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By Dr. Gan Lian Tiong, Musim Mas Group Head of SustainabilityBy Dr. Gan Lian Tiong, Musim Mas Group Head of Sustainability
A lifecycle analysis showed that palm oil mill effluent (POME)
contributes 55% of the GHG emissions in the palm oil supply chain
Source: Int J Life Cycle Asess (2011) 16:669-681
Greenhouse Gas (CO2 ) Emissions
CH4
This is because methane gas emissions from palm oil mill effluent ponds
has high global warming potential (CH4 emissions = 25x CO2)
Greenhouse Gas (CO2 ) Emissions
Therefore we zoom in to find ways to reduce the GHG emissions.
A methane capture project was initiated at Musim Mas’ Pankalang Lesung POM.
Main Objectives of Pangkalan Lesung Methane Capture Project
Methane Capture in Musim Mas
• To reduce GHG emissions in Musim Mas’ palm oil production.
• To obtain Gold Standard in the capture of methane.
• To generate electricity from the biogas captured.
• To register with the UNFCCC for the qualification of CER.
Project Location: Pangkalan Lesung POM
Project Milestones
Methane Capture in Musim Mas
Schematic Diagram of Project Boundary
Submission of Project Design Document (PDD) 11th May, 2010
Methane Capture in Musim Mas
Project Milestones
Methane Capture in Musim Mas
Launching of the Biogas Plant by the Musim Mas Group President Director in February 2011
Methane Capture in Musim Mas
Mill capacity (TPH) 45
FFB processed (t/year) 270,000
Electricity generation potential (MW) 1.5
Potential Electricity Generation from Pangkalan Lesung Methane Capture Project
Project Design Document (PDD) 11th May, 2010
Methane Capture in Musim Mas
Implementation Costs of
Pangkalan Lesung Methane Capture Project
Investment cost : ca 3 million USD
Operation cost : ca 350,000 USD per year
Project Design Document (PDD) 11th May, 2010
Methane Capture in Musim Mas
Project Design Document (PDD) 11th May, 2010
CO2 emission reductions from
Pangkalan Lesung Methane Capture Project
52,397 tones CO2 per year
Methane Capture in Musim Mas
GHG Calculation Methodology – ISCC Document 205
Methane Capture in Musim Mas
• Without CER, negative IRR
• CER price of 6.6 EUR to meet WACC
• PDD CER EUR 9.5 price gave 24.3% IRR
• Current CER price of EUR 4.8 not economical
Return on Equity
Pangkalan Lesung’s Methane Capture Project
Methane Capture in Musim Mas
Discussion
• Environmental benefits:
Palm oil with methane capture has GHG emission value of 7.25 kg CO2eq/Mj which is equivalent to emission savings of 92% as compared with fossil fuel.
• Operational considerations: High technology threshold: system not easy to operate (this is
evident from the fact that many projects even after achieving UNFCCC registration are not running). Out of the 14 companies registered on with UNFCCC only 2 has been awarded the CER.
High operation cost: US $ 350,000 per year.
• Economic consideration: High investment cost (about 30% of the cost of building a new
palm oil mill).
Return not viable due to low current CER price.
• The methane capture system can achieve substantial GHG emissions reduction.
Conclusions
• Due to the high investment/operation cost and low return, the project may not be economically viable at the moment.
• However, we recommend that large plantations with sufficient financial strength should still consider implementing the methane capture system for the long term benefits to the environment.
• Musim Mas will continue to implement methane captures in its other palm oil mills, in cognizance with other field practices, to reduce the carbon footprint in the production of palm oil.
• This is part of the Group’s corporate strategy in the production of sustainable palm oil.