PHI PFS Paper Mill Wastes

8/6/2019 PHI PFS Paper Mill Wastes

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DRAFT FINAL REPORT

PROMOTION OF RENEWABLE ENERGY,ENERGY EFFICIENCY AND GREENHOUSE GAS

ABATEMENT (PREGA)

PHILIPPINES

Utilization of Paper Mill Waste for Steam/Power Generation

A Pre-Feasibility Study Report1

October 2006



Table of Contents

Chapter No. Title Page No.

1 EXECUTIVE SUMMARY 1

2 MAP SHOWING THE LOCATION OF THE PROJECT 2

3 INTRODUCTION 3

4 BACKGROUND 34.1 The Philippines’ Paper Industry 34.2 Opportunities, Constraints, and Issues Related to the Project Sector 44.3 Sustainable Development Objectives likely to be contributed by the Project 54.4 Government Policies and Strategies 64.5 Extent to which Applicable Policies are Enforced 6

4.6 Overlap of Government and ADB Objectives 7

5 DESCRIPTION OF THE PROPOSED PROJECT 85.1 Project Rationale 85.2 Project Goal, Objective, Expected Results, Activities, Scope 85.3 Poverty Reduction and Other MDG Impacts 95.4 Technology Transfer 95.5 Core Business of the Proposed Project Partners and the

Business and Financial Relationships between them 95.6 The Specific Product(s) or Service(s) Generated by the Project 10

6 DETAILED TECHNICAL, ECONOMIC, FINANCIAL ANDENVIRONMENTAL/SOCIAL ANALYSIS 11

6.1 Technical Description 116.2 Project Cost 166.3 Environmental Impacts 16

7 PROJECT IMPLEMENTATION PLAN 17

8 CONTRIBUTION TO SUSTAINABLE DEVELOPMENT 17

9 GHG EMISSION REDUCTION MONITORING AND VERIFICATION 189 1 Current Production and Delivery Patterns 18



10 FINANCIAL ANALYSIS OF THE PROJECT 2310.1 Estimation of Overall Cost Estimates 23

10.2 Project Financial Analyses 2310.3 Financing Plan 25

11 ECONOMIC ANALYSIS OF THE PROJECT 25

12 STAKEHOLDER’S COMMENTS 26

13 KEY FACTORS IMPACTING PROJECT & BASELINE EMISSIONS 26

14 PROJECT UNCERTAINTIES 26

15 CONCLUSION AND RECOMMENDATIONS 27

REFERENCES 28

List of Tables

List of Figures

List of Annexes



List of Tables

Table No. Title Page No.

Table 1 Paper Mill Capacities at CCP 9Table 2 Overview of Boiler Equipment 10Table 3 DENR Emission Limits for Stationary Sources 15Table 4 Fuel and Stream Conditions with Project 15Table 5 Cost Estimate, US$ 16Table 6 Air Pollutant Emission Reductions Due to the Project 17

Table 7 Net CO2 Emission Reduction from Paper Mill Waste Utilizationfor Steam Generation

20

Table 8 Monitoring Scheme 22Table 9 Data Used to Analyze Financial Impact of the Proposed Project 23Table 10 Carbon Credit Revenue of the Project (US$000) 25Table 11 Sensitivity Analysis 25Table 12 Summary of Economic Analysis of the Project 26

List of Figures

Figure No. Title Page No.

Figure 1 Project Location 2Figure 2 Residual Oil Prices (January 2004 – Nov 2003) 4Figure 3 Waste Generation at CCP 12

Figure 4 Typical Layout of the Proposed Project 13Figure 5 Net Present Value of the Project 24Figure 6 Financial Internal Rate of Return of the Project 24

List of Annexes

Annex No. Title Page No.

Annex 1 Steam and Power Flow Diagram 29Annex 2 Scope of Work to Retrofit the Bubbling Fluidized Bed

Combustion System to CCP Boiler No.130

Annex 3 Economic Analysis of the Project 34



Abbreviations

ADB Asian Development BankBOD Biological Oxygen DemandBOT Built-Operate-Transfer CCP Container Corporation of the

PhilippinesCDM Clean Development MechanismCER Carbon Emission ReductionCH

4 Methane

COD Chemical Oxygen DemandCO2 Carbon Dioxide EquivalentCSP Country Strategy ProgramDBP Development Bank of the PhilippinesDENR Department of Environment and Natural

ResourcesDOE Department of EnergyEIRR Economic Internal Rate of Return

ESCO Energy Service CompaniesEUMB Energy Utilization Management

BureauFBC Fluidized Bed Combustor FIRR Financial Internal Rate of ReturnGHG Greenhouse GasGJ GigajouleIEC Information, Education and

CommunicationkWh Kilowatt-hour LBP Land Bank of the PhilippinesMDGs Millennium Development GoalsMJ Mega JoulesMT Metric TonsMTPDP Medium-term Philippine Development

PlanNGOs Non-Government Offices

NOx Nitrogen OxidesNPC National Power CorporationNSO National Statistics OfficePCO Pollution Control Officer Php Philippine PesoPM Particulate Matter RFO R id l F l Oil



1. EXECUTIVE SUMMARY

The paper industry in the Philippines is one of the big energy consumers in the industry sector sharing 7.6 % of the total petroleum product consumption and 7.4 percent of the total electricityconsumption. Energy conservation and efficiency practices and improvements in the existingpaper mills vary considerably. Specific energy consumption varies from 8.7 to 14 GJ per ton of paper produces while specific electricity consumption varies from 324 to 647 kWh per ton.

Paper manufacturing plants were hit hard by the sharp increase of fuel oil prices. Residual oilprices hit hard with an increase of 53% from January 2005 to November 2005. The steepincrease in fuel oil cost greatly affected the operation cost of the paper mills. Industries have to

find means to reduce their fuel oil consumption to remain in operation and competitive in theinternational market.

The Container Corporation of the Philippines (CCP) proposes to retrofit a fluidized bedcombustor in its Boiler No. 1 to be able to utilize its final wastes as fuel. Based on the January2003 to May 2005 waste generation of CCP the paper mill generates an average of 788.3 MTper month (26.3 MT per day) of solid waste. At full capacity, CCP can generate a maximum of 913 MT per month. Currently, CCP pays the waste haulers to transport the waste to the landfillat amount of Php4,800 (US$92.3) per 10 tons load.

Fluidized bed combustion system is energy efficient and an environmentally favorabletechnology for conversion of solid waste with variable heating values and moisture contents, tothermal energy. Utilization of the Plant’s wastes for fuel will free the company from itsenvironmental liabilities from disposal to unsanitary landfills likely to cause water pollution, landdegradation, odor and air pollution. The Project will can fire all its final waste to the fluidizedbed combustor thus, eliminating disposal to the local landfill. Sulfur dioxide (SO2), nitrogenoxides (NOx) and particulate matter (PM) emissions will be reduced at an annual average of 150 MT, 20 MT and 2.8 MT. The annual average greenhouse gas emission reduction is 9,978

MT CO2 equivalent. Replacement of residual fuel oil (RFO) using a clean technology willmitigate air pollutant emissions from fuel combustion and reduce greenhouse gas emission.

CCP is one of the leading manufacturers of paper and paperboard in the Philippines. It hasthree paper mills with a total annual production of 80,000 metric tons. It is a 100 percentrecycled paper mill that produces packaging grade chipboard, boxboard, test linerboard andcorrugating and fluting medium. The Plant has four RFO-fired boilers to supply steamrequirements of the plant.

The Project will involve modification of the existing Boiler No. 1 to create space needed for installation of equipment necessary in the retrofitting of a fluidized bed combustion system at atotal cost of US$ 551,693. The operating and maintenance cost per year is US$ 21,201. TheProject has proven to be financially and economically feasible. Financial and economic rates of return are high at more than 200 percent with payback period of less than one year.

CCP needs investment to implement the Project. Energy service companies are invited to bidfor the project on a build operate transfer (BOT) scheme CCP is also seeking funding/co



2. MAP SHOWING THE LOCATION OF THE PROJECT - WITHIN COUNTRY AND/ORREGION/CITY

The proposed project shall be located in the compound of Container Corporation of thePhilippines, the Proponent, in Balintawak, Quezon City, Metro Manila.

Figure 1Project Location



3. INTRODUCTION

The industry sector contributes to a third of the Gross Domestic Product of the Philippines and asource of more than 15 percent of the country’s employment in 2004. Investments to theindustrial sector however have been low due to high inflation rate (6 % in 2004) mostly as aresult of higher oil prices. The first quarter of 2005 had seen record inflation averaging 8.5%and with declining imports and exports, it is expected that the economy might contract. This isexacerbated by the unstable political situation of the country, which started during the secondquarter of 2005. Compared to the year-ago figure, the volume of production index fell by 1.1percent in July 2005 equivalent to a negative growth rate of -1.1 percent 2. The wood and woodproducts led the industries that contributed to the drop with a decrease of 45.1 percent.

Industries are major energy consumers of the country. The sector is totally dependent on fossilfuel (primarily fuel oil and coal) for steam and power generation. In 2004, the energyconsumption of the industrial sector for heat and power are 9,038.75 million barrels fuel oilequivalent and 15,012 GWh of electricity from the grid. With increasing fuel prices, theGovernment and the private sector have been working together towards reduction of energyconsumption of industries and finding alternative indigenous sources of energy to remaincompetitive with neighboring Asian nations.

The utilization of agricultural and industrial wastes to generate energy (steam, heat and power)

for industries is relentlessly explored through creating new and/or modifying policies, capacitybuilding, technology transfer, environmental management and pollution control strategies,and/or partnerships of public and private sectors. These however, were slowly realized becauseof uncertain economic and political conditions, poor performances of the industries, inability toseek project funding and wariness of foreign investors to do business or spend money in thecountry.

This feasibility study will evaluate the viability of utilizing paper mill wastes as fuel to steamboilers using fluidized bed combustors otherwise know in this report as the “Project”. The

Container Corporation (CCP) Plant, herein called the Proponent, shall implement the Project.The Project will be located at the existing plant of CCP in Balintawak, Quezon City. The Projectwill require a total investment cost of US$ 551.7 thousand and an annual operation andmaintenance cost (O&M) of US$ 21.2 thousand. CCP will reap benefits from fuel oil costsavings, reduce air pollutant and greenhouse gas (GHG) emissions and eliminate solid wastedisposal. The Project proved to be financially and economically feasible.

The total GHG emission reduction will depend on the availability of the paper mill wastes. Theannual average GHG emission reduction from Project implementation is 9,978 MT tons CO2

equivalent.

4. BACKGROUND

4.1 The Philippines’ Paper Industry

The paper industry is highly energy intensive where energy consumption varies with respect to



Energy management of paper manufacturing plants in the country varies with some plants notbeing able to keep up with conservation and efficiency measures implemented by other plants.

Specific energy consumption varies from 8.7 to 14 GJ per ton of paper produced while specificelectricity consumption varies from 324 to 647 kWh per ton3. The percentage of energy used for steam generation range from 38.7 to 63.2 percent of the total energy consumption of the plants.The tons of steam produced per ton of paper vary from 1.22 to 2.85.

The principal solid wastes of concern in paper mills are the wastewater treatment sludge (50 to150 kg per tons of air dried pulp) and solid materials including waste paper, barks, plastics,metals and others depending on the composition of raw materials delivered to the plants.Wastewater treatment sludge is generally recycled. The final wastes are disposed of in

municipal landfills nearest the plant site.

4.2 Opportunities, Constraints and Issues Related to the Project Sector

The significant increases in fuel oil shall raise the energy costs of paper mills. The price of residual fuel oil increased by 76.2% from January 2003 to November 2005, and by 53 % fromJanuary 2005 to November 2005 (Figure 2). The steep increase in fuel oil cost greatly affectedthe cost of operation of most paper mills. Industries have to find other means to reduce their fuel oil consumption to remain in operation and competitive in the international market.

Figure 2Residual Fuel Oil Prices (Jan 2003 – Nov 2005)

0

5

10

15

20

25

P e s o s

p e r l i t e r



The disposal of paper mill wastes has been an environmental challenge to the paper industry.Paper mills would like to avoid environmental liabilities involving foul odor and ground water

contamination at and around their plant and the disposal sites. Also, off-site commercialdumping is becoming more expensive with increasing hauling cost.

To solve these problems, paper mills utilize the wastes as alternative fuel source to reduce themills’ reliance on costly fossil fuels for steam production and power generation. Most commonhere in the Philippines is the utilization of waste oil by mixing it with residual fuel oil before firing.

Fluidized bed combustion systems were recognized as the most energy efficient andenvironmentally favorable alternative for conversion of combustible solid wastes, with variableheating values and moisture contents, to thermal energy. Emissions from fluidized bed

combustors are inherently lower than conventional technologies. The controlled operatingtemperature of fluidized bed system typically at a range of 1400 to 1600ºF minimizes generationof “thermal NOx”. Operation at low oxygen levels also reduces the interaction of fuel-boundnitrogen with oxygen and resultant formation of NOx. The optimum combustion processminimizes products of incomplete combustion (PICs) such as carbon monoxide (CO), dioxinsand furans. Abatement technology for reduction of SOx emissions is also typically integrated intothe fluidized bed system by adding sorbents to the bed such as lime, limestone or dolomite.These sorbents contain calcium oxide that reacts with sulfur compounds to form calcium sulfate

or gypsum.Fluidized bed conversion of waste materials into usable energy is the dominating technology inEurope to limit landfill problems4.

Paper mill wastes as alternative fuel for the mills is expected to reap economic, environmentaland social benefits. However, most paper mills in the country are faced with significant barriersto pursue adoption of modern technology as follows:

a. Lack of market services for modern technologies (e.g., fluidized bed combustor)

b. Lack of local expertise and know-howc. Lack of financing and risk coverage mechanismsd. Inability to access fundinge. High adoption or transaction costf. Disruption of production/plant operationg. Unstable economy with high inflation and unstable exchange rates

4.3 Sustainable Development Objectives Likely to be Contributed by the Project

The Project will promote cleaner production, energy self-sufficiency and environmentally andsocially responsible operation. Utilization of the plant’s waste for fuel will free the company fromits environmental liabilities from disposal to unsanitary landfills likely to cause water pollution,land degradation, odor and air pollution. Replacement of RFO using a clean technology willmitigate air pollutant emissions from fuel combustion. Also, greenhouse gas emissions fromlandfill sites and combustion of fossil fuel will be reduced.



4.4 Government Policies and Strategies

The Philippine government, in its mandate to protect the environment and public health had

enacted various laws that are applicable to the Project as follows:

Republic Act (RA) 8749 Philippine Clean Air Act of 1999 with salient provision for thereduction of greenhouse gases emissions in the country.

RA 9275 known as “Clean Water Act of 2004”, an act providing for a comprehensivewater quality management and for other purposes.

Presidential Decree (PD) 984 known as Pollution Control Decree of 1976 to prevent,abate and control pollution of water, air and land for the more effective utilization of

the resources of this country. PD 1586 known as Establishing Environmental Impact Statement System including

other Environmental Management Related Measures and for Other Purposes toattain and maintain a rational and orderly balance between socio-economic growthand environmental protection.

PD 1151 known as Philippine Environmental Policy to formulate an intensiveintegrated program of environmental protection through a requirement of environmental impact assessment and statements.

PD 1152 known as Philippine Environment Code that establishes specific

environment management policies and prescribe environment quality standards. RA No 9003 Ecological Solid Waste Management Act of 2000 ensures the protection

of public health and environment through the adoption of a systematic,comprehensive and ecological waste management program.

Department of Environment and Natural Resources Administrative Order (DAO)2000-81 – Implementing Rules and Regulations of RA 8749

The following laws were promulgated as support and incentives for the Project as they

encompass solutions to some major problems of pollution control and energy production.

PD 1068 promotes and gives fiscal support to the production of non-conventionalsources of energy

Investment Priority Plan (2005) – provides income tax holidays as well as additionaldeductions from taxable income equivalent to expenses incurred in the developmentof necessary and major infrastructure facilities. Recycling/treatment facility withmanufacturing and energy sources (geothermal, wind, solar, biomass, etc.) ismandatory priority areas.

4.5 Extent to which Applicable Policies are Enforced

The enforcement of environmental rules and regulations, especially in the Metro Manila area,has been firmly implemented by DENR. DENR in collaboration/partnership with other government agencies, the private sector, non-government organizations (NGOs) and/or funding



The Department of Energy (DOE) has been very aggressive in the promotion of energyefficiency to industries. DOE have award programs for best performing industries on energy

efficiency and conservation. New and renewable energy are better promoted for power supplyin rural areas and remote communities. Use of waste to supply energy for manufacturing ismore pursued by the industries (e.g., cement) than DOE. The use of fluidized bed combustionas clean technology is one of the promotional activities of the Energy Utilization andManagement Bureau (EUMB) of DOE but is currently of low priority. There is one internallycirculating fluidized bed boiler (10 ton capacity) in the premises of National Power Corporation’s(NPC) Batangas Coal Fired Thermal Power Plant in Calaca, Batangas installed in 1994 but isonly being used for demonstration purposes. The unit was a grant of the Japan government tothe Philippines under DOE. The project aims to promote clean coal burning technology in the

country that can burn high sulfur and low grade coal at high efficiency and controlled emissionof sulfur dioxide (SO2) and nitrogen oxides (NOx).

Development banks in the country like Land Bank of the Philippines (LBP) and the DevelopmentBank of the Philippines (DBP) have been very supportive with the government programs byproviding the private sector with attractive loan packages to adopt the Government program onenvironmental protection, solid waste management and implementation of energy efficiency andnew and renewable energy projects

4.6 Overlap of Government and ADB Objectives

The Project supports and promotes the key objectives of the Government and AsianDevelopment Bank on energy independence, improving investment climate and private sector participation and protecting the environment. The 2005-2007 country strategy program (CSP)of ADB aligns with the priorities of the Government as presented in the 2004-2010 Medium-termPhilippine Development Plan (MTPDP) and its commitment to the Millennium DevelopmentGoals (MDGs).

On environmental protection, the MTPDP aims for a sustainable and more productive utilizationof natural resources to promote investments and entrepreneurship. It recognizes thesignificance of Philippines’ ratification of the Kyoto Protocol and explicitly stated theimplementation of at least 10 clean development mechanism (CDM) projects and shift fromtechnology generation to technology transfer as one of its environmental managementstrategies. Another vital thrust is the creation of a healthier environment for the populationthrough: (i) improved air quality in major urban centers and bring air quality within acceptable

standard in Metro Manila; (ii) improved solid waste management especially in Metro Manila fullyimplementing the Ecological Solid Waste Management Act (RA9003); and (iii) support wasterecycling and recovery.

On energy independence, the Government continues to strengthen its policies, institutionalcapacity and partnership with the private sector in pursuing maximum use of indigenousresources and of new and renewable energy To boost the development of indigenous



On improving investment climate and private sector participation, ADB operations will contributeto the rehabilitation of the investment climate through multi-dimensional support to improve

enabling conditions for the private sector. The ADB’s private sector strategy focuses under thecountry strategy program 2005 to 2007 on: (i) creating enabling conditions for business, (ii)generating business opportunities for private sector in ADB-finance public sector projects and(iii) catalyzing private investment. Central to this are government reforms and support toadequate physical infrastructure facilities and availability of finance as they allow business tooperate, access markets and finance growth. Successful fiscal consolidation will strengthen theinvestment climate, by building confidence in macroeconomic.

5. DESCRIPTION OF THE PROPOSED PROJECT

5.1 Project Rationale

The Container Corporation of the Philippines (CCP) has been looking for alternative sources of energy that can reduce its cost of operation and improve its competitiveness with other localpaper mills and foreign companies. Currently, total cost of energy amounts to US$ 518.2thousand per month, 59.6% % of which is from use of residual fuel oil for steam generation and40.4 % from use of electricity. CCP’s specific energy cost increased from US$ 62.7 per ton of paper in 2000 to US$84 per ton of paper in 2004.

The availability of technologies like fluidized bed combustor to produce energy from “hard toburn” organic wastes like paper mill waste has triggered CCP’s interest to embark ondeveloping the Project. With the Project, CCP foresees the elimination of its waste disposalproblem and cut on its energy cost.

5.2 Project Goal, Objective, Expected Results, Activities and Scope

The goal of the project is to reduce CCP’s fuel oil consumption to improve its competitiveness inthe local and global market in an environmentally and socially acceptable manner. The objectiveof the Project is to assess the feasibility of the utilizing the paper mill final waste generated byCCP as fuel source for steam generation using a fluidized bed combustor. The Project activitiesare:

a) Assess and quantify waste streams of CCP

b) Determine fuel consumption for steam generation

c) Assess the technical feasibility of retrofitting a bubbling fluidized bed combustor tothe Boiler No. 1.

d) Determine financial and economic impacts of the Project.

e) Identify environmental benefits and sustainable development objectives of theProject.



5.3 Poverty Reduction and Other MDG Impacts

The use of indigenous source of energy, especially waste, in lieu of fossil fuel addresses both

local and global environmental impacts contributing to reduced vulnerability of the poor and tosustainable development. The use of clean energy systems will reduce impact of air pollutionfrom fuel combustion and water pollution from improper handling and disposal of solid waste.Choosing the low carbon energy pathway is one of the truly sustainable development optionsover the long term.

The Project will enhance energy self-sufficiency due to lower operating cost and independencefrom imported fuels. This will result to sustained financial and economic viability of the plant andimprovement of its competitiveness in the local and international market. Energy for sustainable

development places emphasis on expanded use of renewable energy sources and systems toaddress environmental concerns and provide the means for decentralized energy options.

5.4 Technology Transfer

Modern energy technologies are available and can support win-win development optionsaddressing both global environmental protection and local development needs. The Project willintroduce the “waste to energy” concept using a clean energy system.

The Project will impact the direction of technology development, as most new investments inenergy will take place in these markets in the future. The Project will promote capacitydevelopment, build the country’s experience on new energy technology trends and showcasethe viability and industrial application of fluidized bed technology in the Philippine marketconditions.

5.5 Core Business of the Proposed Project Partners and the Business and FinancialRelationships Between them (as required and available)

CCP, the project proponent, is one of the leading manufacturers of paper and paperboard in thePhilippines. Established in 1954, it is composed of three paper mills with a total annualproduction of 80,000 metric tons (MT). It is a 100% recycle paper mill that produces packaginggrade chipboard, boxboard, test linerboard and corrugating and fluting medium (Table 1). Thetotal annual consumption of recycled fibers/waste papers is 100,000 MT, 80% of which is locallysupplied while 20% is imported. The sources of imported raw materials are from United States(US), European Union (EU), Singapore, Hong Kong and Saudi Arabia.

Table 1Paper mill Capacities at CCP

Mill No. Product Capacity

PM1 Chipboard and boxboard 45 MT per day chipboard and



The company is a very active member of Technological Association of Pulp and Paper Industryof the Philippines (TAPPIP) and was a recipient of many environmental initiatives/grants in the

industrial sector.

During the period 1999 to 2003, CCP operated its own power plant which composed of one (1)5.3 MW and one (1) 2.5 MW diesel engine generator sets, to supply electric power requirementsof their electric motor driven equipment such as the screens, presses, pumps, rollers, reelingequipment, etc and lightings. A heat recovery equipment was installed at the exhaust of theengines to preheat water to the boiler. CCP however, stopped operation of these gensets whenit was economical for them to source their power requirements from MERALCO.

5.6 The Specific Product(s) or Service(s) to be Generated by the Project

The production rate and steam demand of the CCP paper mills per month in the last two yearshad been affected by the paper product demands in the local and international market. Steamdemand in 2004 averages at 2,700 MT per MT of paper produced. The average monthly steamproduction rate is 5,000 MT per month or 60,000 MT of paper per year. CCP has four (4) boiler units to generate steam for heating and drying process (Table 2 and see Annex 1 for the steamand power flow diagram). Steam requirement for processes is being provided by two boilersoperating at the same time. Since 2004 to present, only two (2) boilers have been mainly put in

operation (Boiler No. 2 and 4) to supply steam requirements of paper mills 1 and 3. 5 Boilers No.1 and No.3 were used as an alternate for either of the two (2) earlier mentioned boilers. Theaverage yearly operations of the boilers are as follows:

Boiler No. 1 --- Two (2) months at 23 days per month or 1104 hours

Boiler No. 2 --- Nine (9) months at 23 days per month or 4968 hours

Boiler No. 3 --- Three (3) months or 1656 hours

Boiler No. 4 --- Ten (10) months or 5520 hours Boiler No. 1 is 4-5 years old but still operating satisfactorily. The average plant capacityutilization is 1.03 in 2003 and 0.79 in 2004 with mills operating at 23 continuous days per month.

Table 2Overview of Boiler Equipment

Boiler No. 1 2 3 4

Type/Model Water-tube packageDate Installed 1961 1967 1974 2000Steam Generating capacity,lb per hour

20,000 26,500 50,000 60,000

Hours of operation per boiler per year6

1104 4968 1656 5520



Steam and electric power are vital to CCP’s operation. Steam is being used in the stock

preparation stage where washing, disintegrating and cleaning of raw materials are done. Tenpercent (10%) of the plant’s steam requirement is spent on this stage. Steam is not recoveredbecause it gets in contact with the material being processed. The remaining 90 percent is sentto the paper machines (PM1, PM2, PM3 in Annex 1) where heating and drying processes takeplace. Steam condenses in the steam heater and dryer and the condensate is pumped back tothe boiler. Boiler make-up is 15 percent to compensate for steam spent in the stock preparationstage and the inevitable leaks along the pipelines. The boilers are being operated at a ratedcapacity of 125 psi and 406ºC.

The Project will retrofit a fluidized bed combustor in Boiler No. 1 to utilize the final wastes fromthe paper mills. The final wastes are which are currently sent to local landfill(s) for disposal.Boiler No. 1 can be utilized up to 5,664 hours per year using the final wastes of the paper mills.The retrofitted boiler will generate the same steam characteristics as provided by the existingBoiler No. 1. Higher capacity utilization of Boiler 1 is expected than the other three to lower fuelcost of the mills.

The project will utilize up to 9,459 MT per year of waste to replace the rated fuel requirements(Bunker C) of Boiler No. 1. Fuel savings is up to 2,360,000 liters per year resulting to an annual

cost savings of US$ 1,009 thousand.

6. DETAILED TECHNICAL, ECONOMIC, FINANCIAL AND ENVIRONMENTAL/SOCIALANALYSIS

6.1 Technical Description

Waste characteristics and generation

CCP’s raw materials are delivered by trucks in bundles of used/deformed/crumpled packagingmaterisla, cartons that also contain other materials not fit for recycling and/or transforming intothe desired products - boxboard, chipboard and other packaging grade materials. Theseundesirable materials include plastics, wire, rope, etc. which were used in bundling of the rawmaterisl and sands and stones and other materials that are usually trapped in the bundles andtruck bed. These rejects are automatically removed in the ragger/pulper during the stock

preparation stage. Sludge from the approach flow screens and waste water treatment plant arebeing recovered, more than 80 percent of which are being recycled. The remaining 20 percentare biological sludge and are lost in the process. The dry brokes from each paper machine arealso recycled. When the three paper mills are operating at full capacities, the total final rejectssent to the landfill may range from a minimum of 15.5 MT per day to a maximum of 39.7 MT per day (Figure 3). CCP operates its own wastewater treatment plant. Treated water is beingreused for boiler make up and for washing and disintegrating process



Figure 3Waste Generation at CCP

Based on the January 2003 to May 2005 operation data of CCP, the paper mills generated onlyan average of 788.3 MT per month (26.3 MT per day) of final waste. This recorded averageamount will form the basis of this study. The CCP’s final waste composition is as follows:

Plastic sheets - 80%

Abaca twines/coarse fibers - 15%

Wood cubes - 3%

Small pieces of metal wire and sand grits - 2%

The equivalent (composite) heating value of the waste is 9691 Btu per lb7.

WP INPUT, MTAD REJECTS REJECTS FOR POINT OF

FOR LANDFILL RECYCLING RECYCLING

(DRY BROKES)

Max Min

PM1 55.5 PM1 4.5 3.5

PM2 ) PM2 ) )

PM3 ) 276.7 PM3 ) 35.2 ) 16.0

TOTAL 332.2 TOTAL 39.7 19.5

PMI 3 2.5PM2 4.5 2.5 PULPER

PM3 9.5 7.0

TOTAL 17 12.0

PMI 4.0 PULPER

PM2 10.0 PULPER

PM3 21.0 PULPER

OVER-ALL T 56.70 31.50

MAX MIN

OUTPUT, MTBD MAX MIN

REJECTS - 5.0 FROM APPROACH FLOW 3.0

PM1 47.5 REJECTS - 34.7 FROM PULPER 12.5

PM2 80.0 TOTAL REJECTS = 39.7 MTAD (MAX.) 15.5

PM3 165.0

TOTAL 292.5

STOCK

PREPARATION

PULPER

APPROACH

FLOW SCREENS

MACHINE

FINISHED

PRODUCT

WWTP FOR FIBER

RECOVERY 15.0 10 pm12.5 2 A/S





the remaining three other boilers as there are still excess final wastes that still need to bedisposed to landfill.

Pollutant Emissions Control

The control technologies used are: bag house for particulate; in-bed calcinations sulfation for SO2; high energy over fire air system for CO and selective non-catalytic reduction (SNCR) for NOx. SNCR technology injects ammonia into the mid to upper furnace to react with NOx toform nitrogen and water vapor. Use of FBC, with optimal burnout in practice and refractory wallare considered as primary measures to reduce PCDD and or polychlorinated dibenzofuransPCDF emissions to acceptable levels.

The pollutant emissions from the newly retrofitted boiler will be controlled to acceptableemission limits by DENR (Table 3). The complete combustion process in fluidized bedcombustors is key to low pollutant emissions. Combustion at the proper temperature, excessoxygen and residence time helps to limit carbon monoxide (CO) emissions, but if thetemperature gets too high and there is too much oxygen, NOx production is enhanced. Time,temperature, and turbulence are the three T’s of combustion that will help achieve the balanceto optimum conditions. The higher air flow rate of the system suspends the bed solids, creating

a high turbulence zone (800 to 1,100ºC) into which solid or liquid wastes is poured. Rapidmovement of the bed particles and waste materials promotes efficient combustion at lower temperature. Residence times are generally 2 seconds for gases and 30 minutes for solids.

The proposed technology will have very low CO emissions. The turbulent action of the fluidizedbed system provides the ultimate mixing chamber for carbon to combine with two oxygen atomsto form CO2. CO emissions are also an indicator of the potential production of polychlorinateddibenzo-p-dioxins and polychlorinated dibenzofurans (PCDD and PCDF) or commonly referredto as dioxin and furans. Dioxins, furans and CO are considered to be products of incomplete

combustion (PICs). The production of these compounds in the FBC are influenced andcontrolled by:

• Steady and even temperature distribution across the combustion chamber • Consistent fuel feed• Sufficient turbulence• Sufficient residence time.

PICs particulary dioxins and furans can be created in the combustion process due to either poor furnace design, where combustion gases can follow “cool” pathways avoiding the turbulent hotzone, or as a result of transient upset conditions, often caused by fluctuations in the fuel heatingvalue and or fuel feed rate. Such transient conditions can cause rapid devolatilization of wastemateris, momentarily depleting or lowing local oxygen levels in the furnace and causing heavytransient loadings of unburned gaseous and particulate matter. The widely accepted refractory

f f C f



(SNCR) technology shall be used. SNCR works by adding ammonia (in the form of anhydrousammonia or aqueous ammonia) into the vapor space of the combustion chamber within specific

temperature range. The ammonia (NH3) reacts with NOx to form nitrogen and water (H2O)

Sulfur oxides (SOx) emissions will be reduced by in-bed calcinations-sulfation. Sorbents suchas lime or limestone containing calcium oxide (CaO) are added to the bed to react with sulfur compounds to form calcium sulfites, which were further oxidized to form gypsum (CaSO4).

Table 3DENR Emission Limits for Stationary Sources*

Pollutants Acceptable Emission LimitsSox 700 mg/Ncm** as SO2

200 mg/Ncm as SO3NOx 1,500 mg/Ncm as NO2Particulate 150 mg/NcmDioxin 0.1 nanogram/Ncm***

* Source: DENR DAO 2000-81**mg/Ncm – milligram per normal cubic meter

*** limits for non-burn technologies only

The works mentioned above can be undertaken by local contractor. Since the in-houseengineers of CCP has no expertise in the modification of boiler, services of local ESCO shall beengaged by CCP to prepare the general/conceptual design of the project to ensure that their steam requirement would be met, and to protect their interest during the actual implementationof the project. Services of a reputable boiler manufacturer, usually a foreign company, shall becommissioned to conduct modification of boilers. The boiler manufacturer shall also undertakethe overall engineering and modification works, i.e., the preparation of the detailed design and

equipment layout of the whole project and to conduct supervision/coordination with localcontractor and ESCO in the actual work implementation to ensure success of the project.

The final specification of the project is shown in Table 4 below.

Table 4Fuel and Steam Conditions with the Project

Description

Fuel Input 9,459 MT per year (final paper mill waste of CCP)

Proximate analysisAbaca twines/coarse fibers 15%Plastic sheets 80%Small pieces of metal wire and sand grits 2%



Pollution Control measuresCO High energy overfire air system

NOx FBC operating temperature range belowformation of “thermal” and “fuel” NOxformation and SNCR

Dioxins and furans Optimal burnt-out practice and refractory wallSOx In-bed calcinations-sulfation using sorbents

6.2 Project Cost

The total cost of the Project is US$ 551,693 (Php28.69 million), inclusive of import duties andtaxes, of which the local cost is about US$ 354,174 (Php 18.42 million). The foreign exchangecost is estimated at US$ 197,519 (Php 10.27 million) or 30 % of the total cost as the projectneeds the services of foreign consultants to prepare the engineering design and equipmentlayout, which the payment would be in US$. Some equipment, although imported would besupplied by the local contractor, thus there’s no need for foreign currency payment. The costestimates are based on 2005 prices and include provisions of physical contingencies.

Table 5Cost Estimate, US$8

Component Local Forex

Pre-ConstructionDetailed Engineering Design 10,452 43,87Permits, Bonds and Licenses 9,615

Mobilization 5,769ConstructionEngineering Works 13,915 61,69Equipment Supply 193,269Modification/Installation Works 121,153Pollution Control 91,94

TOTAL (Capital Cost) 354,174 197,51O&M (annual) 15,384 5,81

6.3 Environmental Impacts

The Project will promote recycling of paper waste and use of cleaner combustion technologies.The substitution of oil by the paper mill wastes will reduce local pollution as well as globalenvironmental impacts. The Project to be implemented in Metro Manila will be beneficial with



Table 6Air Pollutant Emission Reductions Due to Project

Pollutant Environmental Impact9

Paper mill waste Reduction of up to 788.27 MT per month(9,459 MT per year) of waste to local landfill.

Sulfur dioxide (SO2) Emission Reduction at an average of 150 MT per year

Nitrogen oxides (NOx) Emission Reduction at an average of 20 MT per year Particulate matter (PM) emission Reduction at an average of 2.8 MT per year

Greenhouse gas emission (CO2equivalent) Reduction at an average of 9,978 MT per year

7 PROJECT IMPLEMENTATION PLAN

CCP will establish a project office to manage the day-to-day implementation of the Project. Afull-time project manager, who will directly report to the Vice President for Operations of CCP,will head the project office. The project manager will be fully supported by one project engineer.

The pollution control officer (PCO) will monitor and support the project office in compliance withthe Environmental Management Plan and the Environmental Monitoring Plan. The project officewill be assisted by international consultants to prepare the detailed engineering design, andpreparation of specifications, tender documents, tender evaluation, and constructionsupervision. The Project schedule is as follows:

Activity Date (2007)

Selection of ESCO January 2 to 31Preparation of TOR for Boiler Manufacturer February 1 to March 15Selection of Boiler Manufacturer March 16 to April 23Initial site visit, Boiler Manufacturer April 24 to April 30Preparation of design at Boiler Manufacturer’s H.O. May 1 to June 15Preparation of TOR for local contractor June 16 to July 15Selection of local contractor July 16 to August 15Modification/Installation work August 16 to November 30Procurement of Equipment September 1 to Nov. 30

Test/Start-up/Commissioning December 1 to 5

8 CONTRIBUTION TO SUSTAINABLE DEVELOPMENT

The use of paper mill waste as fuel and clean technology for steam generation will result to local



indigenous resources will reduce CCP’s dependence to imported fuels, which is in line with thesustainable energy development objective of the country.

9 GHG EMISSION REDUCTION MONITORING AND VERIFICATION

9.1 Current Production and Delivery Patterns

Without the Project, CCP will continue to use residual fuel oil (RFO) to fire its existing boilers for steam generation. Boilers No. 1 and 2 will most likely retire within the next five years. However,the remaining two boilers (Boiler 3 and Boiler 4) will be utilized to their full capacity tocompensate in cases where steam demand is high. CCP will continue to send its paper millwaste to the local landfill. There is no plan for capacity expansion at CCP.

9.2 Type and Category and Technology of the Project Activity

The Project will qualify to use the simplified modalities and procedures for small scale CDMproject activities as Type III project activities: other project activities that both reduceanthropogenic emissions by sources and directly emit less than 15 kilotons of carbon dioxideequivalent annually (decision 17/CP7, paragraph 6 (c) (iii). The project activity categoryaccording to the UNFCCC’s published Appendix B- Indicative Simplified Baseline and

Monitoring Methodologies for Selected Small-Scale CDM Project Activities will qualify as TypeIII.B that is, Switching Fossil Fuels.

9.3 Project Boundary and Monitoring Domain

The project boundary is the theoretical margin around the proposed project within whichanthropogenic emissions by sources of GHG under the control of the project participant shall beassessed. The project boundary is the physical, geographical site where fuel combustionaffected by the fuel-switching measures occurs. The paper mill waste will be utilized as fuel to

steam boilers to replace residual fuel oil.The Project boundary for the estimation of baseline and project emissions can be categorizedas direct or indirect emissions. Direct emissions include all anthropogenic emissions fromsources of GHG under the control of the project participants, which are significant andreasonably attributable to the project activity. Indirect GHG emissions are emissions that are aconsequence of the activities of the participant, but which occur at sources owned or controlledby another entity. The project boundary for this project includes:

Direct on-site emissionso CO2 emissions from use of residual fuel oil to generate steam - included in

baselineo CO2 emissions from use of paper mill wastes to generate steam - included in

Project emissions but equivalent to zero

Direct off site emissions



9.4 GHG Emissions Methodologies

The baseline and project activity emissions shall be determined from the amounts of fuels usedby four boilers and their respective heating values and emission coefficients. The net emissionreduction is equivalent to the RFO heat displaced by the paper mill waste considering efficiencyof systems used.

A. Baseline Emission

Baseline emission = CO2 boilbase + CO2lfbase Eq. 1

CO2 boilbase = Heatbase * EFbase Eq. 2

Heatbase = FObase x HVRFO x EFYboiler Eq. 3

Where:CO2 boilbase = carbon dioxide emissions from use of RFO in the boiler Heatbase = heat generated from baseline activity

EFbase = tons CO2 per unit heat generated equal to emission factor of RFO (EFRFO)FObase = baseline amount of RFO firedHVRFO = heating value of RFOEFYboiler = boiler efficiency (0.85)

CO2 lfbase = Qbiobase * CH4_IPCCdecay * GWP_CH4 Eq. 4

Where:

CO2lfbase = baseline methane emission from paper mill waste decay (tons of CO2equivalent)

Qbiobase = quantity of paper mill wastes disposed to landfill under the baselineGWP_CH4 = GWP of CH4CH4_IPCCdecay = IPCC CH4 emission factor for decaying biomass under baselineMCF = methane correction factor (fraction, default is 0.410)DOC = degradable organic carbon (Fraction, see equation 6 or default is 0.3)DOCF = fraction DOC dissimilated to landfill gas (default is 0.77)

F = fraction of CH4 in landfill gas (default is 0.5)

CH4_IPCCdecay = (MCF * DOC * DOCF * F * 16/12) Eq. 5

For DOC, the following equation may be used instead of the default:

DOC 0 4(A) 0 17(B) 0 15(C) 0 30 (D) E 6



C = percent waste that is food wasteD = percent waste that is wood or straw

B. Project activity emission

Project Emission = CO2boilproj + CO2lfproj Eq. 7

CO2boilproj = Heatproject x EFproject Eq. 8

Heatproject = FOproject x HVRFO x EFYboiler + Fuelwaste X HVwaste X EFYfbc Eq. 9

Where:CO2 boilproj = carbon dioxide emissions from use of RFO in the boiler Heatproject = heat generated by project activityEFproject = tons CO2 per unit heat generatedFOproject = amount of RFO fired for project activityFuelwaste = amount of paper mill waste fired for project activityHVwaste = heating value of paper mill wasteEFYfbc = efficiency of circulating fluidized bed boiler (1)

CO2 lfproj = Qbioproj * CH4_IPCCdecay * GWP_CH4 Eq. 10

WhereCO2lfproj = project methane emission from paper mill waste decay (tons of CO2

equivalent)Qbioproj = quantity of paper mill wastes disposed to landfill under the projectGWP_CH4 = GWP of CH4CH4_IPCCdecay = IPCC CH4 emission factor for decaying biomass under baseline

(Eq.5 )

C. Emission Reduction

Emission Reduction = Project Emission – Baseline Emission Eq. 11

9.5 Calculation of Net Emission Reduction

Using equation 11 above the net CO2 emission reduction due to project activity is 14,247 tonsCO2 per year. (Table 7).

Table 7Net CO2 Emission Reduction from

Paper Mill Waste Utilization for Steam Generation



Baseline Emissions: tons of CO2 per year

Carbon dioxide equivalent to methane emissions from paper millwaste decay at the landfill, CO2lfproj 0

Carbon dioxide from combustion of fuel (i.e., waste) in Boiler No. 1,CO2boilproj

0

Net Emission Reduction, tons CO2 equivalent per year 9,978Total Net Emission Reduction for 15 years, tons CO2equivalent

149,671

The Project opts for a renewable crediting period with the length of the first crediting period

equal to 7 years. The total CO2 emission reduction for the first crediting period is 69,846 tonsCO2 equivalent.

9.6 GHG Emission Reduction Monitoring

Monitoring methodology shall follow the suggested methodologies in Appendix B of thesimplified modalities and procedures for small-scale CDM project activities. The amount of fuelsused and heat requirement of the CCP will be monitored. Also, amount of waste generated and

its average heating value shall be determined. Boiler efficiencies shall also be measured on aregular basis. The monitoring plan is presented in Table 8.

The total cost of monitoring is estimated at US$ 4,000 per year.



22

Table 8Monitoring Scheme

IDNumber

Data Type DataVariable

Data Unit Measure(M)

calculated ©r

estimated(E)

Recordingfrequency

Proportionof data to

bemonitored

How will thedata be

archived?(electronic/pap

er)

For howlong is

archiveddata to be

kept?

Comment

1 Fuel Oil FO liters per day

M Daily 100 % Electronic andpaper

Creditingperiod plustwo years

Fuel storage tanks will beequipped with level meters todetermine amount of fuelextracted daily.

2 Paper millwaste

Fuelwaste Kg per day M Daily 100% Electronic andpaper


Paper mill wastes used, asfuel will be weighed beforecharging/firing.

3 Heating valueof fuel oil

HVRFO Kcal per cubicmeter or per kg

M Quarterly One sampleper quarter

Electronic andpaper


Heating value shall bemeasured and reported bythe fuel supplier.

4 Heating valueof paper millwaste

HVwaste Kcal per kg

M Weekly One sampleper week

Electronic andpaper


Waste generation for theweek will be homogeneouslymixed and sampled todetermine average heatingvalue.

5 Boiler Efficiencies

EFY Percent M Monthly Three trialsper month

Electronic andpaper

Creditingperiod plus

two years

Use of efficiency meters



10 FINANCIAL ANALYSIS OF THE PROJECT

10.1 Estimation of Overall Cost Estimates

The data and assumptions used to analyze the financial impact of the proposed Project areshown in Table 9. The Project requires a total investment of US$551,693. Annual operationand maintenance cost is US$21,021. The equipment is expected to have a project life of 15years. The impacts of the volatile fuel prices to the Project were determined using fuelescalation rates of 5%, 10% and 20%.

Table 9Data Used to Analyze Financial Impact of the Proposed Project

ComponentInvestment cost, US$ 551,693

Project development 69,707Construction 481,985

Annual O&M cost, US$ 21,201Project life, years 15Technology depreciation period, years 15Inflation rate, % 5

Discount rates, % 10, 15, & 20Cost of Residual Fuel Oil (Bunker C) @ year 0, US$ /GJ 10.04Carbon intensity, tons CO2/GJ000 77.37Annual monitoring cost, US$000/year 4Carbon credit prices, US$ per ton CO2equivalent 5, 10 & 15

10.2 Project Financial Analyses

The proposed Project will have a positive net present value (NPV) at discount rates of 5%, 10%and 15% (Figure 5). As expected, NPVs increase with increase in carbon price. Financialinternal rate of return (FIRR) is high at 179 percent without carbon credit and up to 205 percentat US$ 15 per ton CO2. (Figure 6). The carbon credit revenue at different discount rates isshown in Table 10. Big savings from fuel costs has largely contributed the high FIRR. The fuelsavings is 10,000 liters per day or 100 TJ per year. The equivalent energy cost saving amountsto US$ 1.01 million. The payback period of the Project is 8 months.



Figure 5Net Present Value of the Project

Figure 6Financial Internal Rate of Return of the Project

10%

15%

20%

10%

15%

20%

10%

15%

20%

10%

15%

20%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

US$ (000)

0 5 10 15US$ per ton CO2

175

180

185

190

195

200

205

Percent



Table 10Carbon Credit Revenue of the Project, US$(000)

Carbon CreditRevenueUS$(000)

Carbon CreditPrice US$5/ton



Discount Rate: 10% 379 759 1,138Discount Rate: 15% 292 583 875

Discount Rate: 20% 233 467 700

A sensitivity analysis was conducted to examine whether the conclusion regarding the financialattractiveness of the Project are robust (Table 11). As shown, the increase or decrease of investment, fuel price and operation and maintenance cost do not affect project viability. Thebig savings from fuel cost renders this Project as highly viable.

Table 11Sensitivity Analysis

Sensitivity Analysis FIRR, %

+15% Investment 156-15% Investment 211+15% RFO Price 214-15% RFO Price 157+10% O&M 178- 10% O&M 179

10.3 Financing Plan

CCP is seeking grant funds to prepare the detailed project design and the investmentrequirements of the Project. Renewable energy service providers/companies to finance, build,operate and transfer the fluidized bed boiler to CCP is the most preferred option. CCP alsolikes to seek funding/co-financing by the ADB, GEF and CDM and/or other sources.

11 ECONOMIC ANALYSIS OF THE PROJECT

The Project’s economic internal rate of return (EIRR) with and without the benefits of CO2credits is shown in Table 12. Environmental impacts due to disposal paper mill wastes to thenearest landfill and pollutant emissions associated with fuel oil combustion are avoided. DENR



Table 12Summary of Economic Analysis of the Project

Parameters No CO2Credit

US$5 per ton CO2e

US$10 per ton CO2e

US$15 per ton CO2e

EIRR, % 286 294 303 312

12 STAKEHOLDERS COMMENTS

(Stakeholder’s comments are still to be gathered – pending country workshop and review by theDepartment of Energy and CCP)

13 KEY FACTORS IMPACTING PROJECT VIABILITY AND BASELINE EMISSIONS

The following factors can affect the project and baseline emissions:

i. Quality of Raw Material Input. CCP buys used paper from different sources (localand/or imported) in bales and come to the Plant in different quality. The amount of wastages from plant operation is directly affected by the quality of used paper

delivered to the plant.

ii. Plant Solid Waste Management Practices. The heat available for steam generation,thus the Project’s GHG emission reduction, is dependent on the amount of paper millwaste available for firing. Poor or improved solid waste management practices in theplant will directly influence the amount the paper mill waste generation.

iii. Paper Product Demand. The amount of steam generated is proportional to theamount of paper produced by CCP. Low production will reduce fuel consumptionand thus, project emissions.

14 PROJECT UNCERTAINTIES

While efforts will be made to ensure the effective design and implementation of project activities,the risks presented below have to be addressed to ensure success of the Project and the

achievement of GHG mitigation goal. Overall, there is a medium risk on implementing theProject.

Unavailability of Funding

CCP is seeking for full funding of the Project. The plan is to seek for energy service companies



Evolving Waste Exchange Programs

The Government, industry associations and NGOs have established several aggressiveprograms to intensify waste exchange between industries. Cement plants are talking to mostpaper industry association to collect and buy paper mill wastes for use as kiln fuel. Theelimination of environmental cost associated with disposal is one of the major cost cutting goalsof most paper companies in the Philippines thus, can offer CCP a short-cut solution to wastemanagement. This is a medium project risk.

Poor Financial Performance by CCP

The low demand of paper products has in the past year caused CCP to lower its productionrate. Poor financial performance can hinder CCP to invest money and if given the chancewould like to implement projects that would increase production rates rather than the proposedProject. Also, poor financial performance can cause disinterest of prospective Project partners,like ESCOs. This is a medium project risk.

15 CONCLUSIONS AND RECOMMENDATIONS

The use of paper mill wastes for steam generation using a fluidized bed combustor will provideCCP an alternative source of energy and significant cost savings in its operation. Also, it willeliminate the Plant’s waste disposal problems and reduce environmental impacts associatedwith landfills in Metro Manila. The Project is financially and economically viable to CCP withnumerous environmental benefits. FIRR and EIRR are more than 200 percent.

The amount and composition of paper mill waste generated will dictate the heating value of thefuel thus, the volume of residual fuel oil that can be replaced. Project implementation should

incorporate good waste management practices to ensure that the heat needed by the fluidizedbed boiler could be provided. Additional paper mill wastes from other sources maybe necessaryand have to be considered by CCP to increase steam generating capacity of Boiler No. 1 andensure enough supply at all times.

CCP however, needs funding for the design and construction of the Project. The company isseeking for interested energy service companies who can offer a build-operate-transfer (BOT)scheme.





29

Annex 1Steam and Power Flow Diagram



Annex 2Scope of Work to Retrofit the Bubbling Fluidized Bed Combustion System to

CCP Boiler No. 1

I. Works needed to effect Retrofit of Bubbling Fluidized Bed Boiler to CCP Boiler No. 1

A.) Modification of wall or ceiling tubes to create opening for the supply of solid waste fueland installation of over fire air to BFB.

Materials:

15 pcs., 2”OD, SA178A tubes @ P12,000.00 each Fabrication/bending of the tubes Steel plate for repair of casing, 2pcs., 1/8” thk. Insulation materials Welding electrodes, oxy-acetylene, grinding disk, etc

B.) Modification of furnace floor tubes to create space for installation of vertical pipes withcap and drain structure for noncombustible materials in the BFP.

Materials: 10 pcs. 2” OD, SA178A tubes @P12,00.00 each Fabrication/bending of the tubes Steel plate for repair of furnace casing, 2pcs., 1/8” thk. Insulation materials Welding electrode, oxy-acetylene, grinding disk, etc. Transportation expenses for tube bending (A. & B)

C.) Installation of vertical pipes/cap on the bed.From the drawing that was provided by CCP, the area that would be covered by thevertical pipes/cap is approximately 5ft. x 12 ft. (60” x 144”). Total vertical pipes thatwould be needed are 592 following the 4”x4” pattern. For average length of the verticalpipe at 3.5ft., the total length would 2072 ft. This would translate to 103.6 pcs. of pipe,say 104 pcs.

Materials: Vertical pipe,1-1/2”dia. sch 40, steel @ P3,250.00 each Cap @ P50.00 each, cost for 592 pcs. Distribution pipe, steel, 20” dia. 1/8” thk. Steel plate for repair of casing, 6 pcs.1/8” thk. Insulation materials Welding electrodes



Insulation materials Structural support Welding electrodes

E.) Solid fuel feed system

Chute& silo steel plate, 8 pcs., 1/8” thk. P3,300.00 ea. Structural and support for chute, silo and conveyor Welding electrode say

F.) Bed drain system

Hopper, use 8 pcs. 1/8” thick plate Drain Pipes, 6” dia.x20’ pipe, 2 pc. Expansion joint & sand reclaim bin 1/8” thk. Manhole Slide gate valves Structural steel support Welding electrodes

G.) Bag house

Bag Filter Steel plate, 8 pcs., 1/8” thk. @ P3,300.00 each Structural and support. Welding electrode Insulation materials

H.) Cyclone Dust Separator

Structural and support Welding electrodes Insulation materials Welding electrodes

I.) Modification of support for boiler at higher elevation and the boiler room

I beam, 4 pcs. 10”x6”x1/4x20’ @ P9,800.00 ea. I beam, 4 pcs., 6”x4”x1/4”x20’ @ P7,000.00 ea. Angular steel, 4”x4”x1/4"x20’ @ P2,900.00 Angular, for siding support Gratings Pipe GI 4 pcs 2” dia x 20’ @ P2000 00



K.) Paints/Thinners

12 pails of paint @ P650.00/pail Primer Thinners

L.) Modification of existing pipe lines connected to the boiler

Main steam line, 6” dia. Carbon steel Auxiliary steam, level alarm lines, 1-1/4 steel pipe Feed water blow-off line, 1-1/2 steel pipe

Blow down, 3/4" steel pipe Chemical feed line, 1/2" steel pipe Insulation materials Welding electrodes, grinding disc, oxy-acetylene Pipe support

M.) Electrical paraphernalia

Cables, breakers, switches, and relays

N.) Sand recovery tank

Steel plate, 1/4” thk., 3 pcs. Structural/support

O.) Vertical extension of powerhouse

Structural steel Plain & Corrugated GI sheets Welding electrodes Gratings Railing, GI pipes, 2” dia., 4 pcs. @ P1,000.00 ea.

P.)Smoke stack and ducting

Steel plate, 1/8´thk.10 pcs. Bending/rolling Structural members Insulation materials Welding electrodes





34

Annex 3Economic Analysis of Project

Cash Flow, US$ Carbon Credit, US$ Net Benefits, US$

Year Investment cost

O&MCost

MonitoringCDM Total Cost

AvoidedCost-WasteDisposal,US$

Fuel CostSavings,US$

Env.Benefit,US$

US$ 5per tonCO2e

US$10per tonCO2e

US$ 15per tonCO2e

WithoutCarbonCredits

US$ 5 per ton CO2e

US$10 per ton CO2e

US$ 15per tonCO2e

0 551,693 551,693 -551,693 -551,693 -551,693 -551,693

1 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

2 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

3 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

4 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

5 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

6 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

7 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

8 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

9 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

10 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

11 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,48012 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

13 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

14 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

15 21,201 4,000 25,201 57,241 1,009,000 530,769 49,890 99,890 149,671 1,575,809 1,621,699 1,671,699 1,721,480

EIRR 286% 294% 303% 312%

PHI PFS Paper Mill Wastes

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