Utilisation of Biomass at Palm Oil Manufacturing Factories in Sabah, Malaysia | CDM/JI | Global Environment Centre Foundation (GEC)

Reports of CDM/JI Feasibility Studies

Title of the research

Utilisation of Biomass at Palm Oil Manufacturing Factories in Sabah, Malaysia

FY 2005

Main research orgnisation

Hokkaido Electric Power Co., Inc.

Research partner(s)

Taisei Construction Co., Ltd., Sawit Kinabalu Sdn. Bhd., Borneo Samudera Sdn. Bhd., SWE Co.

Location of the project

Malaysia (Sabah State)

Summary of the research report (PDF)

Summary

Description of the project

The project, which targets a palm oil factory in Sabah, Malaysia, proposes to make effective use of palm oil mill effluent (POME) that is discharged from the said factory, with a view to generating electricity from biogas. The POME is currently treated in an aerobic and anaerobic open lagoon method, and biogas containing methane gas (CH4) is discharged from the anaerobic open lagoons into the atmosphere. In the project, a closed methane fermentation system will be introduced in order to collect this CH4, use it as the raw material (fuel) for generating electricity. As a result, the project will reduce emissions of methane gas discharged from anaerobic open lagoons, moreover, through connecting generated power to the grid, it will have a carbon dioxide (CO2) emissions reduction effect by offering a substitute for energy from thermal power plants. As is shown in Table 1, the commercial viability was assessed for three cases assuming differing COD values. Case 1 and 2 targets the said factory, and case 3 targets the factory with general value of COD.

Table 1 Project Cases

Case	COD (ppm) of POME discharged from the factory	COD (ppm) of POME put into the methane fermentation system
1	20,000	20,000
2	20,000	50,000
3	50,000	50,000

GHG

CO2, CH4

Sector of the project

Biomass Utilisation

CDM/JI

CDM

Duration of the project activity/ crediting period

2008 - 2023

Baseline methodology/additionality

The approved methodology AM0013 Version 02 shall be adopted in the project.
Table 2 shows the results of examining each item in terms of the project. Both the diagram and the table conclude that the baseline for the project is the adoption of anaerobic open lagoons, i.e. maintenance of business as usual. And, additionality is demonstrated based on AM0013 Version 02.

Table 2 Examination Results concerning Baseline Setting

Examination Item	The Project
① Are anaerobic open lagoons used?	Yes	Anaerobic open lagoons are used.
② Are recent environmental standards satisfied?	Yes	It is managed by the Sabah Department of Environment (DOE) of the Ministry of Natural Resources and Environment and satisfies environmental standards.
③ Is there likelihood of environmental standards being strengthened in future?	Yes	The DOE has plans to strengthen wastewater standards in future.
④ Can environmental standards be satisfied through increasing the number of open lagoons?	Yes	The environmental standards can be satisfied by increasing the number of open lagoons.
⑤ Is there enough land to increase the number of open lagoons?	Yes	Since Sawit Kinabalu also owns land around the factory, the number of open lagoons can be increased.

Estimation of GHG emissions

Table 3 shows the GHG emission reductions in each project case. Total GHG emission reductions over the project life of 16 years are calculated as 246,145 CO2 in Case 1, 218,399tCO2 in Case 2, and 614,645 CO2 in Case 3.

Table 3 GHG Emission Reductions in the Project (tCO2/yr)

Year	2008	2009	2010	2011	2012	2013	2014	2015
Case 1	9,114	12,184	13,145	14,562	15,488	16,238	16,541	16,541
Case 2	6,796	10,915	11,776	13,046	13,876	14,537	14,745	14,745
Case 3	22,786	30,459	32,862	36,404	38,721	40,584	41,283	41,283
Year	2016	2017	2018	2019	2020	2021	2022	2023
Case 1	16,541	16,541	16,541	16,541	16,541	16,541	16,541	16,541
Case 2	14,745	14,745	14,745	14,745	14,745	14,745	14,745	14,745
Case 3	41,283	41,283	41,283	41,283	41,283	41,283	41,283	41,283

Monitoring methodology

AM0013 Version 02 shall be applied to the project. Figure 1 gives an illustrated view of the monitoring plan.

Figure 1 Monitoring Plan Drawing

Environmental impact

Upon conducting a hearing with Department of Environment Sabah regarding environmental regulations, we were told that there is no need to implement an Environmental Impact Assessment (EIA). However, concerning air quality, water quality, stack and noise, we found that it is necessary to conduct assessment with respect to environmental regulations. The project is thought to basically satisfy all the regulatory values.

Issues and tasks for project implementation

Table 4 Internal Rate of Return (IRR): After Tax

Project Case	CER price (USD/tCO2)	CER acquisition period
		0 years5 years16 years
Case 1	5	MinusMinusMinus
	10	MinusMinus4.3％
Case 2	5	0.3％1.0％3.0％
	10	0.3％1.9％5.1％
Case 3	5	0.3％2.6％6.8％
	10	0.3％5.2％11.6％

It can be seen that when there are no CERs (CER acquisition period is 0), the IRR is less than 1% in all cases. When there are CERs (CER acquisition period 5 years and 16 years), the IRR reaches a maximum level of around 5% in Cases 1 and 2. As for Case 3, the IRR is around 12% when the CER acquisition period is 16 years and the CER price is 10 USD/tCO2, and 5% when the acquisition period is 5 years. Accordingly, it was found that the project may be feasible as a private sector undertaking.