NATIONAL KEY ECONOMIC AREAS (NKEA)

1 NATIONAL KEY ECONOMIC AREAS (NKEA) NATIONAL BIOGAS IMPLEMENTATION (EPP5) BIOGAS CAPTURE AND CDM PROJECT IMPLEMENTATION FOR PALM OIL MILLS Updated: June 2011 CONTENTS Page Introduction Purpose 1 NATIONAL Key ECONOMIC AREAS (NKEA) 1 NKEA: Palm Oil 2 EPP 5: Build Biogas Facilities At Mills Across Malaysia Biogas as Potential Renewable Energy (RE): Why Embark on Biogas Capture? 3 Benefits of Biogas Capture 3 How to Capture Biogas? 4 Comparison of Biogas Capture Technologies 5 Total Potential of Biogas from POME 6 Utilization of Biogas Capture 7 Technical Configurations of Biogas Utilization in Palm Oil Mills 7 Options for Utilization 8 Combined Heat and Power (CHP) 8 Steam generation only 10 Electricity generation 12 Other potential applications 16 Incentives for Renewable Energy (RE) 17 Technology Providers For Biogas Implementation 18 Clean Development Mechanism (CDM) 20 Benefits of CDM project in Malaysia 20 Estimated of CER from Biogas CDM Projects 21 NATIONAL project CDM criteria 21 List of CDM Consultants in Malaysia 23 Disclaimer.

2 Information contained herein are given in good faith to assist the oil palm industry in considering and evaluating biogas projects. Readers are advised to check to confirm facts, figures and other information contained herein and seek independent professional advice. We welcome any feedback to constantly improve this booklet. NKEA: EPP 5 Updated: June 2011 1 | P a g e INTRODUCTION Purpose The purpose of this document is: To encourage palm oil mills in Malaysia to implement biogas trapping and utilisation To inform palm oil millers on the benefits of biogas trapping and provide the relevant information to facilitate planning and implementation. The importance of biogas trapping is evident from its inclusion as one of the eight Entry Point Projects (EPPs) of the palm oil sector under the NATIONAL Key ECONOMIC AREAS (NKEA).

3 NATIONAL Key ECONOMIC AREAS (NKEA) Malaysia is to focus on 12 NKEAs to boost the economy and achieve a high income status by 2020. These 12 NKEAs are the core of the ECONOMIC Transformation Programme (ETP) and will receive prioritised government support including funding, top talent and Prime Ministerial attention. In addition, policy reforms such as the removal of barriers to competition and market liberalisation will be carried out. There will be dedicated attention from the Prime Minister and fast-track mechanisms to resolve disputes or bottlenecks in implementing the NKEAs. NATIONAL Key ECONOMIC area (NKEA) ECONOMIC Sectors Oil , gas and energy Palm Oil Financial services Wholesale and retail Tourisms Information and communication technology Education Electrical and electronics Business services Private healthcare Agriculture Greater Kuala Lumpur NKEA: EPP 5 Updated: June 2011 2 | P a g e NKEA: Palm Oil Malaysia s palm oil industry is one of the important industries of the nation and it is the fourth largest contributor to the NATIONAL economy.

4 It currently accounts for RM53 billion in Gross NATIONAL Income (GNI). The Palm Oil NKEA is targeted to increase by RM125 billion to reach RM178 billion by 2020. As a major contributor to ECONOMIC growth, the Palm Oil NKEA programme plans to implement eight core Entry Point Projects (EPPs) spanning the palm oil value chain. The palm oil core EPPs are as follows; Palm Oil NKEA Programme Upstream productivity and sustainability EPP 1 Accelerated replanting to clear backlog of old, low yielding palms EPP 2 Increase the NATIONAL fresh fruit bunches (FFB) yield EPP 3 Improve workers productivity through the introduction or scale up new techniques EPP 4 Increase NATIONAL average oil extraction rate (OER) EPP 5 Build biogas facilities at mills across Malaysia Downstream expansion and sustainability EPP 6 Shift Malaysia s focus towards high value oleo derivatives EPP 7 Emphasise early commercialisation of second generation biofuels EPP 8 Expedite growth in food & health-based downstream segment EPPs aims to achieve the installation of biogas facilities in all palm oil mills in Malaysia by 2020.

5 NKEA: EPP 5 Updated: June 2011 3 | P a g e EPP 5: BUILD BIOGAS FACILITIES AT MILLS ACROSS MALAYSIA Biogas as Potential Renewable Energy (RE): Why embark on biogas capture? It is important for the palm oil industry to capture biogas from palm oil mill effluent (POME). The reasons and benefits of biogas capture are many. These include additional revenues from sale of surplus energy and carbon credits. Furthermore, reducing the carbon footprint through biogas capture enables competitive market access of palm products particularly palm biodiesel to environmentally-sensitive markets such as the European Union and the United States. Benefits of Biogas Capture Reduces GHG emissions methane and CO2 Reduces land use for POME treatment Generates additional revenue in the palm oil milling process OBJECTIVESOF BIOGAS CAPTURE-added revenue-reduced carbon footprintTo reduce greenhouse (GHG) emissions generated from POMETo comply with 35% GHG emission savings requirement for biodiesel under the EU Renewble Energy DirectiveTo produce electricity for the grid connectionTo convert POME to renewable energy for in-house or peripheral useTo utilize biogas as renewable fuel to replace fossil fuel/diesel for generating steam or electricity NKEA: EPP 5 Updated.

6 June 2011 4 | P a g e Eligible for Clean Development Mechanism (CDM) application The CDM project transforms GHG emission reduction into cash through sale of carbon credits Reduces global and local environmental impact Encourages technology innovation and R&D Reduces dependence on fossil fuel, and enhances fuel diversity and security of energy supply. How to Capture Biogas? Biogas capturing from POME has attract great attention across the palm oil industry due to the vast potential of methane recovery for use as a clean renewable fuel as well as for the mitigation of GHG emissions which is recognized by the CDM scheme under the Kyoto Protocol for certified emission reductions (CER) or carbon credits. Biogas capturing from POME can be carried out using a number of various local or foreign technologies.

7 The closed-tank anaerobic digester system with continuous stirred-tank reactor (CSTR), the methane fermentation system employing special microorganisms and the reversible flow anaerobic baffled reactor (RABR) system are among the technologies offered by the technology providers. Ponding system for palm oil mill effluent (POME) treatment and covered lagoon technology NKEA: EPP 5 Updated: June 2011 5 | P a g e Comparison of Biogas Capture Technologies Name of technology provider System Life term (years) HRT (days) Final discharge Volume of biogas generated BOD (mg/L) COD (mg/L) Keck Seng flow stirred tank reactor (CSTR) Continuous >20 18 250-500 8000-12,000 ~ Nm3 per kg of COD Majurutera stirred tank reactor (CSTR) Complete 10 - - - 20 m3 per tonne of POME BEE High efficiency methane fermentation system 20-25 9 50-270 1400-2500 >26-30 m3 per m3 of POME SIRIM (pilot scale) Reversible flow anaerobic baffled reactor (RABR)

8 >20 10-15 - 6000 Nm3 UPM-FELDA-Kyushu Institute of Biogas Technology Semi-commercial closed anaerobic digester 25 10 - 2000 20 m3 of biogas / m3 of POME Ronser Bio-Tech and Shanghai-Jiaotong University on zero-discharge treatment technology AnaEG (Combination of UASB and EGSB technologies) >20 4 - 2000 > Nm3 per reduced COD volume (based on 90% COD removal rate) Biotec Asian International Sdn Bhd Covered lagoon biodigestter 22 - - 23m3/tonne POME Several systems to generate biogas from POME have been developed using both local and foreign technology. The technologies are summarised as follows; NKEA: EPP 5 Updated: June 2011 6 | P a g e Total Potential of Biogas from POME The estimated potential energy generated from biogas in Malaysia is million MWhr of electricity which is equivalent to 261 MW of the potential power based on 21% efficiency in a steam plant (based on yield of FFB in 2009).

9 Material Production Rate Quantity FFB (mil. tonnes) Effluent 67% of EFB million tonne = million m3 Biogas 28 m3 m-3 million m3 Biogas CV at 35 C Total heat value 20 MJ m-3 x 20 million MJ = million MJ million MJ million MWhr *1 MWhr = 1 MJ/3600 Power Output 21% of heat output million MWhr x 21% = million MWhr Power plant size Plant operates 300 days year-1 = 7200 hr year-1 1 880 000 / 7200 = MW NKEA: EPP 5 Updated: June 2011 7 | P a g e Utilization of Biogas Biogas can be used for all applications in place of natural gas. Since most boilers do not require high quality gas specifications, the use of biogas in boilers is most encouraged and has been increasing rapidly. Stationary engines of pumps, generators and power tools are also a popular option for the utilization biogas.

10 In vehicle fuel, upgrading of the biogas quality is necessary. Upgrading the biogas includes the reduction of H2S concentration and CO2. Connecting the electricity generated to the NATIONAL electricity grid is another profitable way of utilizing the biogas, which is in tune with the target set in the Malaysian Fifth Fuel Policy of achieving 5% of NATIONAL grid-connected electricity generation from renewable sources. Technical Configurations of Biogas Utilization in Palm Oil Mills There are various ways of utilizing POME biogas in palm oil mills. With the proper technical configuration and system, biogas generated from the POME can be directly converted into useful energy either for heat, electricity or both. The setting up of biogas plants in palm oil mills would be useful to mills that require additional power for other plants in the palm oil mill such as the EFB fibre plant or kernel crushing plant, as well as for grid-connection under the Small Renewable Energy Power (SREP) Programme The biogas can be also upgraded and stored as a natural gas for utilization in vehicles used in the palm oil mills.