1 Second Regional Workshop Capacity Development for the Clean Development Mechanism (CD4CDM) 23 March 2004 Siem Reap, Cambodia A.T. Biopower Rice Husk Power Project PDD Analysis Presented by You Dara, Project Counterpart, Ministry of Public Works and Transport, Cambodia

2 A.T. Biopower Rice Husk Power Project PDD Analysis

3 Project Description Objectives of the project To use for electricity generation rice husk that would otherwise be burned in the open air or left to decay Project description and proposed activities 22 MW rice husk power plant Sale of electricity to the grid through 25 year power purchase agreement (PPA) Sale of rice husk ash to cement manufacturers Technologies to be employed Suspension-fired boilers designed to produce high quality ash

4 Project Description Project DeveloperA.T. Biopower Co. Ltd (ATB) Project SponsorsRolls-Royce Power Ventures (UK); Al Tayyar Energy (United Arab Emirates); Electricity Generating Authority of Thailand (EGAT) Greenhouse gases targeted CH 4 from avoided open air burning of rice husk. CO 2 from biomass is considered carbon neutral. Location of the projects Thailand, Pichit: rich alluvial plain with extensive network of irrigation canals, 3 harvests a year Expected Schedule Project start date Project lifetime years

5 Social and Environmental Benefits Estimate of Greenhouse Gases abated (tons of CO 2 equivalent) Annual: 84 kT CO2e Over crediting period: 585 kT CO2e over 7 years Calculation based on: 148 GWh annual electric output of project 145 t/year of rice husk used as fuel 30% conversion to electricity rate Baseline scenario Dam built in 1978 for irrigation and electricity production; electricity component never implemented for lack of funds Potential electricity consumers include municipalities with low creditworthiness Difficulties in securing financing

6 Social and Environmental Benefits Specific global & local environmental benefits displacement of fossil fuel based electricity generation reduction of methane emissions from open-air burning of rice husk establishment of environmental protection guarantee fund to pay for damages “in the unlikely event that environmental degradation occurs” as a result of project activities Socio-economic aspects training of national staff, technology transfer priority recruitment of local communities minimum of 67% community support required for government funding of project steam available for local farmers for paddy drying establishment of community development fund endowed with US $ 23,000 annually (scholarships, computer facilities, sustainable farming)

7 Finance Total project cost estimatesUS$ 32 million Sources of financing 5 year subsidy from Thai government

8 Baseline Methodology Barriers preventing the project from getting implemented as a business as usual scenario: Investment barrier: return on investment too low Technological barrier: never applied in Thailand, lack of qualified staff Lack of community support (perceived dusk and smoke problems from rice husk power generation projects) Sales of CERs will increase the project Return on Equity (ROE) by 7.2%

9 Emission Reductions CO 2 emissions from grid electricity (based on forecasts to year 2012) CH 4 emissions from open air burning of rice husk Emissions reduction of the project = + Emission from grid electricity + Emission from open air burning of rice husk - Emission from transportation of husk for the project - Emission from fuel oil used for the project

10 Expert Reviewers Comments The PDD should undertake a cost benefit analysis with detailed scenario planning to support the investment barrier argument. The PDD assumes that official data on grid will be available on a regular basis. The PDD assumes that the uncontrolled burning of biomass is the mode of disposal of unwanted agricultural residues in the baseline situation. Meth Panel Recommendation: approval with minor changes

11 Public Comments Unreliability of official grid statistics Thailand is at a crossroads in energy policy, which could imply broadly divergent baseline scenarios Unsubstantiated barriers to investments; Rice husk electricity generation is already an economically attractive option on its own (without CDM) No detail about public funding; economic analysis not presented CER price set at US $7/ton CO 2 e; a price of US $5 would reduce revenues from carbon sales by 25% Unclear how distance traveled were obtained for calculation of transport emissions