Chemical Projects by Country

distribution of CDM projects by type and geography for the chemical and petrochemical industries. It is interesting to note that while there are a number of different types of projects for the chemical industry, projects to reduce HFCs represent nearly 70% of the registered emission reduction volume [27].

Project Types and Applicability Criteria The CDM provides a framework to develop a wide range of project-based opportunities that reduce gases covered under the Kyoto Protocol.19' Each new project type must comply with a baseline and monitoring methodology approved by the United Nations Framework Convention on Climate Change (UNFCCC) for calculating emission reductions achieved by the project activity. A baseline methodology defines the applicability conditions and establishes a procedure to determine the baseline scenario and estimate emission reductions that result from the project activity. The monitoring methodology outlines the requirements for monitoring equipment, monitoring parameters, and quality control and quality assurance measures. There are three types of methodologies; two large scale types and one small scale type. AM refers to large scale 'Approved Methodology' where ACM refers to large scale 'Approved Consolidated Methodology. . Small scale methodologies are referred to as AMS for .Approved Methodology for Small Scale Projects' [28].

This section examines the eligible project types within the chemical process industry. Table 2.1 outlines the existing approved UNFCCC methodologies and their applicability criteria. While more emission reduction opportunities exist at a chemical complex, new project types that do not conform to existing methodologies must undertake an application process with the UNFCCC for their inclusion.

Project Design Phase Chemical facilities that identify an emission reduction opportunity that complies with the requirements of existing baseline methodologies are able to begin the application process by completing a project design document (PDD) in accordance with the guidelines of the UNFCCC [30].

A PDD is completed in a standardized template issued by the UNFCCC and must clearly demonstrate that the proposed project activity will generate additional GHG reductions in accordance with the local host country. s requirements on economic and sustainable development objectives. At this stage, the project developer decides whether to apply for a fixed 10 year crediting period or a renewable crediting period of 3 x 7 years. The PDD is a comprehensive document which covers the following areas [31]:

1) Description of the project activity and technology to be installed at the facility.

2) Identification of all plausible baseline alternatives in accordance with the approved baseline and monitoring methodology.

19) Gases covered under the Kyoto Protocol include carbon dioxide (C02), methane (CH4), nitrous oxide (N20), sulfur hexafluoride (SF6), hydrofluorocarbons (HFC) and perfluorocarbons (PFC).

Table 2.1 Approved baseline and monitoring methodologies applicable to the chemical process industry [29].

Methodology

Applicability

Brownfield projects3' only

Limited to status quo activity level until the lifetime of existing equipment

Only for existing facilities that have been in operation (emitting HFCs and not CFCs) for at least 3 years between 2000 and 2004 and have remained in operation after 2004 until the project start date

Brownfield projects only

Limited to status quo activities until the lifetime of existing equipment

Only for existing capacity installed before 31 December

2004

Limited to status quo activities until the lifetime of existing equipment

All carbon in the inorganic compound is from CO2 added during production No change to plant output

No change to process and related to emissions due to energy consumption No biomass crowding out

Brownfield projects only

Limited to status quo activities until the lifetime of existing equipment

Only for existing capacity installed before 31 December

2005

Destruction of N2O emissions by catalytic decomposition or catalytic reduction of N2O in the tail gas of nitric acid or caprolactam production plants No change in plant output

Plant does not already have a Non-Selective Catalytic Reduction (NSCR) unit

Brownfield projects only

Limited to status quo activities until the lifetime of existing equipment

Only for existing capacity installed before 31 December 2005

Destruction of N2O emissions by catalytic decomposition or catalytic reduction of N2O inside the burner of a nitric acid plant

Not for process with new ammonia oxidizer Plant does not already have a Non-Selective Catalytic Reduction (NSCR) unit

76 | 2 Managing the Regulatory Environment Table 2.1 Continued

Ref Methodology Applicability

AM0037

AM0050

AM0051

AM0053

AM0063

Flare reduction and gas use at oil and gas processing facilities (Version 2.1)

Feed switch in integrated Ammonia-urea manufacturing industry (Version 2.1)

Secondary catalytic N2O destruction in nitric acid plants. (Version 2)

Biogenic methane injection to a natural gas distribution grid (Version 1.1)

Recovery of CO2 from tail gas in industrial facilities to substitute the use of fossil fuels for production of CO2 (Version 1.1)

Brownfield projects only

The tail gas from an oil or natural gas processing facility was flared for at least 3 years prior to the project start The tail gas is used to produce useful energy or useful products and replace the fuels/feedstock with at least the same CO2e impact

Also includes activities that vent in the baseline Limited to cases where associated gas substitutes feedstock.

Brownfield projects only

Limited to status quo activities until the lifetime of existing equipment

Limited to existing production capacity

Historical operation of at least three years prior to the implementation of the project activity

Thermal energy for processing the feed is the combustion of fossil fuels in boilers in baseline and project

The quantity of steam and electricity is the same for naphtha and natural gas

Brownfield projects only

Limited to status quo activities until the lifetime of existing equipment

Only for existing capacity installed before 31 December 2005

Destruction of N2O emissions by catalytic decomposition or catalytic reduction of N2O inside the burner of a nitric acid plant

Not for the process with new ammonia oxidizer Plant does not already have a Non-Selective Catalytic Reduction (NSCR) unit

Methodology can be used in conjunction with methodologies for capture and destruction/use of biomethane

Substitution of CO2 production from fossil fuels with CO2 recovered from an industrial process Applicable to either activities that consider the difference between highest level of historic emissions from existing plant and project activity emissions or the case where old plant is no longer in operation and thus historic data from operations of the old plant prior to the CDM project are used to define activity level If project results in end to operations of the existing CO2 production plant, the remaining lifetime of the old plant prior to the project will define the crediting period

Table 2.1 Continued

Methodology

Applicability

AM0069

AMS.III.J

AMS.III.O

Biogenic methane use as feedstock and fuel for town gas production (Version 01)

Avoidance of fossil fuel combustion for carbon dioxide production to be used as raw material for industrial processes (Version 3)

AMS.III.M

Reduction in consumption of electricity by recovering soda from paper manufacturing process (Version 2)

Hydrogen production using methane extracted from biogas

Brownfield projects only

Project activities where biogas is captured at wastewater treatment facility or landfill is used to substitute natural gas or other fossil fuels of higher content as feedstock and fuel for the production of town gas Must be 3 year record of venting or flaring ofbiogas. Town gas factory must have no history of using biogas prior to project and must have 3 years data on quantity and quality of fossil fuels used

Limited to 60 Kt annual emission reductions The generation of CO2 from fossil or mineral sources in the baseline is only for the purpose of CO2 production to be used for the production of inorganic compounds. There is no energy by-product of CO2 production from fossil source and its consumption in the baseline All carbon in the CO2 produced under the project shall come from a renewable biomass source The residual CO2 from the processing ofbiomass was already produced but was not used before the project C02 from fossil or mineral sources that is used for the production of inorganic compounds prior to the project will not be emitted to the atmosphere when the project activity is in place

Energy savings resulting from project activities that reduce caustic soda that would be purchased from in country production or imported from facilities located in Non-Annex 1 countries

Up to 60 Kt annual emission reductions Activities that install a biogas purification system to isolate methane from biogas for the production of hydrogen displacing LPG as both feedstock and fuel in a hydrogen production unit

Not applicable to technologies displacing the production of hydrogen from electrolysis. Must prove no diversion of biogas occurs.

a) Brownfield projects refer to projects at existing facilities.

3) Estimation of baseline and project emissions as well as identification and quantification of any sources of leakage in accordance with selected methodology.

4) Evidence that the project is additional based on the latest tool for the demonstration of additionality.20)

5) Proof of CDM consideration.

6) Monitoring plan for the operational phase of the project activity.

7) Evidence of environmental and social benefits of project activity including stakeholder consultations.

Host Country Approval Each CDM project must gain approval from the host country in order to gain registration with the UNFCCC. Host country approval is conditional on the national criteria and requirements established by the Designated National Authority (DNA) acting as the national approval body for CDM projects. Host country requirements vary considerably but generally relate to the demonstration of environmental, social, and economic benefits for the country [32] .

Validation and Registration The validation and registration cycle shown in Figure 2.9 is the CDM approval process before the project is eligible to receive CERs. Validation is an independent third-party evaluation of the CDM project documents against the international requirements established by the UNFCCC. The independent third-party accredited by UNFCCC is referred to as a designated operational entity (DOE) and checks that all information and assumptions in the PDD are accurate and reasonable. Following the validation process, the PDD is posted on the UNFCCC website for public comments [31].

0nce a project is validated, the registration process with the UNFCCC begins. Throughout the validation and registration period, information about the project is made publically available. The registration of the project occurs in the eight week period after the date of receipt by the Executive Board (EB) of the UNFCCC. During the eight week period, the EB determines whether the project activity meets the CDM requirements and may pull a project for review if there are any particular concerns with the project [33].

Monitoring and Verification Project developers must monitor various parameters during the project activity according to the monitoring methodology approved by the EB. Monitoring is initially considered during the project design phase where a monitoring plan is included in the PDD. Information pertaining to the monitoring plan is included in a monitoring report prior to the verification of emissions by an accredited D0E [33].

20) Additionality addresses the question of whether the project activity is additional to the business-as-usual scenario and merits the environmental benefits of reducing greenhouse gas emissions.

Figure 2.9 Validation and registration cycle.

Verification during the operation of the project activity is required to demonstrate that project is achieving real and quantifiable emission reductions in accordance with the requirements of the methodology. Verification refers to the periodic and independent review of emission reductions by a DOE before CERs are issued by the UNFCCC. The DOE must provide certification in the form of written assurance that the project activity achieved the emission reduction verified during the project crediting period [31].

Transacting Emission Reductions CERs are issued to the account of the project developer held with the UNFCCC. Emission reductions are typically transacted through an Emission Reduction Purchase Agreement (ERPA) which contractually

Table 2.2 Example of clean development mechanism project case study.

Project title

Tianji Group Line 1 N2O Abatement

Project description

Host country Sectoral scope CDM methodology

Estimated annual emission reductions UNFCCC fee level

The project activity involves the abatement of nitrous oxide (N2O), an undesired by-product formed in the catalytic oxidation of ammonia for the nitric acid (HNO3) production process. N2O abatement is achieved through the installation of a secondary abatement catalyst inside the ammonia burner where the emissions are formed. N2O is a potent GHG emission with a GWP of 310 tCO2e/ tN2O.

China

Chemical industries

AM0034 (version 2)-Catalytic reduction of N2O inside the ammonia burner of nitric acid plant

502194 tCO2ey-1

USS 98939

binds the project developer and credit buyer at the time credits are issued by the UN. Credit buyers comprise of a range of different entities such as emissions compliance buyers as well as traders and credit aggregators. The purpose of CERs is to eventually retire them in the place of emissions allowances to meet compliance obligations under a cap-and-trade regime. For the case of the EU ETS, this is done through the 'linking directive'21' which enables the compliance installation to surrender CERs in the place of allowances.

Example of CDM project case study (Table 2.2) [34]:

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