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CLEAN DEVELOPMENT MECHANISM SIMPLIFIED PROJECT DESIGN DOCUMENT FOR SMALL-SCALE PROJECT ACTIVITIES (SSC-CDM-PDD) Version 02

CONTENTS A. General description of the small-scale project activity

B. Baseline methodology C. D. E. F. G. Duration of the project activity / Crediting period Monitoring methodology and plan Calculation of GHG emission reductions by sources Environmental impacts Stakeholders comments

Annexes Annex 1: Annex 2: Annex 3: Annex 4: Annex 5: Information on participants in the project activity Information regarding public funding Baseline data Assessment of biomass availability Letter confirming that environmental impact assessment is not required

Annex 6: Plot Plan

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SECTION A.

General description of the small-scale project activity

A.1 Title of the small-scale project activity:

LDEO Biomass Steam and Power Plant in Malaysia 18 April 2006

A.2.Description of the small-scale project activity:

This project aims to use Empty Fruit Bunches (EFB), which are a waste product of the palm oil milling process, as the fuel for a modern, high efficient 35 tonnes per hour capacity, 29 Barg biomass -fired cogeneration system to supply steam and electricity to the Lahad Datu Edible Oils (LDEO) Sdn. Bhd. palm oil refinery in Sabah, Malaysia. The project will be implemented in two stages. At the first stage, 35 t/h of steam will be generated for palm oil refinery process consumption. The second stage of the project will be optimizing the steam energy by installing a steam turbine generator to supply up to 5 MW of electricity for the refinerys own use. The project activity will be able to reduce emissions in three ways. First is by displacing fuel oil, which is used to generate 35 t/h of steam. Second is by displacing electricity from the local grid and diesel fired plant generators. Third is by reducing methane emissions from the rotting EFB waste piles. The energy plant will be sourcing the biomass waste from neighbouring palm oil mills via fuel purchase agreements. This biomass is abundantly available in the region and was earlier open air burned, but since the ban on open air burning in Malaysia entered into force, the biomass must be disposed of in the plantations. However, many mills face a problem in disposing the waste as they do not possess any plantation, but only operate a mill. Plantation owners supplying the fresh palm oil fruit bunches (FFB) are typically not interested in collecting the waste at the mill and disposing it in their plantation. Thus the mills are left with only the option to dispose the EFB in piles to naturally decompose at their mill site, or into natural valleys where it decays, emitting biogas containing methane, a potent greenhouse gas and potential fire hazard. The biogas also emits a putrid odor from the decaying piles that poses an increasing problem for employees and nearby residents of the mills. The palm oil refinery is currently operating a fuel oil fired boiler plant to supply steam for the refining process, burns diesel in engine electricity generators and purchases power from the electricity grid. The Project is to replace the amount of steam and electricity produced from fuel oil in the refinery, and also to replace grid generated power and thus reduce greenhouse gas emissions from the refinery and the local electricity grid. The project will contribute to the use of sustainable renewable energy sources in a highly efficient manner and is in line with Malaysias development policy of renewable energy as the fifth fuel.

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This will lead to greater self-sufficiency of fuel for the energy sector. Currently, fuel oil is subsidized and the Project will directly lead to reduction of subsidized fuel oil for the refinery and lead to reduction of gas and oil subsidies in the Malaysian power sector, as it will produce its own steam and power, displacing conventional power from the grid. The biomass energy system is developed and manufactured by ENCO Systems, a Malaysian company, which manufactures high efficiency boilers and biomass utilization systems, based on a design developed by ENCOs partner - B&W Volund in Denmark. The Project leads to technology and knowledge transfer from Denmark to Malaysia to facilitate local manufacturing of highly efficient biomass boilers. Being able to provide such technology locally will ensure local employment and reduce the foreign expenditures and currency risk for developing these renewable energy sources in Malaysia. The Project is in line with the Malaysian Governments decision to intensify the development of Renewable Energy as the fifth fuel resource under the countrys Fuel Diversification Policy, as stipulated in the objectives of the Third Outline Perspective Plan for 2001-2010 (OPP3) and the Eighth Malaysia Plan (2001-2005). Utilizing Biomass energy as the fifth fuel resource in this project is reducing the use of fossil fuel (fuel oil) and increases the use of local renewable resources such as biomass waste. The project will include pollution control systems for the flue gas and proper disposal of ash and wastewater and will comply with the local environmental regulations. An Environmental Approval was issued for the Project on June 23, 2005. The new improved boiler design made by ENCO Systems in partnership with B&W Volund in Denmark will be more efficient than conventional biomass boilers and less labor intensive per produced unit, but the project will require more skilled staff than the existing plant needs as the capacity is higher due to the electricity generation. The current workforce will be trained to operate the new plant with updated controls and new qualified staff will be employed. The Project gives an opportunity for the local company, ENCO Systems to manufacture and sell highly efficient and state of the art boiler technology. ENCO Systems and B&W Volund will ensure training, maintenance and service on the boiler technology, which will improve the local manpower skills and will provide an opening for employment and recruitment of skilled staff. The Project is expected to develop the energy related industries such as promoting the local manufacturer, ENCO Systems, as an energy efficient biomass boiler manufacturer. As a long-term effect, this will improve the efficiency of the available biomass boilers in the local market. Furthermore, the Project will strengthen Malaysias regional position for the biomass technology market. The Project will lead to economic sustainability, as the fuel source is a sustainable, indigenous resource, which reduces fuel imports and negative impact on the foreign exchange. The Project will also have a positive impact on the economic performance of the palm oil refinery as their energy production will become more reliable and efficient and eliminate the risks of fluctuating oil

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prices, which will enable more economic and reliable production in general. A.3. Project Participants

Name of Party involved (*) ((host) indicates a host Party)

Private and/or public entity(ies) project participants (*) (as applicable)

Kindly indicate if the Party involved wishes to be considered as project participant (Yes/No)

Malaysia (host)

LDEO Energy Sdn. Bhd. Landfill Gas Canada Ltd.

No No

Canada

(*) In accordance with the CDM modalities and procedures, at the time of making the CDM-PDD public at the stage of validation, a Party involved may or may not have provided its approval. At the time of requesting registration, the approval by the Party(ies) involved is required.

A.4. Technical description of the small-scale project activity:

The Project will replace three units of oil fired boilers with one biomass boiler. Apart from supplying steam to the refinery, the Project will also produce electricity by reducing the steam pressure through a steam turbine generator, thus generating enough electricity to power the refinery. The following Table summarizes the technical description of the baseline and CDM Project scenario: Baseline and CDM Project Scenarios Characteristics Operating Boilers Baseline Scenario Two units of 7.3 T/h, One unit of 13.6 T/h, 15 Barg, 230C Fuel Oil Plant diesel oil generators, Electricity grid system Project Scenario One unit of 35 T/h, 29 Barg, 260C Biomass (EFB) Steam turbine and generator (5 MW)

Fuel Input Electricity Input

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A.4.1. Location of the small- scale project activity:

The biomass boiler plant is located in LDEO Palm Oil refinery at Lahad Datu, Sabah State. As the plant is located in a designated industrial park approved by the Malaysian government, the project blends in with the other operations in the area. The specific location is shown on the Plot Plan in Annex 7. A.4.1.1. Host Party(ies):

Malaysia is the host party for this project. A.4.1.2. Region/State/Province etc.:

The project activity is in the region of Lahad Datu in the State of Sabah. A.4.1.3. City/Town/Community etc:

The project is located in a designated Industrial Park nearby Lahad Datu town. A.4.1.4. Detail of physical location, including information allowing the unique identification of this small-scale project activity (maximum one page): The project site has the following physical postal address; LDEO Energy Sdn.Bhd., Km 2, Jalan Kastam Baru Locked Bag No. 16, 91109 Lahad Datu, Sabah MALAYSIA

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A.4.2. Type and Category(ies) and technology of the small-scale project activity: The Project is a small scale project activity and is comprised of a bundle of two project activities utilizing different project types according to Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities. The following are the two project types: Type I Renewable Energy: Category I C, Thermal energy for the user Recovered biomass from the EFB currently discarded will be collected and transported to the Project, where the EFB will be weighed, sorted, cleaned, shredded, dried using flue gas from the Boiler, then conveyed to the Boiler for fuel. The proposed technology includes new equipment to weigh, separate, shred, dry and use the EFB as fuel. Existing boilers cannot use biomass as fuel due to design limitations in the firing chamber. GHG emission reductions will be realized by displacing steam and electricity generation from oil-fired equipment by biomass (EFB) combustion boilers for steam and electricity production. Some local grid supplied electricity will also be displaced. The energy in the form of steam and electricity will be for on-site consumption only. Type III Other Project Activities: Category III E, Methane Avoidance By burning the currently dumped EFB as fuel for the new power plant, the Project activity will avoid the production of methane from EFB that would otherwise have been left to decay. Thus, the Project also conforms to III.E. Project Technology

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The Project will use biomass boiler technology that will allow the plant to be operated solely on EFB fuel. The technology to be used is supplied and the equipment commissioned by ENCO, a local systems manufacturer in Kuala Lumpur. ENCO has a Technology Transfer Agreement with Babcock & Wilcox Volund (BWV) of Denmark, who has supplied biomass boiler systems to more than 50 different countries, including a number of sites in South East Asia. The system used will have a fuel to steam efficiency of 85%, compared to 60% for most existing biomass systems. ENCO has supplied a boiler to another site in Malaysia that started up in late 2005. The steam turbine generator is very robust technology that has been in use for almost a century. The characteristics of EFB a high moisture, low calorie biomass make it difficult to use as fuel for steam and power generation. Advanced technologies and additional measures to pre-treat the EFB to reduce the moisture content to below 40% are required. The history of biomass use in the Palm Oil Industry is that milling factories prefer to use fiber and shells for boiler fuel due to their higher heating value, and little or no use has been made of EFB. The Project will therefore contribute to important technology transfer, and will show the lead for other millers to follow in using an otherwise waste product and environmental contaminant for producing renewable energy to use in their processes. A.4.3. Brief explanation of how the anthropogenic emissions of anthropogenic greenhouse gas (GHGs) by sources are to be reduced by the proposed small-scale project activity, including why the emission reductions would not occur in the absence of the proposed small-scale project activity, taking into account national and/or sectoral policies and circumstances: The combustion of biomass waste is considered carbon neutral and the project activity therefore has no GHG emission compared to the emissions from the oil-fired boilers, which constitutes a part of the GHG emissions in the baseline. In the absence of the Project activity, there will be negligible use of the EFB, which will then be piled and left to decay, emitting methane and nauseous odors in the process. In utilizing this biomass waste, the Project will contribute to the abatement of methane. Furthermore, the project activity will provide steam for a steam turbine to produce electricity for own consumption and thereby displace electricity imports to the project site and thus reduce emissions from the power generation sources in the electricity grid system.

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A.4.3.1 Estimated amount of emission reductions over the chosen crediting period: Years Annual reductions estimation of in tonnes of CO2 e 155,411 217,781 217,781 217,781 217,781 217,781 217,781 1,462,097 emission

2006 2007 2008 2009 2010 2011 2012 Total estimated reductions (tonnes of CO2 e)

Total number of crediting years

7 Years

Annual average over the crediting period of estimated reductions (tonnes of CO2 e)

208,871

A.4.4. Public funding of the small-scale project activity: The project will not receive any public funding that will result in a diversion of official development assistance. A.4.5. Confirmation that the small-scale project activity is not a debundled component of a larger project activity: The project activity is not a debundled component of a larger project activity and there is no registered small-scale CDM project activity and will not be applied to register another small-scale CDM project activity: With the same project participants; and In the same project category and technology/measure; and Registered within the previous 2 years; and That has a project boundary within 1 km of the project boundary of the proposed small-scale activity at the closest point of a larger project activity.

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SECTION B. Application of a baseline methodology: B.1. Title and reference of the approved baseline methodology applied to the small-scale project activity: As identified in A.4.2, and listed in Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities, the following two project types and categories are applicable to the Project: - Type I Renewable energy projects Category C Thermal energy for the user - Type III Other project activities Category E Methane avoidance B.2 Project category applicable to the small-scale project activity: The baseline for the project activity is the GHG emissions from continued use of oil-fired boilers to meet the steam demand of LDEO refinery and GHG emissions from generation capacities from the plant diesel generators and in the SESB (Sabah Electricity Sdn. Bhd.) electricity grid system to supply electricity to the refinery. Electricity produced by the biomass cogeneration plant will be used for internal consumption at the plant and excess power will be supplied to the refinery only. Type I.C includes the baseline methodology for the thermal energy for the user; i.e., the biomass based steam supply to the refinery to displace oil-fired based steam and electricity. The baseline for the grid electricity displacement will be determined according to the methodology for category I.D paragraph 7 (I.D. Renewable electricity generation for a grid). This is in accordance with the selected category I.C. as paragraph 7 describes; for renewable energy technologies that displace electricity the simplified baseline is the electricity consumption times the relevant emission factor calculated as described in category I.D, paragraph 6 and 7.

Type III.E includes the baseline methodology for methane avoidance. There is only one method available in Appendix B. The baseline is the amount of methane from the decay of biomass treated in the Project activity, calculated using the IPCC default emission factors.
B.3. Description of how the anthropogenic emissions of GHG by sources are reduced below those that would have occurred in the absence of the registered small-scale CDM project activity: The Project activity is a biomass-fuelled steam and power generation project that provides steam and electricity to the refinery and avoids methane emissions from biomass waste piles. The Project activity qualifies to use the simplified methodologies that cover co-generation systems where the

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energy output is not exceeding 45 MWthermal. The boiler rating is 35 t/h at 29 barg and 260C. This corresponds to about 23 MWthermal and is lower than the prescribed threshold. Also, the methane avoidance aspect of the Project does not lead to a direct emission exceeding 15,000 tonnes CO2e annually. Direct Project emissions are calculated to be 7,971 t/a CO2e for full year operation. Thus the simplified baseline and monitoring methodologies can be applied. The GHG emission reductions from the project activity are additional and would not have occurred in the absence of the proposed project activity. According to the attachment A to Appendix B of the simplified modalities and procedures for small-scale CDM project activities (ver. 5) the project participants shall provide an explanation to show that the project activity would not have occurred anyway due to at least one of the following barriers: (a) Investment barrier: a financially more viable alternative to the project activity would have led to higher emissions; (b) Technological barrier: a less technologically advanced alternative to the project activity involves lower risks due to the performance uncertainty or low market share of the new technology adopted for the project activity and so would have led to higher emissions, (c) Barrier due to prevailing practice: prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions; (d) Other barriers: without the projects activity, for another specific reason identified by the project participant, such as institutional barriers or limited information, managerial resources, organizational capacity, financial resources, or capacity to absorb new technologies, emissions would have been higher. In absence of the Project activity, the most likely scenario would be that LDEO would continue to operate the oil-fired boilers and diesel generators and purchase incremental electricity from the local grid. There are limited alternatives to oil firing, as the area does not have access to the natural gas distribution grid, which could have been an alternative that would have reduced the GHG emissions. The barrier analysis below is made as a comparison of the two scenarios: 1) Continuation of current practice: supply from fuel oil and electricity grid 2) Proposed Project activity supply from biomass cogeneration plant (a) Investment barrier: The refinery has three oil -fired boilers installed, which are still operational. Annual boiler inspections are carried out and show that the boilers were in good maintenance condition and the efficiency levels are acceptable. Also the flue condition was good as all parameters meet the Department of Environments environmental regulation in the Clean Air Act.

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The supply of electricity from the local grid has not been stable and does cause significant outages or problems that are met by standby power generators at the plant for the refinery operation. The diesel powered refinery generators must be run most of the time. Thus the current supply from the boiler plant, self generation and electricity grid meets the requirements of the refinery and is expected to do so in the future years. There is, therefore, no immediate need to change the current practice. The biomass cogeneration plant involves the installation of new equipment and an investment cost of approximately RM 10 Million for the equipment, installation and commissioning. As the biomass cogeneration projects of this type are relatively new in Malaysia, there is no special finance scheme available and the bank finance must normally be based on the financial performance and collateral of the borrower. The financial risk in the project can be summarized as follows: Price of biomass fuel: Biomass waste is abundantly available in Malaysia and the price level is relatively low due to a low demand for biomass. As biomass energy projects are promoted in Malaysia and are a part of the governments energy policy, it is expected that the number of projects will increase in the future and increase the demand for biomass. This can lead to increased prices for fuel. Operation and maintenance: The technology is new and will require more maintenance than a conventional oil-fired boiler plant. Furthermore, the staff to operate and service the plant must be skilled in biomass cogeneration operation, which is more specialized than conventional boiler operation. (b) Technological barrier: Utilizing EFB for combustion and energy production is new in Malaysia. Especially, the technology for drying the biomass is still undergoing research and development. A special fuel preparation system will have to be installed, where heat from the flue gas will be used for drying the biomass in a dryer. This system is different from earlier methods where pressing techniques have been applied. As the technology is not readily available in Malaysia and the capacity to design and manufacture some of the parts does not exist, there is a technology barrier that leads to higher risk and higher costs for the project than in a situation where conventional technologies were to be used. Skepticism about performance and reliability of new biomass boiler technology is one of the factors limiting project development. (c) Barrier due to prevailing practice: The majority of the palm oil refineries in Malaysia are using fossil fuels to generate steam. The Project introduces both new technologies and a new fuel resource which is un-familiar to the palm

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oil refinery management and staff. Hence, they are not willing to invest or take the risk of such a major change in the energy supply. The palm oil refinery will maintain its own boiler plant and interconnection to the electricity grid in order to secure their energy supply in case the biomass energy plant cannot supply. This underlines that the technology is considered new and barriers exist to its acceptance in Malaysia. Palm oil mills are using biomass waste, but this is limited to shells and fibres, as empty fruit bunches are more difficult to utilize due to the high moisture content and need to be dewatered and shredded before they can be used as fuel. (d) Other barriers In-house knowledge of biomass energy technology at LDEO is limited and, as the technology is new, there are a limited number of technology providers in the Malaysian market. This limits the amount of information there is available for LDEO when evaluating biomass cogeneration projects. This situation leads to reluctance in venturing into such a project. National policies and circumstances relevant to the baseline Malaysia has a national policy of promoting the use of renewable energy. This policy was announced as a part of the 8th Malaysia Plan in 2001 and the target is to increase the power production from renewable energy sources. So far, the implementation of this policy has been limited as only one new biomass energy plant has been established and connected to the grid system. This Project is in line with the governments policy of fuel diversification and will displace fossil fuel consumption with renewable energy sources such as biomass. At present there is no direct program or regulation limiting the future use of fuel-oil and grid generated electricity. Therefore, there are no national circumstances or policies that would reduce the use of oil and electricity in the baseline. The use of oil-fired boilers is in compliance with all applicable legal and regulatory requirements in Malaysia as long as all the local safety and pollution standards are met. Impact of CDM registration The approval and registration of the CDM project activity will alleviate the identified barriers by diversion of some of the risk in the project to the CDM partner and by providing additional revenue from the sale of emission reductions. The revenue from the CDM Program lifts the Project above the minimum risk adjusted return required to invest in the new equipment and to take the performance risk of the new technology. B.4. Description of how the definition of the project boundary related to the baseline methodology selected is applied to the small-scale project activity: Referring to the Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM

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project activities, project boundary is the physical, geographical site where the fuel combustion affected by the fuel-switching measure occurs and the physical, geographical site where the treatment of biomass takes place. In this case, the project boundary refers to the biomass cogeneration plant itself, and is detailed in the layout shown in Annex 7. There is no guidance in Appendix B on the boundary for the Baseline. Consistent with the approved small-scale methodology, CO2 emissions from steam and electricity generation in fossil fuel-fired plants that are displaced due to the Project activity will be taken into account for the baseline determination. Default value from IPCC guidelines will be used, as detailed in Annex 31. In addition, methane emissions from decaying EFB piles will also be part of the Baseline. B.5. Details of the baseline and its development: Two baselines will be used in this Project under the category I.C Thermal energy for the user, in Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities. One will be for renewable energy that will displace the present use of fuel oil in the steam production and the other will displace internal generation from diesel oil and purchase of grid electricity. For the renewable energy technology, which displaces fuel oil, the baseline will be the amount of fossil fuel used in TJ to produce steam at 15 bar, and 230C with three units of the oil-fired boilers. For the boilers, an average efficiency will be used for the three oil -fired boilers of 85%. This figure will be used throughout the emission reduction calculations. When the steam demand varies, the amount of fuel used will vary proportionally. To calculate the amount of fuel energy, the energy content of the steam will be divided by the average efficiency of the boilers. Table B.1. Coefficient to be Used in Baseline Calculations
No 1 2 3 Description Units Value

Carbon Emission Factor, CEF CO2-Carbon Ratio (44/12) CO2 Emissions

tonnes C/TJoil
-

21.1
3.67

tonnes CO2/TJoil

77.37

For the renewable energy technology that displaces electricity, the simplified baseline is the electricity consumption times the relevant emission factor calculated as described in category I.D, paragraphs 6 and 7. The summary of electricity baseline grid factor emissions calculations is attached in Annex 3 for
1

IPCC Manual, 1996, Chapter 1 - Energy, Table 1-1, pg. 1-13

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reference. The Baseline for the methane avoidance component as defined in Type III.E projects is the situation where, in the absence of the Project, EFB is left to decay within the Project boundary and methane is emitted into the atmosphere. The baseline emission is the amount of methane from the decay of biomass that is treated in the Project activity, calculated using the IPCC default emission factors. The calculation formulae for the baseline emissions is provided in Section E.1.2.4. The final draft of this baseline section was completed on 15/04/2006 Name of person/entity determining the baseline is given below: Mr.Gerald Hamaliuk Landfill Gas Canada Ltd. 200 N. Service Road W., Unit 1, Ste. 410, Oakville, ON, Canada L6M 2Y1 Tel: +905 334 6127 Fax: +905 827 6177 E-mail: projectnet@cogeco.ca Landfill Gas Canada Ltd. is the CDM consultant to the Project and is a project participant.

SECTION C. Duration of the project activity / Crediting period: C.1. Duration of the small-scale project activity:

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C.1.1. Starting date of the small-scale project activity: The project activity plans to start operation of the biomass boiler plant in April 2006 C.1.2. Expected operational lifetime of the small -scale project activity: 30y-0m C.2. Choice of crediting period and related information: The project will use a renewable crediting period. C.2.1. Renewable crediting period: The project will have a 7 years renewable crediting period. C.2.1.1. Starting date of the first crediting period: 01/06 /2006 C.2.1.2. Length of the first crediting period: 7y-0m C.2.2. Fixed crediting period: N/A C.2.2.1. Starting date: N/A C.2.2.2. Length: N/A

SECTION D. Application of a monitoring methodology and plan: D.1. Name and reference of approved monitoring methodology applied to the small-scale

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project activity: Title of monitoring methodologies: Type I.C - Thermal energy for the user , Type III.E Methane avoidance. The monitoring methodologies are set out in Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities. D.2. Justification of the choice of the methodology and why it is applicable to the small-scale project activity: The emission reductions are obtained by avoidance of emissions in the existing fossil fuel based steam boiler plant due to installing a new high efficiency biomass based cogeneration plant, and avoids methane emissions from biomass waste piles. CO2 emitted by combustion of biomass waste is considered carbon neutral. The installed boiler capacity will be approximately 23 MWth. This is lower than 45 MWth limit which is noted as the maximum threshold for capacity in Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM project activities. The methane avoidance aspect of the Project does not lead to direct emissions exceeding 15,000 tCO2e annually (estimated Project emissions are 7,971 tCO2e/a). Due to these reasons the project can be considered under the above methodology. The methodology prescribes that the monitoring shall consist of metering the energy supplied to the end user; i.e., the LDEO palm oil refinery. Meters will be installed to monitor the amount of steam energy and electricity supplied from the biomass boiler plant. The meter readings will be used for the calculations of CO2 emission reductions as stated in the formulas in Section E.1. For the methane avoidance, the amount of EFB combusted by the Project activity is to be monitored. The annual Project emissions are also to be monitored to confirm the continuing applicability of the small-scale methodology, in that the direct project emissions related to the methane avoidance does not exceed the 15,000 tCO2e annual limit.

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D.3 Data to be monitored:

ID Number Data Type Data Variable Data unit Measured (m), calculated (c), or estimated (e), Recording frequency Proportion of data to be monitored How will the data be archived? (electronic/ paper) For how long is archived data to be kept? Comment

Thermal Energy

Steam Supplied to the refinery

TJ

m and c

Monthly

100%

Electronic

Minimum 2 years after last CER issuance

Mandatory under methodology I.C

Electrical Energy

Electricity Supplied to the refinery Electricity Consumed by the bio-energy plant

kWh

Monthly

100%

Electronic

Minimum 2 years after last CER issuance

Mandatory under methodology I.C

Electrical Energy

kWh

Monthly

100%

Electronic

Minimum 2 years after last CER issuance

Meter provided by the electricity company, SESB and is existing

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Tonnes of biomass

Biomass consumed by the steam boiler CH4 and N2O IPCC default emission factors

Tonnes

Monthly (aggregate)

100%

Electronic

Minimum 2 years after last CER issuance

Mandatory under methodology III.E

Emission factors

kgCH4/ TJ kgN2O /TJ

IPCC

Annually

Electronic

Minimum 2 years after last CER issuance

Mandatory under methodology III.E. Current default values are 300 and 4, respectively.

Energy

Energy Content of Biomass

TJ/t

Annually

100%

Electronic

Minimum 2 years after last CER issuance

Measured by Third Party Laboratory

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D.4. Qualitative explanation of how quality control (QC) and quality assurance (QA) procedures are undertaken: The electrical and thermal energy meters will be calibrated according to Malaysian standards to have a high accuracy in measurement. The refinery has a steam and electricity purchase agreement with the biomass energy plant operator. This requires proper metering and documentation of the energy supply data monthly. These records will be used to verify the quantity of electrical and thermal energy supply to the refinery. The EFB weighing will be done with a government approved scale for truck weighing to commercial standards. D.5. Please describe briefly the operational and management structure that the project participant(s) will implement in order to monitor emission reductions and any leakage effects generated by the project activity: The electrical and thermal energy parameters can be monitored and verified from monthly invoice issued by biomass plant operator to refinery as this is a part of energy purchase agreement between the two parties. Electricity consumed by the biomass energy plant can be easily obtained from Sabah Electricity Sdn Bhd (SESB) monthly bills to biomass plant operator. This will give an accurate quantity of electricity used by the biomass energy plant. Weigh scale will be by an attendant who will compile daily readings into a monthly report format. The cogeneration equipment is not transferred from another activity and the existing equipment will not be transferred to another activity, so no leakage needs to be considered. D.6. Name of person/entity determining the monitoring methodology: Mr.Gerald Hamaliuk Landfill Gas Canada Ltd. 200 N. Service Road W., Unit 1, Ste. 410, Oakville, ON, Canada L6M 2Y1 Tel: +905 334 6127 Fax: +905 827 6177 E-mail: projectnet@cogeco.ca Landfill Gas Canada Ltd. is the CDM consultant to the Project and is a project participant.

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SECTION E.: Estimation of GHG emissions by sources: E.1. Formulae used: The formulae applied to estimate the baseline emission are obtained from the descriptions in paragraphs 5, 7 and 93 in Appendix B of category I.C, thermal energy for end user, and category III.E, methane avoidance. There are three emission reduction sources applied in this Project. The GHG emissions will be calculated separately and added up at the final stage. The first part will be to calculate the baseline emissions for steam generation that displaces fuel oil in the existing oil-fired boilers. The second part will be the calculation of emissions for displacing both self-generated and grid electricity. The third part will be the calculation of emissions for the decay of EFB from accumulated piles that will not occur when EFB is burned as a renewable fuel. E.1.1 Selected formulae as provided in appendix B: Three formulas have been selected from category I.C and III.E to estimate emissions reduction from fuel oil, electricity displacement and methane avoidance as given below: Formulae to estimate fuel oil displacement; Baseline Emissions = Fuel Consumption X Emission Coefficient of Fuel Displaced (TJ) (tCO2e/TJ) (tCO2e) Formulae to estimate electricity displacement; Baseline Emissions = Electricity Generated/Displaced by Project X Emission Coefficient for Grid (MWh) (tCO2e/MWh) (tCO2e) Formulae to estimate methane from piles of EFB; Calculated in accordance with para. 93 of Appendix B as the amount of methane from the decay of biomass treated in the project activity, calculated using the IPCC default method. Baseline Emissions = Quantity of biomass treated X IPCC emission factor X GWP for methane (t) (tCH4/t biomass) (tCO2e/tCH4) (tCO2e) E.1.2 Description of formulae when not provided in appendix B: N/A E.1.2.1 Describe the formulae used to estimate anthropogenic emissions by sources of GHGs due to the project activity within the project boundary:

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In the absence of steam turbine generator or during steam turbine down time, the biomass energy plant will draw some electricity from the grid to operate the electrical equipment such as motors and conveyors. The electricity drawn will be considered as Project activity emissions and the formula is given below: Project Activity Emissions = Electricity Drawn From Grid X Emission Coefficient for Grid kgCO2e kWh kgCO2e/kWh

The emission coefficient factor for the grid system will be obtained from analyzing the average emission factor for the generation mix in the SESB grid.. The summary of the electricity baseline calculation is presented in Annex 3. Burning decaying biomass results in small amounts of methane and nitrous oxide emissions that would not have occurred in the absence of the Project activity. These emissions are to be determined using IPCC default values using the following relationship: Project activity emissions from biomass combustion (tCO2e) Quantity of = biomass treated (t) Energy content of biomass (TJ/t) Methane and N2O emission factor (CO2e/TJ)

The summary of the biomass decay baseline calculation is presented in Annex 3. CO2 emissions also arise from biomass combustion. However, this is considered carbon neutral, consistent with the IPCC guidelines and therefore not included in the Project emission calculations.

Sources of emissions that are not identified in Appendix B include emissions from activities such as start-up and operation, ash transportation and transportation of EFB from the Palm Oil mills to the refinery. The ash and EFB trucking are an insignificant GHG emission, and would need an equivalent amount of truck movement in any case, as the EFB cannot be piled at the mill for a long period, and will have to be trucked to an appropriate dump site to reduce fire and odor problems.
E.1.2.2 Describe the formulae used to estimate leakage due to the project activity, where required, for the applicable project category in appendix B of the simplified modalities and procedures for small-scale CDM project activities There is no significant leakage in this Project activity. E.1.2.3 The sum of E.1.2.1 and E.1.2.2 represents the small-scale project activity emissions: Since there are no leakages in this project, the small-scale project activity emissions only consist of Project activity emissions within the Project boundary as given in E.1.2.1.

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E.1.2.4 Describe the formulae used to estimate the anthropogenic emissions by sources of GHGs in the baseline using the baseline methodology for the applicable project category in appendix B of the simplified modalities and procedures for small-scale CDM project activities: The formulae applied to calculate the baseline emission is obtained from paragraphs 5, 7 and 93 of Appendix B. A) Formula to Displace Fossil Fuel The first formula is applicable for renewable energy technologies that displace technologies using fossil fuels. IPCC default values for emission coefficients have been used in the calculation below. Baseline Emissions Reduction From Fuel Oil Displacement = Fuel Consumption X Emission Coefficient of Fuel Displaced tCO2e TJ tCO2e/TJ The fuel consumption will be in energy units (TJ) and can be calculated when the energy content in the produced steam with a certain rate of boiler efficiency is known. The formula to calculate fuel consumption is given below. Fuel Consumption = Steam Production X 1/ Boiler Efficiency TJ TJ The emission coefficient of fuel is shown in Table B.5 in Section B.5 in the IPCC Guidelines for National Greenhouse Gas Inventories Reference Manual revised 1996. Boiler efficiency used is 85%, which is at the highest realizable boiler efficiency for the type of oil-fired boiler used in the LDEO Refinery. B) Formula to Displace Electricity The second formula is applied to calculate the baseline emission from grid electricity displacement. Baseline Emissions Reduction from Grid = Electricity Displaced by Project X Emission Coefficient for Grid and Electricity Displacement self-generated power kgCO2e kWh kgCO2e/kWh The electricity displaced by the Project is the amount of electricity that would have been drawn from the generators and grid system.

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C) Formula to Capture Methane The third formula is applied to calculate the baseline emission from methane capture from decaying EFB piles, using the IPCC default method, as below: Baseline Methane Degradable Fraction of Fraction of Mass emission factor = correction X organic X degradable X methane in X conversion for methane factor carbon organic carbon landfill gas factor avoidance disseminated to (16 tCH4/12 tC) (tC/t biomass) landfill gas (tCH4/t biomass) The IPCC default values used for the variables in the above equation are as follows: Methane correction factor 0.4 Degradable organic carbon (DOC) 0.3 Fraction of DOC disseminated to LFG 0.77 Fraction of CH4 in LFG 0.5 The total baseline emission reduction from the Project activity can be calculated by adding the baseline emission reductions from fossil fuel steam production, electricity displacement and methane capture. E.1.2.5 Difference between E.1.2.4 and E.1.2.3 represents the emission reductions due to the project activity during a given period: The difference between total baseline emission reduction and project emission will yield the total emission reduction from the Project activity. The formula is shown below. Total Emission Reduction = Total Baseline Emissions Reductions - Project Activity Emissions tCO2e tCO2e tCO2e E.6 Table providing values obtained when applying formulae above:
Year Emissions due to project activity Leakage Total project activity emissions Baseline emissions due to steam displacement Baseline emissions due to electricity displacement Baseline emissions due to biomass decay Total Baseline emissions 118,886 158,515 158,515 158,515 158,515 158,515 158,515 1,069,976 7,965 21,240 21,240 21,240 21,240 21,240 21,240

2006
6,031 0 6,031

2007
7,971 0 7,971

2008
7,971 0 7,971

2009
7,971 0 7,971

2010
7,971 0 7,971

2011
7,971 0 7,971

2012
7,971 0 7,971

Total
53,857 0 53,857

34,591

45,997

45,997

45,997

45,997

45,997

45,997

310,573

135,405

161,442

225,752

225,752

225,752

225,752

225,752

225,752

1,515,954

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155,411

217,781

217,781

217,781

217,781

217,781

217,781

1,462,097

Note : The first crediting period is from June, 2006 to July, 2013. More detailed calculation is presented in Annex 3.

SECTION F.: Environmental impacts: F.1. If required by the host Party, documentation on the analysis of the environmental impacts of the project activity: According to the Malaysian regulations renewable energy projects below 10 MW are not required to prepare an Environmental Impact Assessment. Furthermore, the Project is located in the centre of Lahad Datu Industrial Park, Sabah, Malaysia. The project is isolated from any residential area as nearest township is about 3 km away. As the plant is located in a designated industrial park approved by the Malaysian government, there will not be any significant impact on neighbours or environment. The Project must comply with the environmental regulations of the country and obtain the necessary approvals before commissioning and during operation of the Project. The Project will apply modern, efficient technologies and the environmental impact will be managed better than in the existing situation, as the biomass waste will be used for energy production with an efficient combustion and emission control. There are therefore no significant environmental impacts of the Project activity.

SECTION G. Stakeholders comments: G.1. Brief description of how comments by local stakeholders have been invited and compiled: The project activity is within the Lahad Datu Industrial Park and in the next lot to the LDEO refinery. As mentioned in the previous sections, the environmental impact of the project is insignificant and has negligible impact on the surrounding environment and community. G1.1 Official reports announcing a Public Forum of the project in 4 different local newspapers: 1. 2. December 1st,2005 Daily Express , Steam power for LD refinery Borneo Post Loji Biomass kurangkan penggunaan minyak petroleum dan bekalan elektrik 3. November 25th, 2005 Asia Times, LD Refinery Public Meeting with Government and

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other associations 4. November 24th, 2005 Shi Wah, LD Refinery Public Meeting with Government and other associations

G 1.2 Public Forum: meeting with the local stakeholders. Presents: No. 1. 2. From Majlis Daerah Lahad Datu (Lahad Datu District Council) Balai Bomba dan Penyelamat Daerah Lahad Datu (Lahad Datu Fire Station and Rescue Team) Jabatan Pengangkutan Jalan Lahad Datu (Lahad Datu Road Transportation Department) Jabatan Kastam Diraja Malaysia Lahad Datu (Lahad Datu Royal Malaysian Custom Department) Sabah Electricity Sdn. Bhd. Lahad Datu (Lahad Datu Sabah Electricity Private Company) Lembaga Pelabuhan-pelabuhan Sabah Lahad Datu (Lahad Datu Sabah Board of Ports) Kelab Sukan dan Rekreasi Lahad Datu (Lahad Datu Sport and Recreation Club) Dewan Perniagaan Tiong Hua Lahad Datu (Lahad Datu Chinese Chamber of Commerce) Persatuan Nelayan Lahad Datu (Lahad Datu Fishermens Association) Ketua Masyarakat Cina Lahad Datu (Lahad Datu Head of Chinese Community) Sekolah Kebangsaan Pekan III Name Hj.Ahmad Sawal Sino B. Lareman Contact Number 089-881621/881501 089-884444/881443

3.

Alice Lo

089-880368

4.

Abdul Hamid Badar

089-881531

5.

Conrad

089-882020

6.

Viyono Selamat

089-811244

7.

Hj.Ahmad Sawal

089-881575

8.

Mok Teng Saiy

089-881392/884779

9. 10.

Jaafar B. Alam Stanley Chin Yat Min Leonella Gonzales

089-8835575 089-883211

11.

089-882817

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(Pekan III National School) 12. 13. 14. Suruhanjaya Tenaga Sandakan (Sandakan Energy Commission) Department of Industrial Development &Research Kota Kinabalu MIDA (Malaysian Industrial Development Authority) Negeri Sabah, Kota Kinabalu Shell Timur Lahad Datu Konsmal Sdn.Bhd. Syarikat General Electrical Work Enco System Sdn.Bhd. Ir. Idris Samaludin Tommie Philip Cheng Siew Hoong 089-666695 088-215035 088-211411

15. 16. 17. 18.

Johnny Thien Ir. Wong Keng Chew Fong Chee Yong Soon Yu Pin, Ajum Bandu, Saiddin Hussein CJ.Liu

089-612185 088-714189 089-882135 03-60913223

19.

Sandakan Edible Oils Sdn. Bhd.

089-611011/2

G.2. Summary of the comments received: Question 1 Do LDEO plan to connect and sell to grid ( SESB) ? Question 2 Will your biomass plant generated any pollution such as discharge to sea? Question 3 Can you elaborate on the design of the land filling for rubbish as shown in your CDM slide? Question 4 Is there any initiative taken by your company to solve the traffic congestion on the main road as there is risk of accident involving students as the oil tanks lay by at the road side? Question 5 Will the biomass plant create any work opportunity? Question 6 What approach has been taken to prevent from terrorist threat? Question 7 What measure have you taken to minimize the fire hazard and what type of fire fighting system available?

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Question 8 What measurement have your company taken to avoid heavy traffic congestion and poor traffic flow? Question 9 Is it possible to put up a sign board to alert tanker driver to slow down driving speed when pass over the school area. No parking allow within 100 meter from the school and round-about. Question 10 Is there any chance to help small holder to set up a small scale business opportunity? Question 11 Do the smell and dust generated by the process will cause any health side effect? G.3. Report on how due account was taken of any comments received: For Question 1 The total power generating capacity of 1.2 MWe and 6.0MWe (future) shall only cater for LDEO Energy and Lahad Datu Edible Oils S/B own consumption. However, SESB may then channel the surplus power to other users. For Question 2 The biomass plant does not generate any effluent. In our existing refinery plant, the effluent generated are treated as to comply to DOE requirement prior to discharge. We are making effort to recycle the treated effluent water. The emission from the boiler chimney shall comply to DOE requirement of Ringelmann No.2 and dust particulate emission of not more than 400 mg/ Nm3. The ash generated from the burning process of biomass is not considered as scheduled waste. We will apply to local council ( MDLD) to allow us to disposal the ash to their approved site. For your information, the ash can also be used as cement enhancer or fertilizer. For Question 3 The design shown is for capturing the biogas generated through biodegradation process; this is not used for our Project. For Council (DBKK) is planning to set-up a facility through CDM. For Question 4 Long queue of CPO tanker at the road side only happen during high crop season. One of the approach that was taken by us to resolve the problem is by upgrading the receiving system whereby higher capacity pumps were installed to speed up pumping rate. Apart from that, a circular has been distributed among the transporter owners to increase the tankers discharge valve from 4 to 6. To avoid long queue, each of the mill has been given a CPO delivery quota. For Question 5

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LDEO Energy S/B requires 12 staffs. Existing staff from LDEO S/B shall be seconded to the biomass plant. However, we shall require additional 4 to 5 new staffs for the biomass plant. The candidates shall be sourced from the local community with minimum O-level (SPM) certificates. For Question 6 LDEO always maintain good relationship and co-operation with local police department, custom department and others enforcement bodies to ensure the security in our area. We also have our own well trained security team to monitor the safety of factory. In addition, we also set up CCTV system to provide better monitoring. For Question 7 LDEO Energy S/B shall adopt the OSH system implemented in Lahad Datu Edible Oils S/B. The system includes fire fighting and emergency response team, oil spillage contingency team and safety & health committee. The fire fighting system is designed by M&E consultant Konsmal S/B and was submitted to Fire& Rescue Department KK for comment and approval. The system include fire hydrant, smoke/heat detector, water deluge system and fire extinguisher. In addition, the fire hydrant system shall be linked to LDEO S/B hydrant system. For Question 8 Based on the layout, the existing Jalan Minyak is shared by three (3) users namely LDEO S/B , Bonasaba S/B and Lahad Datu Oil Product (LOP) and caused the traffic congestion. We have proposed to local council (MDLD) and local state assemblyman YB. Nasrun on the need to develop the road reserve as highlighted in the plan. By having an additional road, the traffic flow can be improved. For Question 9 Yes, LDEO will try to consider your suggestion. We will bring up the matter and discuss with the transporter owner not to park indiscriminately. For Question 10 There are business opportunities for transporter to truck in the biomass fuel from mills and also to truck out the ash from the plant. For further information on setting up of small scale business, individual may refer to Mr. Cheong Siew Hong of MIDA, Kota Kinabalu for further info. For Question 11 As mention earlier, the dust emission from the biomass boiler shall be monitored to comply to DOE requirement. Whereas on the issue of smell, the source actually originates from our existing kernel crushing plant. The new biomass boiler will have very little odour from operations. To overcome this problem, we are collaborating with two consulting firms (Konsmal S/B and Sekitar Ceria Environmental Services S/B ) to workout a suitable dust and odour control. So far there are no known side effects due to the odour.

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Annex 1 CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY Organization: Street/P.O.Box: Building: City: State/Region: Postfix/ZIP: Country: Telephone: FAX: E-Mail: URL: Represented by: Title: Salutation: Last Name: Middle Name: First Name: Department: Mobile: Direct FAX: Direct tel: Personal E-Mail: Organization: Street/P.O.Box: Building: City: State/Region: Postfix/ZIP: Country: Landfill Gas Canada Ltd. 200 N Service Rd. W Unit 1, Ste. 410 Oakville Ontario L6M 2Y1 Canada Azmer Executive Director En Shamsuddin Lahad Datu Sabah 91109 Malaysia +089-884352 +089-884428 ldeoadm@tm.net.my LDEO Energy SDN.BHD KM 2, Jalan Kastam Baru, Locked Bag No.16

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Telephone: FAX: E-Mail: URL: Represented by: Title: Salutation: Last Name: Middle Name: First Name: Department: Mobile: Direct FAX: Direct tel: Personal E-Mail:

+1-905-334-6127 +1-905-827-6177 projectnet@cogeco.ca

Senior Engineer Eng. Hamaliuk Peter Gerald Technical 905-827-6177 905-334-6127 projectnet@cogeco.ca

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Annex 2 INFORMATION REGARDING PUBLIC FUNDING There is no public funding in this project that diverts funds from ODA Programs.

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Annex 3 BASELINE DATA 1 2 3 Average Boiler Efficiency Boiler Operation Time Electricity drawn from grid for the boiler plant 85 8000 1000 % hr/year hr/yr

Electricity Displacement from Steam Turbine Subject Electricity Displacement (Steam Turbine) MW 5.0 Running Hours/year 8000 MWh/year 40,000

Project Emissions from Electricity Consumption in Biomass Energy Plant Subject Project Emissions MW 0.4 Running Hours/year 1000
MWh

400

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STEP 1 Year A B C* D** E= C*D

STEP 2 F G*** H= Fx G

STEP 3 I J*** K=I *J

STEP 6
S= E + H + KNR

Steam Demand

Steam Production

Baseline Fuel Consumption TJ/year 467 621 621 621 621 621 621

Emission Coefficient of Fuel Displaced tCO2e/TJ 74.07 74.07 74.07 74.07 74.07 74.07 74.07

Baseline Emissions

Electricity Displaced by Project MWh 15,000 40,000 40,000 40,000 40,000 40,000 40,000

Emission coefficient for Grid tCO2e/M Wh 0.531 0.531 0.531 0.531 0.531 0.531 0.531

Baseline Emissions

Biomass Fed to Boiler t/a 91,875 122,500 122,500 122,500 122,500 122,500 122,500

Emission coefficient for Biomass Decay tCO2e/t 1.294 1.294 1.294 1.294 1.294 1.294 1.294

Baseline Emissions

Total Project Emissions Reductions tCO2e/ year 155,411 217,781 217,781 217,781 217,781 217,781 217,781 1,462,097

t/h 2006 2007 2008 2009 2010 2011 2012 21 28 28 28 28 28 28

TJ/year 397 528 528 528 528 528 528

tCO2e /year 34,591 45,997 45,997 45,997 45,997 45,997 45,997

tCO2e/ year 7965 21240 21240 21240 21,240 21,240 21,240

tCO2e/ year 118,886 158,515 158,515 158,515 158,515 158,515 158,515 Total

*The Baseline Fuel Consumption C,(TJ) is obtained by dividing the Steam Production B,(TJ) with an average boiler efficiency of 85%. B is calculated as 2.36 GJ/t steam. ** Emission Coefficient of Fuel Displaced (tCO2e/TJ) is obtained from Table B.5. *** Emission Coefficient of Grid is obtained from Malaysian Sabah Grid Baseline Emissions Analysis.

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Project Emissions STEP 4 Year L Electricity Drawn from Grid Mh/h 2006 2007 2008 2009 2010 2011 2012 400 400 400 400 400 400 400 M Emission Coefficient for Grid tCO2e/mwh 0.531 0.531 0.531 0.531 0.531 0.531 0.531 N = L*M Project Emissions STEP 5 O Biomass to Boiler t/a 91,875 122,500 122,500 122,500 122,500 122,500 122,500 P Emission Coefficient for CH4,N2O tCO2e/TJ 7.54 7.54 7.54 7.54 7.54 7.54 7.54 Q Heat Value of Biomass TJ/t .0084 .0084 .0084 .0084 .0084 .0084 .0084 R= O*P*Q Project Emissions

tCO2e/year 212 212 212 212 212 212 212

tCO2e/year 5819 7759 7759 7759 7759 7759 7759

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As prescribed in Section B.5, the method of option (b) of item 7 for Type I.D. is selected for calculating grid electricity baseline emission for the Project. The formula is expressed as follows: Weighted average emission of current generation mix of SESB grid (tCO2/kWh)

Baseline emission for grid electricity (tCO2/year)

Electricity generated by the Project (kWh/year)

As mentioned above, the electricity generation from the power plant will displace supply from SESB distribution grid, therefore the weighted average emissions (in kg CO2equ/kWh) of current generation mix of SESB grid is used for baseline estimation. Table 1 and 2 shows the installed capacity and fuel type, electricity power generation mix of SESB grid for the year of 2005. see: http://www.sesb.com.my/profile.htm Table 1. The installed capacity mix of SESB grid in 2005. Type of Plant Hydro Steam Turbine GT Gas DG Diesel (Major) GT Diesel DG Diesel (Minor) Mini Hydro DG Diesel (Rural) Installed Capacity (MW) 66 15 97 118.88 141.4 43.6 8.34 0.86

Table 2. The fuel type, electricity power generation mix of SESB grid Fuel Type SESB - Hydro SESB - Gas SESB - Diesel IPP - Gas IPP - MFO IPP - Diesel IPP - Bio Energy Total Generated Units (kWh) 462,556,172 427,621,560 496,198,517 991,127,490 996,439,253 3,269,361 14,004,302 3,391,216,655

Applying i.) IPCC Carbon emission factor (CEF; tC/TJ). (IPCC reference manual, Table 1.1.and Table

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1.6.) For Natural Gas is 15.3, for Heavy Oil (MFO) is 21.1 for Diesel Oil is 20.2 ii.) the conservative efficiency data for natural gas, heavy fuel oil and diesel oil as of the latest clarification from EB for the Brazilian grid; i.e., 50% for natural gas and 33% for fuel oil The grid emission factor has been calculated to be 0.531 tCO2/MWh. This is deemed conservative and in line with ACM 0002.

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Annex 4

ASSESSMENT OF BIOMASS AVAILABILITY The availability of Biomass fuel from palm oil industry for the project activity is assessed by using official data by the Malaysian Palm Oil Board, who is producing annual statistics for the palm oil sector. There are no direct statistics on the amount of biomass fuel available in Malaysia and must be calculated by using some assumptions. However this annex provides a clear and transparent calculation of the biomass availability and can be applied in the future as well to assess the biomass availability in any given year. The source of the data tabulated below is obtained from the official website of Malaysian Palm Oil Board. URL of Data Source : http://econ.mpob.gov.my/economy/annual/stat2004/Stactitle_04.htm Table :1 Total Malaysian Land Usage for Palm Trees Plantation (Hectare) Year 2000 2001 2002 2003 2004 Mature 2,941,791 3,005,267 3,188,307 3,303,133 3,450,960 Immature 434,873 493,745 481,936 498,907 424,367 total 3,376,664 3,499,012 3,670,243 3,802,040 3,875,327

Table 2: Yield (Tonnes per hectare) Year 2000 2001 2002 2003 2004 Fresh Fruit Bunches, FFB 18.33 19.14 17.97 18.99 18.60 Crude Palm Oil 3.46 3.66 3.59 3.75 3.73 Palm Kernel 1.01 1.05 0.98 1.02 0.98

Calculation on available EFB was based on the assumption tabulated below. Table 3: Assumptions for Biomass availability Biomass Fibres PKS (Palm Kernel Shell) EFB (Empty Fruit Bunch) Biomass Produced of 100% FFB* 14% 6% 21% Biomass Availability ** 10% 10% 100%

* Feasibility Study on Grid Connected Power Generation Using Biomass Cogeneration Technology, Jan 2000, by Pusat Tenaga Malaysia, PTM.

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**Noel Wambeck, Oil Palm Process Synopsis ed. 2, 2001. It is assumed that biomass is available according to the percentage shown in Table 3 out of total weight of FFB yield. Out of this only 10% of fibres and PKSs are available for other industries outside palm oil mills to utilize. Whereas, EFB is assumed to be fully available as it is currently brought back to plantations for disposal, or dumped in piles or landfills near the mills. Quantity of FFB can be calculated by multiplying total planted hectares with the yield in Table 2 for the respective years. The fibres, PKSs, and EFBs availability is calculated based on the assumptions given in Table 3 above. Table 4: Biomass availability in Malaysia Total Malaysia 2000 2001 2002 2003 2004 FFB 53,923,029 57,520,810 57,293,883 62,726,499 64,187,856 Fibre 754,922 805,291 802,114 878,171 898,630 PKS 323,538 345,125 343,763 376,359 385,127 EFB 11,323,836 12,079,370 12,031,715 13,172,565 13,479,450

It can be seen from Table 4 that the annual biomass availability has been increasing over the five years at an average growth rate of approximately 4% p.a. The total biomass available in Malaysia is much higher than the total amount required for this project operation.

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Annex 6 LETTER CONFIRMING THAT ENVIRONMENTAL IMPACT ASSESSMENT IS NOT REQUIRED A. Written application for approval under regulation 36 and 38, environmental quality act ( clean air) 1978 regulations for installation of fuel burning equipment ( boiler) and stack in Lahad Datu Edible Oils Sdn. Bhd. In this section, 2 original documents are provided. Both documents are with English translations. Original Document 1 (In Native Language)

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Translation in English

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Original Document 2 ( In Native Language)

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Translation In English

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B. Written application for approval for the extension of plant building (process extension) in Lahad Datu Edible oils Sdn.Bhd. Jln Kastam Baru Lahad Datu. In this section, an original document is provided with English translation. Original Document ( In Native Language)

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Translation in English

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C. Written application for approval for the construction of oil palm refinery plant in Lahad Datu Edible oils Sdn.Bhd. Jln Kastam Baru Lahad Datu. In this section, an original document is provided with English translation. Original Document ( In Native Language)

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Translation In English

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Annex 7 Plot Plan