CD4CDM - National Workshop on PDD Cairo, June Capacity Development for CDM Fourth National Workshop Cairo, June 2004 PDD Preparation for CDM Projects PDD Preparation for CDM Projects Vale Do Rosario Bagasse Cogeneration (VRBC) Project - Brazil Vale Do Rosario Bagasse Cogeneration (VRBC) Project - Brazil Samir Amous, APEX, Tunisia Regional Centre for North Africa and Middle-East Tel : Fax :

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  The first CDM Project to be submitted to the EB (NM0001)  The fourth to get approved by the EB (AM0004)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Unilateral CDM Project: Fund raised through the traditional Banking system in Brazil  Crediting Period: 7 years to be renewed twice  670,000 tCO2e for he whole Crediting Period

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  PDD available at the cdm.unfccc.int Web Site  PDD  revised once, final version : July 2003  105 pages including annexes  Very comprehensive PDD, fits entirely the PDD Format

CD4CDM - National Workshop on PDD Cairo, June VRBC PDD Structure

CD4CDM - National Workshop on PDD Cairo, June A. General Description of the Project Activity (15 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.1 - Title: Vale Do Rosario Bagasse Cogeneration (VRBC)  A.2 – Description: Expansion of the mill’s cogen system in order to increase its efficiency and to add value to the bagasse originating from its sugar milling process Bagasse: the residus of the sugar cane that is left after juice extraction Expansion made twice in 2 phases: Phase 1 ( ) and Phase 2 ( )

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.2 – Description: VR has still enough bagasse to supply its internal needs and to sell a small portion to the grid, but needs to shift to higher pressure boilers  beyond the profitability boundaries CDM can allow for substantial revenues  a higher economic performance of the project

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.2 – Description: Decision:  Phase 3 (2001)  15 MW +4 MW (standing-by) Cogen  Phase 4 (2003)  50 MW + 8 MW (standing- by) Cogen Contribution to use a sustainable source of energy (bagasse) Source of Revenue for the Sugar Industry Preservation of the jobs (1Mo) in this sector

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.3 – Project Participants: Vale Do Rosario Sugar Mill:  Founded in 1964  104 Shareholders  4 Mo tons of Sugarcane/yr Project Developer: ECONERGY Brazil:  Technical, Financial and Policy Consultant

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.4 – Technical Description: Location:  Sao Paulo, Brazil,  City: Morro Agudo  2 figures showing the exact location of the Project Category :  Renewable Energy Supply-side grid- connected  displace fuel combustion in energy industries

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.4 – Technical Description: Technology:  Steam-Rankine cycle: Direct combustion of biomass in a boiler to generate Steam  expanded through a Turbine  Waste-heat from the steam turbine recovered to meet industrial-process heat needs  1 figure showing the process involved by the Cogen

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.4 – Technical Description: Technology:  1 table showing detailed components of Phase 3 and Phase 4 equipments  1 table showing detailed data on the equipments, including power delivered and total capacity to export to the grid  3 other figures showing the process Description of how the GHG are to be reduced

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  A.4 – Technical Description: Public Funding:  Funding raised through the traditional banking system (13% to 15% interest Rate)  Advance negotiation with Swedish to sell CERs

CD4CDM - National Workshop on PDD Cairo, June B. Baseline Methodology (9 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  B.1 - Title of the BL Meth.: « Econergy Methodology for Emission Reductions from grid-connected bagasse cogeneration projects »  B.2 & B.3 - Justification of the use of the Meth. And description

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Assumptions : Cogeneration using bagasse comes in substitution to fossil fuels and hydroelectricity utilized for power generation in the reference scenario or BL Future development of the electrical sector in Brazil  increasing quantities of fossil fuels (mainly Nat Gas)  utilisation of bagasse  partly replace marginal power plant that use mainly Nat Gas

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Four question to justify Additionality: Would the project be initiated within the public sector in the absence of CDM ? Would the project be initiated within the private sector in the absence of CDM ? Would VR initiate the project in the absence of the CDM ? Would public-sector policies and/or programs to promote the use of such RE ?

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Reasons justifying Additionality: The economic performance of the projects without CERs are insufficient  unable to remove technical, institutionnal, and financial barriers: Brazil is currently intensively investing on the development of Nat Gas. The thermal electricity will reach 17% in 2004 (vs 9% in 2001) Brazil is not investing on bagasse campanies  there is a need to envisage new spirit towards liberalization of the Elec. sector

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Reasons justifying Additionality: Cost for cogénération: US$ 35 to US$ 105/MWh Marginal cost for electricity in Brazil : US$ 33/MWh Investment on cogeneration should be compared against other investment opportunities with equal risks Internal Rate of Return   16% (without CERs), and 22% (with CERs=US$5)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Reasons justifying Additionality: High transaction costs  bureaucracy to obtain agreements for Environmental impact assessment  Institutional burdens No standard conractual agreements for selling electricity to the grid (guaranty of duration, guarantee of effective payment, etc.)  Regulatory burdens Presidentiel Decree to develop cogeneration waited since 1997, never published  Regulatory burdens No guarantee of performances of Bagasse Cogenerator  Technical burdens

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Baseline: Emission factors for the South-South- East and Midwest grid to which VR is connected and which will receive the electricity from the cogenerator  avoid thermal emissions of the related grid Conservative assumption: Bagasse would have been burned instead of getting landfilled (CH4 - emissions)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Baseline Emission Factor: Total System Average  275 tCO2/GWh Operating Margin 1 (System Average minus low cost/must run)  719 tCO2/GWh Operating Margin 2 (System Average minus 92% of Hydro, based on contribution of Hydro to the baseload)  550 tCO2/GWh Build Margin  569 tCO2/GWh Combined Margin : 604 tCO2/GWh

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  B.5 – Project Boundaries: - Baseline energy grid: the South-South-East and Midwest Subsystem - Bagasse cogeneration Plant  B.6 – Details of the BL Development: - Date: July 16, Entity : ECONERGY

CD4CDM - National Workshop on PDD Cairo, June C: Duration/Crediting Period (1 Page)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Duration: Starting Date: 09/06/2001 Expected Operational Lifetime: 25y-0m  Crediting Period: 7 yrs Renewable Starting Date of the first CP: 09/06/2001 Length of the first CP: 7y-0m

CD4CDM - National Workshop on PDD Cairo, June D: Monitoring Methodology and Plan (13 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  D.1 - Name: « Two Party Monitoring plan for bagasse cogeneration projects »  D.2 – Justification Only a couple of short sentences Explanations are provided in Annex 4

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  D.3-D.4-D.5 tables duly described: D.3 – Data to monitor Emissions from the project:  Monthly recording of energy produced before after the project  Measured energy produced before the project D.4 – Other relevant data:  Mass of bagasse previoulsy marketed  Fossil fuel burned by the former bagasse buyer  Efficiency of the bagasse Cogen.  Efficiency of the fossil fuel plant used by the former bagasse buyer.

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil D.5 – Other relevant data:  Energy generated by Fossil-fueled plants connected to the Brazialian grid  Emission factors (tCO2/MWh)  Net Calorific values of fuels used  Etc. D.6 – QA/QC  Metering Equipment: a figure is shown, Accuracy class I, calibrated in 2001 A camera is also used to monitor the Meter equpment, can be wired to the internet for continuous monitoring by stakeholders

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil D.6 – QA/QC  Certificate of invoice for the electricity sold to the grid An alternative meter is also available Two figures are also provided showing the meter location and the technical specifications D.7 – Person/Entity determining the MM Econergy

CD4CDM - National Workshop on PDD Cairo, June E: Calculation of GHG Emissions (10 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  E.1 – Description of the Formulae for GHG calculation:  E.2 - Description of the Formulae for Leakage calculation: Certificates from the 3 former bagasse clients on their new energy practices  E.3 – Sum of E1 and E2

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  E.4 – Description of the Formulae for GHG calculation of the BL and the Emission reductions: Detailed calculations on how OM and BM have been calculated  E.5 – Table providing detailed values along the 7 yrs of the Crediting Period

CD4CDM - National Workshop on PDD Cairo, June F: Environmental Impacts (7 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  F.1 – F.2 - Env. Impact Study undertaken according to the National Regulations  Environmental Licences were finally delivered by the Authorities: Copies of the Licences are shown in the report

CD4CDM - National Workshop on PDD Cairo, June G: Stakeholder Comments (5 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  G.1 – Description of the Process: Calls for comments were published in the Newspaper Figures of the announcements are shown in the report  G.2 – No Comments were received

CD4CDM - National Workshop on PDD Cairo, June References (2 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  17 Brazilian and International References listed

CD4CDM - National Workshop on PDD Cairo, June ANNEX 1: Contact Information (2 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Econergy Contact Information  VR Contact Information

CD4CDM - National Workshop on PDD Cairo, June ANNEX 2: Information regarding Public Funding (1 Page)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Description of the funding resources for the project: the traditional banking system  No contribution from any other ODA resources

CD4CDM - National Workshop on PDD Cairo, June ANNEX 3: New Baseline Methodology (18 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Comprehensive description of the Baseline Methodology, involving 10 sections

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil

CD4CDM - National Workshop on PDD Cairo, June ANNEX 4: New Monitoring Methodology (12 Pages)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Comprehensive description of the New Monitoring Methodology, involving 7 sections

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil

CD4CDM - National Workshop on PDD Cairo, June ANNEX 5: Baseline Data (1 Page)

CD4CDM - National Workshop on PDD Cairo, June Cogeneration Bagasse - Brazil  Description of Key Elements used to determine the Baseline (Energy, Emission Factor, Calorific Value, Oxidation rate)

CD4CDM - National Workshop on PDD Cairo, June