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Title of CPA:
SOCFINDO EFB PLUS POMECO-COMPOSTING PROJECT (CPANO.001)
Title of PoA to which CPA is to be included:
CO-COMPOSTING AND COMPOSTING
PROGRAM OF ACTIVITIES FORPALM OIL
MILLS IN INDONESIA
REPORT NO. 2011-9535/01REVISIONNO.01
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4_Socfindo_CPA_FVR_01_WONGS_Brinks_FA_WONGYS_mleh_FA_mleh_FA_20120613_mleh20120615_FA_20120620_clean.docx
DNVCLIMATE CHENGE
SERVICES AS
Climate Change & EnvironmentalServicesVeritasveien 1,1322 HVIK, NorwayTel: +47 67 57 99 00Fax: +47 67 57 99 11http://www.dnv.comOrg. No: NO 994 774 352 MVA
Date of first issue: Pro ect No.:
31 January 2012 PRJC-314605-2011-CCS-MYSApproved by: Organisational unit:
Michael Lehmann DNV KEMA Energy & Sustainability
Accredited Climate Change ServicesClient: Client ref.:
PT. Socfin Indonesia Harold Williams
Identification of CPA: Socfindo EFB plus POME Co-composting Project (CPA No. 001)
Issue date of CDM-SSC-CPA-DD: 31 May 2012 (Version: 03)
Host Party: Indonesia
PoA: Co-composting and Composting Program of Activities for Palm Oil Mills in Indonesia
Methodology: AMS-III.F Version: 10
CPA ER estimate: 70 910 tCO2eover 7 years or 10 130 tCO2e on average yearlyGHG reducing Measure/Technology: Avoidance of methane emissions through composting
Size: Large Scale Small Scale
Validation Phases:
Desk Review Follow up interviews
Resolution of outstanding issues
Validation StatusCorrective Actions Requested Clarifications Requested
Full Approval and request for inclusion Rejected
In summary, it is DNVs opinion that the CPA Socfindo EFB plus POME Co-compostingProject (CPA No. 001) as described in the CDM-SSC-CPA-DD of31 May 2012 requesting
to be included in the PoA Co-composting and Composting Program of Activities for Palm
Oil Mills in Indonesia, meets the eligibility criteria established in the PoA and all relevant
UNFCCC requirements for including CPAs in a PoA and correctly applies the baseline and
monitoring methodology AMS-III.F, version 10. DNV thus requests the inclusion of the CPA
in the PoA.
Re ort No.: Date of this revision: Rev. No. Ke words:
2011-9535/01 2012-06-20 01 CDM
Kyoto Protocol
Programme of Activities
Re ort title:
Socfindo EFB plus POME Co-composting
Project (CPA No. 001)
Work carried out b :
Simon Wong Yon Sing, Fathullah Akmal
Khalid, Foo Wei Yee, Denise Lai Siew Sit
No distribution without permission from
the Client or responsible organisational
unit
Work verified b :
Hendrik W. Brinks, Michael Lehmann Limited distribution
Unrestricted distribution
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Page i
Abbreviations
ABC Aerated Bunker Co-composting Plant
AMWS Animal Waste Management System
CAR Corrective Action Request
CDM Clean Development MechanismCDM-SSC-CPA-DD CDM small-scale programme activity design documentCDM-SSC-POA-DD CDM small-scale programme of activities design documentCH4 Methane
CL Clarification request
CME Coordinating/Managing Entity
CO2 Carbon dioxide
CO2e Carbon dioxide equivalentCOD Chemical Oxygen DemandCPA CDM programme activityCPO Crude Palm OilDNA Designated National Authority
DNV Det Norske Veritas
EFB Empty Fruit Bunch
EIA Environment Impact Assessment
EMMP Environmental Management and Monitoring Plan
FAR Forward Action Request
FFB Fresh Fruit Bunch
GHG Greenhouse gas(es)GPS Global Positioning System
GWP Global Warming Potential
IPCC Intergovernmental Panel on Climate Change
MCF Methane Correction Factor
MP Monitoring Plan
NCV Net Calorific Value
NGO Non-governmental Organisation
NPV Net Present Value
ODA Official Development Assistance
PERTAMINA Indonesian National Oil Company
PKS Palm Kernel ShellsPoA Programme of activitiesPoA-DD Programme of activities Design Document
POME Palm Oil Mill Effluent
RSPO Roundtable on Sustainable Palm Oil
SWDS Solid Waste Disposal Site
UNFCCC United Nations Framework Convention on Climate Change
WWTS Wastewater Treatment System
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TABLE OF CONTENTS
1 INTRODUCTION ........................................................................................................ 11.1 Objective 11.2 Scope 12 METHODOLOGY ....................................................................................................... 22.1 Desk Review of the Project Design Documentation 22.2 Site visit and follow-up Interviews 52.3 Resolution of Outstanding Issues 52.4 Internal Quality Control 62.5 Validation Team 63 VALIDATION FINDINGS ......................................................................................... 7Appendix A: Protocol for Assessing Compliance of Specific CDM Programme Activities
with the Programme of Activities
Appendix B: Curriculum Vitae of validation team
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1 INTRODUCTIONPT. Socfin Indonesia has commissioned DNV Climate Change Services AS (DNV) to assess
the information in the CDM-CPA-DD for the CPA titled Socfindo EFB plus POME Co-
composting Project (CPA No. 001)(hereafter called the CPA) against the requirements for
including CPAs to the PoA Co-composting and Composting Program of Activities for Palm
Oil Mills in Indonesia and further documentation requirements for including CPAs to a PoA.
This report summarises the findings of the validation of the specific small-scale CDM
Programme of Activities Design Document (CDM-SSC-CPA-DD).
1.1
ObjectiveThe assessment of a CPA requesting to be included in a PoA shall ensure that all therequirements determined in the PoA are met.
The assessment was performed on the basis of the eligibility criteria established in the PoA
and the UNFCCC criteria for including CPAs to programme of activities under the Clean
Development Mechanism (CDM), as well as criteria given to provide for consistent project
operations, monitoring and reporting according to AMS-III.F Avoidance of methane
emissions through composting, version10.
1.2 ScopeThe validation scope is defined as an independent and objective review by a Designated
Operational Entity (DOE) of the specific CDM-SSC-CPA-DD to be included in the PoA. The
DOE shall scrutinize the information in the CDM-SSC-CPA-DD to assess compliance with
the eligibility criteria established by the PoA, to check correctly application of AMS-III.F
(Version 10) and to check compliance with documentation requirements for CPAs.
The validation is not meant to provide any consulting towards the programme participants.
However, stated requests for clarifications and/or corrective actions may have provided input
for improvement of the project design.
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2 METHODOLOGYThe validation consisted of the following three phases:I a desk review of the specific CDM-SSC-CPA-DD with relevant information to be
included in the PoA;
II follow-up interviews with programme stakeholders
III the resolution of outstanding issues and the issuance of the final validation report and
opinion.
The following sections outline each step in more detail.
2.1 Desk Review of the Project Design DocumentationThe following table lists the documentation that was reviewed during the validation:
2.1.1 Documentation provided by the project participants/1/ PT. Carbon Agro Indo: CDM-SSC-PoA-DD for PoA titled Co-composting and
Composting Program of Activities for Palm Oil Mills in Indonesia, Version 01 dated
28 June 2011 published for comments and Version 03 dated 17 January 2012 for final
report
/2/ PT. Carbon Agro Indo: Generic CDM-SSC-CPA-DD for PoA titled Co-compostingand Composting Program of Activities for Palm Oil Mills in Indonesia, Version 01
dated 28 June 2011 published for comments and Version 03 dated 31 May 2012 for
final report
/3/ PT. Carbon Agro Indo:CDM-SSC-CPA-DD for CPA titled Socfindo EFB plus POMECo-composting Project (CPA No. 001), Version 01 dated 28 June 2011 published for
comments and Version 03 dated 31 May 2012 for final report
/4/ PT. Carbon Agro Indo:Financial Analysis Spread Sheet for CPA titled Socfindo EFBplus POME Co-composting Project (CPA No. 001), Version 01 dated 28 June 2011
published for comments and CPA BB FInancial Analysis ver_3.xls for final report
Fertilizer savings calculation:Fertilizer Savings_template CPA inclusion_Option A.xls
Fertilizer savings calculation:Fertilizer Savings_template CPA inclusion_Option B.xls
/5/ PT. Carbon Agro Indo:Emission Reduction Spread Sheet for CPA titled Socfindo EFB
plus POME Co-composting Project (CPA No. 001), Version 01 dated 28 June 2011
published for comments and CPA BB Emission Reduction spreadsheet ver_4.xls forfinal report
/6/ PT. Socfin Indonesia: Environmental Management and Monitoring Plan (ref. number
660/084/Tarukim-SB/2005), approved on 20 June 2005
/7/ Roundtable on Sustainable Palm Oil : RSPO Principles and Criteria for Sustainable
Palm Oil ProductionIncluding Indicators and Guidance, dated October 2007
/8/ PT. Socfin Indonesia:Fertilizer Supply Agreements for Dolomite, Muriate of Potash,
Rock Phosphate Egypt and Urea, for the year 2009
/9/ PT. Socfin Indonesia: Socfindo Standard Fertilisation Programme, version 09-30 for
the year 2009
/10/ PT. Socfin Indonesia:Palm Oil Tree Census for Fertiliser Usage, for the year 2009/11/ PT. Socfin Indonesia:Sales and Purchase Agreement for Dolomite, Urea, Potassium
nd Rock Phosphate between PT. Socfin Indonesia and various fertilizer suppliers, for
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the year 2009
/12/ PT. Socfin Indonesia:Diesel Purchase Invoices, for the months of January 2010 toMarch 2010
/13/ Carbon Conservation:Proposal for Carbon Services for PT Socfin Indonesia, dated 9
April 2010
/14/ PT. Socfin Indonesia:Feasibility Study Co-Composting at Bangun Bandar Mill, dated
27 April 2010
/15/ PT. Socfin Indonesia:Minutes of Meeting of the Board of The Commissioners of the
P.T. Socfin Indonesia (Socfindo) held in Jakarta, dated 28 April 2010
/16/ PT. Socfin Indonesia:Declaration of No ODA for project activity CPA001- Socfindo
EFB plus POME Co-composting Project
/17/ Burden et al: A Business Case for the Aerated Bunker Composting (ABC) System,published in 2010
/18/ PT. Socfin Indonesia: Report on Stakeholder Consultation Meeting, dated 27
September 2010
/19/ UNFCCC Secretariat: Submission of Prior Consideration of CDM Form for PT Socfin
Indonesia, dated 1 October 2010
/20/ Indonesian CDM Designated National Authority:Receipt of Document from P.T. Socfin
Indonesia, dated 12 October 2010
/21/ North Sumatra Provincial Authority: Wastewater Test Reports for the year 2008, 2009
and 2010, dated December 2010
/22/ PT. Socfin Indonesia:Wastewater and Production Records for the year 2008, 2009 and2010, dated December 2010
/23/ PT. Socfin Indonesia:Contract for Piling Works between PT. Socfin Indonesia and PT.
Perintis Pondasi Teknotama, dated 4 July 2011
/24/ PT. Socfin Indonesia:Contract for Concrete, Steel & Roof Works between PT. Socfin
Indonesia and CV Cikini Raya, dated 4 July 2011
/25/ PT. Socfin Indonesia: Contract for Precast Concrete Panel between PT. Socfin
Indonesia and Wijaya Karya Beton, dated 4 July 2011
/26/ Technical Department of PT. Socfin Indonesia: Clarification on the choice of MCC
Panel and Bunker Filler, dated 15 August 2011
/27/ Sucofindo: Wastewater Analysis Certificate for the Wastewater MeasurementCampaign from 11 August 2011 to 23 August 2011, dated 27 August 2011
/28/ PT. Carbon Agro Indo and PT Socfin Indonesia: Cooperation Agreement to join CDM
Program of Activities, Co-composting Programme of Activities in Indonesia, dated 3
October 2011
/29/ PT. Carbon Agro Indo:Co-composting and Composting Program of Activities for PalmOil Mills in Indonesia Management Plan for the Inclusion of CDM Program of
Activities (CPAs), dated 16 December 2011
/30/ Dr John Burden and Rodney Barrett: Commissioning of the Aerated Bunker
Composting Facility on 8 March 2012, letter dated 14 March 2012
/31/ PT. Socfin Indonesia: Sample Employee Payslips for the months of January 2010 toMarch 2010, printed on 12 June 2012
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2.1.2 Methodologies, tools and other guidance by the CDM Executive Board/32/ CDM Executive Board: Validation and Verification Manual, EB44 Annex 1 version 1.2/33/ CDM Executive Board:Baseline and monitoring methodology Avoidance of methane
emissions through compostingAMS-III.F, EB59 version 10
/34/ CDM Executive Board: Guidelines on the assessment of investment analysis, EB62
Annex 5 version 05
/35/ CDM Executive Board: Information on Additionality (Attachment A of Appendix B of
4/CMP.1 Annex II), EB63 Annex 24 version 08
/36/ CDM Executive Board: CDM-SSC-PoA-DD Small Scale CDM Programme of Activities
Design Document form, EB33 Annex 43 version 01.0
/37/ CDM Executive Board: General Guidelines to SSC CDM methodologies, EB61 Annex
21 Version 17/38/ CDM Executive Board: Tool to determine the remaining lifetime of equipment, EB 50
Annex 15 version 01
/39/ CDM Executive Board: Standard for Demonstration of Additionality, Development of
Eligibility Criteria and Application of Multiple Methodologies for Programme of
Activities, EB65 Annex 3 version 01.0
/40/ CDM Executive Board: Co-composting Programme of Activities in Indonesia,
http://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/2MJW8CICWDNRL1F7
2DM11M3M8A6Q8M/view.htmllast accessed 20 December 2011
/41/ CDM Executive Board: Emissions from solid waste disposal sites, EB65 Annex 19
version 06.0.0/42/ CDM Executive Board:Baseline and monitoring methodology Methane recovery in
wastewater treatment AMS-III.H, EB58 version 16
/43/ CDM Executive Board: Tool to calculate baseline, project and/or leakage emissions
from electricity consumption, EB39 Annex 7 version 01
/44/ CDM Executive Board: Tool to calculate project or leakage CO2 emissions from fossil
fuel combustion, EB41 Annex 11 version 02
2.1.3 Documentation used by DNV to validate / cross-check the informationprovided by project participants
/45/ Ministry of Environment of Indonesia:EIA Requirements for Projects and/or Activities,
dated 2 October 2006
/46/ Intergovernmental Panel on Climate Change: 2006 IPCC Guidelines for Natinoal
Greenhouse Gas Inventories, published in year 2006
/47/ Stichnothe and Schuchardt: Greenhouse gas reduction potential due to smart palm oil
mill residue treatment, published in 2010.
/48/ Wong Wei-Shen, The Star:Natural BoosterSumatra Bioscience advocates the use of
organic fertiliser in oil palm plantations for higher yield and environmental
preservation, dated 4 June 2012
http://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/2MJW8CICWDNRL1F72DM11M3M8A6Q8M/view.htmlhttp://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/2MJW8CICWDNRL1F72DM11M3M8A6Q8M/view.htmlhttp://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/2MJW8CICWDNRL1F72DM11M3M8A6Q8M/view.htmlhttp://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/2MJW8CICWDNRL1F72DM11M3M8A6Q8M/view.htmlhttp://cdm.unfccc.int/ProgrammeOfActivities/Validation/DB/2MJW8CICWDNRL1F72DM11M3M8A6Q8M/view.html7/30/2019 6511- CPA FVR_26Jun2012
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2.2 Site visit and follow-up InterviewsOn 8 August 2011, DNV visited the project site of PT. Socfin Indonesia and performed
interviews with project stakeholders.
Date Name Organization Topic
/49/ 2011-08-08 Mr. Lufaldy
Ernanda
Mr. Mark
Harding
Carbon
Conservation /
PT. Carbon
Agro Indo
Project technology. Project participants. Applicability criteria. Additionality. CDM consideration. Baseline, Project and
Emission reductioncalculations.
Stakeholder consultationprocess.
/50/ 2011-08-08 Mr. P. Sinurat
Mr. Julians
Sinuraya
PT. Socfin
Indonesia
Project technology. POME generation COD of wastewater Mill licenses. Legal and environmental
issues.
Stakeholder consultationprocess.
Monitoring plan and projectmanagement
2.3 Resolution of Outstanding IssuesThe objective of this phase of the validation was to resolve any outstanding issues which
needed to be clarified prior to DNV's positive conclusion on the CPA. In order to ensure
transparency a validation protocol was customised for assessing CPAs. The protocol shows in
a transparent manner the criteria (requirements), means of verification and the results from
validating the identified criteria. The validation protocol serves the following purposes:
It organises, details and clarifies the requirements a CPA requesting inclusion is expectedto meet;
It ensures a transparent validation process where the validator will document how aparticular requirement has been validated and the result of the validation.
The completed validation protocol for the CDM-SSC-CPA-DD titled Socfindo EFB plus
POME Co-composting Project (CPA No. 001) is enclosed in Appendix A to this report.
A corrective action request (CAR) is raised if one of the following occurs:
(a)The project participants have made mistakes that will influence the ability of theproject activity to achieve real, measurable additional emission reductions;
(b)The CDM requirements have not been met;(c)There is a risk that emission reductions cannot be monitored or calculated.
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A clarification request (CL) is raised if information is insufficient or not clear enough to
determine whether the applicable CDM requirements have been met.
It must be noted that the CPA titled Socfindo EFB plus POME Co-composting Project (CPA
No. 001) was submitted for validation together with the PoA-DD for the PoA Co-
composting and Composting Program of Activities for Palm Oil Mills in Indonesia. The
validation of the PoA-DD also raised issues relevant to the CPA titled Socfindo EFB plus
POME Co-composting Project (CPA No. 001). Hence, findings relevant to the CPA titled
Socfindo EFB plus POME Co-composting Project (CPA No. 001) are included in the
validation protocol of the validation report (DNV report no. 2011-9535) for the PoA Co-
composting and Composting Program of Activities for Palm Oil Mills in Indonesia.
2.4 Internal Quality ControlThe CPA validation report underwent a technical review before requesting inclusion of the
CPA. The technical reviews were performed by a technical reviewer qualified in accordance
with DNVs qualification scheme for CDM validation and verification.
2.5 Validation Team
Role Last Name F ir st Name Countr y
Type of involvement
Deskreview
Sitevisit/Interviews
Reporting
Supervision
ofwork
Technicalrev
iew
TA13.1competence
Financialexp
ertise
Team leader
(Validator)
Wong Yon Sing
(Simon)
Malaysia
Assessor under
training / Financial
expert after from
28 October 2011
onwards)
Khalid Fathullah
Akmal
Malaysia
Assessor under
training
Foo Wei Yee Malaysia
Financial expert
(before 28 October
2011)
Lai Siew Sit
(Denise)
Malaysia
Technical
reviewer
Brinks Hendrik Norway
Technical
reviewer
Lehmann Michael Norway
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3 VALIDATION FINDINGSThe CPA titled Socfindo EFB plus POME Co-composting Project (CPA No. 001), as
described in the CDM-SSC-CPA-DD of31 May 2012, meets the requirements to be included
in the PoA Co-composting and Composting Program of Activities for Palm Oil Mills in
Indonesia and correctly applies the baseline and monitoring methodology AMS-III.F, version
10.
DNV thus requests the inclusion of the CPA titled Socfindo EFB plus POME Co-composting
Project (CPA No. 001) in the PoA Co-composting and Composting Program of Activities
for Palm Oil Mills in Indonesia.
The total emission reductions from the CPA titled Socfindo EFB plus POME Co-compostingProject (CPA No. 001) are estimated to be on the average 10 130 tCO2e per year over the
selected 7 year crediting period. The emission reduction forecast has been checked and it is
deemed likely that the stated amount is achieved given that the underlying assumptions do not
change.
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APPENDIX A
PROTOCOL FOR ASSESSING COMPLIANCE OF SPECIFIC CDMPROGRAMME ACTIVITIES WITH THE PROGRAMME OF
ACTIVITIES
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Protocol for assessing compliance of specific CPA with the PoADNV Report No. 2011-9535/01, rev. 01 A-1
CHECKLIST QUESTION Ref. MoV* COMMENTSDraft
Concl.
Final
Concl.
A. General description of CPAA.1. Project boundaries
A.1.1 Are the CPAs spatial boundaries (geographical)clearly defined, allowing the unique identification of
the CPA?
/3/ DR The CPAs spatial boundaries are clearly
defined in the SSC-CPA-DD. It allows for
unique identification of the CPA.
OK
A.1.2 Are the CPAs system boundaries (components andfacilities used to mitigate GHGs) clearly defined?
/3/ DR Components and facilities used to mitigate
GHGs are clearly defined in the projectdocument.
OK
A.1.3 Has it been demonstrated that the CPA is within thegeographical borders of the PoA?
/1/
/3/
DR According to the project document, the CPA
is located in Medan, Sumatera Island, which
within the geographical and political
boundaries of the PoA.
OK
A.1.4 Has it been confirmed that no part of the CPA isregistered as a CDM project or included in a
registered POA?
/3/
/28/
DR
I
It has been confirmed that the CPA is not
registered as a CDM project or included in
another registered PoA.
This was crosschecked with the information
available on UNFCCC website and also the
confirmation from the CPA owner, PT Socfin
Indonesia in the agreement signed with the
CME.
OK
A.2. Participation requirementsA.2.1
Which Parties and CPA implementer are participatingin the CPA? Are they included in the PoA? /3/ DR The Host Party is the Republic of Indonesiaand this is mentioned in the SSC-PoA-DD.
The implementer is PT Socfin Indonesia.There is no Annex I Party for the CPA and
PoA.
OK
A.3. Duration of the CDM programme activity,Crediting Period
A.3.1Are the CPAs starting date and operational lifetimeclearly defined and evidenced?
/3/
/23/
DR
IThe CPAs starting date is specified as 4 July
2011, as evidenced from the contracts signed.
OK
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CHECKLIST QUESTION Ref. MoV* COMMENTSDraft
Concl.
Final
Concl.
/24/
/25/
The operational lifetime is 20 years. They are
clearly defined and evidenced.
A.3.2Has the crediting period been clearly defined and isthe start of the crediting period deemed to be
reasonable?
/3/ DR The project selects a 7-year, twice renewable
crediting period with a total length of 21
years.
OK
A.3.3Has it been confirmed that the length of the CPAcrediting period does not exceed the end of PoA?
/3/ DR Yes, it has been confirmed that the length of
the CPA crediting period does not exceed the
end of PoA.
OK
B. Eligibility of CPA and Estimation of EmissionReductions
B.1. Eligibility criteria for CDM Programme ActivitiesIt is assessed whether the CPA complies with the criteria for
inclusion in the registered programme of activities.
B.1.1 Has it been sufficiently justified that the CPAcomplies with:
Boundary:
(i) Physical boundary: The entire boundary of the CPA projectactivity must be physically located within the territory of the
Republic of Indonesia as set out in section A.4.1.2 of the
PoA-DD.
(ii)Time Induced Boundary: No CPA shall commence beforethe Start Date of the PoA, as set out in section B.1. of this
PoA-DD. In addition, no CPA shall commence later than 28
years after the start date of the PoA-DD as set out in section
B.1. of the PoA-DD.
/1/
/3/
/23/
/24/
/25/
/49/
/50/
DR
I
(i) The CPA project activity is physicallylocated within the territory of the
Republic of Indonesia. The address of the
project activity is Bangun Bandar crude
palm oil mill, Martebing village, Dolok
Masihul district, Serdang Bedagai
regency, North Sumatra, Indonesia. The
GPS coordinates provided by the projectparticipant are 985758.70E -
99436.33 E and 31624.46 N -32032.54 N.The location and GPS coordinates of the
CPA have been verified during the site
visit. Therefore, it is confirmed that the
CPA meets the criteria for physical
boundary defined in the PoA.
OK
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CHECKLIST QUESTION Ref. MoV* COMMENTSDraft
Concl.
Final
Concl.
(ii)The starting date of the PoA is 8 June2011 which is the date of commencement
of validation. The starting date of the
CPA is 4 July 2011 and this is evidenced
from the contracts signed in relation to
the project activity. The commencement
of the CPA is approximately one monthafter the starting date of the PoA.
Therefore, it is confirmed that the CPA
meets the criteria for time induced
boundary defined in the PoA.
Therefore, it is concluded that the CPA
complies with eligibility criterion 1 stated inthe PoA-DD.
B.1.2 Has it been sufficiently justified that the CPAcomplies with:
Double Counting: To avoid double counting of emission
reductions each CPA must provide specific geographic GPS
coordinates for the Project Activity to enable uniqueidentification of the Project Activity.
/1/
/3/
/49/
/50/
DR
I
The GPS coordinates for the CPA are
985758.70E - 99436.33 E and31624.46 N - 32032.54 N. In addition,
the address of the CPA has been provided.
From address details and GPA coordinates, it
allows for unique identification of the CPA.
In addition, the address and GPS coordinates
have been verified during the site visit.Therefore, it is concluded that the CPA
complies with eligibility criterion 2 stated in
the PoA-DD.
OK
B.1.3 Has it been sufficiently justified that the CPAcomplies with:
Cooperation Agreement: Each CPA owner must enter into a
/1/
/3/
/28/
DR The CPA owner represented by PT Socfin
Indonesia has entered into a cooperation
agreement with the coordinating entity
represented by PT Carbon Argo Indo on 3
OK
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CHECKLIST QUESTION Ref. MoV* COMMENTSDraft
Concl.
Final
Concl.
cooperation agreement with the Coordinating entity which
includes at a minimum the matters set out in section A.4.4.1(iv)
of the PoA-DD:
(i) The CPA Owner is aware and voluntarily agrees thatthe CPA will be subscribed to the present PoA under
the conditions as required by the approved PoA and the
contractual arrangement between the CPA Owner andthe Coordinating Entity.
(ii) Certifies the CPA has not been and will not beregistered as a single CDM project activity nor as a
CPA under another PoA, nor any voluntary scheme and
warrants on an ongoing basis that they will not seek to
have the project activity which forms the basis of the
proposed CPA registered as a CDM project or
registered under any other scheme that earns carboncredits for the emission reductions achieved while the
project is included in a CPA or proposed CPA under the
present PoA.
(iii) The CPA Owner will certify in writing that theproposed CPA is not a debundled part of a bigger
project.
(iv) CPA Owner cedes all rights to independently claim andown emission reductions under the Clean Development
Mechanism of the UNFCCC or any voluntary scheme
other than through the managing entity of the present
PoA as agreed.
October 2011. Significant matters presented
in cooperation agreement are:
(i) PT Socfin Indonesia voluntarilysubscribes to the PoA
(ii) The CPA cannot be registered in anyother Carbon Credit Scheme
(iii) Certification by PT Socfin Indonesiathat the CPA is not a debundledcomponent of another project
(iv) PT Socfin Indonesia cedes all rights toindependently claim and own emission
reductions.
Therefore, the signed cooperation agreement
verified demonstrates and confirms that the
CPA complies with eligibility criterion 3
stated in the PoA-DD.
B.1.4 Has it been sufficiently justified that the CPAcomplies with:
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I
There is no existing co-composting or
composting activities at the site of the
proposed CPA. Without the proposed project,
OK
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No Pre-existing Co-composting or Composting at Site: Each
CPA shall be implemented at a Palm Oil Mill site where no
composting or co-composting activity was taking place before
the Project Activity.
POME is treated anaerobically in open
lagoons and EFB is sent to the plantations for
disposal. The site visit performed by DNV
also reveals no evidence of existing co-
composting or composting activities at the
site.
Therefore, the site visit by the validationteam was able to confirm that the CPA
complies with eligibility criterion 3 stated in
the PoA-DD.
B.1.5 Has it been sufficiently justified that the CPAcomplies with:
Technology and compliance with Methodology: Each CPA
must be a newly developed, upgraded or expanded co-
composting or composting facility using composting technology
that:
(i) Uses Palm Oil Mill Organic waste as inputs and via anaerobic composting process within the parameters set out in
section A.4.2.1 of the PoA-DD produces organic compostfor reapplication to land as organic fertilizer
(ii) Meets the requirements of approved methodology AMS-III.F version 10, including its relevant assessment tools andguidelines:
1. This methodology comprises measures to avoid theemissions of methane to the atmosphere from biomass or
other organic matter that would have otherwise been left
to decay anaerobically in a solid waste disposal site
(SWDS), or in an animal waste management system
(AWMS), or in a wastewater treatment system
/3/
/14/
/49/
/50/
DR
I
The CPAs compliance with technology and
methodology is demonstrated as follows:
(i) The CPA uses Palm Oil Mill Organicwaste as inputs and produces organiccompost via an aerobic composting
process. The compost produces will be
applied as organic fertilizer. Palm Oil
Mill Organic wastes used in the CPA are
Empty Fruit Bunches (EFB) and Palm
Oil Mill Effluent (POME). These two
wastes are co-composted in a process
which will be controlled aerobically.(ii) The CPA meets the requirements of
approved methodology AMS-III.F
version 10, including its relevant
assessment tools and guidelines. This is
demonstrated as follows:
1. The CPA aims to avoid emissions ofmethane to the atmosphere from thedecay of EFB and POME. Without
OK
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(WWTS). In the project activity, controlled aerobic
treatment by composting of biomass is introduced.
2. The project activity does not recover or combust landfillgas from the disposal site (unlike AMS-III.G Landfill
methane recovery), and does not undertake controlled
combustion of the waste that is not treated biologically
in a first step (unlike AMS-III.E Avoidance of methaneproduction from decay of biomass through controlled
combustion, gasification or mechanical/thermal
treatment). Project activities that recover biogas from
wastewater treatment shall use methodology AMS-III.H
Methane recovery in wastewater treatment. Project
activities involving co-digestion of organic matters shall
apply methodology AMS-III.AO Methane recoverythrough controlled anaerobic digestion.
3. Measures are limited to those that result in emissionreductions of less than or equal to 60 ktCO2 equivalent
annually.
4. This methodology is applicable to the composting of theorganic fraction of municipal solid waste and biomass
waste from agricultural or agro-industrial activities
including manure.
5. This methodology includes construction and expansionof treatment facilities as well as activities that increase
capacity utilization at an existing facility. For project
activities that increase capacity utilization at existing
facilities, project participant(s) shall demonstrate that
special efforts are made to increase the capacity
utilization, that the existing facility meets all applicablelaws and regulations and that the existing facility is not
this, EFB would be left to decay
anaerobically in a SWDS and POME
would be left to decay anaerobically
in a wastewater treatment system. The
CPA introduces controlled aerobic
treatment of EFB and POME. This is
evidenced from the feasibility studyand has been confirmed during the site
visit.
2. The project activity does not involvelandfill gas recovery and combustion,
controlled combustion of waste,
gasification or mechanical/thermal
treatment. AMS-III.H is not
applicable as the project does notinvolve biogas recovery. AMS-III.AO
is not applicable as the project does
not involve anaerobic digestion. This
has been confirmed from documents
related to the project design and
verified from interviews during the
site visit.
3. Emission reductions achieved by theCPA is estimated to be on average
10 130 tCO2e annually. This is less
than the limit of 60 ktCO2e annually.
4. The applicability of this methodologyis confirmed as the CPA involves the
composting of waste from agro-industrial activities. In this case, EFB
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included in a separate CDM project activity. The special
efforts should be identified and described.
6. This methodology is also applicable for co-compostingwastewater and solid biomass waste, where wastewater
would otherwise have been treated in an anaerobic
wastewater treatment system without biogas recovery.
The wastewater in the project scenario is used as asource of moisture and/or nutrients to the biological
treatment process e.g. composting of empty fruit
bunches (EFB), a residue from palm oil production, with
the addition of palm oil mill effluent (POME) which is
the wastewater co-produced from palm oil production.
7. In case of co-composting, if it cannot be demonstratedthat the organic matter would otherwise been left to
decay anaerobically, baseline emissions related to suchorganic matter shall be accounted for as zero, whereas
project emissions shall be calculated according to the
procedures presented in this methodology for all co-
composted substrates.
8. The location and characteristics of the disposal site ofthe biomass, animal manure and co-composting
wastewater in the baseline condition shall be known, in
such a way as to allow the estimation of its methane
emissions, using the provisions of AMS-III.G, AMS-
III.E (concerning stockpile), AMS-III.D Methane
recovery in animal manure management systems or
AMS-III.H respectively.
Project activities for composting of animal manure shall
also meet the requirements under paragraphs 1, and 2 (c)of AMS-III.D. Further no bedding material is used in the
and POME from the palm oil mill are
composted. This is evidenced from the
feasibility study and confirmed during
the site visit.
5. The applicability of this methodologyis confirmed as the CPA involves the
construction of new treatmentfacilities. There is no expansion or
capacity increase involved. This has
been confirmed during the site visit
and supported by documents related to
the projects design.
6. The applicability of this methodologyis confirmed as the project involves
co-composting of wastewater (POME)and solid biomass waste (EFB).
POME would otherwise been treated
anaerobically in open lagoons without
biogas recovery as per current
practices. This has been confirmed
during the site visit. In the project
scenario, POME is used as a source of
moisture and nutrients to the
composting of EFB. This is evidenced
from design documents related to the
CPA.
7. Baseline emission from the decay ofEFB is not claimed for this CPA and
accounted for as zero. DNV hasconducted a site visit and it was found
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animal barns or intentionally added to the manure stream
in the baseline. Blending materials may be added in the
project scenario to increase the efficiency of the
composting process (e.g. to achieve a desirable C/N ratio
or free air space value), however, only monitored
quantity of solid waste or manure or wastewater diverted
from the baseline treatment system is used for emissionreduction calculation. The following requirement shall
be checked ex ante at the beginning of each crediting
period:
a. Establish that identified landfill(s)/stockpile(s)can be expected to accommodate the waste to be
used for the project activity for the duration of
the crediting period; or
b. Establish that it is common practice in the regionto dispose of the waste in solid waste disposal
site (landfill)/stockpile(s).
9. The project participants shall clearly define thegeographical boundary of the region referred in
paragraph 8 (b), and document it in the CDM-PDD. In
defining the geographical boundary of the region,
project participants should take into account the source
of the waste i.e. if waste is transported up to 50 km, the
region may cover a radius of 50 km around the project
activity. In addition, it should also consider the distance
to which the final product after composting will be
transported. In either case, the region should cover a
reasonable radius around the project activity that can bejustified with reference to the project circumstances but
that currently, EFB is dumped in the
palm oil plantations.
8. The location and characteristics of thedisposal site of EFB and POME have
been defined. EFB is dumped in the
plantations and POME is treated
anaerobically in open lagoons. Inaddition, the following requirements
have been established through
observations and interviews during the
site visit:
a.It is reasonable to assume that thepractices of EFB dumping and
anaerobic open lagoon POME
treatment would continuethroughout the duration of the
crediting period. There is ample
space in the plantations to
accommodate the EFB and the
anaerobic wastewater treatment
system has been designed to
accommodate the requirements of
the palm oil mill.
b.EFB dumping in plantations and
anaerobic treatment of POME is the
common practice in the region of
the proposed CPA.
9. The geographical boundary of theregion of the proposed CPA has beenclearly defined in the CPA-DD. It is
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in no case it shall be more than 200 km. Once defined,
the region should not be changed during the crediting
period(s).
10.In case produced compost is handled aerobically andsubmitted to soil application, the proper conditions and
procedures (not resulting in methane emissions) must be
ensured.11.In case produced compost is treatedthermally/mechanically, the provisions in AMS-III.E
related to thermal/mechanical treatment shall be applied.
12.In case produced compost is stored under anaerobicconditions and/or delivered to a landfill, emissions from
the residual organic content shall to be taken into
account and calculated as per the latest version of theTool to determine methane emissions avoided fromdisposal of waste at a solid waste disposal site.
(iii) In addition in order ensure the environmental integrity ofeach co-composting facility that is brought under this PoA
and to ensure that the co-composting facility does not
become a source of environmental pollution itself, each
facility must:
1. Locate the main composting facility upon animpermeable composting pad / floor of concrete or some
other impermeable material (This ensures leaching from
the compost does not take place directly into the soil
below and improves the composting process);
2. Incorporates a system / process to adequately deal withany run-off or leachate from the compost itself and / orensure any liquid discharge would be diluted or treated
the 50 km radius around the proposed
CPA location. This is justified as the
maximum distance for transporting
the waste utilised by the CPA is 50
km.
10.The produced compost will be usedfor direct application in the plantation.Therefore, aerobic handling of
produced compost has been ensured.
11.The provisions in AMS-III.E relatedto thermal/mechanical treatment are
not applied. This is because the
produced compost is not treated
thermally or mechanically.
12.The produced compost will not bestored anaerobic conditions or
delivered to a landfill. According to
project documents, the produced
compost will be directly applied to
landfill. This has been supported by
interviews with the project participant.
Therefore emissions from the residual
organic content are not taken into
account and calculated and this is
considered acceptable.
(iii) The environmental integrity of the CPAhas been ensured as follows:
1. The main composting facility willinstall a concrete floor to prevent soilcontamination of leachate. This has
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to environmentally acceptable levels before entering the
surrounding environment.
been confirmed during the site visit.
2. The composting process involves norun-off leachate leaking to the
surrounding environment. Excess
POME or liquid from the composting
process is stored in a buffer tank and
recycled back to the compostingprocess. The composting process is
isolated from rainwater as a roof is
constructed for this purpose. This is
evident from the projects design and
confirmed during the site visit.
Therefore, the validation team was able toconfirm that the CPA complies with
eligibility criterion 5 stated in the PoA-DD.
B.1.6 Has it been sufficiently justified that the CPAcomplies with:
Start date: Each CPA Owner must be able to provide
documentary evidence to verify the start date of the CPA.
/3/
/23/
/24/
/25/
DR It has been verified that documentaryevidences have been provided. This allows
the CME to verify the start date of the CPA.
The start date of the CPA is evidenced by the
contracts signed with respect to the project
activity, specifically piling works, concrete,
steel and roof works and precast concretepanel, where these contracts are all signed on
the same date and its the earliest of all
financial commitment.
Therefore, the validation team was able to
confirm that the CPA complies with
eligibility criterion 6 stated in the PoA-DD.
OK
B.1.7 Has it been sufficiently justified that the CPA /1/ DR It has been demonstrated that the CPA (c.f. OK
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complies with:
Additionality: Each CPA must be able to demonstrate that the
Project Activity which forms the CPA would not have occurred
anyway due to an investment barrier by following and applying
all steps of the additionally assessment as set out in sections
E.5.1 and E.5.2 of the PoA-DD.
/3/
/4/
/10/
/11/
/14/
/15/
/23//24/
/25/
/34/
Section B.2 of the CPA protocol) would not
have occurred due to financial barrier. All
steps of the additionality assessment set out
in sections E.5.1 and E.5.2 of the PoA-DD
have been followed.
Therefore, the validation team was able to
confirm that the CPA complies witheligibility criterion 7 stated in the PoA-DD.
B.1.8 Has it been sufficiently justified that the CPAcomplies with:
PoA Specific Requirements:
(i) Environmental Impact Analysis (EIA): Each CPAwhich involves the implementation of a Compost Facility
with a compost output capacity:
a. Greater than or equal to 100 tons per day shallprovide a copy of their EIA which has been
submitted to, and approved by the IndonesianMinistry of the Environment.
b. Less than 100 tons per day, shall provide a copy ofthe Environmental Management and MonitoringPlan (EMMP) that was submitted and approved by
the responsible Indonesian authorities.
(ii) Compliance with Relevant National Standards: EachCPA Project Activity must comply with the relevant
Indonesian National or Regional Environmental Standard.
(iii) Stakeholder Consultation: Each CPA must be able todemonstrate with appropriate documentary evidence that
/3/
/6/
/18/
/45/
DR (i) It has been sufficiently justified that theCPA complies with the Environmental
Impact Analysis (EIA) requirements of
the PoA-DD and the host party of
Indonesia. Since the output capacity of
the project is 23 tons per day, the CPAhas provided its approved
Environmental Management and
Monitoring Plan (EMMP).
Therefore, it is confirmed that the CPA
meets the criteria for environmental
impact analysis (EIA) defined in thePoA.
(ii) The CPAs compliance with national orregional environmental standard is
evidenced from the EMMP.
Environmental requirements from the
Indonesian Ministry of Environment
have also been reviewed.
Therefore, it is confirmed that the CPA
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Stakeholder Consultation has been undertaken in
accordance with the requirements of CDM rules and
procedures.
meets the criteria for compliance with
relevant national standards defined in
the PoA.
The CPA has provided documentary
evidence to support that the stakeholder
consultation has been undertaken. It
allows the CME to determine that it isdone in accordance with the
requirements of CDM rules and
procedures.
Therefore, it is confirmed that the CPA
meets the criteria for stakeholder
consultation defined in the PoA.
Therefore, the validation team was able to
confirm that the CPA complies with
eligibility criterion 8 stated in the PoA-DD.
B.1.9 Has it been sufficiently justified that the CPAcomplies with:
Debundling: To ensure a CPA is not a debundled component ofa large scale activity, the Project Activity under each CPA must
not have the same activity implementer as the proposed smallscale CPA or a coordinating or managing entity, which also
manages a large scale PoA of the same technology/measure
which is within 1 km of the boundary of the proposed small-
scale CPA, at the closest point.
/3/
/37/
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/50/
DR
I
The CPA is not a debundled component of
another project activity. It has been
confirmed through site visit that there is no
other project activity within 1 km of the
boundary of the proposed CPA at the closest
point.Therefore, the validation team was able to
confirm that the CPA complies with
eligibility criterion 9 stated in the PoA-DD.
OK
B.1.10 Has it been sufficiently justified that the CPAcomplies with:
SSC Threshold Criteria: Each CPA shall not reduce more than
/3/
/4/
/5/
DR The CPA is estimated to reduce 10 130
tCO2e on average yearly. This is less than the
limit of 60 ktCO2e annually.
OK
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60 ktCO2e annually. Therefore, the validation team was able to
confirm that the CPA complies with
eligibility criterion 10 stated in the PoA-DD.
B.1.11 Has it been sufficiently justified that the CPAcomplies with:
Use of Development or Assistance Funds: Each CPA mustcertify in writing whether any Development Aid or Assistance
funds have been used for funding the construction and operation
of the Project Activity which forms the PoA. If any
Development Aid or Assistance funds have been used, then
before inclusion in the PoA, the CPA owner must provide
evidence to confirm that such funds do not result in a diversion
of any official development assistance funds.
/3/
/15/
/49/
/50/
DR
I
Interviews conducted during the site visit
also revealed that the CPA does not use anyDevelopment Aid or Assistance funds for its
construction or operation. Confirmation ofsuch was received from the project owner,
PT Socfindo in a form of a declaration.
Therefore, the validation team was able to
confirm that the CPA complies with
eligibility criterion 11 stated in the PoA-DD.
OK
B.2. AdditionalityAdditionality of a CPA is assessed through eligibility criteria 7
above.
B.2.1 Is it demonstrated that the IRR of the CPA islower than 12.5% (before tax)?
/1/
/3/
/4/
/10/
/11//12//14/
/15/
/16/
/17/
/23/
/24/
/25/
DR To demonstrate the additionality, the CPA
uses an investment analysis. It has been
shown below that the project is not
financially attractive. Hence, it has been
justified that the CPA complies withadditionality criteria 1.
Choice of approach:As the proposed CPA generates benefits
through savings from reduced fertilizer
imports, and the alternative to the project
(baseline scenario) does not involve
investments, benchmark analysis was chosen
OK
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as an appropriate analysis method. Financial
attractiveness of the project without CER
revenues has been demonstrated. It is
confirmed that this choice of approach is
consistent with the requirements of section
E.5.2 of the PoA-DD.
Input parameters:
Key parameters applied in the projects
financial analysis are listed as per the PoA-
DD section E.5.2. They are assessed as
follows:
Technical lifetime of 20 years: This wascrosschecked against the technical
providers estimation included in the
Feasibility Study Report. Therefore, this
is considered to be in line with the
requirements of the PoA-DD.
Investment decision date of 28 April2010: This is evidenced through minutes
of meeting of the board of the
commissioners of the P.T. Socfin
Indonesia (Socfindo) held in Jakarta on
the same date. Therefore the investment
decision date of 28 April 2010 is accepted
and this is consistent with the
requirements of the PoA-DD.
Date project starts operating of 8 March2012: This was crosschecked against the
technical providers estimation.
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Therefore, this is considered to be in line
with the requirements of the PoA-DD.
Annual compost production of 30 000tons: This is sourced from the technology
provider as evidenced in the feasibility
study. Therefore, this is considered to be
in line with the requirements of the PoA-DD.
The price of compost is not specified inthe CPA-DD: Compost produced by the
CPA will be used internally and is not
aimed to be sold to a third party.
Therefore, this exclusion is considered
acceptable and in line with the
requirements of the PoA-DD.
Estimated fertilizer savings of 2 256.36million IDR per year: The compost
produced will be applied to plantation
and this will result in cost savings due to
reduced usage of fertilizer. Specific
information was available from externally
published sources in relation to thepercentage of fertilizer savings that would
be able to be achieved using that compost
technology in that region, thus it is
justified that Option A template was used
to calculate the estimated fertilizer
savings. The price of inorganic fertilizer
is obtained from the average purchase
price of Dolomite, Rock Phosphate, Urea
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and Potassium for the year of 2009.
Purchase contracts have been reviewed
and it was found that the value used in the
template is consistent with the purchase
price in year 2009. The fertilizer dosage
amount is obtained from the historical
records for fertilizer usage in the year2009. Similarly, these records have been
reviewed and it was found that the
amount selected is consistent with the
original source.
By participating in the programme, it is
estimated that this will result in a 35%
reduction of inorganic fertilizer use due
to the assumption that 1.5 tons ofcompost is produced from each ton of
EFB used. It is noted that this is of the
higher range as compared to figures
published in academic papers and also
used in other registered co-composting
CDM projects, which assumes a compost
production of 0.35 to 0.6 tons per ton of
EFB. In addition, this is evidenced by the
feasibility study. Therefore, this is
considered conservative and acceptable.
The assumption used in the financial
analysis to be in line with the
requirements of the PoA-DD.
Currency of 1 USD = 9 013 IDR and 1Euro = 12 049 IDR: Currency rates are
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taken from the middle rate dated 27 April
2010 from the Bank Indonesia currency
rate calculator. This is inconsistent with
the requirements of the PoA-DD which
requires an average exchange rate during
the twelve months preceding the date of
the investment decision date. Capital and equipment cost of 14 281
million IDR: This is sourced from the
feasibility study. It is considered that the
feasibility study represents costs
estimated from technology providers.
This cost has been cross-checked with
publicly available information from a
paper presented during the 2010
International Conference & Exhibition on
Oil Palm Biomass and an article
published in a local newspaper. From
these two sources, the price of an aerobic
bunker composting system is reported to
be 2.00 million USD to 2.31 million USD
(18.7 billion IDR to 21.6 billion IDR).Capital and equipment cost of 14 281
million IDR used in the investment
analysis is lower than the costs published.
Therefore, this is considered to be
conservative. The bulk of the initial
capital cost is for the bunker system
which is where co-composting takes
place. For this item, 9.104 million IDR is
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allocated and this is equivalent to 63.75%
of the total investment cost. In addition,
signed contracts have been reviewed and
it was found that a total of 4 127 million
IDR (tax inclusive) of investment
expenditure has been committed against
an estimated 7 251 million IDR for thebunker building. These signed contracts
cover piling works, concrete steel roof
works and precast concrete panel for the
bunker building.
At the time of site visit, the bunker
building is still under construction and
more expenditure is expected towards the
bunker building. In conclusion, DNVconsiders the investment cost of 14 281
million IDR as per the feasibility study to
be acceptable and this cost has been
cross-checked with independent sources.
CER revenue of 3 510.25 million IDR peryear: This is sourced from the feasibility
study which is considered to be consistentwith the board or management estimation
of the CER price. The amount of revenue
from CER sales is accepted as it is in
accordance with the requirements of the
PoA-DD.
Operation and maintenance cost of 1864.68 million IDR: O&M cost for theproposed CPA comprises of fuel and
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electricity costs (410.26 million IDR),
labour costs (420.80 million IDR) and
maintenance costs (1 033.62 million
IDR). These costs are assessed separately.
The bulk of the O&M cost is incurred for
the operation and maintenance of the
bunker system. This is where emissionreduction through aerated co-composting
takes place. As part of the normal
operation of the bunker system, waste
materials fed are required to be pre-
processed and the bunker is continuously
aerated using fans. Materials composting
in the bunker are continuously monitored
for their temperature and oxygen level.From time to time, maintenance is
incurred in order to clean the composting
area, to maintain the control system and
to service the aeration fans. DNV has also
verified that the O&M cost applied in the
financial analysis are sourced from the
feasibility study. Therefore, this is
considered to be reasonable.
Fuel and electricity cost of 410.26 millionIDR: Fuel cost is sourced from historical
company purchase records, while the
estimation of fuel usage is sourced from
the feasibility study and information from
the technology provider. Under the
project activity, additional fuel is required
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for the operation of the spreader machine,
tractor, wheel loader and truck. The
additional amount of diesel consumed by
the project activity is 29 522.39 litres.
Additional diesel is used for the operation
of the spreader machine, tractor, wheel
loader and trucks. DNV has cross-checked this amount with the feasibility
study and confirmed that this is sourced
from the equipment
manufacturer/technology provider. DNV
has reviewed the historical diesel
purchase records and found that average
diesel prices paid for the months of
January 2010 to March 2010 is IDR 5764 per litre. The months of January 2010
to March 2010 were selected as these
were the months of the feasibility study
period. Diesel price used in the financial
analysis is IDR 4 500 per litre. The diesel
price used in the financial analysis is
lower than the actual price paid as per the
historical company purchase records
(between IDR 5 533 to IDR 6 006 at the
time when the FSR was finalised in April
2010). This is considered to be
conservative.
The project assumes no additional
electricity cost will be incurred for theCPA. Equipment and facilities related to
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the CPA use electricity generated from
the mill adjacent to the composting plant.
Due to this, DNV considers the exclusion
of electricity cost from the investment
analysis to be acceptable and
conservative.
Labour cost of 420.80 million IDR: Theamount of labour is sourced from thetechnology provider. The labour rate is
based on the internal labour rate of PT
Socfin. DNV considers that the CPA
requires additional amount of labour
since the project activity requires
additional material handling. In addition,
the co-composting system is operating
continuously and therefore requires
continuous supervision and manpower.
DNV considers the technology provider
recommendation that 12 additional
manpower required for continuous day to
day operation of the composting plant to
be reasonable. DNV has also reviewedthe actual historical labour rates of PT
Socfin which were available at the time
of decision making. It was checked that
the internal labour rates of PT Socfin
were between 28 million to 147 million
IDR while labour rates applied in the
financial analysis are between the range
of 24 million IDR and 80 million IDR.
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This is lower than the actual labour rates
of the CPA which is reasonable
considering the additional manpower for
the composting plant could be met by
lower skilled workers. Hence, DNV has
accepted the labour cost applied in the
financial analysis. Maintenance cost of 1 033.62 million
IDR: This is obtained from information
provided by the technology provider. In
addition, the maintenance cost is
supported by the feasibility study
prepared for the project activity.
Therefore, the maintenance cost is
deemed acceptable.
Land rental cost. This is not applicable asthe project activity takes place in the
premises of the CPA project proponent.
Rental of land from third parties is not
applicable.
Licensing and royalty cost: As PT Socfinis the owner of the composting plant a ndthe palm oil mill. there is no royalty or
licensing costs imposed on the CPA
owner (PT Socfin) as confirmed during
the site visit. This cost is taken as zero in
the financial analysis and this is
considered conservative.
Insurance: Expenses related to insuranceare taken as zero in the financial analysis.
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This is considered to be reasonable and
conservative.
Feedstock costs: Expenses related to thecosts for raw material feedstock inputs
into the compost facility are taken as zero
in the financial analysis. This is
considered to be reasonable andconservative.
Calculation and conclusion:Pre-tax project IRR calculations over 20
years of operation period were provided in a
spread sheet. The IRR without CDM
revenues were calculated as -5.14%. With
CDM benefits, the IRR of the project
increases to 21.96%.
Sensitivity Analysis:
This analysis has been carried out for
parameters contributing more than 20% to
revenues or cost to check on the robustness
of the financial analysis. -10% to 10%variations were made to the project revenue,
project investment and O&M cost. It was
shown and calculated in the financial analysis
spread sheet that none of the variations on the
3 parameters result in the IRR exceeding the
benchmark.
In addition, the following variations are
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Concl.
needed for reaching the benchmark:
i) Project revenue: The IRR of the projectactivity will reach the benchmark if
project revenue is increased by 70%.
Revenue delivered by the project is in the
form of cost savings and this is dependenton the amount of fertilizer savings and
fertilizer cost. Based on this, the
maximum amount of revenue delivered
by the project is limited by the fertilizer
costs that would be incurred in the
absence of the project activity. It is
assessed that apart from CDM, the project
does not introduce new revenue streamsor causes an increase in existing revenue
streams (e.g. increased palm oil
production). Therefore, i t is assessed that
an increase of the project revenue of 70%
is deemed to be unlikely.
ii) Project investment: The IRR of theproject activity will reach the benchmark
if the project investment cost is reduced
by 80%. At the time of validation, the
project proponent has already committed
to expenditures related to the project
activity. Signed contracts have been
reviewed and it was found that a total of 4
127 million IDR (tax inclusive) ofinvestment expenditure has been
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committed. This represents 29% of the
estimated project investment cost of 14
281 million IDR. From this, it is
concluded that a reduction of project
investment cost of 80% is not achievable.
iii)O&M cost: The IRR of the projectactivity will reach the benchmark ifO&M costs are reduced by 85%. It has
been assessed that these costs are
estimated conservatively and supported
by external evidences. Annual O&M cost
is calculated to be about 13% of total
investment cost. This has been compared
with other registered CDM projects
involving co-composting of EFB andPOME in the host country of Indonesia
(Project 444516%, Project 406426%
and Project 371721%). Due to this, it is
concluded that a reduction of O&M cost
by 85% is unlikely.
In conclusion, given the above investment
barrier, it is sufficiently demonstrated that the
project is not a likely baseline scenario and
that emission reductions thus are additional
to what would otherwise have occurred.
B.3. Calculation of GHG Emission ReductionsProject emissions
It is assessed whether the project emissions are stated according
to the methodology and the PoA-DD and whether the
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argumentation for the choice of default factors and values -
where applicableis justified.
B.3.1 Is the calculation of project emissions of the CPAin accordance with the procedure described in the
PoA-DD?
/1/
/3/
/5/
/14/
/46//49//50/
DR
IThe calculation of project emissions in the
CPA has been checked and it is in
accordance with the procedure described in
the PoA-DD.
The PoA-DD lists project emissions of theCPA as follows:
a. CO2 emissions due to incrementaltransportation distances;
b. CO2 emissions from electricity and/orfossil fuel consumption by the project
activity facilities;
c. Methane emissions during compostingprocess;
d. Methane emissions from runoff water;e. In case the compost is stored under
anaerobic conditions and/or delivered to
a landfill: the methane emissions from
the disposal/storage of compost.
CO2 emissions due to incremental
transportation distances:
The calculation of this source of emission is
done as per the procedures specified in the
PoA-DD. It has been confirmed through site
visit the co-composting facility is located inthe boundary of the project activity. As a
result of this, incremental transportation for
OK
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POME and EFB is not anticipated. Therefore,
this source of emission is disregarded.
CO2 emissions from electricity and/or
fossil fuel consumption by the project
activity facilities:
Project emission due to final composttransportation is estimated to be 248.04
tCO2e per year. This is based on the
anticipated diesel oil consumption of
76 582.36 kg per year which is based on
internal estimations and supported by the
feasibility analysis. The NCV of diesel oil of
43.3 TJ/kg and the CO2 emission factor of
diesel oil of 74 800 kg/TJ. These values areapplied from the upper default values of the
2006 IPCC Guidelines for National
Greenhouse Gas Inventories. The density of
diesel oil of 0.84 kg/litre was soruced from
PERTAMINA (national oil supplier,
http://www.pertamina.com/index.php/detail/r
ead/minyak-diesel)
This is calculated as per option B specified in
the procedures specified in the PoA-DD. It
has been checked that the same equation,
assumptions and input parameters were used
in the CPA-DD. The selection of option B to
calculate this emission is considered
acceptable as the chemical composition ofdiesel oil is not available at the time of
http://www.pertamina.com/index.php/detail/read/minyak-dieselhttp://www.pertamina.com/index.php/detail/read/minyak-dieselhttp://www.pertamina.com/index.php/detail/read/minyak-dieselhttp://www.pertamina.com/index.php/detail/read/minyak-dieselhttp://www.pertamina.com/index.php/detail/read/minyak-diesel7/30/2019 6511- CPA FVR_26Jun2012
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validation.
Methane emissions during composting
process:This emission is considered to be zero. This
is considered acceptable as the temperature
and oxygen content of the compostingprocess are monitored. This assumption is in
line with the specifications of the PoA-DD
and the methodology AMS-III.F version 10.
Methane emissions from runoff water:
There is no run-off water from the project
activity and this is evidenced from theprojects design. Unutilized POME will bere-applied to the co-composting process and
the co-composting area is roofed to isolate
rainwater. Therefore, this emission is
considered to be zero and this is acceptable.
Methane emissions from the
disposal/storage of compost:
It has been confirmed during the site visit
that the final compost from the project
activity will be directly applied in the
plantation. It does not involve anaerobic
storage of compost or landfill disposal.
Therefore, this source of emission is taken tobe zero and this is consistent with the
specifications of the PoA-DD.
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B.3.2 Are CPA-specific conservative assumptions usedwhen calculating the project emissions?
/3/ DR CPA-specific conservative assumptions are
used when calculating the project emissions.
OK
B.3.3 Are CPA-specific uncertainties in the projectemission estimates properly addressed?
/3/ DR There are no CPA-specific uncertainties in
the project emissions calculation.
OK
B.4. Calculation of GHG Emission ReductionsBaseline emissions
It is assessed whether the baseline emissions are stated
according to the methodology and the PoA-DD and whether the
argumentation for the choice of default factors and valueswhere applicableis justified.
B.4.1 Is the calculation of baseline emissions of theCPA in accordance with the procedure described
in the PoA-DD?
/1/
/3/
/5/
/21/
/22/
/27//42/
/49/
/50/
DR
I
CC
The calculation of baseline emissions in the
CPA has been checked and it is in
accordance with the procedure described in
the PoA-DD.
The PoA-DD lists project emissions of the
CPA as follows:
a. Baseline emission due to methanegeneration potential of the solid waste
composted
b. Baseline emission due to methaneemission from baseline wastewatertreatment system
c. Baseline emission due to methaneemissions on account of inefficiencies inthe baseline wastewater treatment
systems and presence of degradableorganic carbon in the treated wastewater
discharged into river/lake/sea
d. The amount of methane that would have
OK
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to be captured and combusted in the year
to comply with the prevailing regulations
Baseline emission due to methane
generation potential of the solid waste
composted:
This source of emission is regarded as zero.According to the baseline practice as
observed during the site visit, EFB from the
palm oil mill is disposed in the plantations. Itwas confirmed during the site visit that the
EFB dump site is located in plantation lands
and in patches of not more than 2 meters
high and 5 meters wide. Therefore, anaerobic
decomposition of EFB cannot be ascertained
to the MCF values prescribed by Tool to
determine methane emissions avoided from
disposal of waste at a solid waste disposal
site referred by the methodology in the
calculation of BECH4,SWDS,y.
Therefore, the baseline emission from the
current dumping situation of the EFB istaken as zero, and is consistent with
paragraph 7 of AMS-III.F. This is considered
to be acceptable and conservative.
Baseline emission due to methane
emission from baseline wastewater
treatment system:The baseline emissions are estimated form
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the influent flow rate and the COD value of
POME applied to the co-composting process.
The wastewater flow is estimated from the
average POME generated by the mill for the
past three years (2008 to 2010), which is 47
612.39 m3 per year. This has been verified
from the historical data of the mill.
The COD value of the POME is estimated
through a 10-day measurement campaign
done during 11 to 23 August 2011. DNV has
cross-checked the results of the measurement
campaign with original wastewater test
certificates issued by an independent
laboratory. In addition, historical data hasalso been checked to ensure that the
measurement campaign is conducted during
typical operation conditions. It is noted that a
complete set of 1 year data as required by
paragraph 26 of AMS-III.H version 16 is not
available as the COD records of the
untreated POME were not available. The
monitoring of untreated POME is not part of
the normal operation of the mill as
confirmed during the site visit.
In accordance with the methodology,
average value from the measurement
campaign has been used and the result has
been multiplied by 0.89 to account for theuncertainty range. Hence, baseline emission
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from anaerobic lagoons has been calculated
in accordance to paragraph 27 of AMS-III.H
version 16. The COD value of the POME is
taken to be 58.5 kgCOD/m3.
The COD removal efficiency of the baseline
treatment is calculated using a final CODdischarge value of 0.197 kgCOD/m3. This is
determined from past 3 years monthly
records of the COD of the final discharge to
water body. The COD removal efficiency
calculation has been checked and it is
correctly calculated at 99.7%.
The methane correction factor (MCF) for thebaseline wastewater treatment system is 0.8
and this is correctly applied. It was
confirmed during the site visit that the
baseline wastewater treatment system
involves anaerobic deep lagoons. Lagoon
depth confirmed during the site visit and via
engineering drawings of the lagoons was 5
meters and this is more than the limit of 2
meters. Therefore, the MCF value applied is
consistent with the default value listed in
AMS-III.H.
The methane producing capacity of the
wastewater (Bo,ww) and the global warmingpotential of methane (GWPCH4) are correctly
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taken as 0.25 kgCH4/kgCOD and 21
respectively. These values are appropriately
sourced from the default values listed in
AMS-III.H.
The baseline emissions will be calculated
based on the actual amount of methanerecovered. For ex-ante estimation purposes,
the estimated baseline emission calculated is
10 378.58 tCO2e annually.
Baseline emission due to methane
emissions on account of inefficiencies in
the baseline wastewater treatment systems
and presence of degradable organic
carbon in the treated wastewater
discharged into river/lake/sea:This emission is estimated from the amount
of wastewater discharged to water body in
the baseline and the COD of the wastewater
discharged. The wastewater flow is
estimated from the average POME generated
by the mill for the past three years (2008 to
2010), which is 47 612.39 m3 per year. This
has been verified against the historical data
of the mill. The final COD discharge value is
taken as 0.197 kgCOD/m3 and this is
determined from past 3 years monthly
records of the COD of the final discharge towater body.
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The methane correction factor (MCF) for the
discharge pathway of the wastewater
treatment system is 0.1 and this is correctly
applied. It was confirmed during the site visit
that the treated wastewater of the baseline
wastewater treatment system is discharged tothe water body. Therefore, the MCF value
applied is consistent with the default value
listed in AMS-III.H.
Similarly, the methane producing capacity of
the wastewater (Bo,ww) and the global
warming potential of methane (GWPCH4) are
correctly taken as 0.25 kgCH4/kgCOD and21 respectively. These values are
appropriately sourced from the default values
listed in AMS-III.H.
The baseline emissions will be calculated
based on the actual amount of wastewater
discharged. Forex-ante estimation purposes,
the estimated baseline emission calculated is
4.38 tCO2e annually.
The amount of methane that would have
to be captured and combusted in the year
to comply with the prevailing regulations:
This emission is taken to be zero as there are
no prevailing regulations mandating the
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