015 372,028 - - 2016 372,028 - - 2017 372,028 - - 2018 372,028 - - 2019 372,028 - - 2020 372,028 - -

Period


On October 2008, new automated scales were installed at AIPSA’s facilities in order to measure biomass residues delivered to the CBS boiler. The equipment installed is a Toledo scale, model “9270 Integradora”. Prior to the new automated scales, the amount of biomass residues fired in the CBS boiler was calculated based on the total sugar cane entering AIPSA’s facilities. A summary of how the calculation was performed is presented in the file entitled “bagasse 2003-2005.xls”. The file details the procedure for calculating biomass residues burned at the CBS boiler. Pith fired at the CBS boiler is measured with QUIMPAC’s digital scale.

Any comment: Records stored in the Titanium central information system and Templates containing bagasse use calculations, humidity and ash content will be archived during two years after verification.

Data / Parameter: FCi,n = FCon-site,i,y

Data unit: mass or volume unit

Description: Quantity of fossil fuel type i fired in all boiler(s) at the project site during the historical year n

Source of data used: On-site measurements Value applied: Values used in calculation are presented in the following Table:


FC i,n

Ton2005 9,852 2006 10,335 2007 208 2008 - 2009 - 2010 1 2011 - 2012 - 2013 - 2014 - 2015 - 2016 - 2017 - 2018 - 2019 - 2020 -

Period


Two Quimpac fuel storage tanks were used to store residual oil No. 6 (Bunker fuel) traded in accordance to the Resources Exchange Agreement. The tanks have a fixed volume. Both AIPSA and Quimpac representatives regularly survey the height of fuel stored. Every time Quimpac added fuel into the tank a cross checking between both representatives was performed in order to secure the amount of fuel sold/purchased. Fuel height was measured by means of a calibrated iron ruler as this is a common practice for measuring fuel storage in the petroleum sector.

Any comment: The CBS boiler does not have a system for measuring the combustion of liquid or gaseous fuels because It can not burn these fuels.

Data / Parameter: EFFF,CO2,y Data unit: tCO2e/GJ Description: CO2 emission factor of the fossil fuel type displaced by biomass residues for the

year y Source of data used: Project participants use 2006 IPCC Guidelines for National Greenhouse Gas

Inventories Vol 2 Energy, Chapter 2 stationary combustion page 2.16 table 2.2 Bunker fuel, Default emission factor = 77,400 Kg CO2/ TJ or in the following link: http://www.ipcc-nggip.iges.or.jp/public/2006gl/pdf/2_Volume2/V2_2_Ch2_Stationary_Combustion.pdf

Value applied: 0.0774 Justification of the choice of data or description of measurement methods and procedures actually applied :

IPCC default emission factor.

Any comment: Data / Parameter: - Data unit: MWh Description: Highest historical electricity generation at the project site during the most recent

three years prior to the implementation of the project activity and electricity


generation during the year y at the project site Source of data used: Power plant operation monthly report Value applied: Year MWh/año

2001 14.717,802002 14.969,622003 17.285,822004 15.746,362005 9.552,7172006 9.155,5032007 14.008,2952008 7.220,39


The energy is registred by an electronic Watt meter name brand ABB series #01201163, in coordination between AIPSA ans CAHUA S.A., the electric service utility company. Measurements are taken from the meter monthly. The responsible technician is Ing. Juan Luna Chief of the Area of Electrical Instrumentation.

Any comment: Data / Parameter: Moisture content of biomass Data unit: % water content

Description: Moisture content of each biomass residue type k Source of data used: On-site measurements Value applied: Period Bagasse

%water content Pith

%water content

2002 50.73 54.73 2003 50.84 54.84 2004 51.08 55.08 2005 50.77 54.77 2006 51.07 55.07 2007 50.83 0.00 2008 51.14 0.00 2009 49.89 0.00 2010 49.67 0.00


AIPSA´s standard NTP 207,063:2008 (detailed in Annex 1 monitoring plan) determines bagasse humidity content according to the document ICUMSA GS7-5 (1994) “The Determination of Moisture in Cane and Bagasse by Oven Drying”. The calculation of pith humidity is based in an analysis simultaneously performed during 2 months at Quimpac and AIPSA laboratories, where pith humidity range was found between 3.5 and 4.5 more than bagasse, reaching by agreement a value of 4 points higher than the measured bagasse humidity.

Any comment: Templates will be archived during two years after verification. Data / Parameter: NCVk and NCVi

Data unit: GJ/ton of dry matter or GJ/liter

Description: Net calorific value of the biomass residue type k and net calorific value of the fossil fuel type i

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 38 Source of data used: Provider data and calculated Value applied: Values used in calculation are presented in the following Table:

PeriodNVC

BagasseNVC Pith

NVC fossil Fuel

NVC Foliage

(GJ/Ton) (GJ/Ton) (GJ/Ton) (GJ/Ton)2005 9.48 8.73 43.17 0.002006 9.42 8.59 43.17 0.002007 9.47 8.70 43.17 8.052008 9.42 8.70 43.17 8.002009 9.67 8.70 43.17 8.202010 9.79 8.70 43.17 8.002011 9.80 8.70 43.17 8.002012 9.42 8.70 43.17 8.002013 9.42 8.70 43.17 8.002014 9.42 8.70 43.17 8.002015 9.42 8.70 43.17 8.002016 9.42 8.70 43.17 8.002017 9.42 8.70 43.17 8.002018 9.42 8.70 43.17 8.002019 9.42 8.70 43.17 8.002020 9.42 8.70 43.17 8.00


Bunker oil NCV measurement is performed by Petroperú. Bagasse, Pith and foliage NCVs are based on humidity content of each fuel according to Hugot’s Handbook. Humidity measurement follows variable “Moisture content of biomass”.

Any comment: The NCV data are recorded daily in the Titanium System. Data / Parameter: ECPJ,y

Data unit: MWh Description: On-site electricity consumption attributable to the project activity during the year y

Source of data used: On-site measurements Value applied: Values used in calculation are presented in the following Table:

Period EC pj,y

2007 6,092 2008 9,214 2009 11,968 2010 36,190 2011 28,464 2012 32,327 2013 32,327 2014 32,327 2015 32,327 2016 32,327 2017 32,327 2018 32,327 2019 32,327 2020 32,327

Justification of the Monthly energy bills will be manually reported to local database.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 39 choice of data or description of measurement methods and procedures actually applied : Any comment: Data / Parameter: EFgrid,y Data unit: tCO2/MWh Description: CO2 emission factor for electricity used from the grid. Source of data used: Emission factor taken from Poechos I project. Registration Date: 14 Nov 2005.

CDM PDD Page 9 or in the following link : http://cdm.unfccc.int/UserManagement/FileStorage/RV1CUGCHTF2HXTZIRZP4F1ST26GIS9


N/A

Any comment: Data / Parameter: TLy Data unit: Tons Description: Average truck load of the trucks used Source of data used: Determined by averaging the weights of each truck carrying sugarcane into the

project plant. Value applied: 30 Ton Justification of the choice of data or description of measurement methods and procedures actually applied :

Every truck entering AIPSA’s facilities loaded with sugarcane and foliage is weighed at the entrance platform scale. The weight measurement is recorded and aggregated daily in the Titanium central information system.

Any comment: Data / Parameter: AVDy Data unit: Km

Description: Average return trip distance (from and to) between the biomass fuel supply sites and the site of the project plant during the year y

Source of data used: Records of project participants related to the origin of the foliage in the AIPSA´s Field Inventories.

Value applied: 0 Km for Bagasse and Pith because this biomass residues are generated in the facility. 31 Km is the maximum return trip distance for foliage transport. The foliage is collected from the sugarcane fields, where it was traditionally burn or degraded. The distance between each of the fields and the project plant is registered in the Field


Inventories in the Titanium System. Justification of the choice of data or description of measurement methods and procedures actually applied :

The measurement is taken in both trajectories (come and back). The distance measurement is recorded in the Titanium system in the Field´s inventories.

Any comment: Templates will be archived during two years after verification. Data / Parameter: EFkm, co2, y Data unit: tCO2/Km Description: Average CO2 emission factor for the trucks measured during the year y Source of data used: IPCC default values. Value applied: 0.00119 Justification of the choice of data or description of measurement methods and procedures actually applied :


Any comment: Data / Parameter: EFCH4,BF Data unit: tCH4/GJ Description: CH4 emission factor for the combustion of the biomass residues in the boilers Source of data used: AM0036 page 18 Value applied: 41.1 kg/TJ or 0.0000411 Ton CH4/GJ Justification of the choice of data or description of measurement methods and procedures actually applied :

Default CH4 emission factor

Any comment: Data / Parameter: EF burning, CH4, k,y

Data unit: tCH4/GJ Description: CH4 emission factor for uncontrolled burning of the biomass residue type k during

the year y Source of data used: AM0036 v 2.1 page 14. Default value in the 100% of uncertainty Value applied: 0.001971 Justification of the choice of data or description of measurement methods and procedures actually applied :


Any comment:

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 41 Data / Parameter: EFCO2 LE,y Data unit: tCO2e/GJ Description: CO2 emission factor of the most carbon intensive fuel used in the country Source of data used: Section 6.4 p.23 of the attached ‘Balance Nacional de Energía 2007’ (2007 National

Energy Overview” states that during the period comprised during 1985-2007 the most used fossil fuels in the peruvian agroindustrial sector are: Gasolina Motor (GM) + Kerosene (KE), Diesel and Petróleo Industrial. In p.196 ‘Petroleo Industrial’ is defined as a conglomerate of heavy petroleum refining residues and generally used in boilers, electricity gensets and navigation. In the Peruvian ‘petroleo industrial’ market exist two references with similar characteristics: Petroleo residual No. 6 (bunker oil No.6) and residual 500, being bunker oil No. 6 the heavier fraction. As mentioned above, Bunker oil No. 6 is the fuel used to run the FW boiler and, therefore, constitutes the baseline fuel for this project activity. Bunker Oil No.6 is referenced in the Resources Exchange Agreement as the fuel to be traded between QUIMPAC and AIPSA. According to 2006 IPCC guidelines or in the following link: http://www.ipcc-nggip.iges.or.jp/public/2006gl/pdf/2_Volume2/V2_2_Ch2_Stationary_Combustion.pdf default residual fuel emission factor = 77,400 Kg CO2/ TJ. As a result, Bunker Oil Nº 6 is the most carbon intensive fuel of those used in the Peruvian agroindustrial sector.



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

>> Baseline emission reduction (BEy) is calculated as follow:

BE y BE HG,y BE BF,yTon CO2 /yr Ton CO2 /yr Ton CO2 /yr

2007 140,473 140,222 251 2008 134,561 134,513 48 2009 160,853 160,853 - 2010 183,686 183,686 - 2011 191,550 191,550 - 2012 184,217 184,217 - 2013 184,217 184,217 - 2014 184,217 184,217 - 2015 184,217 184,217 - 2016 184,217 184,217 - 2017 184,217 184,217 - 2018 184,217 184,217 - 2019 184,217 184,217 - 2020 184,217 184,217 -

Period

The calculation of Project Emissions (PEy) is including: emissions from on-site fossil fuel combustion, emissions from on-site electricity consumption, emissions from off-site transportation of biomass

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 42 residues and CH4 emissions from combustion of biomass residues in the boiler(s). Following table is showing calculation:

PE,y PET,y PEFF,y PE ec,yPE

biomass,CH4, y

Ton CO2 /yr Ton CO2 /yr Ton CO2 /yr Ton CO2 /yr Ton CO2 /yr2007 6,369 - 694.75 3,320 2,354.56 2008 7,332 - - 5,021 2,310.57 2009 9,163 - - 6,521 2,641.12 2010 22,741 - 3.49 19,721 3,016.07 2011 18,656 - - 15,511 3,145.15 2012 20,641 - - 17,616 3,024.74 2013 20,641 - - 17,616 3,024.74 2014 20,641 - - 17,616 3,024.74 2015 20,641 - - 17,616 3,024.74 2016 20,641 - - 17,616 3,024.74 2017 20,641 - - 17,616 3,024.74 2018 20,641 - - 17,616 3,024.74 2019 20,641 - - 17,616 3,024.74 2020 20,641 - - 17,616 3,024.74

Period

Leakage emissions during crediting period are calculated as following table:

Ly EF CO2, le

BF bagasse sold others,y

NVC,bagasse

Ton CO2 /yr Ton CO2/ GJ Ton GJ/ Ton2007 9,765.59 0.08 13,323.16 9.47 2008 7,852.66 0.08 10,770.23 9.42 2009 11,100.24 0.08 14,837.53 9.67 2010 11,686.27 0.08 15,418.46 9.79 2011 11,732.73 0.08 15,475.82 9.80 2012 11,334.41 0.08 15,545.59 9.42 2013 11,338.03 0.08 15,550.56 9.42 2014 11,410.55 0.08 15,650.02 9.42 2015 11,410.55 0.08 15,650.02 9.42 2016 11,410.55 0.08 15,650.02 9.42 2017 11,410.55 0.08 15,650.02 9.42 2018 11,410.55 0.08 15,650.02 9.42 2019 11,410.55 0.08 15,650.02 9.42 2020 11,410.55 0.08 15,650.02 9.42

Period

B.6.4 Summary of the ex-ante estimation of emission reductions: The table below is presenting summary of the estimation of emission reduction during crediting period January 1st 2007 to December 31st 2020. Following table is including baseline emissions, project emissions and leakage.

ERy BE y PE y Ly

Ton CO2/yr Ton CO2 /yr Ton CO2 /yr Ton CO2 /yr2007 124,339 140,473 6,369 9,766 2008 119,377 134,561 7,332 7,853 2009 140,590 160,853 9,163 11,100 2010 149,259 183,686 22,741 11,686 2011 161,161 191,550 18,656 11,733 2012 152,241 184,217 20,641 11,334 2013 152,238 184,217 20,641 11,338 2014 152,165 184,217 20,641 11,411 2015 152,165 184,217 20,641 11,411 2016 152,165 184,217 20,641 11,411 2017 152,165 184,217 20,641 11,411 2018 152,165 184,217 20,641 11,411 2019 152,165 184,217 20,641 11,411 2020 152,165 184,217 20,641 11,411 Total

Average 147,454 2,064,362

Period

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 43 B.7. Application of the monitoring methodology and description of the monitoring plan: B.7.1 Data and parameters monitored: Data / Parameter: ηηηηboiler

Data unit: -

Description: Average net efficiency of heat generation in the boiler(s) when fired with fossil fuels Source of data to be used:

On-site measurements

Value of data applied for the purpose of calculating expected emission reductions in section B.5

69%

Description of measurement methods and procedures to be applied:

The overall heat generation system efficiency was calculated as an average of the boilers performance in the 2002 – 2004 period. The result of the boiler’s efficiency performance on such period is presented in the following table:

2002 0.70 2003 0.69 2004 0.68

PeriodBoiler

Eficiency

QA/QC procedures to be applied:

Efficiencies were found individually as power delivered to steam and generated power for each fuel is known; heat value is known and respective amount of mass, then for the current calculation, the global efficiency is found; this involves total delivery steam energy by energy generated per each fuel.


Data / Parameter: Data#2: HGPJ,total,y

Data unit: GJ/yr Description: Total heat generated in all boilers at the project site, firing both biomass residues

and fossil fuels, during the year y Source of data to be used:

Calculated


The table below shows the gross heat generation for the period 2005-2020. The gross heat generation is calculated by adding each fuel combusted which has been multiplied times its respective net calorific value, resulting in the gross available amount of heat generated to be used at AIPSA. Gross heat generation times the boiler efficiency equals the net heat generation useful for running all process activities. The variables required to measure net heat generation are as follows: Data#2a:T1 (Temperature of water), Data#2b:T2 (Temperature of over heat steam), Data#2c:P1 (Boiler feed-water pressure), Data#2d:P2 (Boiler overheated steam pressure), Data#2e:F (Flow-Boiler steam flow)


The period comprised between 2005-2006 presents the final calculation of heat generated during the period based upon the amount of bagasse, pith and fossil fuel burned in the Foster Wheeler Boiler and Edge Moore boilers and their corresponding Calorific Values. Ex ante and ex post gross heat generation is presented below.

2005 2,785,085 2006 2,932,935 2007 2,737,003 2008 2,677,058 2009 3,060,036 2010 3,494,503 2011 3,644,015 2012 3,504,504 2013 3,504,504 2014 3,504,504 2015 3,504,504 2016 3,504,504 2017 3,504,504 2018 3,504,504 2019 3,504,504 2020 3,504,504

PeriodHG pj,total, y

(GJ/y)


Variables data #2a through 2d determines water and steam enthalpies; the measurement methods for these variables are detail below. Difference between enthalpies multiplied by Variable data #2e determines the instant amount of heat produced and transferred to steam. Heat production is aggregated to obtain hourly, daily, monthly and yearly heat production.


Calculation of HGpj,total,y is performed on hourly basis. Since heat generation is a calculated variable, QA/QC procedures are the same as those presented in variables data #2a-2e

Any comment: Records will be archived during two years after verification Data / Parameter: Data#2a: T1

Data unit: ºC Description: Boiler feed-water temperature Source of data to be used:

Measured


Year


T1 2007 116.72 2008 115.46 2009 124.01 2010 105.68


Measurement equipment to be used: Type J thermocouple with a temperature transmitter type 20TT100. Specifically, the Smar TT300 is a transmitter mainly intended for measurement of temperature


using RTDs or thermocouples. How the measurement is undertaken: An instant temperature level digital signal

is produced per second by the Type J thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at 10 seconds intervals, transmitted continually, and remains in digital format in the control panel hard drive for one month. Hourly, the supervisor in charge of the boiler manually writes down the measurement on screen in a paper template specially designed for this objective. The template contains one day’s information of the tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Calibration procedures applied: According to manufacturer’s specifications first calibration of thermocouples is performed after 3 years of boiler’s start up. First calibration is programmed on December 09.

Accuracy of the measurement method:

Higher than 99.5%. According to manufacturer’s specifications the accuracy is ±0.02%.

Responsible person/entity that should undertake the measurements:

Chief of Power Plant, Engineer Erwin Shult Guimet

Measurement interval: An instant temperature level digital signal is produced per second by the Type J thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument.


An instant temperature level digital signal is produced per second by the Type J thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at ten seconds intervals and remains in digital format in the control panel hard disk for one month. Hourly, the boiler supervisor in charge writes down the measurement on screen in a paper template specially designed for this aim. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The Chief Power supervisor performs monthly and yearly aggregates. Redundancy of the monitoring equipment is performed by field measurement instruments and monitoring of other tracking variables (e.g. pressure or flow) which


are also taken from field instruments and the control panel. Supervisors take regular readings from temperature gauges on the boilers and compare them with readings in the control panel. Deviations higher than 5% of normal condition at the working pressure or flow, switch on and alarm to all area supervisors.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2b: T2

Data unit: ºC Description: Boiler overheated steam temperature Source of data to be used:

Measured


Year


T2 2007 344.73 2008 362.57 2009 409.49 2010 396.24


Equipment that will be used: Type K thermocouple with a temperature transmitter type 20TT330. Specifically the Smar TT300 Series is a transmitter mainly intended for measurement of temperature using RTDs or thermocouples.

How the measurement is undertaken: An instant temperature level digital signal is produced per second by the Type K thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at 10 second intervals and remains in digital format in the control panel hard drive for one month. Hourly, the boiler supervisor in charge writes down the measurement from the screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Calibration procedures applied: According to manufacturer’s specifications the first calibration of thermocouples is performed after 3 years of boiler’s start up. The first calibration is programmed on


December 09. Accuracy of the measurement method:




Measurement interval: An instant temperature level digital signal is produced per second by the Type J thermocouple and transmitted to a central control panel screen.


An instant temperature level digital signal is produced per second by the Type J thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at ten second internals and remains in digital format in the control panel hard drive for one month. Hourly, the boiler supervisor in charge writes down the measurement from the screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The Chief Power supervisor performs monthly and yearly aggregates. Redundancy of the monitoring equipment is performed by field measurement instruments and monitoring of other tracking variables (e.g. pressure or flow) which are also taken from thermometers on the boilers, and the control panel. Supervisors take regular readings from field instruments and compare them with readings from the control panel. Deviations higher than 5% of normal condition at the working pressure or flow, switch on an alarm to alert all area supervisors.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2c: P1

Data unit: Bars Description: Boiler feed-water pressure Source of data to be used:

Measured


Year

Yearly Average feed-water pressure

P1 2007 34.87 2008 34.90 2009 41.29 2010 40.73


Equipment that will be used: The Smar LD300 series, type LD302, Differential pressure gauge appliance with capacitive transmitter type 20PT200.

How the measurement is undertaken: An instant pressure level digital signal is produced per second by the gauge and transmitted to a central control panel that shows on screen the measurement taken by


the instrument. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard drive for one month. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Calibration procedures are applied: According to manufacturer’s specifications first calibration of pressure devices is performed after 3 years of boiler’s start up. First calibration is programmed on December 09.





Measurement interval: An instant pressure level digital signal is produced per second by the gauge and transmitted to a central control panel that shows on screen the measurement taken by the instrument.


An instant pressure level digital signal is produced per second by gauge and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard drive for one month. Redundancy of the monitoring equipment is performed by field measurement instruments and monitoring of other tracking variables (e.g. temperature or flow) which are also taken from field instruments and the control panel. Supervisors take regular readings from field instruments and compare them with readings in the control panel. Deviations higher than 5% of normal condition at the working temperature or flow, switch on an alarm to alert all area supervisors.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2d: P2

Data unit: Bars Description: Boiler overheated steam pressure Source of data to be used:

Measured


Year P2 2007 29.87 2008 29.90 2009 35.85 2010 35.73

Description of Equipment that will be used: The Smar LD300 series, Type LD302,

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 49 measurement methods and procedures to be applied:

differential pressure gauge appliance with capacitive transmitter type 20PT200

How the measurement is undertaken: An instant pressure level digital signal is produced per second by the gauge and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard drive for one month. Hourly, the boiler supervisor in charge writes down the measurement on screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Calibration procedures are applied: According to manufacturer’s specifications first calibration of pressure devices is performed after 3 years of boiler’s start up. First calibration is programmed on December 09.


Higher than 99.5% According to manufacturer’s specifications the accuracy is ±0.04%.



Measurement interval: An instant pressure level digital signal is produced per second by the gauge and transmitted to a central control panel that shows on screen the measurement taken by the instrument.


An instant pressure level digital signal is produced per second by gauge and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard drive for one month. Hourly, the boiler supervisor in charge writes down the measurement from the screen on a paper template specially designed for this objetive. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The Chief Power supervisor performs monthly and yearly aggregates. Redundancy of the monitoring equipment is performed by field measurement instruments and monitoring of other tracking variables (e.g. temperature or flow)


which are also taken from field instruments and the control panel. Supervisors take regular readings from field instruments and compare them with readings in the control panel. Deviations higher than 5% of normal condition at the working temperature or flow, switch on and alarm to alert all area supervisors.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Data#2e: F

Data unit: Tn/h Description: Boiler steam flow Source of data to be used:

Measured


Year F 2007 52,691.33 2008 49,256.07


Equipment that will be used: The Smar LD300 series, Type LD302, Nozzle type differential pressure appliance with temperature measurement and flow transmitter type 20FT300. The instrument automatically calculates the compensated mass flow according to temperature changes. Two signals are sent to the control panel: the corrected and the uncorrected measurements.

How the measurement is undertaken: An instant compensated mass flow digital signal is produced per second by the flowmeter and transmitted to a central control panel that shows on screen the measurement taken by the instrument. A mass flow totalizer aggregates mass flow. The integration time is 2-10 mseconds. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard dive for one month. Hourly, the boiler supervisor in charge writes down the measurement from the screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The project activity plans to modify the digital storage of this variable so that it will automatically be stored in the hard drive for minimum two years.

Calibration procedures are applied: According to manufacturer’s specifications


first calibration of thermocouples is performed after 3 years of boiler’s start up. First calibration is programmed on December 09.





Measurement interval: An instant compensated massflow digital signal is produced per second by the flowmeter and transmitted to a central control panel that shows on screen the measurement taken by the instrument.


An instant compensated mass flow measurement digital signal is produced per second by the Type J thermocouple and transmitted to a central control panel that shows on screen the measurement taken by the instrument. Data on screen is digitally recorded at ten second intervals and remains in digital format in the control panel hard drive for one month. Hourly, the boiler supervisor in charge writes down the measurement on screen on a paper template specially designed for this objective. The template contains one day’s information of tracking variables. Daily templates are archived in folders in the security shelves of the control panel room. The Chief Power supervisor performs monthly and yearly aggregates. Redundancy of the monitoring equipment is performed by field measurement instruments and monitoring of other tracking variables (e.g. pressure or flow) which are also taken from field instruments and the control panel. Supervisors take regular readings from field instruments and compare them with readings in the control panel. Deviations higher than 5% of normal condition at the working pressure or flow, switch on and alarm to alert all area supervisors.

Any comment: Templates will be archived during two years after verification. Data / Parameter: BFk,y , BFPJ,k,y

Data unit: Tons of dry matter Description: Quantity of biomass residue type k fired in all boiler(s) at the project site during the

year y Source of data to be used:



Values used in calculation are presented in the following Table:


BF bagasse,y BF pith,y BF foliage, yTon Ton Ton

2005 245,383 3,801 - 2006 255,931 8,741 - 2007 286,237 478 1,640 2008 283,912 - 325 2009 316,590 - - 2010 356,850 - - 2011 372,028 - - 2012 372,028 - - 2013 372,028 - - 2014 372,028 - - 2015 372,028 - - 2016 372,028 - - 2017 372,028 - - 2018 372,028 - - 2019 372,028 - - 2020 372,028 - -

Period


Equipment that will be used: On October 2008, new automated scales were installed at AIPSA’s facilities in order to measure biomass residues delivered to the CBS boiler. The equipment installed is a Toledo scale, model “9270 Integradora”. Prior to the new automated scales, the amount of biomass residues fired in the CBS boiler was calculated based on the total sugar cane entering AIPSA’s facilities. A summary of how the calculation was performed is presented in the file entitled “bagasse 2003-2005.xls”. The file details the procedure for calculating biomass residues burned at the CBS boiler. Pith fired at the CBS boiler is measured with QUIMPAC’s digital scale.

How the measurement is undertaken:

Digital scales send an instant mass weight signal of the biomass feeding into the boiler to the control panel. Data is aggregated and stored in the central information system called “Titanium”. When these scales are out of operation, the amount of bagasse is derived from the amount of heat generated by the boiler and the NCV of the bagasse.

Calibration procedures are applied: The digital panel of the scales shows when calibration is necessary. According to manufacturer’s specifications the calibration of the scales has four methods: electronic, standard weight, current, real weight. The calibration is performed every month or when significant changes occur to the ratio of vapor produced/bagasse burned.

Accuracy of the measurement Higher tan 99.2%. According to manufacturer’s


method: specifications the accuracy is 0,25%. Responsible person/entity that should undertake the measurements:


Measurement interval: A per minute record of the aggregated measure is stored at the Titanium central information system.


During the period January 2007 – October 2008 the amount of biomass residues fired at the CBS boiler was calculated by means of the sugar cane platform scales and the humidity content and ash content in cane to be milled at AIPSA’s facilities. These calculations were performed in a daily fashion. From October 2008 and beyond, biomass residues are measured directly from the digital scales in a continuous fashion. Data will be reported for 1 hour periods. A daily report is delivered under this activity. The humidity content and ash content in cane to be milled are also recorded for quality assurance of sugar to be produced. Crosscheck of the measurements with an annual energy balance that is based on purchased quantities and stock changes of the bagasse.

Any comment: Records stored in the Titanium central information system and Templates containing bagasse use calculations, humidity and ash content will be archived during two years after verification.

Data / Parameter: FCi,n = FCon-site,i,y

Data unit: mass or volume unit

Description: Quantity of fossil fuel type i fired in all boiler(s) at the project site during the historical year n

Source of data to be used:




FC i,n

Ton2005 9,852 2006 10,335 2007 208 2008 - 2009 - 2010 1 2011 - 2012 - 2013 - 2014 - 2015 - 2016 - 2017 - 2018 - 2019 - 2020 -

Period


Two Quimpac fuel storage tanks were used to store residual oil No. 6 (Bunker fuel) traded in accordance to the Resources Exchange Agreement. The tanks have a fixed volume. Both AIPSA and Quimpac representatives regularly survey the height of fuel stored. Every time Quimpac added fuel into the tank a cross checking between


both representatives was performed in order to secure the amount of fuel sold/purchased. Fuel height was measured by means of a calibrated iron ruler as this is a common practice for measuring fuel storage in the petroleum sector.


Daily checking. Crosscheck of the measurements with an annual energy balance that is based on purchased quantities and stock changes.

Any comment: The CBS boiler does not have a system for measuring the combustion of liquid or gaseous fuels because It can not burn these fuels.

Data / Parameter: EFFF,CO2,y Data unit: tCO2e/GJ Description: CO2 emission factor of the fossil fuel type displaced by biomass residues for the

year y Source of data to be used:

Project participants use 2006 IPCC Guidelines for National Greenhouse Gas Inventories Vol 2 Energy, Chapter 2 stationary combustion page 2.16 table 2.2 Bunker fuel, Default emission factor = 77,400 Kg CO2/ TJ or in the following link: http://www.ipcc-nggip.iges.or.jp/public/2006gl/pdf/2_Volume2/V2_2_Ch2_Stationary_Combustion.pdf


0.0774


None. IPCC default emission factor.


Official data of high quality is used.

Any comment: Templates will be archived during two years after verification. Data / Parameter: - Data unit: MWh Description: Highest historical electricity generation at the project site during the most recent

three years prior to the implementation of the project activity and electricity generation during the year y at the project site


Power plant operation monthly report

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 55 Value of data applied for the purpose of calculating expected emission reductions in section B.5

Year MWh/año2001 14.717,802002 14.969,622003 17.285,822004 15.746,362005 9.552,7172006 9.155,5032007 14.008,2952008 7.220,39


The energy is registred by an electronic Watt meter name brand ABB series #01201163, in coordination between AIPSA ans CAHUA S.A., the electric service utility company. Measurements are taken from the meter monthly. The responsible technician is Ing. Juan Luna Chief of the Area of Electrical Instrumentation.


AIPSA and CAHUA S.A compare measurements each month.

Any comment: Templates will be archived during two years after verification. Data / Parameter: Moisture content of biomass Data unit: % water content

Description: Moisture content of each biomass residue type k Source of data to be used:



Period Bagasse

%water content Pith

%water content

2002 50.73 54.73 2003 50.84 54.84 2004 51.08 55.08 2005 50.77 54.77 2006 51.07 55.07 2007 50.83 0.00 2008 51.14 0.00 2009 49.89 0.00 2010 49.67 0.00


Equipment that will be used: Precision scale 6,100 gr OHAUS 038-LM-2008 Model EP6102C is used to measure weight; Oven with temperature control, Model TCM44 dries the biomass.

How the measurement is undertaken: AIPSA´s standard NTP 207,063:2008 (detailed in Annex 1 monitoring plan) determines bagasse humidity content according to the document ICUMSA GS7-5 (1994) “The Determination of Moisture in Cane and Bagasse by Oven Drying”. The calculation of pith humidity is based


in an analysis simultaneously performed during 2 months at Quimpac and AIPSA laboratories, where pith humidity range was found between 3.5 and 4.5 more than bagasse, reaching by agreement a value of 4 points higher than the measured bagasse humidity.

Calibration procedures are applied: The external calibration is realized annually but every month the instrumentation area realizes verification of the instruments and adjusts when necessary. According to manufacturer’s specifications, the external calibration is done by InCALTM , a laboratory accredited in Peru by IDECOPI. The Annex 108 shows the calibration certificate 038-LM-2008 granted on 2008-09-19 (detailed in Annex 2 monitoring plan). According to manufacturer’s specifications, the oven’s external calibration is done annually. The Annex 3 monitoring plan shows the oven’s external calibration certificates LMC0246-08 granted on 18-2-08 by a laboratory accredited in Brasil.

Accuracy of the measurement method: According to manufacturer’s specifications for scale, the accuracy is 0.01 gr. In accordance with NTP 207.063:2008 the oven has 160 liters of capacity and works at 105°C +/- 3 °C.


The monthly verification is performed by AIPSA´s Instrumentation Area (Eng. Cesar Cornejo and Eng. Carlos Horna.) Quality Assurance Laboratory.

Measurement interval: Humidity is measured every two hours every day and recorded in the Titanium System.


Measurements are compared with the expected range.

Any comment: Templates will be archived during two years after verification. Data / Parameter: NCVk and NCVi

Data unit: GJ/ton of dry matter or GJ/liter

Description: Net calorific value of the biomass residue type k


and net calorific value of the fossil fuel type i Source of data to be used:

Provider data and calculated



PeriodNVC

BagasseNVC Pith

NVC fossil Fuel

NVC Foliage

(GJ/Ton) (GJ/Ton) (GJ/Ton) (GJ/Ton)2005 9.48 8.73 43.17 0.002006 9.42 8.59 43.17 0.002007 9.47 8.70 43.17 8.052008 9.42 8.70 43.17 8.002009 9.67 8.70 43.17 8.202010 9.79 8.70 43.17 8.002011 9.80 8.70 43.17 8.002012 9.42 8.70 43.17 8.002013 9.42 8.70 43.17 8.002014 9.42 8.70 43.17 8.002015 9.42 8.70 43.17 8.002016 9.42 8.70 43.17 8.002017 9.42 8.70 43.17 8.002018 9.42 8.70 43.17 8.002019 9.42 8.70 43.17 8.002020 9.42 8.70 43.17 8.00


Equipment that will be used: The Net Calorific Value of bunker fuel No.6 used for heat generation was provided by Petroperú which is the fossil fuel provider. The NCV values for bagasse, pith and foliage were provided by AIPSA’s Laboratory (Aseguramiento de la Calidad) based upon formulae from E. Hugot manual, “Manual de Ingenieros Azucareros” page 623 (detailed in Annex 4 monitoring plan). Biomass residues humidity is calculated daily at AIPSA’s laboratory facilities.

How the measurement is undertaken: Bunker oil NCV measurement is performed by Petroperú. Bagasse, Pith and foliage NCVs are based on humidity content of each fuel according to Hugot’s Handbook. Humidity measurement follows variable “Moisture content of biomass”. The NCV data are recorded daily in the Titanium System.

Calibration procedures are applied: In accordance to Annex 5 “Plan de calibracion de balanzas” standard calibration of scales are performed every year but are verified and adjusted monthly.

Accuracy of the measurement method: High

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 58 Responsible person/entity that should

undertake the measurements: Engineer Carlos Horna, Quality Assurance.

Measurement interval: Daily QA/QC procedures to be applied:

Humidity is measured every two hours every day. To measure biomass residues humidity, AIPSA’s laboratory facilities use a scale and a lab oven. The calibration certificate for the laboratory scale is presented in Annex 108 shows the calibration certificate 038-LM-2008 granted on 2008-09-19 (detailed in Annex 2 monitoring plan).

Any comment: Templates will be archived during two years after verification. Data / Parameter: ECPJ,y

Data unit: MWh Description: On-site electricity consumption attributable to the project activity during the year y




Values used in calculation are presented in the following Table: Period EC pj,y

2007 6,092 2008 9,214 2009 11,968 2010 36,190 2011 28,464 2012 32,327 2013 32,327 2014 32,327 2015 32,327 2016 32,327 2017 32,327 2018 32,327 2019 32,327 2020 32,327


Equipment that will be used: Monitoring of Energy meter, confirmed by monthly bills.

How the measurement is undertaken: Monthly energy bills will be manually reported to local database.

Calibration procedures are applied: The calibration procedures for the energy use meter are performed by the electricity provider and carried out in a Reference Laboratory accredited by international standards according to indications of the manufacturer. The Reference laboratory should give a Certificate of Calibration specifying the status, identification of instrument, date of calibration, and next calibration. AIPSA should review these procedures which are the sole


responsibility of the electricity supplier. Accuracy of the measurement method: High Responsible person/entity that should undertake the measurements:

Electricity supply company.

Measurement interval: Continuous QA/QC procedures to be applied:

Monthly. Cross check with the monthly invoice from the grid operator. The maintenance, frequency of calibration and control procedures programming is established by the electricity provider. Calibration and maintenance are subject to procedures established by instrument manufacturer under direction of the electricity supplier.

Any comment: Data will be archived during the crediting period and two years afterwards. In the future, as local electricity services providers evolve, this function may become fully automated.

Data / Parameter: EFgrid,y Data unit: tCO2/MWh Description: CO2 emission factor for electricity used from the grid. Source of data to be used:

Emission factor taken from Poechos I project. Registration Date: 14 Nov 2005. CDM PDD Page 9 or in the following link : http://cdm.unfccc.int/UserManagement/FileStorage/RV1CUGCHTF2HXTZIRZP4F1ST26GIS9


0.54493


N/A


N/A

Any comment: Templates will be archived during two years after verification. Data / Parameter: TLy Data unit: Tons Description: Average truck load of the trucks used Source of data to be used:

Determined by averaging the weights of each truck carrying sugarcane into the project plant.


30 Ton

Description of measurement methods

Equipment that will be used: 1) Platform scale type BA,75 Tn SAIRBANKS MORSE, indicator IQ

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 60 and procedures to be applied:

plus 310ª, Model IQ 310 AF (used until december 2007)

2) Platform scale type BB, 80 Tn Metler Toledo, Model IND 310

3) Platform scale type BC, 80 Tn Metler Toledo, Model IND 310

How the measurement is undertaken: Every truck entering AIPSA’s facilities loaded with sugarcane and foliage is weighed at the entrance platform scale. The weight measurement is recorded and aggregated daily in the Titanium central information system.

Calibration procedures are applied: The calibration is carried out annually but every month, the AIPSA instrumentation area carries out the verification, considering the procedure FAL-I-009 “Verificacion de la balanza de plataforma para camiones”, (detailed in Annex 6 monitoring plan). Annex 106 shows the calibration certificate for the platform scale granted on 2008-08-18 (detailed in Annex 7 monitoring plan). Monthly verification is performed by AIPSA´s Instrumentation Area, Engineer Cesar Cornejo and the Engineer Carlos Horna of the Quality Assurance area. External calibration is performed by an accredited laboratory in Peru.

Accuracy of the measurement method: High (Accuracy class III) Responsible person/entity that should undertake the measurements:

The Scale Operator will register the data in the Titanium Central Information system. The Quality Assurance area ensures compliance with standard FPB-I-001 (detailed in Annex 8 monitoring plan).

Measurement interval: Measurement is performed on every truck entering AIPSA’s facilities.


As per standard FPB-I-001

Any comment: Information is archived 2 more years after verification Data / Parameter: AVDy Data unit: Km

Description: Average return trip distance (from and to) between the biomass fuel supply sites and the site of the project plant during the year y


Records of project participants related to the origin of the foliage in the AIPSA´s Field Inventories (detailed in Annex 9 monitoring plan).

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 61 Value of data applied for the purpose of calculating expected emission reductions in section B.5

0 Km for Bagasse and Pith because this biomass residues are generated in the facility. 31 Km is the maximum return trip distance for foliage transport. The foliage is collected from the sugarcane fields, where it was traditionally burn or degraded. The distance between each of the fields and the project plant is registered in the Field Inventories in the Titanium System.


Equipment that will be used: The trip distance between the facility and the fields is measured by the trucks odometers.

How the measurement is undertaken: The measurement is taken in both trajectories (come and back). The distance measurement is recorded in the Titanium system in the Field´s inventories.

Calibration procedures are applied: N.A. Accuracy of the measurement method: High Responsible person/entity that should undertake the measurements:

Engineer Luis Benitez, field manager, Statistical area.

Measurement interval: Measurement is performed for every payment period, given that truck drivers are paid their salary based on mileage driven in the transport of cane and biomass.


Check consistency of distance records provided by the truckers by comparing recorded distances with other information from other sources (e.g. maps).

Any comment: Templates will be archived during two years after verification. Data / Parameter: EFkm, co2, y Data unit: tCO2/Km Description: Average CO2 emission factor for the trucks measured during the year y Source of data to be used:

IPCC default values.


0.00119





Any comment: Templates will be archived during two years after verification. Data / Parameter: EFCH4,BF Data unit: tCH4/GJ Description: CH4 emission factor for the combustion of the biomass residues in the boilers

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 62 Source of data to be used:

AM0036 page 18


41.1 kg/TJ or 0.0000411 Ton CH4/GJ


Default CH4 emission factor


None. Default emission factor.

Any comment: Templates will be archived during two years after verification. Data / Parameter: EF burning, CH4, k,y

Data unit: tCH4/GJ Description: CH4 emission factor for uncontrolled burning of the biomass residue type k during

the year y Source of data to be used:

AM0036 v 2.1 page 14. Default value in the 100% of uncertainty


0.001971





Any comment: Templates will be archived during two years after verification. Data / Parameter: EFCO2 LE,y Data unit: tCO2e/GJ Description: CO2 emission factor of the most carbon intensive fuel used in the country Source of data to be used:

Section 6.4 p.23 of the attached ‘Balance Nacional de Energía 2007’ (2007 National Energy Overview” states that during the period comprised during 1985-2007 the most used fossil fuels in the peruvian agroindustrial sector are: Gasolina Motor (GM) + Kerosene (KE), Diesel and Petróleo Industrial. In p.196 ‘Petroleo Industrial’ is defined as a conglomerate of heavy petroleum refining residues and generally used in boilers, electricity gensets and navigation. In the Peruvian ‘petroleo industrial’ market exist two references with similar characteristics: Petroleo residual No. 6 (bunker oil No.6) and residual 500, being bunker oil No. 6 the heavier fraction. As mentioned above, Bunker oil No. 6 is the fuel used to run the FW boiler and, therefore, constitutes the baseline fuel for this project activity. Bunker Oil No.6 is referenced in the Resources Exchange Agreement as the fuel to be traded between


QUIMPAC and AIPSA. According to 2006 IPCC guidelines or in the following link: http://www.ipcc-nggip.iges.or.jp/public/2006gl/pdf/2_Volume2/V2_2_Ch2_Stationary_Combustion.pdf default residual fuel emission factor = 77,400 Kg CO2/ TJ. As a result, Bunker Oil Nº 6 is the most carbon intensive fuel of those used in the Peruvian agroindustrial sector.


0.0774






B.7.2. Description of the monitoring plan:

>> Project participants have proposed a new monitoring methodology named “Monitoring methodology for steam generation from biomass residues displacing fossil fuels CDM projects”. Since the bagasse boiler is already in place, the monitoring plan corresponds to the already in place devices used to record all variables described in section B.7.1. All variables listed in section B.7.1 correspond to the methodology requirements explained in section B.6 below. Project activity’s data will be archived during the whole crediting period and at least 2 more years. Since the new boiler uses environmentally sustainable biomass residues, grown on location as its main fuel, the project activity results in zero net CO2 on-site emissions. The CO2 emissions of the biomass combustion process will be absorbed by the growing sugar cane plants, representing a continual cyclic process of carbon emission and equivalent sequestration. Although AIPSA´s plan is to produce steam exclusively with residual biomass, the monitoring plan also includes measuring the amount of Bunker fuel that would have been burned in the new boiler or in Foster Wheeler, as it will not be uninstalled. On-site fossil fuel consumption for the operation of the biomass boiler is metered through mass or volume (flow) meters in boiler. Project participants will cross-check these estimates with fuel purchase receipts. Project participants will monitor the time of storage (or rotation) of stocks of all types of biomass used for combustion in the project boiler with the stocks of biomass residues at the beginning of the month, at the end of month and the amount of biomass residues combusted during that period. Rotation will be calculated comparing the quantity of biomass residues combusted during the month, with the increase of stock.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 64 B.8. Date of completion of the application of the baseline study and monitoring methodology and the name of the responsible person(s)/entity(ies): >> Nov 8, 2011 Juan Carlos Caycedo, email: [email protected]; Maria Teresa Rojas email: [email protected]; Yolima Gordillo Herrera, email: [email protected] ; Andean Center for Environmental Economics – CAEMA, email: [email protected] Address: Cra 3 No 11 – 55 Int 213, Bogotá, Colombia. TelFax: (571) 337 6553, 337 6616 URL: www.andeancenter.com SECTION C. Duration of the project activity / crediting period C.1. Duration of the project activity: C.1.1. Starting date of the project activity: >> January 1, 2007

C.1.2. Expected operational lifetime of the project activity: >> 40 years. C.2. Choice of the crediting period and related information: C.2.1. Renewable crediting period: C.2.1.1. Starting date of the first crediting period: >> January 1, 2007 C.2.1.2. Length of the first crediting period: >> 7 years (renewable once) C.2.2. Fixed crediting period: C.2.2.1. Starting date: >> Left blank on purpose. C.2.2.2. Length: >> Left blank on purpose.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 65 SECTION D. Environmental impacts >> D.1. Documentation on the analysis of the environmental impacts, including transboundary impacts: >> The implementation of the project activity, the new bagasse boiler and associated fuel switching activities, will significantly improve the environment and general well being of the local community by displacing the current system. The existing energy production system imposes significant environmental problems that may have affected the local community negatively in terms of human health and visual pollution. Environmental problems directly related to the current system include: (a) harmful emissions of various types of pollutants from the burning of Bunker fuel; (b) the high levels of pith particles in the air.

Graphic 3. Smog over Paramonga Community from Baseline Boilers using Bunker Fuel, 2006

These afflictions were referred to by stakeholders in the public consultation process (see section E). The adoption of the new bagasse boiler will reduce or eliminate the emissions of nationally controlled air pollutants, metals, total organic compounds, trace elements, and greenhouse gasses commonly generated by the combustion of Bunker fuels in industrial burners. The new bagasse boiler includes a wet scrubber which will control emissions of particulates; according to EPA, these scrubbers reduce particulates

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 66 between 50 and 60%.6 CO will still be emitted by bagasse consumption; however, the new boiler complies with World Bank-IFC emission standards. NOx should be reduced, and SO2 emissions should be eliminated. Pith particles from the existing system, which fill the air when prevailing winds blow them upwards from open air storage and handling systems, have been deposited over the years throughout the community, accumulating in homes and public places. The new system will reduce Pith usage and volatility by 75%. This should significantly reduce the minor irritations to eyes and breathing commonly experienced by local residents. Metals, total organic compounds and trace elements have not been measured, but have been documented by US EPA as standard emissions from the industrial combustion of Bunker fuel. If these are present in the current emissions in significant quantities, the impacts to human health may be highly significant; the CDM project activity should reduce or eliminate most of these, to the benefit of the community’s health and welfare. TOCs, Metals and Trace Elements from Combustion of Bunker fuel in Industrial Boilers Compilation of Air Pollutant Emission Factors, AP-42, Fifth Edition, Volume I,: Stationary Point and Area Sources. US EPA, Washington DC, 2004 Section 1.3: Fuel Oil Combustion Total Organic Compounds

Volatile organic compounds; semi volatile organic compounds; condensable organic compounds; formaldehyde.

Trace Elements As, Be, Cd, Cr, Cu, Pb, Hg, Mn, Ni, Se, Zn Trace metals A wide range of metals are usually emitted. Actual emissions depend on the

composition of the fuel, concentration levels of the metals, and combustion temperatures. See appendix IV, EPA table 1.3-11 for metals and emissions factors identified in 18 of 19 samples from residual oil combustion in industrial boilers.

In conclusion, the current pollution problems will be replaced by vapour and reduced particulate emissions from the controlled burning of bagasse in the new boiler, which includes a high efficiency wet scrubber. The new system should greatly reduce emissions of the entire range of contaminants documented by EPA from Bunker fuel. The CO2 will be recycled and sequestered during each growing season, resulting in zero net CO2 emissions. The adoption of the project activity should greatly improve the local environment, including human health and visual pollution. In addition, the project will contribute significantly to reducing global warming by displacing 1,354,500 tons of CO2 during the 10 years accreditation period, and potentially much more, as the useful life of the new boiler could be many more years into the future.

6 Technical proposal from MEIC-CBSERV, the new boiler manufacturers. Pg 16.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 67 Host party requirement: INRENA is the government authority responsible for controlling air quality in Peru’s sugar cane processing industry. Regulations require that the new boiler comply with existing regulation D.S. 074-2001-PCM, “National Standards for Environmental Air Quality”. The new system complies with World Bank-IFC standards and improves upon Peru’s permitted limits for NO2, SO2, and CO. The wet scrubber should control particulate matter emissions far below permitted standards, which should also improve visual effects. D.2. If environmental impacts are considered significant by the project participants or the host Party, please provide conclusions and all references to support documentation of an environmental impact assessment undertaken in accordance with the procedures as required by the host Party: >>Environmental impacts are not considered significant.

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 68 SECTION E. Stakeholders’ comments >> E.1. Brief description how comments by local stakeholders have been invited and compiled: >> To inform and consult local stakeholders about the project activity, AIPSA conducted a community stakeholders forum on the 29th of October 2004 at the Paramonga sugar mill installations. Paramonga invited local radio and television stations to the event to ensure regional dissemination of the event and the main messages. AIPSA prepared a list of potentially interested and affected stakeholders from all sectors of the community and invited them to the forum. The event was attended by the governor, the mayor, directors of the television and radio stations, representatives of the poor communities most affected by the existing pollution, numerous health services organizations, local police, and environmental officials from the mayor’s office. The national environmental authority, CONAM, was invited but was unable to attend. 23 participants attended. AIPSA officials presented the project in detail, highlighted the technical and environmental attributes of the new bagasse boiler, and discussed how the air pollution problems from the existing system would be reduced or eliminated. As part of AIPSA’s commitment to social and environmental responsibility, a second networking event was held on September 14 and 15, 2011 concerning the advancement of project activities. The project was presented in detail and included all the technical, environmental and social aspects. This event had 149 attendees among area residents, municipal mayors, academic institutions, NGO officials, government agencies, representatives of the religious sector and local AIPSA employees. Invitation to this event was carried out personally, through letters delivered to each one of the guests and mass media announcements - newspapers and radio. It should be noted that the event collected 120 surveys, signed by individuals confirming their support of the project, and identified no issues regarding them. The interaction with stakeholders was detailed and comprehensive. Commencement of networking activities and project presentation:

Figure 1. Main Table, networking event held on the 14th and 15thof September, 2011. From left to right: Dr. Thomas Black,

CAEMA. Eng. Jorge Fernandez, AIPSA. Eng. Jose Laca, General Manager, AIPSA. Eng. Efrain Salas, AIPSA. Eng. Senisse Cotrina, FONAM. Dr. Hugo Ayon, AIPSA

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 69 E.2. Summary of the comments received: >>Participants were asked to fill out a short survey form that asked them to state in their own words their perceptions regarding environmental conditions around the Paramonga sugar mill. 20 of the 23 indicated that the worst environmental problems in the area are caused by the smokestack emissions from the residual fuel boilers. 100% supported the project to replace the burning of Bunker fuels with the wet-scrubbed bagasse boiler. In the question and answer session, all participants discussed the negative health and visual effects of the existing boilers and fuels, and most insisted that the new project be implemented as soon as possible. Appendix V-A includes the results of the survey and the transcriptions of all the comments and questions received at the end of the event. AIPSA asked participants to send in any additional comments by mail if they wished; none had been received at the date of preparation of this document. During the September 14 and 15, 2011 networking event, workshops were held with community representatives and stakeholders. In order to ensure greater participation and interaction with the community, a total of 20 round tables were set up. Each table was comprised of AIPSA technical experts of the highest level and experience regarding the fuel replacement project and between 5 and 10 community representatives and stakeholders. A note taker was assigned at each table to log the questions, comments and requests of participants. For a period of 2.5 hours, the projects and perceptions of the participantswere discussed in an orderly and straightforward manner, with great intensity.

Figure 2. AIPSA team and stakeholder work session.

In addition, the individual participants completed 120 surveys. All the surveys highlighted favorable aspects of the projects addressed in the networking event. Only a few surveys, along with the positive comments, includedproject areasrequiringimprovement. Among the opinions expressed in the surveys, participants stressed that the project has improved the environmental conditions of the surroundings by incorporating emissions reduction plans in its activities and has contributed positively to the development of the population by incorporating social programs for education (EscuelasExitosas, Educanto and BecasVallegrande), sports and recreation (school sports, stadium availability, Christmas party) and public area enhancement (cleaning of parks and public areas).

PROJECT DESIGN DOCUMENT FORM (CDM PDD) - Version 02 CDM – Executive Board page 70 However, participants expressed the project should improve in aspects such as: bagasse control, expanding education coverage to the female community and improve the communication and dissemination of the effected projects. Similarly, concernsregarding the possible displacement of manual labor by the use of harvesters and whether the project could contribute to the recovery of the regional hospital (Santa Rosa Hospital) were manifested. Atranscript of the networking event is included in Appendix V-B. It contains a summary of the questions and comments made by stakeholders during the workshops and surveys. Additionally, a model of the invitation letters and press release issued convening the networking events is also included. E.3. Report on how due account was taken of any comments received: >> During stakeholder consultation realized in October 29 2004, no negative comments regarding the implementation of the project activity (the new bagasse boiler) were received. The recommendations from the community were all related to the rapid replacement of the old boiler and fuels with the new system. Some of the questions and comments made by the community at the September 14 and 15 of 2011 event were answered by AIPSA during the event, others were answered in a written statement, sent to the interested party directly. A list of each question and the answer issued by AIPSA is found in Appendix V-B. In conclusion, based on the results of the sustainability matrix established by the Gold Standard, and the results of the surveys completed by the participants, a thorough assessment of the sustainability of the project is not required given that none of the parameters evaluated in the surveys completed by the stakeholders received a negative score. Only the access to health services was rated as having "no change" (0). The tables issued all the other parameters a positive (+) score. As no major concerns arose during the networking processes, changes in project design or the incorporation of additional measures to demarcate or avoid negative environmental impact were unwarranted.


Annex 1

CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Agro Industrial Paramonga S.A.A. (AIPSA) Street/P.O.Box: Address: Avenida Javier Prado Este 5245 – Camacho Building: -- City: Lima State/Region: Lima Department Postcode/ZIP: -- Country: Perú Telephone: (51-1) 317 0400 ext. 1002 until 16 December 2004; then, (51-1) 618 1616 ext

1002.. FAX: (51-1) 618 1617 E-Mail: [email protected] URL: http://www.agroparamonga.com/ Represented by: Mr. Hugo Ayon Title: Director of Finance Salutation: Mr. Last name: Ayon Middle name: -- First name: Hugo Department: Finance Mobile: -- Direct FAX: (51-1) 618 1617 Direct tel: (51-1) 317 0400 ext. 1002 until 16 December 2004; then, (51-1) 618 1616 ext

1002.. Personal e-mail: [email protected]


Annex 2 INFORMATION REGARDING PUBLIC FUNDING No public funding will be used for the CDM project


Annex 3

BASELINE INFORMATION

TABLE A.3.1: ESTIMATED STEAM AND THERMAL ENERGY REQ UIREMENTS OF THE

BASELINE SCENARIO

Projected # Sugar Cane Bagasse Steam Thermal Energy Year Days of Produced Produced Requirements Requirements

Operation Ton Ton Ton TJ 2006 293.7 1,088,888 304,979 643,434 2,110 2007 318.2 960,983 269,155 567,854 1,863 2008 298.2 1,087,001 304,450 642,319 2,107 2009 329.3 1,056,063 295,785 624,037 2,047 2010 327.7 1,090,397 356,850 644,326 2,113 2011 318.3 1,090,397 372,028 644,326 2,113 2012 318.3 1,090,397 372,028 644,326 2,113 2013 318.3 1,090,397 372,028 644,326 2,113 2014 318.3 1,090,397 372,028 644,326 2,113 2015 318.3 1,090,397 372,028 644,326 2,113 2016 318.3 1,090,397 372,028 644,326 2,113 2017 318.3 1,090,397 372,028 644,326 2,113 2018 318.3 1,090,397 372,028 644,326 2,113 2019 318.3 1,090,397 372,028 644,326 2,113 2020 318.3 1,090,397 372,028 644,326 2,113

Projection Parameters Working Hours per day 22 Ton Cane/Hour 171.5 % bagasse/cane 0.28 % ton steam/ton sugar cane 0.59 Enthalpy of steam (MJ/t) 3280


TABLE A.3.2 FUEL CONSUMPTION AND THERMAL ENERGY GEN ERATION IN PLANT DURING YEARS 2003 AND 2004 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 2003

Thermal Energy (GJ)

Foster Wheeler Boiler 157,208.60 146,359.46 162,790.90

147,374.42 145,945.88 150,730.55 128,997.46 145,329.72

138,625.90 151,624.19 153,297.51 142,269.01

1,770,553.58

Edge Moore Boiler

Distral Boiler - - - - - 4,687.61 7,934.02 11,719.56 10,625.47 8,160.86 10,664.50 10,691.94

64,483.96

Total Thermal Energy (GJ) 157,208.60 146,359.46 162,790.90

147,374.42 145,945.88 155,418.17 136,931.48 157,049.28

149,251.37 159,785.04 163,962.01 152,960.94

1,835,037.54

Amount of fuel combusted (t)

Fuel Oil in Foster Wheeler 2,955.59 3,028.22 3,316.74

3,151.88 2,978.75 2,284.30 1,837.93 1,809.26

1,772.51 1,942.81 2,136.72 2,281.49

29,496.20

Bagasse in Foster Wheeler 2,851.72 1,135.06 41.12 - 2,024.47 8,688.07 8,633.14 10,581.68

9,500.29 10,458.68 8,667.31 5,227.34

67,808.89

Pith in Foster Wheeler 7,931.68 7,367.20 8,670.87

8,457.80 6,514.74 5,002.93 3,687.50 4,777.71

5,299.85 5,879.34 7,302.87 7,717.04

78,609.53

Fuel Oil in Distral - - - - - 144.35 231.35 338.28 305.44 238.39 311.14 316.11 1,885.05

Bagasse in Edge Moore Amount of Energy in fuels (GJ) 185,305.40

172,541.76 183,768.61

175,612.46 172,054.10 189,394.04 166,942.10 190,488.93

182,891.77 197,326.39 203,323.79 186,857.98

2,206,507.33

% Fossil Fuels 0.64 0.71 0.73 0.72 0.70 0.52 0.50 0.45 0.46 0.44 0.48 0.56 0.57 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 2004

Thermal Energy (GJ)

Foster Wheeler Boiler 137,524.42 131,484.23 135,999.86

133,044.65 149,109.99 137,576.12 141,669.73 139,789.63

128,305.34 143,340.94 132,854.74 127,002.35

1,637,702.01

Edge Moore Boiler - 16,463.09 22,111.86

20,683.31 20,860.56 21,359.61 20,821.53 20,503.96

18,349.53 17,929.62 19,359.22 19,478.44

217,920.73

Distral Boiler 7,943.52 2,791.68 988.59 - 2,819.11 5,956.37 1,759.83 2,477.27 111.41 - - -

24,847.77

Total Thermal Energy (GJ) 145,467.94 150,738.99 159,100.31

153,727.97 172,789.66 164,892.09 164,251.10 162,770.85

146,766.28 161,270.56 152,213.96 146,480.79

1,880,470.51

Amount of fuel combusted (t)

Fuel Oil in Foster Wheeler 2,153.28 1,430.12 2,265.86

1,888.15 2,932.24 2,707.98 2,725.21 2,769.45

2,529.22 3,091.39 2,964.21 2,788.15

30,245.26

Bagasse in Foster Wheeler 7,800.27 6,194.61 3,652.73 2,657.73 3,735.36 2,149.02 986.33 784.79 636.68


9.528,92 8.590,31 2.186,63 48.903,38

Pith in Foster Wheeler 7.549,82 5.471,99 5.032,63

4.527,90 6.680,06 6.898,71 6.559,13 7.487,67

6.968,46 7.678,48 7.797,00 6.165,62

78.817,47

Fuel Oil in Distral 235,15 128,56 11,26 - 82,20 176,26 51,44 70,78 3,25 - - - 758,89

Bagasse in Edge Moore - 2.901,11 3.869,75

3.607,77 3.686,40 3.773,60 3.658,09 3.552,44

3.247,91 3.052,27 3.213,28 2.505,05

37.067,66

Amount of Energy in fuels 196.093,35 184.208,74 193.430,08

190.309,50 212.884,51 202.350,94 203.020,96 198.711,12

181.407,69 197.882,37 193.163,48 170.454,65

2.323.917,38

% Fossil Fuels 0,49 0,34 0,47 0,40 0,57 0,57 0,55 0,57 0,56 0,63 0,62 0,66 0,55 Minimum fraction of fossil fuel co-fired per year 0,55


This template shall not be altered. It shall be completed without modifying/adding headings or logo, format or font.


This template shall not be altered. It shall be completed without modifying/adding headings or logo, format or font.

Annex 4

MONITORING INFORMATION Please see section B.7.2.

Annex 5

STAKEHOLDERS’ COMMENTS

- - - - -

documento de diseño del proyecto cambio de combustible

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