Factor AG & Carbon Services: CDM Projects in the Cement Sector

1. Lahore Factor AG & Carbon Services:CDM Projects in the Cement Sector

2. Contents • Factor Company Profile • CDM Projects in the Cement Industry • Factor Track Record • Factor Track Record in Cement

3. Factor AG We advise on emissions trading – since 1999 Carbon Financing Carbon Asset Development Carbon Risk Management

4. Factor Consulting + Management

5. Factor Team • Over 100 full time CDM and Carbon Finance Experts at Factor AG • Operations include • Headquarters in Zurich, Switzerland • Subsidaries and Partner offices in: • China • India • Brazil • Romania • Pakistan • Germany • USA • Chile • Russia

6. Carbon Financing Executed transactions from initial offering to final contract Transacted with the most credible Buyers in the market Over 15 Mt CO2 transacted since 2004 with a market value exceeding € 100 million Carbon Asset Development Over 20 registered CDM Projects Over 20 more at validation Over 60 projects under development Total pipeline exceeding 20 Mt CO2 to 2012 Track Record in a Nutshell (as of June 2007)

7. We do business with leading global firms...

8. Contents • Factor Company Profile • CDM Projects in the Cement Industry • Track Record • Track Record in Cement

9. Approved Methodologies for Cement Projects

10. ACM0005 - Increasing the Blend in Cement Production • Applicable for projects, that increase the share of additives (i.e. reduce the share of clinker beyond current practices in the country) • Additives are defined as materials blended with clinker to produce blended cement types and include fly ash, gypsum, slag, etc. • Applicable under the following conditions • There is no shortage of additives related to the lack of blending materials. Project • Participants should demonstrate that there is no alternative allocation or use for the additional amount of additives used in the project activity. If the surplus availability of additives is not substantiated the project emissions reductions (ERs) will be discounted. • This methodology is applicable to domestically sold output of the project activity plant and excludes export of blended cement. • Adequate data are available on cement types in the market.

11. ACM0015 - Using alternative raw materials in cement kilns Applicable to • project activities that use alternative raw materials that do not containcarbonates (AMC) in cement kilns for the production of clinker. The AMC partially or fully substitutesraw materials that contain calcium and/or magnesium carbonates (e.g. limestone). • existing as well as to greenfield plants Under the following additional conditions: • Use of alternative materials shall increase neither the capacity of clinker production nor the lifetimeof equipment • Type and quality of produced clinker remain the same • Alternative raw materials have never been used in the clinker manufacturing facility prior to theimplementation of the project activity; • There is sufficient historical information about the clinker manufacturing facility, the raw materialsused, and energy performance of the kiln. Is not applicable for the following activities: • Energy efficiency initiatives for improvements in process equipment (up-grade towers, grindingseparators, burners, expert control systems, etc.); • Fuel switching.See ACM0015 for more details.

12. ACM0003 - Partial substitution of fossil fuels withalternative fuels or less carbonintensive fuels in cement manufacture Applicable to • activities in the cement industry where fossil fuel(s) used in anexistingclinker production facility are partially replaced by one or more carbon intensive fossil fuel(s)and/or alternative fuels. The following conditions shall apply • A significant investment is required to enable the use of the alternative fuel(s) and/or the less carbonintensive fossil fuel(s); • During the last three years prior to the start of the project activity, no alternative fuels have been usedin the project plant; • The CO2 emissions reduction relates to CO2 emissions generated from fuel combustion only and isunrelated to the CO2 emissions from decarbonisation of raw materials (i.e. CaCO3 and MgCO3 bearingminerals); • The methodology is applicable only for installed capacity (expressed in tons clinker/year) that exists bythe time of validation of the project activity. • In case of project activities using biomass residues, renewable biomass or biomass from dedicated plantations, additional applicabilityconditions apply

13. AM0024 - Waste Heat Recovery and Utilization forPower Generation at cement plants Applicable to project activities that use waste heat gas generated in clinker makingprocess (i.e. in the cement kilns) to produce electricity. Applicable under the following conditions • The electricity produced is used within the cement works where the proposed project activity is locatedand excess electricity is supplied to the grid; no electricity export to the gridin the baseline scenario (in case of existing captive power plant); • Electricity generated under the project activity displaces either grid electricity or from an identifiedspecific generation source. Identified specific generation source could be either an existing captivepower generation source or new generation source; • The grid or identified specific generation source option is clearly identifiable; • Waste heat is only to be used in the project activity, etc. NOT applicable to project activities • Where the current use of waste heat or the identified alternative business as usual use of waste heat is • located outside of the clinker making process • that affect process emissions from cement plants.

14. Contents • Factor Company Profile • CDM Projects in the Cement Industry • Factor Track Record • Factor Track Record in Cement

15. Factor Track Record:CDM Projects

16. Factor Track Record:CDM Projects

17. Factor Track Record:CDM Projects

18. Factor Track Record: CDM Projects

19. Factor Track Record: CDM Projects

20. Factor Track Record: CDM Projects

21. Contents • Factor Company Profile • CDM Projects in the Cement Industry • Factor Track Record • Factor Track Record in Cement

22. Factor Track Record in Cement (cont.):CDM Projects • China:Developed 3 CDM projects for power generation from kiln waste heat, and purchased the resulting carbon credits (ongoing). • My Home Cement, India:Developed CDM-PDD for fly ash blending project and supported sale of carbon credits (ongoing). • Wietersdorfer + Peggauer Cement, 2003 (Austria): Prepare comprehensive strategy on CO2 emissions trading in Europe, including: Analysis of impacts of EU ETS on Austrian and European cement and lime markets; evaluation of a planned capacity expansion project; establishment of CO2 abatement cost curve; recommendations for policy lobbying. • Holcim, 2003:Study on CO2 emissions associated with global freight transport of clinker and cement. • Holcim, 2003:Study GHG emissions intensity of different building materials, taking into account differences in amount of material required per construction unit. • Holcim:Supported PDD development for projects in Costa Rica, Indonesia

23. Factor Track Record in Cement (cont.):CDM Projects • Japan Cement Association:In the context of the Asia Pacific Partnership for Climate Protection (AP6), Factor supported the Japan Cement Association in developing a protocol for the calculation of CO2 emissions in the cement industry. The Protocol will be used by cement companies in all AP6 countries for inventorying their CO2 emissions. • Confidential Client:Supported identification and selection of CDM projects in cement plants in South- and Southeast Asia (India, Indonesia, Thailand, Vietnam). • Confidential Client:Supported the revision of a baseline methodology and project design document (PDD) for a proposed CDM project in Central America. • GTZ, India:Developing CDM methodology for cement sector in India based on benchmarking principle. In cooperation with Indian Cement Manufacturing Association (CMA) and National Council for Cement and Building Materials (NCB) (ongoing).

24. Factor Track Record in Cement (cont.):CDM Projects • Cembureau:Supported comprehensive CO2 benchmarking exercise for all cement plants in Europe (ongoing). • Cembureau, Heidelberg Cement, Holcim, Italcementi, Lafarge (2002):Evaluation of mechanisms for allocation of CO2 emissions allowances in the EU emissions trading scheme. Quantitative analysis of allowance mechanisms with respect to impacts on European cement markets. • WBCSD Cement Sustainability Initiative (CSI), 2000-01:Cement CO2 Protocol. Factor AG was responsible for developing the CO2 Protocol guidance document and Excel-based calculation tool in accordance with the decisions taken by the CSI group. The Protocol is available at www.ghgprotocol.org. • Confidential Client:Benchmarking of 700 cement companies worldwide with respect to emissions of local air pollutants, using publicly available data.

25. Factor Track Record in Cement (cont.):CDM Projects • WBCSD Cement Sustainability Initiative (CSI):Revision of Cement CO2 Protocol. In the CSI, a group of 15 leading cement companies cooperate on global sustainability issues including climate change. The CSI group comprises, among others, the following companies: Cemex, HeidelbergCement, Holcim, Italcementi, Lafarge, RMC, and Secil. Factor AG is mandated to provide support in revising the Cement CO2 Protocol. The Protocol comprises a monitoring and reporting standard and an Excel-based calculation tool for CO2 emissions in the cement industry. The Protocol has become part of the Corporate GHG Protocol developed by the WBCSD and the World Resources Institute. • German Technical Cooperation (GTZ), 2004-05:We have conducted a series of awareness building workshops on climate change and the CDM project development for the cement, pulp and paper, and power sectors and provided in-depth training for the largest petrochemical company in India. Through this mandate, we provide continued support to several cement companies in preparing CDM project documentation.

26. Factor Track Record in Cement (cont.):CDM Projects • CDM Executive Board & Methodologies Panel of the UNFCCC, 2004-06:Reviewed the baseline methodologies of the following CDM projects in the cement industry: - Birla project for increased blending, India - Lafarge project for increased use of biomass fuels, Malaysia - Indocement project for increased blending, Indonesia - Indocement project for increased use of alternative fuels, Indonesia - Taishan project for power generation from waste heat, China – Grasim methodology for energy efficiency improvement in cement plants

27. Factor Track Record in Cement (cont.):CDM Methodologies • India: • Developing new CDM methodology for cement based on benchmarking (ongoing) • In cooperation with Cement Manufacturer’s Association (CMA) and National Council for Cement and Building Materials (NCB) • Holcim: • Supported CDM methodology for new cement kilns • CDM Executive Board / UNFCCC: • Reviewed various cement-related methodology submissions for the CDM-EB

28. Factor Track Record in Cement (cont.):Corporate Strategies • WBCSD / CSI Cement CO2 Monitoring and Reporting Protocol • CSI is a group of 15 leading cement companies (Holcim, Lafarge, Cemex, Heidelberger, Italcementi, Secil, etc.) • Factor supported the development of the CO2 monitoring and reporting protocol for the CSI (2001 / 2004) • This protocol is today the widest-used protocol in the cement industry globally • Cembureau: • Factor is supporting a CO2 benchmarking exercise covering all cement plants in Europe (ongoing) • Asia-Pacific Partnership for Climate (AP6): • For Japan Cement Association, Factor supported development of a protocol to be used for CO2 benchmarking among AP6 members

29. Contact DetailsFactor Consulting + Management AGStauffacherstrasse 45  CH-8004 Zurich  SwitzerlandPhone +41 44 298 28 00  Fax +41 44 298 28 99  www.factorglobal.comCarbon Services (Private) LimtedAl-Maalik 19 Davis Road  Lahore PakistanPhone +9242-6313235 & 36 Fax +9242-6312959 www.carbon.com.pk

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