1. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 1 Capacity Development for CDM Fourth National Workshop Cairo, 14-15 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 : +216 71 848 094 --- Fax : +216 71 843 453 amous.apex@gnet.tn amous.apex@gnet.tn

2. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 2 Cogeneration Bagasse - Brazil  The first CDM Project to be submitted to the EB (NM0001)  The fourth to get approved by the EB (AM0004)

3. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 3 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

4. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 4 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

5. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 5 VRBC PDD Structure

6. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 6 A. General Description of the Project Activity (15 Pages)

7. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 7 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 (1990-1994) and Phase 2 (1995-1997)

8. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 8 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

9. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 9 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

10. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 10 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

11. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 11 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

12. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 12 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

13. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 13 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

14. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 14 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

15. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 15 B. Baseline Methodology (9 Pages)

16. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 16 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

17. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 17 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

18. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 18 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 ?

19. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 19 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

20. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 20 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  2004-2011  16% (without CERs), and 22% (with CERs=US$5)

21. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 21 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

22. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 22 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)

23. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 23 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

24. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 24 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, 2003 - Entity : ECONERGY

25. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 25 C: Duration/Crediting Period (1 Page)

26. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 26 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

27. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 27 D: Monitoring Methodology and Plan (13 Pages)

28. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 28 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

29. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 29 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.

30. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 30 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

31. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 31 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

32. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 32 E: Calculation of GHG Emissions (10 Pages)

33. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 33 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

34. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 34 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

35. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 35 F: Environmental Impacts (7 Pages)

36. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 36 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

37. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 37 G: Stakeholder Comments (5 Pages)

38. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 38 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

39. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 39 References (2 Pages)

40. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 40 Cogeneration Bagasse - Brazil  17 Brazilian and International References listed

41. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 41 ANNEX 1: Contact Information (2 Pages)

42. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 42 Cogeneration Bagasse - Brazil  Econergy Contact Information  VR Contact Information

43. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 43 ANNEX 2: Information regarding Public Funding (1 Page)

44. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 44 Cogeneration Bagasse - Brazil  Description of the funding resources for the project: the traditional banking system  No contribution from any other ODA resources

45. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 45 ANNEX 3: New Baseline Methodology (18 Pages)

46. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 46 Cogeneration Bagasse - Brazil  Comprehensive description of the Baseline Methodology, involving 10 sections

47. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 47 Cogeneration Bagasse - Brazil

48. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 48 ANNEX 4: New Monitoring Methodology (12 Pages)

49. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 49 Cogeneration Bagasse - Brazil  Comprehensive description of the New Monitoring Methodology, involving 7 sections

50. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 50 Cogeneration Bagasse - Brazil

51. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 51 ANNEX 5: Baseline Data (1 Page)

52. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 52 Cogeneration Bagasse - Brazil  Description of Key Elements used to determine the Baseline (Energy, Emission Factor, Calorific Value, Oxidation rate)

53. CD4CDM - National Workshop on PDD Cairo, 14-15 June 2004 53