Fedepalma Approved CDM Validation Report

VALIDATION REPORT

DET NORSKE VERITAS

FEDEPALMA Sectoral CDM Umbrella Project for Methane

Capture, Fossil Fuel Displacement and

Cogeneration of Renewable Energy

in Colombia

REPORT NO. 2007-0011 REVISION NO. 01

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Head Office: Veritasvn. 1, N-1322 HØVIK, Norway

DET NORSKE VERITAS CERTIFICATION AS

Veritasveien 1 N-1322 Høvik Norway http://www.dnv.com

Date of first issue: Project No.: 2007-01-04 45010113 Approved by: Organisational unit:

Mari Grooss Viddal Climate Change Services

Client: Client ref.: FEDEPALMA Miguel Mazorra

Project Name: FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy Country: Colombia Methodology: AM0013 Version: 04 GHG reducing Measure/Technology: Combination of the following options: Option I: A covered anaerobic digester alone or plus Option II: biogas electricity generation plant running on cleaned biogas-methane and/or Option III: New High Efficiency Boilers. ER estimate: 757 067 annual average Size

Large Scale Small Scale

Validation Phases: Desk Review Follow up interviews Resolution of outstanding issues

Validation Status Corrective Actions Requested Clarifications Requested Full Approval and submission for registration Rejected

In summary, it is Det Norske Veritas Certification AS (DNV)’s opinion that the FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy in Colombia, as described in the PDD Version 8 of 16 June 2008, meets all relevant UNFCCC requirements for the CDM and all relevant host Party criteria and correctly applies the baseline and monitoring methodology AM0013 Version 4. DNV thus requests the registration of the project as a CDM project activity. Report No.: Date of this revision: Rev. No. Key words: 2007-0011 2008-07-04 01 Report title: FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy in Colombia

Climate Change

Kyoto Protocol

Validation

Clean Development Mechanism

Work carried out by:

Alfonso Capuchino, Barbara Lara, Ramesh Ramachandran

No distribution without permission from the Client or responsible organisational unit

Work verified by: Limited distribution

Michael Lehmann

Unrestricted distribution

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Abbreviations CAEMA Andean Center for Economics in the Environment BOD Biochemical Oxygen Demand CAR Corrective Action Request CDM Clean Development Mechanism CEF Carbon Emission Factor CER Certified Emission Reduction CH4 Methane CL Clarification request CO2 Carbon dioxide CO2e Carbon dioxide equivalent COD Chemical Oxygen Demand DNV Det Norske Veritas DNA Designated National Authority FEDEPALMA Federación Nacional de Cultivadores de Palma de Aceite GHG Greenhouse gas(es) GWP Global Warming Potential IPCC Intergovernmental Panel on Climate Change MP Monitoring Plan MVP Monitoring and Verification Plan N2O Nitrous oxide NGO Non-governmental Organisation ODA Official Development Assistance PDD Project Design Document UNFCCC United Nations Framework Convention on Climate Change WWTP Waste Water Treatment Process

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TABLE OF CONTENTS

1 EXECUTIVE SUMMARY – VALIDATION OPINION ..........................................5

2 INTRODUCTION ....................................................................................................6

2.1 Objective 6 2.2 Scope 6

3 METHODOLOGY ...................................................................................................7

3.1 Desk Review of the Project Design Documentation 7 3.2 Follow-up Interviews with Project Stakeholders 9

3.3 Resolution of Outstanding Issues 10

3.4 Internal Quality Control 12 3.5 Validation Team 12

4 VALIDATION FINDINGS ....................................................................................13

4.1 Participation Requirements 13

4.2 .Project Design 13 4.3 Baseline Determination 15

4.4 Additionality 18 4.5 Monitoring 21

4.6 Estimate of GHG Emissions 23

4.7 Environmental Impacts 26 4.8 Comments by Local Stakeholders 27

4.9 Comments by Parties, Stakeholders and NGOs 27

Appendix A: Validation Protocol

Appendix B: Certificates of Competence

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1 EXECUTIVE SUMMARY – VALIDATION OPINION Det Norske Veritas Certification AS (DNV) has performed a validation of the “FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy” in Colombia. The validation was performed on the basis of UNFCCC criteria for the Clean Development Mechanism and host Party criteria, as well as criteria given to provide for consistent project operations, monitoring and reporting. The review of the project design documentation and the subsequent follow-up interviews have provided DNV with sufficient evidence to determine the fulfilment of stated criteria. The host Party is Colombia and no Annex I Party has been identified yet. Colombia fulfils the participation criteria and has approved the project and authorized the project participants. The DNA from Colombia confirmed that the project assists in achieving sustainable development. The project correctly applies AM0013 “Avoided methane emissions from Organic Waste-water treatment”, version 04.

The project results in reductions of CH4/CO2 emissions by: a) burning CH4 emissions from the waste treatment process instead of passively venting and b) by generating electricity and/or co generating heat and steam for the extractions plants with methane power generators and implementing high pressure boilers instead of using diesel power plants located on site or purchasing electricity from the grid. The project results in reductions of CH4/CO2 emissions that are real, measurable and give long-term benefits to the mitigation of climate change. It is demonstrated that the project is not a likely baseline scenario. Emission reductions attributable to the project are hence additional to any that would occur in the absence of the project activity. The total emission reductions from the project are estimated to be on the average 757 067 tCO2e per year over the selected 7 year crediting period. The emission reduction forecast has been checked and it is deemed likely that the stated amount is achieved given that the underlying assumptions do not change. Adequate training and monitoring procedures have been implemented.

In summary, it is DNV’s opinion that the “FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy” in Colombia, as described in the PDD version 8 of 16 June 2008, meets all relevant UNFCCC requirements for the CDM and all relevant host Party criteria and correctly applies the baseline and monitoring methodology AM0013. DNV thus requests the registration of the project as a CDM project activity.

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2 INTRODUCTION Federación Nacional de Cultivadores de Palma de Aceite (FEDEPALMA) has commissioned Det Norske Veritas Certification AS (DNV) to perform a validation of the “FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy” project in Colombia (hereafter called “the project”). This report summarises the findings of the validation of the project, performed on the basis of UNFCCC criteria for the CDM, as well as criteria given to provide for consistent project operations, monitoring and reporting. UNFCCC criteria refer to Article 12 of the Kyoto Protocol, the CDM modalities and procedures and the subsequent decisions by the CDM Executive Board.

2.1 Objective The purpose of a validation is to have an independent third party assess the project design. In particular, the project's baseline, monitoring plan, and the project’s compliance with relevant UNFCCC and host Party criteria are validated in order to confirm that the project design, as documented, is sound and reasonable and meets the identified criteria. Validation is a requirement for all CDM projects and is seen as necessary to provide assurance to stakeholders of the quality of the project and its intended generation of certified emission reductions (CERs).

2.2 Scope The validation scope is defined as an independent and objective review of the project design document (PDD). The PDD is reviewed against the criteria stated in Article 12 of the Kyoto Protocol, the CDM modalities and procedures as agreed in the Marrakech Accords and the relevant decisions by the CDM Executive Board, including the approved baseline and monitoring methodology. The validation team has, based on the recommendations in the Validation and Verification Manual employed a risk-based approach, focusing on the identification of significant risks for project implementation and the generation of CERs.

The validation is not meant to provide any consulting towards the project participants. However, stated requests for clarifications and/or corrective actions may have provided input for improvement of the project design.

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3 METHODOLOGY The validation consisted of the following three phases:

I a desk review of the project design documents II follow-up interviews with project stakeholders

III the resolution of outstanding issues and the issuance of the final validation report and opinion.

The following sections outline each step in more detail.

3.1 Desk Review of the Project Design Documentation The following table outlines the documentation reviewed during the validation:

/1/ ACEE: Project design document for the FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy, Version 1 dated 15 November 2006, version 2, 3, 4, 5 6, 7 and final version 8 dated 19 June 2008.

/2/ Colombian DNA, Colombian Approval Letter and Modified Approval Letter that includes as project participants FEDEPALMA and the Andean Center for the Economics in Environment, dated 25 June 2007 and 22 August 2007.

/3/ International Emission Trading Association (IETA) & the World Bank’s Prototype Carbon Fund (PCF): Validation and Verification Manual. http://www.vvmanual.info

/4/ CDM Executive Board: AM0013, Approved methodology “Avoided methane emissions from Organic Wastewater Treatment” Version 04, EB28

/5/ CDM Executive Board: ACM0002, Approved methodology “Consolidated baseline methodology for grid-connected electricity generation from renewable sources” Version 06, 19 May, 2006

/6/ ACEE: Baseline calculation spreadsheet December 21, 2006; 03 October, 2007 and 02 November, 2007.

/7/ ACEE – BTG Carbon Consultancy: Pre Feasibility study for the identification and potential evaluation of carbon credits by methane capture applying a CDM project in the Colombian palm sector. August, 2004

/8/ FEDEPALMA: Environmental Performance of the Colombian Oil Palm Industry, 20 January 2006.

/9/ FEDEPALMA: Environmental Guidelines for the Oil Palm Agroindustry Sub sector, September 2003.

/10/ FEDEPALMA 2006 Statistical Yearbook, The Oil Palm Agroindustry in Colombia and the World, June 2006

/11/ FEDEPALMA: CDM Project Social Consultations, July 2006

/12/ CENIPALMA: Technical Bulletin 10 Effluent management in oil palm extract plants 1.

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Start up, operation and maintenance of stabilizing lagoons. March 1996

/13/ CENIPALMA: Technical Bulletin 11 Effluent management in extract plants 2. Stabilizing lagoons design. March 1997

/14/ ACEE: Heat Generation emissions simulation 16 October, 2007

/15/ FEDEPALMA: Waste waters external laboratories analysis for all plants included in the CDM project Delivered 21 August, 2007

/16/ FEDEPALMA: Representation agreement for the development of a CDM an umbrella Project in the Colombian Palm sector between FEDEPALMA and the included organizations FEDEPALMA 044/06 dated 30 January, 2006

/17/ FEDEPALMA: photographic compendium of the 32 plants waste water treatment lagoons.

/18/ FEDEPALMA/ACEE: CDM project 32 companies baseline forms August 2006

/19/ ACEE: Baseline emission factor 02 December, 2007

/20/ Methodological “Tool to determine project emissions from flaring gases containing methane” EB28 annex 13

/21/ CDM Executive Board: Tool for the demonstration and assessment of additionality (version 03), EB29

/22/ Agricultural Minister; Superficial, underground, marine and estuary waters use and liquid residuals Decree 1594 of 1984

/23/ Ministry of Environmental, Housing and Territorial Development: Environmental license regulation: DECREE 1220 of 25 April, 2005

/24/ Victor Clavero Montenergro Predictive maintenance of electric generator in a tri-generation plant in the Malaga delegation September 2006

/25/ ACEE FEDEPALMA: Monitoring scheme 19 December, 2006

/26/ Environment Agency: Guidance for Monitoring Landfill Gas Engine Emissions Draft for Consultation: November 2002 http://www.environment-agency.gov.uk/

/27/ IPCC Guidelines for National Greenhouse Gas Inventories 2006

/28/ Centro Nacional de Despacho: Real Generation Neon database 2005

The main changes between the PDD version 1 published for the 30 days stakeholder commenting period and version 2 published for the second stakeholder commenting period and final version 8 submitted for registration are as follows:

- Addressing of methodological changes from version 3 to version 4. - Addressing corrections over clarifications and corrective action request.

- Update of starting date of the first crediting period - Colombian grid emission factor calculation inclusion in the PDD.

- Revised section B.6.2 and B.7.1 according AM0013.

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- Revised Monitoring Plan in accordance to AM0013.

3.2 Follow-up Interviews with Project Stakeholders

Date Name Organization Topic

/29/ 2006-12-24 José Francisco Charry Ruiz

Colombian DNA

- Environmental permits - National Environmental legislation

- LoA status

/30/ 2006-12-22 Alvaro Portilla

Corporación Autónoma Regional de Santander - CAS.

- Local environmental regulations. - Current local oil palm producers’ environmental fulfilment. - Stakeholders meeting assistance.

/31/ 2006-12-22 Miguel Angel Mazorra

FEDEPALMA

- National oil palm statistics - Stakeholders consultation process - Pre feasibility study - Required technology - Management of the umbrella project

- Project implementation

- Project initiation date - Environmental requirements in the Palm sector

/32/ 2006-12-22 Jesus Alberto Garcia

CENIPALMA

- Waste water treatment conditions in the Colombian palm oil industry. - Current Lagoons design, operation and maintenance

/33/ 2006-12-23

Omar Cadena Argemiro Reyes Tito Eduardo Salcedo León Darío Uribe

Palmeras de Puerto Wilches Extractora Monterrey Palmas Oleaginosas Bucarelia Oleaginosas Las Brisas

- Physical conditions - Assessment of production figures as well as data provided to perform the baseline analysis. - Local permits and local environmental requirements. - Lagoons External

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laboratory analysis.

/34/ 2006-12-22

- Thomas Black - Juan Carlos Caycedo - Yohany Acosta

ACEE

- Proposed project technology - Baseline and monitoring methodologies - Additionality evaluation - Calculation of emission reductions - Monitoring plan - Emission factor calculation

3.3 Resolution of Outstanding Issues The objective of this phase of the validation was to resolve any outstanding issues which needed be clarified prior to DNV’s positive conclusion on the project design. In order to ensure transparency a validation protocol was customised for the project. The protocol shows in a transparent manner the criteria (requirements), means of verification and the results from validating the identified criteria. The validation protocol serves the following purposes:

• It organises, details and clarifies the requirements a CDM project is expected to meet; • It ensures a transparent validation process where the validator will document how a

particular requirement has been validated and the result of the validation.

The validation protocol consists of three tables. The different columns in these tables are described in the figure below. The completed validation protocol for the “FEDEPALMA Sectoral CDM Umbrella Project for Methane Capture, Fossil Fuel Displacement and Cogeneration of Renewable Energy” is enclosed in Appendix A to this report.

Findings established during the validation can either be seen as a non-fulfilment of CDM criteria or where a risk to the fulfilment of project objectives is identified. Corrective action requests (CAR) are issued, where:

i) mistakes have been made with a direct influence on project results; ii) CDM and/or methodology specific requirements have not been met; or iii) there is a risk that the project would not be accepted as a CDM project or that

emission reductions will not be certified.

A request for clarification (CL) may be used where additional information is needed to fully clarify an issue.

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Validation Protocol Table 1: Mandatory Requirements for CDM Project Activities

Requirement Reference Conclusion

The requirements the project must meet.

Gives reference to the legislation or agreement where the requirement is found.

This is either acceptable based on evidence provided (OK), a Corrective Action Request (CAR) of risk or non-compliance with stated requirements or a request for Clarification (CL) where further clarifications are needed.

Validation Protocol Table 2: Requirement checklist

Checklist Question Reference Means of verification (MoV)

Comment Draft and/or Final Conclusion

The various requirements in Table 2 are linked to checklist questions the project should meet. The checklist is organised in different sections, following the logic of the large-scale PDD template, version 03 - in effect as of: 28 July 2006. Each section is then further sub-divided.

Gives reference to documents where the answer to the checklist question or item is found.

Explains how conformance with the checklist question is investigated. Examples of means of verification are document review (DR) or interview (I). N/A means not applicable.

The section is used to elaborate and discuss the checklist question and/or the conformance to the question. It is further used to explain the conclusions reached.

This is either acceptable based on evidence provided (OK), or a corrective action request (CAR) due to non-compliance with the checklist question (See below). A request for clarification (CL) is used when the validation team has identified a need for further clarification.

Validation Protocol Table 3: Resolution of Corrective Action and Clarification Requests

Draft report clarifications and corrective action requests

Ref. to checklist question in table 2

Summary of project owner response

Validation conclusion

If the conclusions from the draft Validation are either a CAR or a CL, these should be listed in this section.

Reference to the checklist question number in Table 2 where the CAR or CL is explained.

The responses given by the project participants during the communications with the validation team should be summarised in this section.

This section should summarise the validation team’s responses and final conclusions. The conclusions should also be included in Table 2, under “Final Conclusion”.

Figure 1 Validation protocol tables

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3.4 Internal Quality Control The draft validation report including the initial validation findings underwent a technical review before being submitted to the project participants. The final validation report underwent another technical review before requesting registration of the project activity. The technical review was performed by a technical reviewer qualified in accordance with DNV’s qualification scheme for CDM validation and verification.

3.5 Validation Team Role/Qualification Last Name First Name Country

Team Leader / CDM Validator

Capuchino Alfonso Mexico

GHG Auditor Lara Barbara Mexico Sector Expert Ramachandran Ramesh India Technical Review Lehmann Michael Norway

The qualification of each individual validation team member is detailed in Appendix B to this report.

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4 VALIDATION FINDINGS The findings of the validation are stated in the following sections. The validation criteria (requirements), the means of verification and the results from validating the identified criteria are documented in more detail in the validation protocol in Appendix A. The final validation findings relate to the project design as documented and described in the revised and resubmitted project design documentation.

4.1 Participation Requirements The project participants are FEDEPALMA and Andean Center for Economics in the Environment. The host Party is Colombia. There is no Annex I Party yet identified. The host Party Colombia meets the relevant requirements to participate in the CDM. The National DNA has provided approval of the project and confirmation of their voluntary participation in it /2/. As confirmed by the DNA of Colombia, the project activity assists Colombia in achieving sustainable development by: - Improving waste water quality. - Reducing local and global emissions from fossil-generated electricity. - Conversion to renewable energy:. The validation did not reveal any information that indicates that public funding from an Annex I Party is involved and that the project can be seen as a diversion of official development assistance funding towards Colombia.

4.2 .Project Design The umbrella project includes 32 palm oil plants in Colombia from the north, central eastern and western regions of the country. The 32 plants included in the project are:

REGION PALM OIL EXTRACTION PLANT TOWN, DEPT. 1 Central Bucarelia S.A. Puerto Wilches, Santander 2 Central Extractora Monterrey S.A. Puerto Wilches, Santander 3 Central Oleaginosas Las Brisas S.A. Puerto Wilches, Santander 4 Central Palmeras de Puerto Wilches S.A. Puerto Wilches, Santander 5 Central Extractora Central S.A. Puerto Wilches, Santander 6 Central Palmas del Cesar S.A. San Alberto, Cesar 7 Central Indupalma S.A. San Alberto, Cesar 8 Central Agroince Ltda. y Cia. S.C.A San Martin, Cesar 9 Eastern Agropecuaria La Loma Ltda. Acacias, Meta

10 Eastern Palmeras del Llano S.A. Acacias, Meta 11 Eastern Inversiones La Mejorana Ltda. Acacias, Meta 12 Eastern Guaicaramo S.A. Barranca de Upia, Meta 13 Eastern Hacienda La Cabaña S.A. Cumaral, Meta 14 Eastern Plantaciones Unipalma de los Llanos Cumaral, Meta

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15 Eastern Sapuga S.A. Puerto Gaitan, Meta 16 Eastern Aceites Manuelita S. A. San Carlos de Guaroa, Meta 17 Eastern Oleaginosas San Marcos Ltda. San Carlos de Guaroa, Meta 18 Eastern Palmeras El Morichal Ltda San Carlos de Guaroa, Meta 19 Eastern Entrepalmas S.A. San Martin, Meta 20 Eastern Palmeras San Pedro Ltda. San Martin, Meta 21 Eastern Palmeras Santana Ltda. Villanueva, Casanare 22 Eastern Extractora Sur del Casanare S.A. Villanueva, Casanare 23 North C.I. Tequendama S.A. Aracataca, Magadalena 24 North Oleoflores Ltda. Codazzi, Cesar 25 North Aceites S.A. El Reten, Magdalena 26 North C.I. El Roble S.A. Tucurinca, Magdalena 27 North Frupalma S.A. Tucurinca, Magdalena 28 Western Astorga S.A. Tumaco, Nariño 29 Western Palmas de Tumaco S.A. Tumaco, Nariño 30 Western Palmeiras S.A. Tumaco, Nariño 31 Western Palmar Santa Elena Ltda. Tumaco, Nariño 32 Western Palmas Santafé Ltda. Tumaco, Nariño

As part of the validation DNV visited 4 plants (selected in a random sample from the same region) in order to assess current waste water treatment conditions, management system and transparency of the supplied data applied for the baseline calculation. In the case were facilities were not visited photographs of current process were requested and data applied for baseline and emission reduction estimations were assessed in all cases. The baseline Chemical Oxygen Demand (COD) was checked using data presented for the baseline year 2005 (with the exception of the Extractora Central S. A. plant where the baseline calculation was done taking into account the information of 2007, as this was a new palm oil processing plant which started operations in the middle of 2006).

Each of the 32 participating plants will implement one or more of the three technology options described below. Given that the palm oil extraction process is very similar from plant to plant, varying primarily in scale, the technology to be used to implement options I, II and III will be similar across plants, but will vary in terms of scale and some technology parameters may change among plants because each is free to purchase the technology from the supplier which offers the best conditions. Technology Option I: Methane Mitigation Only. A covered anaerobic digester must be built to optimize wastewater treatment efficiency and to capture the entire biogas/methane flow produced. This will be done in one of two ways: A) retrofit and cover the existing methanogenic lagoon, to convert it into a covered anaerobic digester with adequate sludge management capability, and capture and burn the methane in a high efficiency flare or in an industrial oven, or b) a new covered anaerobic digester is built and the old anaerobic lagoon is decommissioned. The new digester is built to conform to national waste water treatment laws and regulations, and is designed on the basis of the acceptability criteria of the approved

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methodology AM0013. To burn the methane, the plants will use an enclosed high flare system. Technology Option II: Methane Mitigation plus Electricity Generation for Internal Use. In addition to the methane capture technology implemented in Technology Option I, biogas cleaning systems and methane driven electricity generation plants are purchased and installed. CO2 emissions that previously resulted from diesel-driven electricity generation plants or, if applicable, power plants connected to the grid are displaced by generating electricity with methane in specially designed biogas power plants.

Technology Option III: Cogeneration of heat and power. In addition to the methane capture technology investments for Technology Option I, this option includes either the retrofitting of existing low efficiency boilers or the investment in new high efficiency boilers for high pressure steam generation, and the purchase of new high efficiency steam turbines to generate electricity. Heat is currently generated using biomass. The use of biogas for heat generation will thus not displace fossil fuels and result in reduction of CO2 emissions. However, electricity generation will displace diesel-driven electricity generation or, if applicable, grid electricity. In all cases an agreement between FEDEPALMA and palm oil producers included in the project ensures that people involved in the operation of above mentioned equipment will be trained by manufacturers in order to ensure correct equipment operation and maintenance.

Project duration is considered as 30 years and a renewable credit period of 7 years is selected starting on 1 September 2008 or the date of registration, whichever occurs later.

4.3 Baseline Determination The project applies the approved baseline and monitoring methodology AM0013 “Avoided methane emissions from organic waste-water treatment”, version 04 /4/, and the “Tool to determine project emissions from flaring gases containing methane” /20/. The baseline determination considers the emissions from a) the waste treatment processes; b) emissions from electricity consumption /generation and c) emissions from thermal energy generation. As per AM0013 the baseline is dynamic and determined based on the flow rate and COD of the organic wastewater entering the digesters in the project scenario, adjusted for the ratio of pre-project COD levels of the wastewater entering and leaving the lagoons. Pre-project COD levels of the wastewater at the inflow and outflow of the existing anaerobic lagoons were determined based on one year historical data as required by AM0013. All plants were considered in order to develop baseline emissions related to the waste treatment process, but no all oil plants producers are expecting to apply Technology Option II and III, and only those ones that expressed interest in utilizing biogas to produce electricity or thermal energy were collecting data on the historic electricity consumptions during 3 years (no date on thermal energy consumption was collected as displacement of thermal energy will not result in reduction of CO2 emissions as currently biomass residues are used to generate thermal energy). If other plants chose to utilize biogas for electricity generation, data on the

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historic electricity needs to be reported in the projects and monitoring reports and verified by the verifying DOE.

Utilisation of biogas PARTICIPATING EXTRACTION PLANTS Electricity Heat

AGROINCE LTDA & CIA S.C.A X INDUPALMA S.A. X PALMAS DEL CESAR S.A. X OLEAGINOSAS LAS BRISAS S.A.

X

PALMERAS DE PUERTO WILCHES S.A.

X

PALMAS OLEAGINOSAS BUCARELIA S.A.

X

EXTRACTORA CENTRAL X

CENTRAL ZONE

EXTRACTORA MONTERREY S.A.

X

ACEITES MANUELITA S.A. X PALMERAS SANTANA LTDA X PALMERAS SAN PEDRO LTDA. X SAPUGA S.A. X EL PALMAR DEL LLANO S.A. X PALMERAS EL MORICHAL LTDA

X

OLEAGINOSAS SAN MARCOS LTDA

X

INVERSIONES LA MEJORANA LTDA

X

HACIENDA LA CABAÑA S.A. X ENTREPALMAS S.A. X GUAICARAMO S.A. X EXTRACTORA DEL SUR DE CASANARE S.A.

X

AGROPECUARIA LA LOMA LTDA

X

EASTERN ZONE

PLANTACIONES UNIPALMA DE LOS LLANOS S.A.

X

C.I. TEQUENDAMA S.A. X C.I. EL ROBLE S.A. X EXTRACTORA FRUPALMA S.A. X ACEITES S.A. X

NORTHERN ZONE

OLEOFLORES LTDA X PALMAS DE TUMACO S.A. X WESTERN ZONE PALMEIRAS S.A. X

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PALMAR SANTA ELENA S.A. X ASTORGA S.A. X PALMAS SANTA FE S.A. X

The methodology is applicable to the project activity since it aggregates a bundle of similar methane recovery projects, each of which has at least one organic wastewater treatment plant and meets the following conditions: • The existing wastewater treatment systems consist of open lagoons with an “active”

anaerobic condition complemented with cooling and facultative lagoons. The existing wastewater treatment systems are characterized as follows:

� The depth of the open anaerobic lagoons participating in this bundled project are, in all cases, more than 1m;

� The residence time of the sludge in the open lagoons participating in this bundled project is, in all cases, more than thirty days. This was assessed by reviewing all the design data of the Oil Palm Plants, where one of the purposes of the lagoon construction design was to ensure an optimal COD and BOD removal from waste waters passing throughout the lagoon systems in order to comply with decree 1594/1984. All lagoon were designed to have a residence time of organic matter superior than 30 days, During the site visit it was confirmed that organic matter sediments remain in the bottom of the lagoon longer than one year;

� The temperature of the sludge in the open lagoons participating in this bundled project is, in all cases, higher than 10ºC. The monthly average ambient temperature in the northern region is above 27°C; in the cooler days the ambient temperature is above 22°C. Moreover, the waste water leaves the palm oil extraction plants at 50°C in average. Also in the other regions, all the plants are near sea level, the temperatures are tropical humid.

• The project activity involves no sludge storage before land application. The handling of sludge is to be carried out under aerobic conditions.

As required by the methodology, the various credible alternatives for the treatment of wastewater and sludge management were evaluated. Existing baseline conditions were verified by different means including a) site visit to 4 plants; b) interview with National sectoral experts /31/-/33/; c) document review of national sectoral technical information /8/-/10/; /12/ and /13/ and d) meetings with local and national environmental authorities /29/,/30/, sectoral authorities (FEDEPALMA and CEDEPALMA) /31/ and /32/. These verifications as well as a legal requirement assessment demonstrate that: - There is no requirement to capture and/or destroy methane from the waste water treatment process. - All existing waste water treatment plants (lagoon systems) in all the units complies with environmental regulations as stated in Decree 1594 of 1984 /22/, - There are no regulations that enforce the need to construct covered anaerobic digesters. Hence DNV was able to confirm that the use of anaerobic lagoon for the treatment of wastewater is the most plausible baseline scenario.

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The physical delineation of the project is defined as the extraction plant site including the waste water treatment and sludge management system.

The system boundaries are presented as follow:

GHGs involved Description

CH4 Direct emissions from the waste treatment processes.

CO2 Emissions from electricity consumption / generation Baseline emissions

CO2 Emissions from thermal energy generation (as biomass is used in the baseline, these emissions are considered CO2 neutral)

CO2 On-site fossil fuel consumption due to the project activity

CO2 Emissions from on-site electricity use Project emissions

CH4 Direct emissions from the waste treatment processes.

Leakage No leakage is associated with the project activity

4.4 Additionality The additionality of the project activity has been established for all three technology options individually using the “Tool for the demonstration and assessment of additionality” version 3 /21/:

Validation formally commenced only few days after the start date of the project, i.e. 15 November 2006 when FEDEPALMA began contractual consolidation of the participating plants in the CDM umbrella project. In addition, evidences were presented that demonstrate that CDM was considered long before the decision to proceed with the project activity. These include among others the decision by the Board of Directors of the Fondo de Fomento Palmero (Palm Sector Promotion Fund) to finance a CDM UMBRELLA PROJECT pre-feasibility study in December 2002, implementation of pilot CDM technology project in second semester of 2003 and pre-feasibility study finished august 2004 /7/ for the FEDEPALM CDM UMBRELLA PROJECT. Step 1: Identification of alternatives to the project activity consistent with current laws and regulations Each technology option includes 3 project activities alternatives and all of them are consistent with the current laws and regulations such as Decree 1594 of 1984 /22/. The three alternatives are as follow: - First Alternative: Continue with business as usual technology and processes.

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- Second Alternative: Implement the technological options proposed by this project activity without CDM or CER revenues. - Third Alternative: Implement the technological options proposed by this project activity with CDM and CER revenues. - Technology Option I complies with all applicable legal and regulatory requirements as confirmed during interviews with local and national environmental agencies //29/ and /30/ and by assessing each plant external laboratories tests to waste water discharges /15/. - Technology Option II complies with all applicable legal and regulatory requirements as stated by local and national environmental authorities during site visit. There are no laws, regulations or decrees that require palm oil mills to generate renewable energy with biogas, or that would have required the extractor plants to adopt this technology. The purchase and implementation of biogas-methane electricity generation plants along with the required equipment, infrastructure and technology, are in complete compliance with all national and local laws and regulations. - Technology Option III complies with all applicable legal and regulatory requirements as stated by local and national environmental authorities during site visit. The purchase and implementation of high pressure boilers, steam turbines, and the required equipment, infrastructure and technology for cogeneration, are in complete compliance with all national and local laws and regulations. All palm oil extraction plants will implement Technology Option I. Additionally, 19 out of the 32 palm oil extraction plants have expressed their interest to implement to utilise biogas to generate elecricity. CO2 emission reductions from those 10 extraction plants were calculated and presented within the PDD and its supportive calculation spreasheets. These plants will effectively implement electricity generation based upon cost-benefit analyses performed once the project is registered and the value of the CER incomes is determined. Those plants which did not expressed their interest to implement electricity generation will proceed in the same way as those that explicitly expressed their will: They will take a decision of investing in electricity generation based upon cost-benefit analyses once the projects is registered and the value of the CER incomes is determined. The total emission reductions from the 19 plants that expressed their interest to implement electricity generation is 8.087 tCO2e/year which represents 1,6% of the total emission reductions for the whole project. Implementation of heat generation will follow the same pattern of decision making: The plant managers will effectively implement heat generation based upon cost-benefit analyses performed once the project is registered and the value of the CER incomes is determined. As heat is currently generated from biomass residues, heat generation from biogas will not result emission reductions and would thus not have any impacts on the project’s emission reductions. Step2: Investment analysis - Technology Option I applies option 1 (simple cost analysis). - Technology Option II and III applies option 2 (the Investment Comparison Analysis).

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Technology Option I: The CDM pre-feasibility study conducted in 2004 /7/ carried out an extensive financial analysis of the costs and benefits associated with converting to the methane capture technology in 16 representative extraction plants located in the 4 regions of Colombia. As described in the simple financial analysis, without CER revenues, investment in Technology Option I produces negative returns, because there are no other revenues associated with the investment other than CERs. With CER revenues estimated at a price of US$6, the projects become economically attractive and makes the conversion of the existing open lagoon waste water treatment system to the CDM project activity of covered anaerobic digesters economically feasible.

It was assessed that in the baseline case, all 32 plants have complete waste water treatment (WWT) lagoons operating at levels that comply with national and local regulations. At least 80% of the BOD is being eliminated by the WWT systems in the baseline case. The project activity which will cover the anaerobic lagoons may increase the efficiency of WWT above 80%, but the participating plants are unsure as to how much it will increase. Therefore, the savings from reduced pollution charges will be marginal and too uncertain to be included in the financial analysis.

It was also assessed that Decree 1594/84 states that firms delivering wastewater to rivers must implement WWT systems with efficiencies no lower than 80% BOD removal. On the top of this mandatory removal, decree 3100/2003 obliges firms to report BOD loads to rivers and to pay a charge of Col$118,59/kg BOD in the effluent thrown away to rivers. The Colombian Pollution Charges program brings incentives to polluters in order to improve their existing WWT systems, but do not bring incentives to capture and mitigate methane as the project activity describes. It is not possible to assume that the pollution charges program will lead to improvements in the WWT systems that, in the future, incorporate neither an enclosed anaerobic digester, nor capture of methane emission, nor flaring methane in an enclosed flaring system.

Technology Option II and III:

The CDM pre-feasibility study /7/ utilized both IRR and NPV to compare the investment required for Technology Option II and III with CERs revenue and without CER revenue, in contrast to continuing with the business as usual which requires no incremental investment. These analyses take into account the savings from not having to purchase diesel fuel or electricity from the grid. The CDM pre-feasibility study /7/ calculated the suitable financial indicator for Technology Option II and III of the proposed CDM project activity. It included all relevant costs (for example, the investment cost, the operations and maintenance costs), and revenues (excluding CER revenues, but including subsidies/fiscal incentives where applicable), and, as appropriate, non-market cost and benefits in the case of public investors.

For option II and III also a sensitivity analysis is presented which takes into account critical assumptions and variables as follows:

• The cost of diesel fuel including transport, which has risen greatly since the pre-feasibility study was incresed;

• The price of grid-supplied electricity, which could increase over time significantly;

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VALIDATION REPORT

The results of the investment analysis were presented in a transparent manner with all the relevant assumptions presented in the PDD /1/ as well was assessed to ensure transparency. During site visit the origin and validity of the information applied were assessed, concluding that the documented results are real and accurate against data delivered.

Step 3: Barrier analysis This step was not selected by project participants.

Step 4: Common practise analysis Technology Option I:

All of the 52 palm oil extraction plants in Colombia today maintain and operate their open lagoon wastewater treatment system in order to comply with national laws and regulations, and do so under guidance from FEDEPALMA. Only the CDM pilot plant has implemented and operates the desired new technology, which was implemented with FEDEPALMA to prepare for the SECTORAL CDM UMBRELLA PROJECT.

As observed during the site visit to the selected oil plant producers facilities and as confirmed after meeting local and national environmental authorities, besided the FEDEPALMA CDM project bundle there are no similar practises as Technology Option I, converting open anaerobic lagoons to capture the methane and mitigate it. There are no similar technologies implemented in other agro-industrial sectors or in other industrial sectors of Colombia.

Technology Option II: All of the plants in the sector have at least one diesel power plant, even if they are interconnected, to ensure electricity supply if grid supply is interupted. Besided the FEDEPALMA CDM pilot project, there are no plants in Colombia operating with power plants designed for operation only with methane from biogas.

Technology Option III:

There are no plants in Colombia operating with cogeneration systems designed to capture the methane and employ it in an efficient manner to co-generate heat, vapour and electricity for own use. From the analyses provided by project participants it can be determined that the alternative “Continue with business as usual” for all 3 Technology Options is the most likely baseline scenario. Therefore, emission reductions attributable to the project are additional to any that would occur in the absence of the project activity.

4.5 Monitoring The project applies the approved monitoring methodology AM0013 “Avoided methane emissions from Organic Wastewater Treatment” Version 04 /4/.

For grid electricity displaced, ACM0002 “Consolidated baseline methodology for grid-connected electricity generation from renewable sources” version 6 /5/ has been applied.

The monitoring parameters are adequate and consistent with both methodologies AM0013 and ACM0002.

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Details of the data to be collected, the recording frequency, proportion, and control forms are described and deemed appropriate.

The responsibilities and authorities for local project management are described in the PDD, and overall project responsibilities and authorities are stated in the FEDEPALMA Representation agreement for the development of a CDM an umbrella Project in the Colombian Palm sector between FEDEPALMA and the included organizations /14/.

Project management includes the following responsibilities: - Baseline and project data monitoring will be conducted by the extraction plant’s metric

analyst with the support of the enterprise engineer representing the umbrella project. - Calibration of monitoring equipment will be carried out by independent, outside laboratories.

4.5.1 Parameters determined ex-ante - COD that leaves the anaerobic lagoon with the effluent, D3 / COD a, out, the value applied is a field measurement. - COD that enters the lagoon which is assumed to be equal to the COD input to the digester or directed to land application, D4 / COD a, in, the value applied is a direct measurement. - Amount of electricity in the year y that would be consumed at the project site in the absence of the project activity, D7 / EGy, the value applied is a direct measurement (Historic electricity consumption for some more mills may be added during verification). - Quantity of thermal energy that would be consumed in year y at the project site in the absence of the project activity using fossil fuel, D9/HGbl,y, the value applied is 0, None of the project participants use fossil fuels for thermal energy production purposes. - Maximum methane producing capacity Bo IPCC /27/ default value of 0.21 will be used. - CEF BL, therm, CO2 emissions intensity for thermal generation, value 0. For sites where the electricity used in absence of the project activity would be generated by means of diesel fired generator sets, CEFBl,elec,y equals 0.8 tCO2/MWh following Table AMS-1.D.1 due aggregated electricity generation of all project participants being far less than 15GWh/y. For sites where the electricity used in absence of the project activity would be imported from the grid, the CO2 emission factor for electricity consumed at the project site in the absence of the project activity, the calculation was performed according to ACM0002 v.6. The calculation performed in the attached file is only for demonstrative purposes related to the present PDD. CEF Bl, elec, y will be calculated ex-post in a yearly basis during the whole crediting period.

4.5.2 Parameters monitored ex-post The baseline and project emission parameters that are monitored ex-post are indicated in Section B.7.1 and Annex 4 of the PDD. DNV has verified that the list of parameters and monitoring methodology are in line with the requirements of Version4 AM0013, ACM002 and the “Tool to determine project emissions from flaring gases containing methane”.

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The CO2 emission factor for displacing grid electricity CEFBl,, elec,y will be determined based on the a dispatch data analysis for the operating margin (OM) as described in ACM0002 /5/ and the calculation described in emission factor calculation spreadsheet /19/. For ex-ante emission reduction forecast contained in the PDD, the operating margin and build margin emission coefficients have been determined using data from 2005 and was calculated to be of 0.2766 tCO2e/MWh. During the project’s crediting period the emission factor will be determined ex-post based on national data is published by the dispatch centre of Colombia /28/.

4.5.3 Management system and quality assurance PDD /1/ provides in the monitoring plan a clear description of basic quality assurance activities, which were found correctly documented and addressed.

FEDEPALMA has in place a management system requirements which will ensure adequate project monitoring and performance, but individually oil palm producers do not in all cases have management system requirements (training, calibration, corrective and preventive actions, document and record control) Specially, emergency procedures are not in place and the implementation of such procedures will need to be verified during the first verification by the verifying DOE.

During site visit and document review it was verified that the FEDEPALMA agreement with involved oil palm producers indicates the inclusion of training requirements for employees involved in the project as well as operation and maintenance requirements.

The monitoring system /25/, which will be installed by all 32 participating plants, relies on continuous emissions monitoring for all relevant applications, with fully automated data gathering and storage, with parallel reporting to all interested parties. The automated monitoring system at each extraction plant will interconnect to a sector-wide computer network that will permit the capture of the information flow from each instrument, in order to save it in relational databases, which will permit the digital archiving of the emissions data for any consultation or calculations of baseline emissions, project activity emissions, and estimation of CERs being generated. To ensure the continuity of the capture and registration of the data flows, thereby reducing the risks of data loss when maintenance or calibration is carried out on the instruments, monitoring redundancy will be applied. Key data flows will have double flow monitors. The Bundled CDM project information will be managed by FEDEPALMA who will analyze the consolidated data for the 32 plants and use it to prepare the quarterly and yearly monitoring reports required for annual verification. The responsibilities and authorities for project management have been defined and procedures for monitoring and reporting, including QA/QC procedures, have been identified. All monitoring data will be kept for at least two years after the end of the crediting period or the last issuance of CERs for this project activity, whichever occurs later.

4.6 Estimate of GHG Emissions The emission reductions are calculated as the difference of the baseline emissions and the project emissions. No leakage is associated with the project activity. The formulas and factors used in the project’s emissions calculations are in accordance to the approved baseline methodology AM0013, version 4.

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All aspects related to the direct and indirect GHG emissions relevant to the project activity have been addressed and calculations are presented in a transparent manner and in line with the approved methodology AM0013 version 04.

The calculations for the ex-ante estimation of expected emission reductions are transparently documented, and correct and appropriate assumptions and emission factors in accordance with the emission factors given by AM0013 version 04 have been applied.

Baseline emissions Baseline emissions were calculated considering the 32 plants indication to apply one of the 3 technology option described. In each case palm oil producers were requested to deliver in a survey /18/ information which was included in the baseline emission calculation file /6/. This information involves chemical oxygen demand (COD) of the effluent that historically entered the lagoon in the absence of the project activity, the amount of electricity that was historically consumed at the project site, the ambient temperature for the region, the current lagoon dimensions, on-site electricity generation with diesel generators, monthly production and organic charge at the inlet and outlet of the treatment system. Baseline emissions are calculated in two sections: (i) Lagoon baseline emissions (ii) Electricity baseline emissions. (i) Lagoon baseline emissions The baseline emissions from the lagoon are estimated based on the, the maximum methane producing capacity (Bo) and a methane conversion factor (MCF) that expresses what proportion of the effluent would be anaerobically digested in the open lagoons. Project participants applies a value of (Bo) 0.21 kg CH4/kg COD. And MCFbaseline,m is estimated as the product of the fraction of anaerobic degradation due to depth (fd) and the fraction of anaerobic degradation due to temperature (ft). (ii) Electricity baseline emissions The amount of electricity that was historically consumed at the project site was requested from all oil plants intending to generate electricity and verified on site during the site visit to the selected plants. Information were calculated using the average of the 3 years 2003-2005. The CO2 emission factor for electricity consumed at the project site in the absence of the project activity (tCO2/MWh) will be calculated according to ACM0002 /5/ applying the dispatch data analysis for the OM. A combined margin of 0.2766 tCO2e/MWh was applied for the ex-ante emission reduction forecast included in the PDD /19/. The rest of the values were established with a value of zero as: - So far, none of the project participants have expressed interest in generating power to feed

into the grid - None of the project participants use fossil fuels for thermal energy production purposes.

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Project Emissions The project activity emissions consist of: � the residual methane emitted from the facultative lagoons, � physical leakage from the digester, � stack emissions from the flare, industrial boiler or the biogas generation plant alter

burning the methane, � emissions from heat use and electricity use due to the project activity using fossil fuel, for

example if there is insufficient biogas or biomass available at any point in time; � emissions related to energy consumption in auxiliary equipment needed to operate the

digester, the filtering systems, and to manage the sludge, � Emissions from land application of sludge, � Emissions from wastewater removed in the dewatering process.

Methane emissions from lagoons The calculation of these CH4 emissions is conservatively carried out in the same way as for the baseline, using the same values for Bo and the methane conversion factor (MCF): Physical leakage from biodigesters The project applies the IPCC guidelines specify physical leakage from anaerobic digesters as being 15% of total biogas production. Stack emissions from the flare or energy generation Methane contained in the residual biogas collected from the anaerobic digester outlets will be mitigated in two possible ways:

1. In generation of electricity in gensets, or of heat in boilers, during the mill’s operating hours; or,

2. In the flaring system when the mill is not operating and gas is not stored in storage tanks.

Ex-ante project emissions of methane from the stacks and ex ante residual emissions of methane from the flares are calculated using the "Tool to determine project emissions from flaring gases containing methane” /20/. When biogas is used to generate electricity or heat in the gensets or the boilers, the project will only use new equipment with manufacturers specifications that ensure that methane mitigation efficiencies are higher than 99%. For the flare efficiency of the enclosed flare efficiency, the project will use the option of applying a 90% default flare efficiency and will monitor compliance of the flares’ operation with manufacturer’s specifications and parameters. Emissions related to energy consumption in auxiliary equipment needed to operate the digester, the filtering systems, and to manage the sludge as well as Emissions from heat use and electricity use due to the project activity (PEelec/heat):

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Increase of electricity use is expected to be negligible since additional use of electricity by the project activity will not be higher than 1% from the current electricity use which was corroborated by an analysis of electricity consumption of auxiliary equipment proposed for the project. According to AM0013, electricity generation and thermal generation are required to be calculated if methane is used to generate electricity and/or heat and project participants wish to claim emission reductions from this activity. As per electricity generation, project participants willing to install power plants will implement power capacity enough to become self sufficient in electricity consumption. Therefore, CEFd is expected to be zero. Accordingly, as per heat generation, project participants willing to produce heat from the methane content in the biogas, at present use biomass from Fresh Fruit Bunches to produce heat. Therefore, CERPr,therm,y is expected to be zero, as well. As a conservative measure, 1% of the baseline emissions were assumed for the calculation of emissions from heat use and electricity use due to the project activity. Emissions from land application of sludge Nitrous oxide emissions from land application of sludge are to be estimated in accordance with AM0013.:The project activity will improve sludge management and ensure aerobic degradation of the sludge both in the dewatering facility and in land application. Thus, anaerobic COD degradation from sludge and formation of nitrous oxide is assumed to be negligible in the project activity. As demonstrated in baseline file /6/ and as a conservative measure, 1% of the calculated baseline emissions are deducted due to emissions from sludge management. The “Improved Dewatering Facility” will include gravity based drainage for removal of excess water from the sludge, with daily transport of the dewatered sludge to the palm growing fields. The excess water from the sludge will be re-injected into the anaerobic digester while the sludge will be dispersed in the growing fields in the most aerobic conditions possible. According to the AM0013, it is not possible to assure full aerobic degradation of the sludge. Data parameters D32 and D33 takes into account this potential condition and discount from the baseline emissions the potential methane and nitrous oxide emissions to be generated in the land application of the sludge. Emissions from wastewater removed in the dewatering process These emissions apply maximum methane producing capacity and methane conversion factor which were already estimated.

4.7 Environmental Impacts The construction and implementation of the three CDM options are non-intrusive to the surrounding communities and do not negatively affect local environmental conditions. As such, the construction and implementation do not require environmental licenses or permits from the regional or national environmental authorities as stated by National and local environmental authorities and stated in Decree 1220 of 25 April, 2005 /23/. As plants will work to maximize the efficiency of their wastewater treatment in the new anaerobic digesters, this should result in substantial improvements in the quality of final water effluents. In addition, odours are eliminated by capturing, cleaning and burning the biogas. As such, the implementation and operation of biogas capture and mitigation will produce net

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positive benefits locally and globally with regard to water effluents and to local and global emissions from waste water treatment.

As biogas and biomass displace diesel and grid electricity, a number of collateral emissions will be displaced in addition to GHG, locally and globally. These include heavy and fine particulates, SO2, NOx and CO among others. This elimination of fossil fuel emissions through the generation of renewable energy from biomass and biogas should improve the local environment in general, as well as workplace conditions. However, increased burning of residual fiber and residual nutshells in the cogeneration process which will occur in some of the plants may result in increased emissions of dark smoke, consisting of particulates, which may be controlled with new investments in technology such as Cyclones. During site visit were evaluated the pre-feasibility study /7/ which includes the Environmental Impact assessment. As well, were interviewed project participants and local environmental authorities in order to ensure that environmental concerns were adequate identified and actions correctly taken.

4.8 Comments by Local Stakeholders After all the participating extractor plants were consolidated in the CDM Project Bundle, the Palm Growers Association invited a wide range of stakeholders in the areas where the projects are located to presentations and in-depth discussions of the new CDM emissions reduction and renewable energy project. Stakeholders meetings included community representatives, municipal health and environment offices, regional environmental authorities, fishing associations, environmental NGOs, water service utility companies, community action committees, and universities, among others. Stakeholder consultations were held in each of the four major palm growing regions near the project activities. The new project activity was presented in detail, and stakeholders gave their comments in writing Project participants have delivered evidence of all stakeholders meeting and comments received./11/ No actions were necessary in order to take due account of comments received and this was verified by interviews with different persons that assisted in the process /33/.

4.9 Comments by Parties, Stakeholders and NGOs The PDD (version 1 dated 15 November 2006 applying version 03 of AM0013 and version 2 dated 15 November 2006 applying version 04 of AM0013) was made publicly available on DNV’s climate change website1 in two different periods and Parties, stakeholders and NGOs were through the CDM website invited to provide comments during a 30 days period for version 1 from 22 November 2006 to 21 December 2006 and from 15 March 2007 to 13 April, 2007, resepectively. In both periods no comments were received.

CDM Validation 2007-0011, rev. 01 27

1 http://www.dnv.com/focus/climate_change/projects/projectlist.asp?

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CDM Validation, DNV Report No. 2007-0011, rev. 01 A-1

APPENDIX A

CDM VALIDATION PROTOCOL

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Table 1 Mandatory Requirements for Clean Development Mechanism (CDM) Project Activities Requirement Reference Conclusion

About Parties

1. The project shall assist Parties included in Annex I in achieving compliance with part of their emission reduction commitment under Art. 3.

Kyoto Protocol Art.12.2 N/A

2. The project shall assist non-Annex I Parties in contributing to the ultimate objective of the UNFCCC.

Kyoto Protocol Art.12.2. OK

3. The project shall have the written approval of voluntary participation from the designated national authority of each Party involved.

Kyoto Protocol Art. 12.5a, CDM Modalities and Procedures §40a

CAR 1

OK

4. The project shall assist non-Annex I Parties in achieving sustainable development and shall have obtained confirmation by the host country thereof.

Kyoto Protocol Art. 12.2, CDM Modalities and Procedures §40a

CAR 1

OK

5. In case public funding from Parties included in Annex I is used for the project activity, these Parties shall provide an affirmation that such funding does not result in a diversion of official development assistance and is separate from and is not counted towards the financial obligations of these Parties.

Decision 17/CP.7, CDM Modalities and Procedures Appendix B, § 2

OK

6. Parties participating in the CDM shall designate a national authority for the CDM. CDM Modalities and Procedures §29 OK

7. The host Party and the participating Annex I Party shall be a Party to the Kyoto Protocol.

CDM Modalities §30/31a OK

8. The participating Annex I Party’s assigned amount shall have been calculated and recorded.

CDM Modalities and Procedures §31b No Annex1 party

identified

9. The participating Annex I Party shall have in place a national system for estimating GHG emissions and a national registry in accordance with Kyoto

CDM Modalities and Procedures §31b No Annex1 party

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Requirement Reference Conclusion Protocol Article 5 and 7. identified

About additionality

10. Reduction in GHG emissions shall be additional to any that would occur in the absence of the project activity, i.e. a CDM project activity is additional if anthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in the absence of the registered CDM project activity.

Kyoto Protocol Art. 12.5c, CDM Modalities and Procedures §43

OK

About forecast emission reductions and environmental impacts

11. The emission reductions shall be real, measurable and give long-term benefits related to the mitigation of climate change.

Kyoto Protocol Art. 12.5b OK

For large-scale projects only

12. Documentation on the analysis of the environmental impacts of the project activity, including transboundary impacts, shall be submitted, and, if those impacts are considered significant by the project participants or the Host Party, an environmental impact assessment in accordance with procedures as required by the Host Party shall be carried out.

CDM Modalities and Procedures §37c OK

About stakeholder involvement

13. Comments by local stakeholders shall be invited, a summary of these provided and how due account was taken of any comments received.

CDM Modalities and Procedures §37b OK

14. Parties, stakeholders and UNFCCC accredited NGOs shall have been invited to comment on the validation requirements for minimum 30 days, and the project design document and comments have been made publicly available.

CDM Modalities and Procedures §40 OK

Other

15. The baseline and monitoring methodology shall be previously approved by the CDM Executive Board.

CDM Modalities and Procedures §37e CL 1 OK

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Requirement Reference Conclusion

16. A baseline shall be established on a project-specific basis, in a transparent manner and taking into account relevant national and/or sectoral policies and circumstances.

CDM Modalities and Procedures §45c,d CL 2 OK

17. The baseline methodology shall exclude to earn CERs for decreases in activity levels outside the project activity or due to force majeure.

CDM Modalities and Procedures §47 OK

18. The project design document shall be in conformance with the UNFCCC CDM-PDD format.

CDM Modalities and Procedures Appendix B, EB Decision

OK

19. Provisions for monitoring, verification and reporting shall be in accordance with the modalities described in the Marrakech Accords and relevant decisions of the COP/MOP.

CDM Modalities and Procedures §37f OK

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Table 2 Requirements Checklist CHECKLIST QUESTION

* MoV = Means of Verification, DR= Document Review, I= Interview

Ref. MoV* COMMENTS Draft Concl.

Final Concl.

A. General Description of Project Activity The project design is assessed.

A.1. Project Boundaries Project Boundaries are the limits and borders defining the

GHG emission reduction project.

A.1.1. Are the project’s spatial boundaries (geographical) clearly defined?

/1/ DR The 31 participating extraction plants are located in the four major palm oil production regions, which are North; Central; Eastern; and Western Regions. PDD describes an umbrella project that includes 31 palm oil plants but baseline calculation sheet includes 32 plants.

CL 2 OK

A.1.2. Are the project’s system boundaries (components and facilities used to mitigate GHGs) clearly defined?

/1/ DR Yes- Clearly defined for each one of the 3 technology options. Technology Option I: methane mitigation only. A covered anaerobic digester; high efficiency flare or industrial oven; real time data metering; sludge extraction; and biogas cleaning and filtering systems. For the Technology Option I, there are two plausible methods, one by modifying the existing lagoon, and the second by installing a new one. Technology Option II: Methane Mitigation plus Electricity Generation for Internal a

OK

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CHECKLIST QUESTION * MoV = Means of Verification, DR= Document Review, I=

Interview Ref. MoV* COMMENTS Draft

Concl. Final Concl.

biogas electricity generation plant running on cleaned biogas-methane, obtained from the covered anaerobic digester and data loggers and analyzers; Technology Option III: Cogeneration of heat and power.: New High Efficiency Boilers; New high efficiency small scale steam turbines to generate electricity; Electricity control and distribution technology; Technology and equipment for interconnection to the grid. And Data monitoring, recovery and transmission systems to central databases.

A.2. Participation Requirements Referring to Part A, Annex 1 and 2 of the PDD as well

as the CDM glossary with respect to the terms Party, Letter of Approval, Authorization and Project Participant.

A.2.1. Which Parties and project participants are participating in the project?

/1/ DR The Host Party is the Republic of Colombia; Project participants area FEDEPALMA and Andean Center for Economics in the Environment

OK

A.2.2. Have all involved Parties provided a valid and complete letter of approval and have all private/public project participants been authorized by an involved Party?

/1/ /2/

DR No written proof from the Colombian DNA. Project participants deliver the LoA from the Colombian DNA. There is no Annex-I party identified.

CAR 1 OK

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Concl. Final Concl.

LoA was provided.

A.2.3. Do all participating Parties fulfil the participation requirements as follows:

- Ratification of the Kyoto Protocol

- Voluntary participation

- Designated a National Authority

/1/ DR Colombia has designated the Ministry of Environment and Housing and territorial development as the DNA and ratified the Kyoto Protocol on November 30th, 2001. No Annex I Party is yet identified.

OK

A.2.4. Potential public funding for the project from Parties in Annex I shall not be a diversion of official development assistance.

/1/ DR I

There is no evidence of public funding from parties included in Annex 1.

OK

A.3. Technology to be employed Validation of project technology focuses on the project

engineering, choice of technology and competence/ maintenance needs. The validator should ensure that environmentally safe and sound technology and know-how is used.

A.3.1. Does the project design engineering reflect current good practices?

/1/

DR I

In Colombia there is no reference to similar projects. FEDEPALMA with other oil palm producers develop a digester used specifically as a study model for this Project.

OK

A.3.2. Does the project use state of the art technology or would the technology result in a significantly better performance than any commonly used

/1/ DR I

Yes. Even that a technology supplier has not been selected yet, the project has been conceptualized with the most modern

OK

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Concl. Final Concl.

technologies in the host country? technology available or even with developed technology, which will meet with the AM00013 methodology requirements.

A.3.3. Does the project make provisions for meeting training and maintenance needs?

/1/ DR I

FEDEPALMA acting as a Project participant and as association of all palm oil producers provide bid specifications including training and maintenance support by equipment supplier.

OK

A.4. Contribution to Sustainable Development The project’s contribution to sustainable development is assessed.

A.4.1. Has the host country confirmed that the project assists it in achieving sustainable development?

/1/ DR I

Even that LOA had not been issued yet, an interview with Colombian DNA declares that CDM projects must look to be implemented in full industrial sectors rather than sole organizations. Palm oil plants are identified as one of the most critical producers in the country. LoA had been delivered

CAR 1 OK

A.4.2. Will the project create other environmental or social benefits than GHG emission reductions?

/1/ DR Yes. Improvement of waste water quality and conversion to renewable energy.

OK

B. Project Baseline The validation of the project baseline establishes whether the selected baseline methodology is appropriate and whether the selected baseline represents a likely baseline scenario.

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Concl. Final Concl.

B.1. Baseline Methodology It is assessed whether the project applies an appropriate baseline methodology.

B.1.1. Does the project apply an approved methodology and the correct version thereof?

/1/ DR The applied methodology AM00013 version 3 has a deadline to requests for registration 15 Feb 07 and the starting date of the crediting period is March 2007 which needs to be defined correctly. 15 November 2006 is the new starting date. 12 September 2008 is the new starting of the crediting period.

CL 1 OK

B.1.2. Are the applicability criteria in the baseline methodology all fulfilled?

/1/ DR Monitoring plan was assessed finding that some data defined in the methodology were not included in the PDD, ex-ante data/calculations are not included in the PDD and monitoring proposed process diagram shows that some monitoring devices are located in an inadequate position; this could lead to monitoring mistakes. Final PDD and monitoring diagrams delivered for validation includes all equipment required by the methodology and placed as required. As ex-ante applied values are so different because of source come from 32 different plants project participants

CAR 2 OK

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Concl. Final Concl.

include it in the baseline emission calculation spreadsheet.

B.2. Baseline Scenario Determination The choice of the baseline scenario will be validated with focus on whether the baseline is a likely scenario, and whether the methodology to define the baseline scenario has been followed in a complete and transparent manner.

B.2.1. What is the baseline scenario?

/1/ DR Operation of open lagoon treatment system with an active anaerobic condition and electricity generation by diesel generators. Baseline scenario has been defined as the continuation of methane emissions that would have been released without the implementation of the project activity and the CO2 emissions that would be released due to fossil fuel combustion in electricity generation in case the project activity is not implemented.

OK

B.2.2. What other alternative scenarios have been considered and why is the selected scenario the most likely one?

/1/ DR First Alternative: Continue with business as usual technology and processes. These are cost-effective, proven technologies and processes that conform within all national environmental regulations, and are very well established practices throughout the sector. All of the plants in the sector today

OK

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maintain and operate their open lagoon treatment system in order to comply with national laws and regulations. Second Alternative: Implement the technological options proposed by this project activity without CDM or CER revenues. There is no precedent for the conversion to these technologies without CDM. Nowhere in the country, or in the region, is this package of methane capture technology being introduced without CDM, with the exception of the CDM Pilot Project. As the financial analysis delivered to the validator, the NPV and IRR of carrying out this conversion is negative without CDM and therefore is not feasible or sustainable without CER sales incomes. Third Alternative: Implement the technological options proposed by this project activity with CDM and CER revenues. The CDM pre-feasibility study conducted in 2004 by the Biomass Technology Group (Netherlands) carried out an extensive financial analysis of the costs and benefits

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Concl. Final Concl.

associated with converting to the methane capture technology in 16 representative extraction plants located in the 4 regions of Colombia. As shown in the simple financial analysis below, With CER revenues estimated at a price of US$6, the projects become economically attractive and justify the conversion of the existing open lagoon waste water treatment system to the CDM project activity of covered anaerobic digesters.

B.2.3. Has the baseline scenario been determined according to the methodology?

/1/ DR Not all parameters required by the methodology are addressed in the PDD and this does not ensure an accurate baseline determination. PDD version 2 and further versions address all data/parameters required by the methodology.

CAR 2 OK

B.2.4. Has the baseline scenario been determined using conservative assumptions where possible?

/1/ DR Baseline scenario has been defined as the continuation of methane emissions that would have been released without the implementation of the project activity and the CO2 emissions that would be released due to fossil fuel combustion in electricity generation in case the project activity is not implemented.

OK

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When FEDEPALMA or the Oil producers were not able to measure or report a value, then IPCCC factors were used.

B.2.5. Does the baseline scenario sufficiently take into account relevant national and/or sectoral policies, macro-economic trends and political aspirations?

/1/ DR I

In Colombia there are no regulations pertaining to mandatory installation of closed anaerobic digesters technology or related to combustion of biogas. The applicability of the national policies was assessed with the Ministry of Environment and the sectorial policies with FEDEPALMA. This conforms that the project meets all requirements.

OK

B.2.6. Is the baseline scenario determination compatible with the available data and are all literature and sources clearly referenced?

/1/ DR No. During data calculation for determining baseline emissions were found that Data 3 (COD that leaves the lagoon with the effluent) was calculated by each one of the oil plants but at a site visit was found that reported values does not always matches with production and site records. As well, was identified that not all 32 plants external laboratory plants external laboratory analysis were provided. Baseline emission calculation spreadsheet matches values between applied values and the one reported by external laboratories and

CAR 3 CL 3

OK

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this information had been provided for all 32 oil plants.

B.2.7. Have the major risks to the baseline been identified?

/1/ DR A risk to the baseline could include the possibility of changes in the regulations. Regulatory requirements relating to wastewater treatment will be monitored and the baseline, if necessary, updated at renewal of the crediting period.

OK

B.3. Additionality Determination The assessment of additionality will be validated with focus on whether the project itself is not a likely baseline scenario.

B.3.1. Is the project additionality assessed according to the methodology?

/1/ DR Additionality is addressed: by Option B) Option B) Using the latest version of the “Tool for the demonstration and assessment of additionality” Project Participants does not applies the latest version /Version 3)

CL 4 OK

B.3.2. Are all assumptions stated in a transparent and conservative manner?

/1/ DR All assumptions have been assessed on site and verified as required.

OK

B.3.3. Is sufficient evidence provided to support the relevance of the arguments made?

/1/ DR Yes all arguments were verified by supported documents like in the case of financial analysis, and/or by physical verification and/or interviews with involved entities.

OK

B.3.4. If the starting date of the project activity is before /1/ DR During validation process seriously OK

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the date of validation, has sufficient evidence been provided that the incentive from the CDM was seriously considered in the decision to proceed with the project activity?

consideration of the CDM was assessed through several documents such as the pre-feasibility study and multiple executive summaries.

B.4. Calculation of GHG Emission Reductions – Project emissions

It is assessed whether the project emissions are stated according to the methodology and whether the argumentation for the choice of default factors and values – where applicable – is justified.

B.4.1. Are the calculations documented according to the approved methodology and in a complete and transparent manner?

/1/ DR Calculations were done according to the methodology but the provided spreadsheet does not include the visualization of the applied formulas (locked). Colombian Grid factor was determined with non updated information and using a small scale methodology, please clarifiy. As a conservative measure, 1% of the calculated project emissions are estimated due to emissions from sludge management. Project Participant provides spreadsheet with the required information. This was assessed

CL 5 CL 6 CL 7

OK

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and found complete and in a transparent manner. As well, grid factor was assessed and determined to correctly calculated as required by ACM0002 and according to large scale project

B.4.2. Have conservative assumptions been used when calculating the project emissions?

/1/ DR Project activity emissions are estimated at 20% of the baseline emissions as a conservative measure. Each source of project activity emissions are described in the PDD and in case of required IPCCC factors were applied. Emissions from heat use and electricity use due to the project activity is expected to be negligible since additional use of electricity by the project activity will not be higher than 1% from the current electricity use, please provide the basis of this assumption for estimating exante project emissions.

CL 8 OK

B.4.3. Are uncertainties in the project emission estimates properly addressed?

/1/ DR Major uncertainty are related to flared emissions which in this case will be monitored continually as defined in option b) for enclosed flares described in the Methodological “Tool to determine project emissions from flaring gases containing

OK

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methane”

B.5. Calculation of GHG Emission Reductions – Baseline emissions

It is assessed whether the baseline emissions are stated according to the methodology and whether the argumentation for the choice of default factors and values – where applicable – is justified.

B.5.1. Are the calculations documented according to the approved methodology and in a complete and transparent manner?

/1/ DR PDD does not include data to be monitored for the determination of baseline emissions. During data calculation for determining baseline emissions were found that Data 3 (COD that leaves the lagoon with the effluent) was calculated by each one of the oil plants but at a site visit was found that reported values does not always matches with production and site records. Final version of PDD clearly states all data required to be monitored and calculations provided are presented in a complete and transparent manner. As well, project participants deliver copy of external laboratory effluent test analysis for the 32 oil plants and such values matches the reported values applied for baseline calculation in spreadsheet.

CAR 2 CAR 3 CL 9 CL 10

OK

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Electricity consumption considers data from 3 years 2003-2005.

B.5.2. Have conservative assumptions been used when calculating the baseline emissions?

/1/ DR According to Baseline information provided from all plats was identified that some plants (Palmas de Santa Fe or Palmar Santa Elena for example) does not consume electricity from the grid and consume from on-site fossil fuel fired power plant. PDD includes a description of the variables includes the energy sources used to perform the calculations. It is explained how diesel fired electricity generation is included in the CO2 emissions from electricity use and thermal energy production equation.

CL 11 OK

B.5.3. Are uncertainties in the baseline emission estimates properly addressed?

/1/ DR Project participants apply a maximum methane producing capacity (Bo) value of 0.25 kg CH4/kg COD

as a conservative assumption,

while the methodology requires to apply a value of 0.21 please clarify.

CL 12 OK

B.6. Calculation of GHG Emission Reductions – Leakage

It is assessed whether leakage emissions are stated

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according to the methodology and whether the argumentation for the choice of default factors and values – where applicable – is justified.

B.6.1. Are the leakage calculations documented according to the approved methodology and in a complete and transparent manner?

/1/ DR IPCC guidelines specify physical leakage from anaerobic digesters as being 15% of total biogas production. which is accounted under project emissions. As the rest of the methodology, no leakage is associated with the project activity

OK

B.6.2. Have conservative assumptions been used when calculating the leakage emissions?

/1/ DR See B.6.1 OK

B.6.3. Are uncertainties in the leakage emission estimates properly addressed?

/1/ DR See B.6.1 OK

B.7. Emission Reductions The emission reductions shall be real, measurable and give long-term benefits related to the mitigation of climate change.

B.7.1. Are the emission reductions real, measurable and give long-term benefits related to the mitigation of climate change.

/1/ DR Delivered emission calculation data sheet does not includes formulas used and shows only final values.

CL 5 OK

B.8. Monitoring Methodology It is assessed whether the project applies an appropriate monitoring methodology.

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B.8.1. Is the monitoring plan documented according to the approved methodology and in a complete and transparent manner?

/1/ DR Since methodology AM0013 Version 3 is not available for registration any more, project participant needs to apply for Methodology version 4 which requires that flare efficiency and project emissions be calculated using the “Tool to determine project emissions from flaring gases containing Methane. These have been included in the last version of the PDD.

CL 1 OK

B.8.2. Will all monitored data required for verification and issuance be kept for two years after the end of the crediting period or the last issuance of CERs, for this project activity, whichever occurs later?

/1/ DR Monitoring plan was assessed finding that some data defined in the methodology were not included in the PDD, ex-ante data/calculations are not included in the PDD and monitoring proposed process diagram shows that some monitoring devices are located in an inadequate position; this could lead to monitoring mistakes. Yes as stated in the Last version of the PDD.

CAR 2 OK

B.9. Monitoring of Project Emissions It is established whether the monitoring plan provides for reliable and complete project emission data over time.

B.9.1. Does the monitoring plan provide for the collection and archiving of all relevant data necessary for estimation or measuring the

/1/ DR Monitoring plan was assessed finding that some data defined in the methodology were not included in the PDD, ex-ante

CAR 2 OK

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greenhouse gas emissions within the project boundary during the crediting period?

data/calculations are not included in the PDD and monitoring proposed process diagram shows that some monitoring devices are located in an inadequate position; this could lead to monitoring mistakes. Yes. PDD includes in Annex 4 all parameters required by the applied methodology.

B.9.2. Are the choices of project GHG indicators reasonable and conservative?

/1/ DR See B.9.1 Yes and the one selected meets with methodology requirements.

CAR 2 OK

B.9.3. Is the measurement method clearly stated for each GHG value to be monitored and deemed appropriate?

/1/ DR See B.9.1

CAR 2

B.9.4. Is the measurement equipment described and deemed appropriate?

/1/ DR See B.9.1 .

CAR 2 OK

B.9.5. Is the measurement accuracy addressed and deemed appropriate? Are procedures in place on how to deal with erroneous measurements?

/1/ DR See B.9.1

CAR 2 OK

B.9.6. Is the measurement interval identified and deemed appropriate?

/1/ DR See B.9.1

CAR 2 OK

B.9.7. Is the registration, monitoring, measurement and /1/ DR See B.9.1 CAR 2 OK

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reporting procedure defined?

B.9.8. Are procedures identified for maintenance of monitoring equipment and installations? Are the calibration intervals being observed?

/1/ DR See B.9.1

CAR 2 OK

B.9.9. Are procedures identified for day-to-day records handling (including what records to keep, storage area of records and how to process performance documentation)

/1/ DR See B.9.1 The monitoring plan does not describe for how long the obtained data will be kept. Yes. Determined in the PDD

CAR 2 CL 13

OK

B.10. Monitoring of Baseline Emissions It is established whether the monitoring plan provides for reliable and complete baseline emission data over time.

B.10.1. PDD does not include data to be monitored for the determination of baseline emissions.

/1/ DR PDD does not include data to be monitored for the determination of baseline emissions. Last version of the PDD describes a monitoring plan that meets methodology requirements.

CAR 2 OK

B.10.2. Are the choices of baseline GHG indicators reasonable and conservative?

/1/ DR See B.10.1 .

CAR 2 OK

B.10.3. Is the measurement method clearly stated for each baseline indicator to be monitored and also deemed appropriate?

/1/ DR See B.10.1

CAR 2 OK

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B.10.4. Is the measurement equipment described and deemed appropriate?

/1/ DR See B.10.1 .

CAR 2 OK

B.10.5. Is the measurement accuracy addressed and deemed appropriate? Are procedures in place on how to deal with erroneous measurements?

/1/ DR See B.10.1

CAR 2 OK

B.10.6. Is the measurement interval for baseline data identified and deemed appropriate?

/1/ DR See B.10.1

CAR 2 OK

B.10.7. Is the registration, monitoring, measurement and reporting procedure defined?

/1/ DR See B.10.1

CAR 2 CL 13

OK

B.10.8. Are procedures identified for maintenance of monitoring equipment and installations? Are the calibration intervals being observed?

/1/ DR See B.10.1

CAR 2 OK

B.10.9. Are procedures identified for day-to-day records handling (including what records to keep, storage area of records and how to process performance documentation)

/1/ DR See B.10.1

CAR 2 CL 13

OK

B.11. Monitoring of Leakage It is assessed whether the monitoring plan provides for reliable and complete leakage data over time.

B.11.1. Does the monitoring plan provide for the collection and archiving of all relevant data

/1/ DR Not applicable as per the monitoring OK

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necessary for determining leakage?

methodology AM0013

B.12. Monitoring of Sustainable Development Indicators/ Environmental Impacts

It is assessed whether choices of indicators are reasonable and complete to monitor sustainable performance over time.

B.12.1. Is the monitoring of sustainable development indicators/ environmental impacts warranted by legislation in the host country?

/1/ DR I

Neither Colombian environmental authorities nor National DNA require the monitoring of specific sustainable development indicators.

OK

B.13. Project Management Planning It is checked that project implementation is properly prepared for and that critical arrangements are addressed.

B.13.1. Is the authority and responsibility of overall project management clearly described?

/1/ DR I

The formal authority and responsibility of project management have not been clearly described. Project participants have described the means that overall project management authority and responsibility will be applied.

CL 14 OK

B.13.2. Are procedures identified for training of monitoring personnel?

/1/ DR I

Procedures have not been envisaged, defined and linked to the ISO 9001/ISO 14001 certified management system procedures of the organizations that have such systems

CL 14 OK

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(FEDEPALMA and some oil producers). Contract between FEDEPALMA and oil producers describes the responsibility of training.

B.13.3. Are procedures identified for emergency preparedness for cases where emergencies can cause unintended emissions?

/1/ DR I

There is no description of emergency preparedness procedures. Emergency preparedness procedures had not been identified yet and will not be implemented until project equipment and facilities be constructed and put in place.

CL 14

B.13.4. Are procedures identified for review of reported results/data?

/1/ DR I

PDD describes the means applied for review of reported results/data.

OK

B.13.5. Are procedures identified for corrective actions in order to provide for more accurate future monitoring and reporting?

/1/ DR I

See B.13.2 Such procedures will not be implemented until project start operations and project participants get better understand of process and equipment function.

CL 14

C. Duration of the Project/ Crediting Period It is assessed whether the temporary boundaries of the project are clearly defined.

C.1.1. Are the project’s starting date and operational /1/ DR Project starting date is determined at 01 OK

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lifetime clearly defined and evidenced?

January, 2006 and this date is related to the beginning of contractual consolidation. The operational lifetime of the project is estimated to be 30 years.

C.1.2. Is the start of the crediting period clearly defined and reasonable?

/1/ DR It is not clear as to which is the exact starting date of the crediting period. Last version of PDD determines project starting date of 15 November, 2006, and starting date of the crediting period 12 September 2008 or the date of registration whichever occurs later.

CL 1 OK

D. Environmental Impacts Documentation on the analysis of the environmental impacts will be assessed, and if deemed significant, an EIA should be provided to the validator.

D.1.1. Has an analysis of the environmental impacts of the project activity been sufficiently described?

/1/ DR I

Yes included in the pre feasibility study OK

D.1.2. Are there any Host Party requirements for an Environmental Impact Assessment (EIA), and if yes, is an EIA approved?

/1/ DR I

No specific host country requirements for an EIA for such projects exist.

OK

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D.1.3. Will the project create any adverse environmental effects?

/1/ DR I

No adverse environmental impacts are expected from this project.

OK

D.1.4. Are transboundary environmental impacts considered in the analysis?

/1/ DR I

No specific transboundary environmental effects are envisaged as the whole project boundary including the biogas pipelines are expected to be within the plant.

OK

D.1.5. Have identified environmental impacts been addressed in the project design?

/1/ DR I

Yes related to construction, waste water quality, local and global emissions and conversion to renewable energy

OK

D.1.6. Does the project comply with environmental legislation in the host country?

/1/ DR I

Yes a list of all relevant environmental permits were submitted and corroborated with the Ministry of Environmental.

OK

E. Stakeholder Comments The validator should ensure that stakeholder comments have been invited with appropriate media and that due account has been taken of any comments received.

E.1.1. Have relevant stakeholders been consulted?

/1/ /11/

DR I

Yes. FEDEPALMA have identified local authorities, managers from different local plants and persons from universities and NGO as stakeholders.

OK

E.1.2. Have appropriate media been used to invite comments by local stakeholders?

/1/ /11/

DR I

Direct letters to the identified stakeholders OK

E.1.3. If a stakeholder consultation process is required by regulations/laws in the host country, has the

/1/ /11/

DR I

A formal stake holder process is not required for this project under the Colombian

OK

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stakeholder consultation process been carried out in accordance with such regulations/laws?

environmental law.

E.1.4. Is a summary of the stakeholder comments received provided?

/1/ /11/

DR I

Yes OK

E.1.5. Has due account been taken of any stakeholder comments received?

/1/ /11/

DR I

Yes OK

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Table 3 Resolution of Corrective Action and Clarification Requests Draft report clarifications and corrective action requests by validation team


Summary of project owner response Validation team conclusion

CAR 1. There is no evidence of project approval by the Colombian DNA

A.2.2 A.4.1

LoAs attached in English and Spanish. Project Participant delivers LoA from the DNA of Colombia. This CAR is considered closed.

CAR 2 Methodology AM0013 requires the monitoring of certain data for determining baseline emissions and project emissions. During document review the following deviations were found: a) Provided documentation does not show clearly the data/values used for baseline emissions; b) The PDD does not include all the data required to be monitored as for example (D13); c) There is no reference to the ex-ante values/calculations in the PDD. d) Reviewing the monitoring proposed process diagram was found that some devices are placed in inadequate positions. These will lead to measurement mistakes. Examples: ART3 (COD analyzer) and data D27 (KT31).

B.1.2 B.2.3 B.5.1 B.8.2 B.9.1-B.9.9 B.10.1-B10.9

In response to: a) In the attached Excel File

(BLEtCO2e.xls) the data is presented for calculation of baseline emissions.

b) In Annex 4 of the PDD, all required variables were included according to AM0013 v.4 methodology.

c) In the file mentioned in (a) all baseline ex-ante values and calculations are presented.

d) The monitoring plan and diagram were reviewed with industry experts and corrected. For example, ART3 and D11 are now placed at the point where effluent leaves the lagoon/digester. D27 was appropriately placed with regard to the power generation equipment. A new device (D31) was incorporated to the measurement system for analyzing the combustion time of the heat generation equipment. In section B.6.1 an in table 8, greater

Project Participants delivers new version of the PDD and update version of baseline emissions calculation, which includes clearly description of all required baseline emission data as stated in the methodology including ex-ante data New monitoring diagram includes a description of all devices that will be installed and the position which are correctly placed. This CAR is thus considered partly closed.

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Draft report clarifications and corrective action requests by validation team



precision for calculation of residual stack emissions and enclosed flare emissions was included per manufacturer’s specifications. In the monitoring information section in annex 4, D22.1, D22.2, and D22.3 were removed based on industry experts’ recommendations. See the above modifications in the CDM-PDD in the file named “Fedepalma cdm pdd v3 I.doc”

CAR 2 (continued) The PDD does not clearly differentiate between parameters determined ex-ante and the parameters to be monitored ex-post. Section B.6.2 shall only list the parameters that are determined ex-ante and which will not be monitored ex-post, such as i) the emission factor for a diesel generator CEFBl,elec . ii) EGy, i..e the the amount of electricity in the year y that would be consumed at the project site determined based on historic electricity consumption iii) HGBl,y ,i.e. the quantity of thermal energy that would be consumed in year y at the project site in the absence of the project activity, which has to be determined based on

B.1.2 B.2.3 B.5.1 B.8.2 B.9.1-B.9.9 B.10.1-B10.9

The project participant delivered a revised version of the PDD in which is clearly stated the parameters that are determined ex-ante and the parameters determined ex-post, included in the correct tables.

The project participant delivered a revise PDD version 8 dated 16 June 2008 in which are clearly defined the parameters determined ex-ante and the parameters determined ex-post. The information of the parameters monitored ex-post is clearly identified in the section B.7.1 in the PDD and not only in annex 4. This CAR 2 (continued) is thus considered closed. However, the PDD does not clearly differentiate between parameters determined ex-ante and the parameters to be monitored ex-post.

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3 years historic data, but which is 0 as no fossil fuels, but only biomass have been used for heat generation and the project biogas will thus only replace CO2 neutral biomass iv) CEFBl, therm, i.e. the CO2 emissions intensity for thermal energy generation v) CODa,out. i.e. the COD that leaves the lagoon with the effluent determined based on one year historical data vi) CODa,in, i.e. the COD that enters the lagoon based on on one year historical data vii) Bo The monitoring tables for each monitoring parameter are currently in Annex 4 and section B.7.1 refers to Annex 4, but these should be directly included in section B.7.1. CAR 3 During data calculation for determining baseline emissions were found that Data 3 (COD that leaves the lagoon with the effluent) was calculated by each one of the oil plants but at a site visit was found that reported values does not always matches with production and site records.

B.2.6 B.5.1

1.- Newly submitted documentation which supports the individual plant calculations for COD removal in each plant’s WWT system includes all formulas used, as well as supporting laboratory analyses. This information includes complete data on COD entering and exiting the WWT systems. This file is named “Calculo de la DQO.zip” and has been submitted to DOE. 2.- Confirmation of laboratory records

Project Participant delivers 32 participating plants external laboratory analysis as well as a new version of baseline emissions calculation that matches correctly. This CAR is considered closed.

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from each plant supporting baseline information are included in file (laboratory records.pdf), attached.

CL 1: The applied methodology AM00013 version 3 has a deadline to requests for registration 15 Feb 07 and the starting date of the crediting period is March 2007 which have not been defined a specific day.

B.1.1 B.8.1 C.1.2

Participant responses have been submitted with the goal of requesting registration by or on 15 Feb 07. However, this was modified because the required version of the methodology changed and the PDD was re-written with the new methodology and posted for comments on DNV’s website. PDD will apply methodology version 4 The Start of the crediting period has been changed to 12 September 2008

The PDD was updated to apply methodology AM00013 version 4 This Clarification request is considered closed.

CL 2PDD describes an umbrella project that includes 31 palm oil plants but baseline calculation sheet includes 32 plants.

A.1.1 This has been corrected. 32 plants are included in the PDD and in all baseline and emissions calculations. See in the CDM PDD attached in the file named “Fedepalma cdm pdd v3 I.doc”

PDD version 2 defines clearly the existence and location of the 32 plants. Also all supported document from all 32 plants were provided. This clarification is considered closed.

CL 3: There is no evidence of all plants external laboratory test results in order to corroborate that effluents meet national regulations and values applied for calculations are correct.

E.3.3 External laboratory records on COD effluents are presented in the attached file named: laboratory records.pdf. Additionally, letters from the regional environmental authorities certifying compliance with national regulations were presented to the DNA in order to obtain the LoA. Copy of these letters

Project participants deliver copy of 32 plants external laboratory analysis required to demonstrate the values applied in the baseline and emission reduction calculations. Such analysis matches with the applied values. The laboratory analyses demonstrate that each plant that accomplish with the

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are attached in the file “cartas corporaciones.pdf” Newly submitted documentation which supports the individual plant calculations for COD removal in each plant’s WWT system includes all formulas used, as well as supporting laboratory analyses. This file is named “Calculo de la DQO.zip” and has been submitted to DOE.

environmental regulations. The following parameters are considered: - Biochemical Oxygen Demand. - Chemical Oxygen Demand. - pH - Temperature. - Suspended Solids. - Flow This clarification is considered closed.

CL 4: As required by the selected methodology project participants need to apply the latest version of the “Tool for the demonstration and assessment of additionality” but was identified that PDD use version 2.

B.3.1 Modify PDD and update it with the application of the “Tool for the demonstration and assessment of additionality”

Section B.5. Of the PDD version 2 includes the use of the “Tool for the demonstration and assessment of additionality” version 4. This Clarification is considered close.

CL 5: Delivered emission calculation data sheet does not include formulas used to determine emission values and this does not allow to asses applied formulas.

B.4.1 B.7.1

Formulas on how baseline emission were calculated are now included in the attached file BLE tCO2e.xls. Please note that the annual amount of emission reductions for the project has been slightly modified, because FEDEPALMA has consolidated more precisely the specific technology options that each participating plant chooses to implement under the CDM

Project participants deliver spreadsheet with the baseline and emission reduction calculations formulas in a mean that allow formulas applied. These were assessed and found that meet methodology requirements. This Clarification is considered closed.

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project. The average annual estimate of emission reductions is still very close to the average annual estimate included in the PDD version previously posted on the DNV website. The precise data for each participating plant is included in the BLE tCO2e.xls spreadsheet, attached. Newly submitted documentation which supports the individual plant calculations for COD removal in each plant’s WWT system includes all formulas used, as well as supporting laboratory analyses. This file is named “Calculo de la DQO.zip” and has been submitted to DOE. These formulas are the bases for calculation of the emission values.

CL 6 Colombian grid factor was defined as the same one utilized in other Colombian project. Thus this is a large scale project must ensure that applied methodology is used and support data is up dated.

B.4.1 2006 generation data for the entire grid was obtained from the National Dispatch Center. Large scale emissions factor methodology for Colombia was obtained from UPME and applied. Data support for the calculation of the large scale emissions factor for the project is provided in the files: a. Presentación.ppt that contains the

Project participants deliver supported documents that describe the methodology applied and Colombian grid emission factor which were assessed against National official sources and determine to be correctly calculated applying the latest data available.

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procedure for calculating the emissions factor and the final result of the calculation.

b. A-linea-base-full-escala-final-publicacion.doc containing the procedure approved by the institution in charge of delivering the emissions factor of the Colombian electricity grid (UPME – Unidad de Planeación minero Energética)

c. Factor de emisiones.xls containing complete data for all grid connected plants, including electricity generation for 2006, the prices of electricity generation for each plant that sold electricity to the grid, the fuel emission factor for each plant generating electricity to the grid, the result of the calculation to obtain the operation margin, the result of the calculation to obtain the build margin, the electricity that each project participant plant would generate and displace from grid use, and the summary information of the calculation to obtain the project’s emission factor.

This Clarification is considered closed.

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CL 7 Respect to Emissions from land application of sludge (Nitrous oxide) was stated that as a conservative measure, 1% of the calculated baseline emissions are deducted due to emissions from sludge management emissions from land application of sludge, please provide basis of this assumption

B.4.1 In the spreadsheet named “baseline modified”, in the first tab named “COD Calculations”, the last table starting on cell A479 aggregates the N2O emissions in terms of tons of CO2 equivalent. This table demonstrates that N2O emissions are one percent of the total project emissions.

Baseline emission spreadsheet includes a reference of the land application emissions which demonstrated the assumption. This Clarification is considered closed

CL 8 Emissions from heat use and electricity use due to the project activity is expected to be negligible since additional use of electricity by the project activity will not be higher than 1% from the current electricity use, please provide the basis of this assumption for estimating ex-ante project emissions.

B.4.2 Each of the project’s electric and electronic components has a low electricity consumption rate, with the exception of the sludge pumps and blowers. In order to calculate the project’s electricity consumption, the operating assumption is that the following project activity components operate constantly, which is conservative: 1. Monitoring and Information System Monitoring System - 33 instruments were included for each plant - Control systems are composed of a control panel that present the electronics and power elements’ performance. Local Information System - 1 computer for supervision and reporting activities - 1 printer 2. Methane capture and mitigation

Project participants delivers a clear explanation which indicates that the expected electricity consumption will be less than 1%. This clarification is considered closed.

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system - 2 Blowers - 1 sludge pump. - Lighting system: Four 100W Light bulbs - 1 flaring system

2

Electricity consumption per plant (Watts)

Total electricity consumption in the 32 Palm oil extraction plants (Watts)

Instrumentation and sensors (33 instruments)

340 10,880

Control Systems (1 control panel)

3,000 96,000

Local Information systems (computers and printers)

1 Computer 375 12,000

1 printer 170 5,440

Blowers (2) 1,118 35,776

Sludge pumps(6) 132,000 4,224,000

Lighting system (8 light bulbs)

800 25,600

Flaring system 1,200 38,400 Total electricity consumption

139,003 4,448,096

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Bibliography:

� Siemens instruments manual FI 01 2007.

� Dell computers manual

� Hewlett Packard printer 1150 manual

� Screen CRT: Samsung 740 operation manual

� John Zink Blower and flare equipment manuals.

� PUMPEX 5P 20 manual.

� Light bulb specifications. Auxiliary Equipment to determine electricity consumption once the Project is operative: One electricity meter will be located in between the electricity cable from the grid to the Palm oil extraction plant, ref D12/ELp,y Firms implementing technology option III, need to install an electricity network analyzer in order to measure electricity consumption from the grid and power delivery to the grid.

CL 9 Baseline electricity and thermal energy consumptions should be estimated as the average of the historical 3 years consumption as stated in AM0013 Version 04 page 10

B.5.1 Table An 3.7 of the PDD presents information on electricity consumption from those mills willing to build and operate power generation equipment and wanting to credit emission reductions from this activity. Their willingness to include electricity generation within the CDM project activity was determined according to their answers to the survey performed in 2006. Recent positive

Provided information was crosschecked with plants electricity consumption and matches correctly. The estimation was done with 3 years data from 2003-2005 as baseline were created in 2006. Clarification is considered closed

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developments regarding CDM markets have resulted in greater interest. Some of the mills that responded negatively to incorporate electricity generation in 2006, are now moving towards introducing power generation capacity in their mills. The monitoring reports to be presented in the project’s verifications will include the updated information on all plants that effectively built and operated power capacity in their mills as a result of the CDM incentive.

CL 10 As part of the baseline information was identified that not all plants deliver baseline information in the described template. In other cases template information does not matches the one included in the excel file and/or is not consistent or transparent.

B.5.1 Relevant information was revised. A consultation process with the participating plants was carried out in order to resolve inconsistencies in the supporting information and to solicit additional information on their electricity use in 2003 and 2004 per DOE recommendation. Answers were compiled in the file ”respuesta a observaciones.xls”. Data was included in the file ”baseline modified.xls”. PDD was modified in Annex 3 to incorporate the changes in calculations due to adjustments in the information. Documentation of the firms responses and certification of additional data points are presented in the file ”Binder

New provided documents were assessed and compared with baseline calculation file. Calculations take into account these values. This clarification is considered closed.

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4 – todas las certificaciones.pdf” CL 11 According to Baseline information provided from all plats was identified that some plants (Palmas de Santa Fe or Palmar Santa Elena for example) does not consume electricity from the grid and consume from on-site fossil fuel fired power plant. Project participants must describe how this case was considered.

B.5.2 See page 55 of the PDD, definitions of EGy and CEFBl,elec,y. The description of the variables includes the energy sources used to perform the calculations. It is explained how diesel fired electricity generation is included in the CO2 emissions from electricity use and thermal energy production equation.

Provided PDD includes the description of this conditions and also, project spreadsheet included in the calculations. This Clarification is considered closed.

CL 12 Project participants apply a maximum methane producing capacity (Bo) value of 0.25 kg CH4/kg COD

as a conservative

assumption, while the methodology requires to apply a value of 0.21 please clarify.

B.5.3 Section B.6.2. Of the PDD was modified on the description and value of Bo.

Last version of the PDD includes a Bo value of 0.21 as stated in the applied methodology. Also the rest of the calculations and estimations include it. This clarification is considered closed.

CL 13: The monitoring plan does not describe for how long the obtained data will be kept.

B.9.9 B.10.7 B.10.9

In Annex 4 of the CDM-PDD each key parameter variable includes, in the comments row, information about the minimum period data related to each parameter will be stored: minimum 2 years after each issuance of CERs. See in the CDM PDD attached in the file named “Fedepalma cdm pdd v3 I.doc” Monitoring data will be kept a minimum of two years at each plant and five years at the FEDEPALMA central

PDD version 2 includes the time that these data/parameters will be kept. This Clarification is considered close.

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information center. The comments section of each data/parameter table in the PDD now includes reference to the minimum period that data will be stored on site.

CL 14: There are no detailed procedures envisaged for project management covering authority & responsibility, measurement, monitoring, reporting, calibration, maintenance & emergency preparedness. Management System procedures related to documentation/record keeping, corrective actions, internal audits & performance reviews has also not been considered.

B.13.1 B.13.2 B.13.3 B.13.5

Authority and responsibility of project management: Each of the 32 participating plants has signed a binding long term contract (No. 044 of March 1, 2006) with FEDEPALMA that clearly sets out the responsibilities of the producer association in the management of the project and the responsibilities of each participating plant. FEDEPALMA’s responsibilities include coordination, capacity building, legal representation of the project for UNFCCC Registration and commercial purposes, quality control programs for monitoring and reporting, emergency repair and maintenance, monitoring, reporting and Verification, among others. FEDEPALMA’s project management responsibilities are stipulated in clauses 6 and 7 of the contract, and participating plants’ responsibilities are included in clauses 4 and 5.

Contract 044 was reviewed and found that meet most of the management system requirements, but once that equipment is installed and working properly need to issue the required operations and monitoring specific procedures for the 32 participating plants. This finding must be closed before the first verification.

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Contract 044 was provided to the DOE for review on the basis of strict confidentiality. A copy of the final text of the agreement is attached in the file named “DIFINITIVO Fedepalma-Empresas.18 enero 2006.pdf”

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APPENDIX B

CERTIFICATES OF COMPETENCE

CERTIFICATE OF COMPETENCE

Alfonso Capuchino Qualification in accordance with DNV’s Qualification scheme for CDM/JI (ICP-9-8-i1-CDMJI-i1

GHG Auditor: Yes

CDM Validator: Yes JI Validator: --

CDM Verifier: Yes JI Verifier: --

Industry Sector Expert for Sectoral Scope(s): --

Høvik, 6 November 2006

Einar Telnes Michael Lehmann Director, International Climate Change Services Technical Director


Ramesh Ramachandran Qualification in accordance with DNV’s Qualification scheme for CDM/JI (ICP-9-8-i1-CDMJI-i1

GHG Auditor: Yes

CDM Validator: Yes JI Validator: --

CDM Verifier: Yes JI Verifier: --

Industry Sector Expert for Sectoral Scope(s): Sectoral scope 4, 5, 13

Technical Reviewer for (group of) methodologies:

ACM002, AMS-I.A-D, AM0019, AM0026, AM0029, AM0045

Yes

Høvik, 22 December 2006

Einar Telnes Michael Lehmann Director, International Climate Change Servicer Technical Director


Michael Lehmann Qualification in accordance with DNV’s Qualification scheme for CDM/JI (ICP-9-8-i1-CDMJI-i1

GHG Auditor: Yes

CDM Validator: Yes JI Validator: Yes

CDM Verifier: Yes JI Verifier: Yes

Industry Sector Expert for Sectoral Scope(s): Sectoral scope 1, 2, 3

Technical Reviewer for (group of) methodologies:

ACM0001, AM0002, AM0003, AM0010, AM0011, AM0012, AMS-III.G

Yes AM0027 Yes

ACM002, AMS-I.A-D, AM0019, AM0026, AM0029, AM0045

Yes AM0030 Yes

ACM003, ACM0005, AM0033, AM0040 Yes AM0031 Yes

ACM0004, ACM0012 Yes AM0032 Yes

ACM0006, AM0007, AM0015, AM0036, AM0042 Yes AM0035 Yes

ACM0007 Yes AM0038 Yes

ACM0008 Yes AM0041 Yes

ACM0009, AM0008, AMS-III.B Yes AM0034 Yes

AM0006, AM0016, AMS-III.D, ACM0010 Yes AM0043

AM0009, AM0037 Yes AM0046

AM0013, AM0022, AM0025, AM0039, AMS-III.H, AMS-III.I

Yes AM0047

AM0014 Yes AMS-II.A-F, AM0044 Yes

AM0017 Yes AMS-III.A Yes

AM0018 Yes AMS-III.E, AMS-III.F Yes

AM0020 Yes

AM0021, AM0028, AM0034, AM0051 Yes

AM0023 Yes

AM0024 Yes

Høvik, 5 February 2007

Einar Telnes Michael Lehmann Director, International Climate Change Services Technical Director


Barbara Lara Qualification in accordance with DNV’s Qualification scheme for CDM/JI (ICP-9-8-i1-CDMJI-i1

GHG Auditor: Yes

CDM Validator: JI Validator: --

CDM Verifier: -- JI Verifier: --

Industry Sector Expert for Sectoral Scope(s): --

Høvik, 2 May 2008

Michael Lehmann Technical Director, Climate Change Services

Fedepalma Approved CDM Validation Report

Documents

Transcript of Fedepalma Approved CDM Validation Report