Case Study: Gemina Rice Husk Project Nicaragua (Scenario Analysis and Small-Scale Simplified Methodologies) Carbon Fina

1. Case Study: Gemina Rice Husk Project Nicaragua (Scenario Analysis and Small-Scale Simplified Methodologies) Carbon Finance Unit The World Bank 22 October 2002 www.CarbonFinance.org (Revised by CCIC, 17 July 2003)

2. Contents • Introduction to the Gemina Rice Husk Project • Elements of the baseline • Applicability of the Meth Panel’s recommendations for simplified methodologies for Small-Scale CDM projects

3. Introduction to the Project • Current practice • Gemina produces 18,000 tons of rice husk yearly, increasing to 25,000 tons after expansion in 2003 • Rice husks are dumped in open piles • Periodic burning of piles to reduce volume • Rice husk to electricity project • Construction of ~1.6 MW power plant • Plant consumes 2.75 t rice husk per hour • Ash used to substitute for cement

4. Introduction to the Project • Technology: Conventional boiler/steam turbine • Rice husks are fed to the combustor and burned to produced to produce heat • Steam generated is passed to steam turbine which drives an electrical generator • Rice Husk Power Plant • To cover electricity demand for rice and flourmill complex • And sell the excess electricity to third parties

5. Yearly reductions 2003-2012 (low/optimal) CO2 energy 7,418 / 11,144 t CO2e Methane from husks 2,338 / 2,338 t CO2e CO2 cement 0 / 2,712 t CO2e • Projected reduction 21 years: 212,395 t CO2e (low) Introduction to the Project • Main sources of emission reductions • Displacement of electricity from fossil fuel • Methane reduction from avoided rice husk decomposition • CO2 reduction from substitution of cement

6. Elements of the Baseline • Baseline • Electricity would otherwise be produced using fossil fuels • Dumping of waste husks from Gemina rice mill in open piles • Gemina project is small-scale • Renewable energy component less than 15MW • Rice husk power plant directly emits less than 15,000 t CO2e If biomass is counted as renewable energy direct emissions from the project are zero

7. (b) showing that barriers impede other options. • - especially relevant for small scale investments Elements of the Baseline • Approach for calculating baseline emissions selected by Gemina • Marrakech Accord 48 a): Existing or historical emissions, as applicable • Justification of selected approach • 48 a) defines Business-as-usual as baseline scenario • PCF interpretation: BAU can be justified by (a) using historic or current information (control group) or

8. Elements of the Baseline Barriers to investment identified for Gemina • Regulatory barriers to access the market for electricity • Smallest block of electricity that can be offered on the Nicaragua wholesale market is 5 MW (Gemina 1.6 MW) • Competitive disadvantage of non-traditional projects • Lack of precedents regarding integration of small generators of renewable energy created problems with concessionaire • Limited access to credit • Gemina could not attract financing due to inter alia absence of long-term PPA, high country risk for Nicaragua

9. Elements of the Baseline • Indicator for restrictive nature of identified barriers: • Gemina rice husk generator is first-of-a-kind technology in all Central America • PCF assistance to overcome the barriers • Carbon purchase agreement is secure revenue stream • World Bank involvement may trigger the interest of other financial institutions

10. Applicability of Meth Panel’s recommendation for simplified methodologies • Gemina project falls under category I. D.“Renewable Electricity Generation for a Grid” • Recommended simplified methodology: • Technology/Measure: 25. Biomass combined heat and power (co-generation) systems that supply electricity to a grid • Boundary: 26. Physical, geographical site of the renewable generation source

11. Applicability of Meth Panel’s recommendation for simplified methodologies • Recommended simplified methodology: • Baseline: 28. For a system where all fossil fuel fired generating units use fuel oil or diesel oil, the baseline is the annual kWh generated by the renewable unit times an emission coefficient for a modern diesel generating unit of the relevant capacity operating at optimal load • Leakage: 30. If the renewable energy technology is new equipment being installed for the first time, no leakage calculation is required.

12. Applicability of Meth Panel’s recommendation for simplified methodologies • Recommended simplified methodology: • Monitoring: 31. Shall consist of metering the electricity generated by the renewable technology. In the case of co-fired plants, the amount of biomass input and its energy content shall be monitored.

13. Thank you ! Department of Environment and Natural Resources CDM Training Workshop November 4-6, 2003 Climate Change Information Center Conference Room