DG Cement WHR PDD

PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) - Version 03
CDM – Executive Board
CLEAN DEVELOPMENT MECHANISM

PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD)
Version 03 - in effect as of: 22 December 2006
CONTENTS
A. General description of the small scale project activity
B. Application of a baseline and monitoring methodology
C. Duration of the project activity / crediting period
D. Environmental impacts
E. Stakeholders‟ comments
Annexes
Annex 1: Contact information on participants in the proposed small scale project activity
Annex 2: Information regarding public funding
Annex 3: Baseline information
Annex 4: Monitoring Information
Annex 5: Advertisements for Stakeholders‟ Meeting
Annex 6: Pictures of Stakeholders‟ Meeting
1
Revision history of this document
Version Date Description and reason of revision

Number
01 21 January Initial adoption
2003
02 8 July 2005  The Board agreed to revise the CDM SSC PDD to reflect
guidance and clarifications provided by the Board since
version 01 of this document.
 As a consequence, the guidelines for completing CDM SSC
PDD have been revised accordingly to version 2. The latest
version can be found at
<http://cdm.unfccc.int/Reference/Documents>.
03 22 December  The Board agreed to revise the CDM project design
2006 document for small-scale activities (CDM-SSC-PDD), taking
into account CDM-PDD and CDM-NM.
2
SECTION A. General description of small-scale project activity
A.1 Title of the small-scale project activity:
DGKCC Waste Heat Recovery and Utilization for 10.4 MW Power Generation at Dera Ghazi Khan Plant
Version 11
Date: 07/11/2011
A.2. Description of the small-scale project activity:
The project activity involves the installation of waste heat recovery systems to generate electricity at D.G.
Khan Cement Company (hereafter referred to as DGKCC), Khofli Sattai Dera Ghazi Khan Plant. D.G.
Cement Khofli Sattai Plant is part of Nishat Group which ranks among top five business houses of
Pakistan. DGKCC was established in 1978 and started its commercial production in April 1986 with 2000
Tonnes per Day (TPD) clinker based on dry process technology. Plant and machinery was supplied by
UBE Industries of Japan. Nishat Group acquired DGKCC in 1992 under privatization initiative by
Government of Pakistan and immediately undertook the optimization by raising the capacity to 2200 TPD
in 1993. To meet the increasing demand, another production line of 3300 TPD was added in August,
1997. The plant and machinery was supplied by M/S F.L. Smidth of Denmark.
The capacities of both kilns were enhanced in 2005; kiln 1 was upgraded to 2700 TPD whereas the
capacity of kiln 2 was increased to 4000 TPD
DGKCC currently holds QMS (Quality Management System) and EMS (Environmental Management
System) certifications, ISO9001:2000 and ISO14001:2004, respectively. The plant has two kilns with
total clinker production capacity of 6700 TPD (Kiln 1: 2700 TPD & Kiln 2: 4000 TPD) through dry
process.
Currently at DGKCC, almost all the waste heat from the clinker production process is vented to
atmosphere. The cement factory has its own captive power plant which constitutes four Niigata
18V32CLX engines (total capacity 23.84 MW) and three Wartsila 20V34SG engines (total capacity 25.42
MW). Niigata engines run on Heavy Fuel Oil (HFO) and were installed in 1996-1997, whereas Wartsila
engines run on natural gas (NG) and were recently commissioned in 2006. Diesel is consumed as an
auxiliary fuel in Niigata engines. In addition to captive power plant, the cement factory has 20 MW grid
electricity import connection. No electricity is exported to the grid.
The power export to grid is prevented by reverse current protection system already in place at DGKCC.
The system consists of a relay which detects the flow of power in reverse direction and generates an
alarm when there is such a reverse flow. Furthermore, a meter is also installed which can be used for
detection of reverse current flow. Once reverse power is detected and alarm is generated the operator
takes necessary action to stop this reverse flow. In this way it is ensured that no electricity is exported to
the grid. A same reverse current protection system has been installed for WHR project thus making sure
no electricity is fed to the grid by WHR project.
The project activity involves installation of total four heat recovery steam generators (HRSGs) of capacity
54.3 TPH and a steam turbo-generator for 9.36 MW net electricity generation. Two HRSGs will be
installed on each kiln, one at pre-heater and one on cooler. As such, the project activity will displace the
3
fossil fuel based grid electricity imports to DGKCC. The project will reduce Greenhouse Gas (GHG)
emissions by 33,845 t CO2 per year and will lead to sustainable development.
The project activity will result in sustainable development of the following:
Environmental Development
 significant reduction in the emissions of Greenhouse Gases and other environmental

contamination
 improvement of the local environment by reduction in temperature of the vented hot air
 conservation of local fossil fuel resources by avoiding fossil fuel based electricity generation
from the grid
Social Development
 alleviation of poverty by providing labour employment opportunities to the local community

during construction phase
 creation of new permanent jobs during construction and operation phase
 positive impact on local communities by avoiding grid electricity which will become available to
domestic consumers
 addition to power generation capacity of Pakistan
 less health impact for the population through less emission of greenhouse gases and particles
Economic Development
 cost reduction for generating electricity as no additional fuel is used

 employment opportunities for the local people
Technology Development
 introducing modern technology in the country (technology transfer)

 setting up an example of sustainable development to be followed by other cement factories
A.3. Project participants:
Kindly indicate if
the Party involved
Name of Party involved Private and/or public entity(ies)
wishes to be
((host) indicates a host project participants
considered as
Party) (as applicable)
project participant
(Yes/No)
Islamic Republic of Pakistan D.G. Khan Cement Company Ltd.
No
(host) (private entity)
Carbon Services (Private) Limited
Islamic Republic of Pakistan No
(private entity)
First Climate (Switzerland) AG
Switzerland No
(private entity)
4
A.4. Technical description of the small-scale project activity:
A.4.1. Location of the small-scale project activity:

>>
A.4.1.1. Host Party(ies):
Islamic Republic of Pakistan
A.4.1.2. Region/State/Province etc.:
Punjab
A.4.1.3. City/Town/Community etc:
Khofli Sattai, District Dera Ghazi Khan
A.4.1.4. Details of physical location, including information allowing the

unique identification of this small-scale project activity :
The project is located at:
D.G. Khan Cement Factory

Khofli Sattai, District Dera Ghazi Khan
Punjab, Pakistan
The company is headquartered at:
Nishat House, 53 – A, Lawrence Road,

Lahore, Pakistan
.
Exact location of the plant, with respect to its geographical coordinates, is:
Latitude: 30°32‟62”,
Longitude: 70°54‟48”.
The location of the project is illustrated in the figures below.
5
Figure A.4.1.4.1: Location of the Project
Source: http://maps.google.com
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A.4.2. Type and category(ies) and technology/measure of the small-scale project activity:
In accordance with Appendix B of the simplified modalities and procedures for small-scale CDM project
activities, the Project activity fall under the following type and category:
Type III. Other project activities

Category Q: Waste Energy Recovery (gas/heat/pressure) Projects
Sectoral Scope 04 – Manufacturing industries
The project activity involves installation of four HRSGs and one steam turbo-generator. All the waste
heat recovered from clinker production process would be utilized for power generation and the hot
exhaust from HRSGs would be used to preheat the raw materials. Two HRSGs (12.2 tph and 8.7 tph on
pre-heater (PH) and cooler (AQC) end respectively) on 2700 TPD kiln (Kiln 1), and two (20.0 tph and
13.4 tph on pre-heater (PH) and cooler (AQC) end respectively) on 4000 TPD kiln (Kiln 2) will be
installed. The superheated steam generated by the HRSGs will be passed to 10.4 MW steam turbine to
generate net 9.36 MW electricity. The electricity generated by the project activity will be consumed
within the cement works. Net electricity generated by the project activity (70,087.68 MWh/yr) will
displace grid electricity imports; hence this potential will result in 33,845 t CO2 reductions per year.
Kawasaki Plant Systems (KPS), Ltd is the main contractor of the project. Sojitz corporation is its local
agent in Pakistan. KPS is providing equipment for the project activity from various suppliers which
include Chinese and Japanese suppliers.
As the technology used in the project activity is new to the region, proper training was essential for
successful operation of WHR equipment. Mr. Shafqat Javed, Manager Waste Heat Recovery Project at
DGKCC, completed his training of operation and maintenance of waste heat recovery plant under
supervision of Kawasaki. He then provided further training to his subordinates at the plant.1
Table A.4.3.2: Major Equipment of Project Activity
Name of
Quantity Manufacturer & Model Specifications
Equipment
Capacity: 12.2 tph

Manufacturer = Kawasaki Plant System, Gas Flow: 158,433 Nm3/h
HRSG at PH of
01 Ltd. Japan. Gas Temp
2700 TPD kiln Model = Serial No. 24165-DGK-PH-1 At inlet: 338 °C
At outlet: 227 °C
Capacity: 8.7 tph
Gas Flow: 104,000 Nm3/h
HRSG at AQC of Manufacturer = Kawasaki Plant System,
01 Gas Temp
2700 TPD kiln Ltd. Japan.
Model = Serial No. 24165-DGK- AQC-1
At inlet: 360 °C
At outlet: 94 °C
1
All documents related to employees‟ training for new WHR system have been provided to the DOE.
7
Capacity: 20.0 tph

HRSG at PH of
4000 TPD kiln
At inlet: 314 °C
Model = Serial No. 24165-DGK-PH-2 At outlet: 220 °C
Capacity: 13.4 tph
HRSG at AQC of
4000 TPD kiln Model = Serial No. 24165-DGK-AQC-2 At inlet: 360 °C
At outlet: 98 °C
Rated Output: 10.4 MW
Manufacturer = Nanjing Turbine and Revolutions: 3000 rpm
Electric Machinery (Group) Co. Ltd.
Steam turbine 01 Type: multi-stage, mixed
China.
Model = NZ11-1.53 / 0.13 pressure condensing
turbine
Manufacturer = Nanjing Turbine and Capacity: 12.235 MVA

Electric Machinery (Group) Co. Ltd. Voltage: 6,300 V
Generator 01
China. Frequency: 50 Hz
Model = QFW2-12-2 Power Factor: 0.85 Lag
The schematic of project activity is as under:
Figure A.4.3.1: Schematic of Project Activity
Cement
HRSGs
Waste heat Steam Steam

Clinker Production at Kilns Turbo- Power Works
Generator
Raw
Materials
Hot exhaust for preheating
incoming raw materials
A.4.3 Estimated amount of emission reductions over the chosen crediting period:
The annual & total estimation of emission reductions for the fixed crediting period of 10 years
(01/01/2012 to 31/12/2021) is provided below:
8
Table A.4.4.1: Emission Reductions over the Crediting Period

Annual estimation of emission reductions in
Years
tonnes of CO2 e
Year 1 33,845
Year 2 33,845
Year 3 33,845
Year 4 33,845
Year 5 33,845
Year 6 33,845
Year 7 33,845
Year 8 33,845
Year 9 33,845
Year 10 33,845
Total estimated reductions
338,450
(tonnes of CO2 e)
Total number of crediting years 10
Annual average over the crediting period of
33,845
estimated reductions (tonnes of CO2 e)
A.4.4. Public funding of the small-scale project activity:
There is no public funding available for the project activity.
A.4.5. Confirmation that the small-scale project activity is not a debundled component of a
large scale project activity:
According to “Guidelines on assessment of debundling for SSC project activities (Version 03, Annex 13,
EB 54)”, a proposed small-scale project activity shall be deemed to be a debundled component of a large
project activity if there is a registered small-scale CDM project activity or an application to register
another small-scale CDM project activity:
(a) With the same project participants;

(b) In the same project category and technology/measure; and
(c) Registered within the previous 2 years; and
(d) Whose project boundary is within 1 km of the project boundary of the proposed small-scale activity at
the closest point
There is no registered small-scale CDM project activity or an application to register another small-scale
CDM project activity by the project participants. There are also no such projects registered in the same
category and technology within previous 2 years. Additionally, no other small scale activity is located in
the vicinity. Thus, the project activity is not a debundled component of a large scale project activity.
9
SECTION B. Application of a baseline and monitoring methodology
B.1. Title and reference of the approved baseline and monitoring methodology applied to the
small-scale project activity:
AMS Type III. – “Other Project activity”

Category Q. Waste Energy Recovery (gas/heat/pressure) Projects (version 03)
For the estimation of the capping factor, corresponding section of ACM0012 (version 03.2) is
implemented.
Referred Tools
 Tool for the demonstration and assessment of additionality (Version 05.2)

 Tool to calculate the emission factor for an electricity system (Version 02.2.0)
B.2 Justification of the choice of the project category:
The current project activity meets all the applicability conditions as outlined in the selected baseline
methodology AMS.III.Q/Version 03. The following table illustrates that AMS.III.Q is fully applicable to
the project activity.
No. Condition Project Activity/Baseline Applicability

Scenario
The Project activity utilizes Category is
The category is for project activities that waste heat from existing plant applicable to
utilize waste gas and/or waste heat at for generation of electricity. project activity.
existing facilities as an energy source for:
(a) Cogeneration; or
(b) Generation of electricity; or
(c) Direct use as process heat;
1 or
(d) For generation of heat in
elemental process (e.g.,
steam, hot water, hot oil, hot
air);
(e) For generation of
mechanical energy.
The category is also applicable to project Not applicable. Project activity Category is
2 activities that use waste pressure to generate doesn‟t use waste pressure. applicable to
electricity at existing facilities. project activity.
The recovery of waste gas/heat may be a Project activity is considered as Methodology is
3
new initiative or an incremental gain in an a new initiative since the applicable to
10

Scenario
existing practice. technology applied in the project activity.
project scenario substantially
differs from the one used in the
baseline.
In case the project activity is an incremental

gain, the difference between the technology
used before project activity implementation
and the project technology should be clearly Not applicable. Project activity
4 shown. It should be demonstrated why there does not involve any
are barriers for the project activity that did incremental gain
not prevent the implementation of the
technology used before the project activity
implementation.
Measures are limited to those that result in The amount of emission Methodology is
emission reductions of less than or equal to reductions will not exceed applicable to
60 kt CO2 equivalent annually. Wherever the 60 kt CO2eq annually during the project activity.
measures lead to waste heat recovery which crediting period.
is incremental to an existing practice of
5 waste heat recovery, only the incremental
gains in GHG mitigation should be taken
into account and such incremental gains
shall result in emission reductions of less
than or equal to 60 kt CO2 equivalent
annually.
The energy produced with the recovered The electricity generated by the Methodology is
6a waste gas/heat or waste pressure should be project activity is measurable. applicable to
measurable project activity.
Energy generated in the project activity may All the electricity generated by Methodology is
be used within the industrial facility or the project activity will be used applicable to
6b
exported to other industrial facilities within the cement plant. project activity
(included in the project boundary)
The project activity does not Methodology is
Electricity generated in the project activity export any electricity to the applicable to
may be exported to the grid or used for grid. The electricity generated project activity.
captive purposes. However, the in the project activity would be
methodology is not applicable to projects used for captive purposes only
where the waste gas/heat recovery project is and would displace electricity
implemented in a single-cycle power plant imports from the grid.
6c (e.g., gas turbine or diesel generator) where
heat generated on site is not utilizable for The waste heat recovery
any other purposes on-site except to generate project is not implemented in a
power. The projects recovering waste energy single cycle power plant. The
from such power plants for the purpose of project activity recovers waste
generation of heat only can apply this heat from the clinker
methodology production process and utilizes
it for power generation.
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Scenario
The emissions reductions are Methodology is
claimed by D.G. Khan Cement applicable to
The emission reductions are claimed by the
6d Company Ltd., who is the sole project activity.
generator of energy using waste energy
owner of all equipment within
the project boundary.
Not applicable. The project
In cases where the energy is exported to
electricity will be consumed
other facilities ( included in the project
on-site and will not be exported
boundary), the following are required:
to any external facility.
(i) All historical information from the
recipient plants;
(ii) An official agreement exists
6e between the owners of the project
energy generation plant (henceforth
referred to as generator, unless
specified otherwise) with the
recipient plant(s) that the emission
reductions would not be claimed by
the recipient plant(s) for using a
zero-emission energy source;
For those facilities and recipients included in The project activity will Methodology is
the project boundary, that prior to displace electricity imports applicable to
implementation of the project activity from the national grid. (source project activity.
(current situation) generated energy on-site of energy in the baseline)
(sources of energy in the baseline), the Therefore, the credits are
credits can be claimed for minimum of the claimed for the whole crediting
6f
following time periods: period of the project activity.
(i) The remaining lifetime of
equipments currently being used;
and
(ii) Crediting period.
The waste gas/heat or waste pressure utilized Almost all waste heat (with the Methodology is
in the project activity would have been exception of minute portion applicable to
flared or released into the atmosphere in the used for heating incoming raw project activity.
absence of the project activity. This shall be materials) utilized in the
proven by one of the following options: project activity for electricity
generation would have been
(i) By direct measurements of
released to the atmosphere in
6g energy content and amount of the waste
the absence of the project
gas/heat or waste pressure for at least
activity. Appropriate evidences
three years prior to the start of the
such as Energy Bills and
project activity.
Financial Statements audited
(ii) Energy balance of relevant by competent authorities will
sections of the plant to prove that the be provided to DOE during the
waste gas/heat or waste pressure was validation.
12

Scenario
not a source of energy before the
implementation of the project activity.
For the energy balance the
representative process parameters are
required. The energy balance shall
demonstrate that the waste gas/heat or
waste pressure was not used and also
provide conservative estimations of the
energy content and amount of waste
gas/heat or waste pressure released.
(iii) Energy bills (electricity, fossil
fuel) to demonstrate that all the energy
required for the process (e.g., based on
specific energy consumption specified
by the manufacturer) has been procured
commercially. Project participants are
required to demonstrate through the
financial documents (e.g., balance
sheets, profit and loss statement) that no
energy was generated by waste gas/heat
or waste pressure and sold to other
facilities and/or the grid. The bills and
financial statements should be audited
by competent authorities.
(iv) Process plant manufacturer‟s
original specification/information,
schemes and diagrams from the
construction of the facility could be
used as an estimate of quantity and
energy content of waste gas/heat
produced for rated plant capacity per
unit of product produced.
For the purpose of this category waste The waste heat recovered from Methodology is
energy is defined as: a by-product the clinker making process applicable to
gas/heat/pressure from machines and complies with the definition project activity.
industrial processes having potential to provided above; the waste heat
provide usable energy, for which it can be from clinker production
demonstrated that it was wasted. For process was vented to the
7 example gas flared or released into the atmosphere before the project
atmosphere, the heat or pressure not activity.. The waste heat from
recovered (therefore wasted). Gases that clinker production process has
have intrinsic value in a spot market as no intrinsic value in a spot
energy carrier or chemical (e.g., natural gas, market as energy carrier or
hydrogen, liquefied petroleum gas, or their chemical. Thus this category is
substitutes) are not eligible under this applicable to the waste heat
13

Scenario
category. from clinker production
process.
B.3. Description of the project boundary:
The baseline emissions for the project activity relate to electricity imported from the grid. Pakistan has
two grid operating companies, National Transmission and Despatch Company (NTDC) and Karachi
Electric Supply Company (KESC). Both companies operate their own network within the unified grid.
Within this system baseline emission sources are limited to CO2 only.
There is no auxiliary fuel combusted in the project activity to supplement waste gas and the turbogenset
consume its own electricity for auxiliary needs. Similarly, the project activity does not incinerate any
waste gas to generate energy. Therefore, the project emissions are considered zero.
The project boundary is illustrated in the figure below.
Figure B.3.1: Project Boundary
Waste Heat
Kiln 1
2700 TPD
Clinker
CEMENT WORKS
Waste Heat 9.36

Recovery MW
Systems
Clinker
Grid
Kiln 2
4000 TPD
Waste Heat
PROJECT BOUNDARY
B.4. Description of baseline and its development:
In the baseline situation, only a small portion of the waste heat generated is recovered from the feed end
of the kiln and is circulated for preheating raw inputs and drying of coal. The high temperature exhaust is
vented to the atmosphere. There are no other potential alternatives of waste heat utilization in the vicinity
of the factory.
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DGKCC receives electricity from two sources, grid and captive power plant. However, grid supply in
Pakistan is not reliable; therefore the captive power plant is used as base load, and does not modify its
regime once the project activity is in place. Table B.4.1 given below shows that share of grid electricity is
decreasing every year due to its unreliability. Therefore, the electricity produced by the project activity
only displaces grid electricity. This is also toward conservativeness as the grid electricity emission factor
(0.489 t CO2/MWh) is lower than the captive power plant emission factor (0.55 t CO2/MWh, see detailed
calculation in annex 3).
Table B.4.1: Historical data
Sep 2004 to Sep 2005 to Sep 2006 to
Average
Aug 2005 Aug 2006 Aug 2007
Clinker production by Kiln 1 (t/yr) 480,671 916,171 963,721 786,854
Clinker production by Kiln 2 (t/yr) 1,156,394 1,253,132 1,350,653 1,253,393
Total clinker production (t/yr) 1,637,065 2,169,303 2,314,374 2,040,247
HFO consumption by Kiln 1 (t/yr) 1,108 1,737 841 1,299
Coal consumption by Kiln 1 (t/yr) 67,469 131,151 139,864 112,828
HFO consumption by Kiln 2 (t/yr) 497 512 852 620
Coal consumption by Kiln 2 (t/yr) 149,879 162,041 167,994 159,971
NG consumption by Kiln 2 (MMCF2/yr) 0 0 150.084 50
Fuel energy consumption by Kiln 1(GJ) 1,655,279 3,200,592 3,372,052 2,742,641
Fuel energy consumption by Kiln 2(GJ) 3,597,051 3,887,903 4,189,812 3,891,588
Electricity imported from grid (MWh/yr) 93,704 111,774 57,189 87,556
Electricity generated by captive power
93,233 116,695 188,096 132,675
plant (MWh/yr)
Total electricity consumption (MWh/yr) 186,937 228,469 245,285 220,231
Share of grid electricity (%/yr) 50% 49% 23% 40%
Share of captive generation (%/yr) 50% 51% 77% 60%
Average specific fuel energy consumption for clinker production by Kiln 1 (GJ/t clinker) 3.486
Average specific fuel energy consumption for clinker production by Kiln 2 (GJ/t clinker) 3.105
So in the absence of project activity the only possible baseline scenario is that the waste heat is released to
the atmosphere and the project electricity used by cement plant is supplied by the national grid.
B.5. Description of how the anthropogenic emissions of GHG by sources are reduced below
those that would have occurred in the absence of the registered small-scale CDM project activity:
Seriousness of CDM consideration before starting date of the project activity
The starting date of the project activity is the 18th October 2007 when the contract was signed between
DGKCC and supplier of WHR project equipment. The project proponent was aware of the CDM long
before the start date of the project activity and CDM income proved to be a decisive factor in the
investment decision taken in September 2007 to implement the project3. Contract with CDM consultants
was finalized in November 2007 and during the whole implementation phase before validation DG
Cement was accompanied by CDM consultants.
2
MMCF = million cubic feet
3
Proofs for CDM awareness and consideration will be provided to DOE during validation.
15
Project timeline is given below in Table B.5.1
Table B.5.1: Project timeline

Milestone Date Source
Email communication
CDM Awareness June 2007 between Carbon Services and
DGKCC
Project Approval
Investment Decision September 2007
Documentation
Several e-mail
communications between
Proposal from CDM Consultant Sep-Oct,2007 DGKCC and Carbon
Services for finalization of
CDM contract
Contract between DGKCC
Project Start Date October 18, 2007 and WHR equipment
supplier
DGKCC‟s contract with
Finalization of CDM contract November, 2007 CDM consultant Factor (now
First Climate AG)
Preparation of CDM questionnaire by Email communication
CDM consultant for acquisition of April 01, 2008 between Carbon Services and
information & data from DGKCC First Climate
CDM Questionnaire for acquisition of
Email from Carbon Services
information and data is sent to April 11, 2008
to DGKCC
DGKCC by CDM consultant
Working on CDM project – Internal Email communication
communication between Carbon June 30, 2008 between Carbon Services and
Services and First Climate First Climate
missing data is sent to DGKCC by July 11, 2008
to DGKCC
CDM consultant
additional data is sent to DGKCC by August 07, 2008
to DGKCC
CDM consultant
Working on CDM project – Draft
Email communication
Emission Reduction calculations are
September 01, 2008 between Carbon Services and
shared with First Climate by Carbon
First Climate
Services
Project site visit on September 20, Email from Carbon Services
September 17, 2008
2008 is planned by CDM consultant to DGKCC
CDM stakeholders‟ consultation Stakeholders‟ consultation
October 24, 2008
meeting is held meeting documents
Information regarding project
equipment is asked from DGKCC by November 07, 2008
to DGKCC
CDM consultant
Clarification request to CDM Meth
December 08, 2008 AM_CLA_0137
Panel for applicability of AM0024 on
16
the proposed CDM project activity

Revision request to CDM Meth Panel
March 11, 2009 AM_REV_0141
for revision in AM0024
Decision to apply AMS-III.Q. to the Email from Carbon Services
November 9, 2009
proposed CDM project activity to First Climate
Request for quotation to DOE March 03, 2010
Validation contract with DOE March 06, 2010
Project Commissioning April 2010
Application for Host Country
June 11, 2010
Approval
Issuance of Letter of Approval from
November 25, 2010
DNA Switzerland
Issuance of Host Country Approval February 12, 2011
Assessment and demonstration of additionality
The demonstration of additionality is realised through application of the latest version of the “Tool for the
demonstration and assessment of additionality (Version 5.2)”.
Step 1: Identification of alternatives to the project activity (consistent with current laws and
regulations)
Sub-step 1a: Define alternatives to the project activity
The probable alternatives to the project activity are:
Alternative 1. Business-as-usual (current situation or baseline) – No waste heat recovery and

electricity supply by Grid
This scenario is the most viable and credible alternative as there are no additional costs involved and
the only changes in financial structure could be the change of grid electricity tariffs.
Alternative 2. Project Activity without CDM-Registration (grid electricity replacement).

This alternative represents the implementation of the project activity without use of carbon revenues.
The costs of this alternative are too high and it becomes totally unviable for DGKCC to implement
the proposed CDM project activity without CDM income as shown in the benchmark investment
analysis provided below.
Alternative 3. Construction of new power plant on the basis of gas reciprocating engines.
Although this alternative will provide outputs and services comparable to CDM project activity, still
it is not a realistic and credible alternative to the proposed CDM project activity as the circumstances
are such that the baseline situation does not require DGKCC to make an investment for construction
of new power plant.
The existing power sources (grid + captive power plant) are quite capable of meeting the complete
power demand of the cement plant. Table B.4.1 provided above shows that the average annual
electricity consumption by DGKCC is 220,231 MWh/yr. To fulfil this demand in 312 operational
17
days, DGKCC needs only 29.41 MW4 power generation capacity whereas it already has 69.26 MW
(49.26 MW captive + 20 MW grid) of electricity supply capacity. Therefore, there is no reason as to
why DGKCC shall construct/purchase new gas reciprocating engines when the circumstances or the
baseline situation do not require it to do so.
If DGKCC had planned a capacity expansion of its existing clinker production lines and which had
necessitated for it to add more power generation capacity, only then alternative 3 would have been a
realistic and credible alternative to proposed CDM project activity. Since this is not the case, it is
eliminated and not further discussed under Step 2
Furthermore, the elimination of alternative 3 is in compliance with the guidance provided in “Tool for
the demonstration and assessment of additionality” V 5.2; justifications are briefly provided below:
It is stated in Footnote 4 to Paragraph (1) of Sub-step 1 (a) that “For example, a coal-fired power
station or hydropower may not be an alternative for an independent power producer investing in wind
energy or for a sugar factory owner investing in a co-generation, but may be an alternative for a
public utility. Alternatives are, therefore, related to technology and circumstances as well as to the
investor.”
Since the circumstances/baseline situation do not compel DGKCC to make an investment for
construction of new power plant, alternative 3 cannot be considered as a realistic and credible
alternative to the project activity.
The importance of circumstances and baseline situation is further highlighted in the Section:
Investment comparison analysis and benchmark analysis, Paragraph 15 of the Annex to Tool for the
demonstration and assessment of additionality, wherein it is stated that:
“Guidance: If the proposed baseline scenario leaves the project participant no other choice than to
make an investment to supply the same (or substitute) products or services, a benchmark analysis is
not appropriate and an investment comparison analysis shall be used. If the alternative to the project
activity is the supply of electricity from a grid this is not to be considered an investment and a
benchmark approach is considered appropriate.
Rationale: The purpose of an investment analysis in the context of the CDM is to determine whether
the project is less financially attractive than at least one alternative in which the project participants
could have invested. In cases where the alternative requires investment anyhow and baseline
emissions are based on that alternative, the only means of determining that the project activity is less
financially attractive than at least one alternative is to conduct an investment comparison analysis.
The benchmark approach is therefore suited to circumstances where the baseline does not require
investment or is outside the direct control of the project developer, i.e. cases where the choice of the
developer is to invest or not to invest.”
In view of above it is clear that elimination of alternative 3 is as per the guidance provided in
Footnote 4 and Paragraph 15 of the Annex to the Tool and that the proposed CDM project activity is
purely a voluntary initiative undertaken by DGKCC only due the environmental benefits associated
with the project activity.
4
220,231 / (312 * 24) = 29.41 MW
18
As an outcome of Sub-step 1a, the only realistic and credible alternative to the proposed CDM project
activity is business-as-usual (continuation of the current practice).
Sub-step 1b: Consistency with mandatory laws and regulations
None of the alternative is prevented by the existing legislation in Pakistan. All alternatives are in
compliance with applicable laws and regulations.
Step 2: Investment Analysis
Sub-step 2a:
For the investment analysis Option III (Benchmark Analysis) of the „Tool for the demonstration and
assessment of additionality‟ is chosen.
The investment analysis is done in line with the “Guidance on the Investment Analysis”5.
Referring to guidance provided by document, fulfillment of this guidance by the proposed project
activity‟s investment analysis is shown below:
Guidance Guidance text Explanation related to fulfillment of

Number the guidance by the Investment
Analysis presented below
General issues in presentation and calculation
3 The period of assessment should not be limited to Applicable and fulfilled:
the proposed crediting period of the CDM project The period of assessment is taken as
activity. Both project IRR and equity IRR 20 years (which is not limited to the 10
calculations shall as a preference reflect the period years crediting period for the project
of expected operation of the underlying project activity). The project is using project
activity (technical lifetime), or - if a shorter period IRR to conduct investment analysis.
is chosen - include the fair value of the project The same is reflected in the investment
activity assets at the end of the assessment period. analysis spreadsheet.
In general a minimum period of 10 years and a
maximum of 20 years will be appropriate. The
IRR calculation may include the cost of major
maintenance and/or rehabilitation if these are
expected to be incurred during the period of
assessment. Project participants are requested to
justify and DOEs are requested to validate the
appropriateness of the period of assessment in the
context of the underlying project activity, without
reference to the proposed
CDM crediting period.
4 The fair value of any project activity assets at the Applicable and fulfilled:
end of the assessment period should be included as The fair value of assets at the end of
a cash inflow in the final year. The fair value assessment period is included as cash
5
Annex 5 to EB 62
19
should be calculated in accordance with local inflow in the final year. The same is
accounting regulations where available, or reflected in the investment analysis
international best practice. It is expected that such spreadsheet.
fair value calculations will include both the book
value of the asset and the reasonable expectation
of the potential profit or loss on the realization of
the assets.
5 Depreciation, and other non-cash items related to Applicable and fulfilled:
the project activity, which have been deducted in Depreciation, which is a non cash item
estimating gross profits on which tax is calculated, was deducted to calculate tax, and was
should be added back to net profits for the purpose added back to calculate post tax cash
of calculating the financial indicator (e.g. IRR, flows. Taxation has been included as
NPV). Taxation should only be included as an an expense because the IRR calculated
expense in the IRR/NPV calculation in cases is post tax IRR. The same is reflected
where the benchmark or other financial indicator is in the investment analysis spreadsheet.
intended for post-tax comparisons.
6 Input values used in all investment analysis should Applicable and fulfilled:
be valid and applicable at the time of the All input values, variables and
investment decision taken by the project assumptions used in the investment
participant. The DOE is therefore expected to analysis are valid and applicable at the
validate the timing of the investment decision and time of decision making. The same is
the consistency and appropriateness of the input reflected in the investment analysis
values with this timing. The DOE should also spreadsheet.
validate that the listed input values have been
consistently applied in all calculations.
7 In the case of project activities for which Not Applicable:
implementation ceases after the commencement Implementation of the project activity
and where implementation is recommenced due to has not ceased since its
consideration of the CDM the investment analysis commencement.
should reflect the economic decision making
context at point of the decision to recommence the
project. Therefore capital costs incurred prior to
the revised project activity start date can be
reflected as the recoverable value of the assets,
which are limited to the potential reuse/resale of
tangible assets.
8 Project participants should supply spreadsheet Applicable and fulfilled:
versions of all investment analysis. All formulas Unprotected/readable versions of all
used in this analysis be readable and all relevant investment analysis related
cells be viewable and unprotected. The spreadsheets would be provided to the
spreadsheet will be made available to the DoE and UNFCCC EB.
Executive Board, UNFCCC secretariat and others
contracted to assess the request for registration on
behalf of the Board including assigned members of
the Registration and Issuance Team. In cases
where the project participant does not wish to
make such a spreadsheet available to the public an
exact read-only or PDF copy shall be provided for
general publication. In case the PP wishes to
20
black-out certain elements of the publicly

available version, a clear justification for this shall
be provided to the UNFCCC secretariat by the
DOE when requesting registration.
Specific Guidance on the calculation of project IRR and Equity IRR
9 The cost of financing expenditures (i.e. loan Applicable and fulfilled:
repayments and interest) should not be included in Loan repayment is not considered in
the calculation of project IRR. the IRR analysis. Interest payment is
considered only for tax computation
purpose and has been added back
again. The same is reflected in the
investment analysis spreadsheet.
10 In the calculation of equity IRR only the portion of Not Applicable:
investment costs which is financed by equity Project IRR is calculated.
should be considered as the net cash outflow, the
portion of the investment costs which is financed
by debt should not be considered a cash outflow.
11 Due to the impact of loan interest on income tax Applicable and fulfilled:
calculations it is recommended that when a project Project IRR is calculated to
IRR is calculated to demonstrate additionality a demonstrate additionality and has been
pre-tax benchmark be applied. In cases where a compared against local commercial
post-tax benchmark is applied the DOE shall lending rate in Pakistan. The same is
ensure that actual interest payable is taken into reflected in the investment analysis
account in the calculation of income tax. In such spreadsheet.
situations interest should be calculated according
to the prevailing commercial interest rates in the
region, preferably by assessing the cost of other
debt recently acquired by the project developer
and by applying a debt-equity ratio used by the
project developer for investments taken in the
previous three years.
Selection and validation of appropriate benchmark
12 In cases where a benchmark approach is used the Applicable and fulfilled:
applied benchmark shall be appropriate to the type Project IRR is calculated to
of IRR calculated. Local commercial lending rates demonstrate additionality and has been
or weighted average costs of capital (WACC) are compared against local commercial
appropriate benchmarks for a project IRR. lending rate in Pakistan. The same is
Required/expected returns on equity are reflected in the investment analysis
appropriate benchmarks for equity IRR. spreadsheet.
Benchmarks supplied by relevant national
authorities are also appropriate if the DOE can
validate that they are applicable to the project
activity and the type of IRR calculation presented.
13 In the cases of projects which could be developed Applicable and fulfilled:
by an entity other than the project participant the The proposed project activity consists
benchmark should be based on parameters that of utilizing waste heat from clinker
are standard in the market. The DOE.s validation production process for electricity
of the benchmark shall also include its opinion on generation and can be developed by
whether a company-specific benchmark or a entities other than the project
21
benchmark based on parameters that are standard participant too. The benchmark used
in the market is suitable in the context of the for the project activity is based on
underlying project activity. publically available data source, i.e.
local commercial lending rate.
14 Internal company benchmarks/expected returns Not Applicable:
(including those used as the expected return on The proposed project activity consists
equity in the calculation of a weighted average of utilizing waste heat from clinker
cost of capital - WACC), should only be applied in production process for electricity
cases where there is only one possible project generation and can be developed by
developer and should be demonstrated to have entities other than the project
been used for similar projects with similar risks, participant too. The benchmark used
developed by the same company or, if the for the project activity is based on
company is brand new, would have been used for publically available data source, i.e.
similar projects in the same sector in the local commercial lending rate.
country/region. This shall require as a minimum
clear evidence of the resolution by the company‟s
Board and/or shareholders and will require the
validating DOE to undertake a thorough
assessment of the financial statements of the
project developer - including the proposed WACC
- to assess the past financial behavior of the entity
during at least the last 3 years in relation to similar
projects.
15 If the benchmark is based on parameters that are Not Applicable:
standard in the market, the cost of equity should be Project IRR is used for additionality
determined either by: (a) selecting the values demonstration.
provided in Appendix A; or by (b) calculating the
cost of equity using best financial practices, based
on data sources which can be clearly validated by
the DOE, while properly justifying all underlying
factors. The values in the table in Appendix A may
also be used, as a simple default option, if a
company's internal benchmark is used.
16 If a company‟s internal benchmark is used for the Not Applicable:
expected return on equity, the cost of debt should Company‟s internal benchmark is not
be based on the weighted average cost of debt used.
financing of the legal entity owning the CDM
project activity. For loans, use the weighted
average cost of outstanding long-term debt. For
bonds, use the weighted average yield of the bonds
during the last three months prior to the
submission of the CDM-PDD for validation or
prior to the investment decision, whichever is
earlier. The use of bonds to determine the cost of
debt is only appropriate for corporate bonds issued
in the host country of the CDM project. In cases
where the debt finance structure of the project is
not yet available (e.g. a letter of intent for debt
funding is not available), the cost of debt can be
22
assumed as the commercial lending rate in the

country or the yield of a 10 year bond issued by
the government of the host country or, if this is not
available, the bond with the maturity which is
closest to 10 years. The following should be
documented in the CDM-PDD: (a) for bonds: the
key parameters of the bond including the time of
maturity, yield, registration issuance in the
financial system and set-up in the market; (b) for
loans from a financial institution: the contract of
lending between the financial institution and the
legal entity owning the assets of the project
activity, or, in absence of the contract, a letter
from the bank stating its intention to award the
loan and the key terms for the loan; (c) for debt
financing from a parent company: the transfer of
capital to the legal entity, documented with the
contract of lending between the parent company
and the legal entity owning the assets of the
project activity and/or the parameters of the
corporate bonds as mentioned above. This latter
option is only valid for corporate bonds issued in
the host country of the CDM project activity. If the
benchmark is based on parameters that are
standard in the market, the cost of debt should be
calculated as the cost of financing in the capital
markets (e.g. commercial lending rates and
guarantees required for the country and the type of
project activity concerned), based on documented
evidence from financial institutions with regard to
the cost of debt financing of comparable projects.
In cases where this data is not available, use the
commercial lending rate in the host country to
calculate the cost of debt.
17 If a company‟s internal benchmark is used for the Not Applicable:
expected return on equity, then the percentage of Company‟s internal benchmark is not
debt financing and equity financing should reflect used.
the long-term debt/equity finance structure of the
legal entity owning the assets of the project
activity. The percentage should be determined
based on the latest balance sheet provided under
local fiscal/accounting standards and rules if: (a)
the legal entity owning the assets of the project
activity has balance sheets audited by a third party
within two years prior to the submission of the
CDM-PDD for validation; and (b) the accounting
books of the legal entity reflect at least the total
value of all the assets needed for the project
activity. If the debt/equity finance structure is not
23
yet available, 50% debt and 50% equity financing

may be assumed as a default.
18 If the benchmark is based on parameters that are Not Applicable:
standard in the market, then the typical debt/equity Project IRR is used for additionality
finance structure observed in the sector of the demonstration.
country should be used. If such information is not
readily available, 50% debt and 50% equity
financing may be assumed as a default.
Investment Comparison Analysis and Benchmark Analysis
19 If the proposed baseline scenario leaves the project Investment Comparison Analysis is
participant no other choice than to make an Not Applicable:
investment to supply the same (or substitute) The baseline scenario to the project
products or services, a benchmark analysis is not activity does not create a situation
appropriate and an investment comparison analysis where the project proponent is left
shall be used. If the alternative to the project with no other choice but to make an
activity is the supply of electricity from a grid this investment in any other kind of power
is not to be considered an investment and a plant
benchmark approach is considered appropriate.
Benchmark Analysis is applicable:
The alternative to the project activity is
no waste heat recovery and the supply
of electricity from the grid.
Sensitivity Analysis
20 Only variables, including the initial investment Applicable and fulfilled:
cost, that constitute more than 20% of either total Only parameters which would
project costs or total project revenues should be contribute to more than 20% of total
subjected to reasonable variation (all parameters project cost or total project revenues
varied need not necessarily be subjected to both have been varied in a range of +10% to
negative and positive variations of the same -10%, and sensitivity has been
magnitude), and the results of this variation should conducted. The same is reflected in the
be presented in the PDD and be reproducible in the investment analysis spreadsheet.
associated spreadsheets.. Where a DOE considers
that a variable which constitute less than 20% have
a material impact on the analysis they shall raise a
corrective action request to include this variable in
the sensitivity analysis
21 The DOE should assess in detail whether the range Applicable and fulfilled:
of variations is reasonable in the project context. Parameters which would contribute to
Past trends may be a guide to determine the more than 20% of total project cost or
reasonable range. As a general point of departure total project revenues have been varied
variations in the sensitivity analysis should at least in a range of +10% to -10%, and
cover a range of +10% and .10%, unless this is not sensitivity has been conducted.
deemed appropriate in the context of the specific Furthermore, other vital parameters of
project circumstances. In cases where a scenario investment analysis like O&M costs
will result in the project activity passing the and overhaul costs which do not
benchmark or becoming the most financially account for 20% of the total project
attractive alternative the DOE shall provide an investment have also been included in
assessment of the probability of the occurrence of the sensitivity analysis to ensure the
this scenario in comparison to the likelihood of the robustness of the analysis. The same is
24
assumptions in the presented investment analysis, reflected in the investment analysis

taking into consideration correlations between the spreadsheet.
variables as well as the specific socio-economic
and policy context of the project activity.
Sub-step 2b: Option III. Apply benchmark analysis
Description of Investment Analysis Parameters

The investment analysis is based on the calculation of project IRR and its comparison with the
commercial lending rate (benchmark) evaluated at the time of investment decision.
Benchmark:
The local lending and borrowing rates in Pakistan are based on Karachi Inter-bank Offered Rate (KIBOR)
plus the credit spread over the KIBOR charged by the local bank. In February 2004, KIBOR was
officially introduced by State Bank of Pakistan as a reference rate for all corporate lending in Pakistan6.
Thus the KIBOR portion of the commercial lending rate is always determined by SBP. The credit spread
calculation is performed by local banks which determine it based on various project specific risks or
characteristics of a project type.
For this project activity, DGKCC considered a 6 month tenor average KIBOR of 10.13 % for August
20077 and adopted 200 basis points as reasonable credit spread8. The benchmark thus evaluated was
(10.13 % + 2.0%) = 12.13 %9. This corporate lending rate calculation is in line with the guidance
provided by Citibank10 which estimates a credit spread between 200 to 350 basis points above the 3 or 6
month KIBOR as appropriate for a 7 year term loan (including 2 years grace period), for a loan amount
over PKR 100 million.
Sub-step 2c: Calculation and comparison of financial indicators
Electricity quantities produced by the different sources:

Data of the financial year prior to the investment decision (July 2006 – June 2007) was taken into account
for the calculation of baseline grid electricity; For the project situation, the waste heat recovery system
produces a total of 70,088 MWh per year. Table B.5.1 shows the comparison between the baseline and
the project situation.
Table B.5.1 Electricity Production & Consumption in Baseline and Project Situation
Electricity production
6
Press release by State Bank of Pakistan: http://www.sbp.org.pk/press/2004/jan-21-04.pdf
Third Quarterly report of State Bank of Pakistan FY04:
http://sbp.org.pk/reports/quarterly/fy04/thirdQtr/Money%20Market.pdf
7
KIBOR rate of 2007 are available at the website of State Bank of Pakistan:
http://sbp.org.pk/ecodata/kibor/2007/Aug/index.asp
8
The spread of 200 basis points used in benchmark calculation is based on the loan offer that PP got from Bank
Alfalah Limited, a local bank in Pakistan, (a copy of this loan offer letter has been provided to DOE).
9
See the attached investment analysis spreadsheet
10
Citibank letter has been provided to the DOE.
25
Parameter Unit Baseline % Project %

Project electricity production MWh/yr 0 0% 70,088 32%
Grid electricity import MWh/yr 87,556 40% 17,468 8%
Captive electricity production MWh/yr 132,675 60% 132,675 60%
TOTAL MWh/yr 220,231 100% 220,231 100%
Electricity Consumption
Parameter Unit Baseline Project
Electricity Consumption of Kiln 1 MWh/yr 22,636.00 22,636.00
Electricity Consumption of Kiln 2 MWh/yr 19,833.57 19,833.57
Other Local Loads MWh/yr 177,761.14 177,761.14
Total Electricity Consumption MWh/yr 220,230.71 220,230.71
Electricity prices:
The grid electricity prices paid by DGKCC between July 2006 and June 2007 were considered as basic
values to evaluate and compare the costs of the baseline and project situation. The considered grid
electricity price is 4,261.56 PKR per MWh and the resulting grid electricity costs displaced by the project
electricity are provided below
Table B.5.2. Grid Electricity Costs

Cost of Electricity to be Displaced by WHR Project
Electricity Import (MWh) Total Cost (PKR) Per Unit Cost (PKR/MWh)
70,087.68 298,682,778.09 4,261.56
Electricity Import (MWh) Total Cost (US $) Per Unit Cost (US $/MWh)
70,087.68 4,931,761.72 70.37
Project investment and costs:
In the baseline scenario, no additional investment is necessary and only electricity purchase costs are
considered for the investment comparison. In the project scenario, an important investment is necessary
and annual maintenance costs have to be covered. Every four years, a major overhaul of the equipment is
necessary and creates supplementary costs. The major overhaul costs already consider the yearly cost
increase. Table B.5.3 shows the project investment and costs.
Table B.5.3 Project investment and Costs

Project Costs
Investment 1,563,000,000
O&M Cost 78,150,000.00
Major Overhaul Cost 6,056,310.00
The breakup of project investment is presented in Table B.5.4
Table B.5.4 Details of Project Investment

Parameter Total Cost (PKR)
Main Equipment
Steam turbine + HRSGs 837,876,000
Ocean freight, travel insurance, clearing charges etc 162,124,000
Other Allied Equipment/Accessories not listed here 186,000,000
26
Civil Works Building 305,000,000

Miscellaneous Expenses (Contingencies, rental equipment e.g.
cranes, utilities during project erection and labor not related to civil 72,000,000
works)
TOTAL PROJECT INVESTMENT 1,563,000,000
Other Assumptions for IRR calculation
Depreciation period is 20 years at the end of which the project will have a salvage value of 10% of the
initial cost, which is in line with DG policy for calculation of depreciation. The 10% residual value of the
equipment is added in the last year of evaluation. Yearly depreciation and financial expenditures are not
taken into account in the financial analysis. The net income is taxed at 35% and is considered in the
analysis.
Table B.5.5 shows the exchange rate (August 2007), the yearly estimated increase rate of grid electricity11
as well as the expected increase in operation and maintenance costs.
Table B.5.5 Other Parameters

Project Decision Moment Sep-07
Exchange rate US $ --> local currency 60.56 PKR
Exchange rate € --> local currency 82.47 PKR
Technical lifetime of the plant 20 years
Depreciation period 20 years
Price Increase Grd Electricity 0.62% per year
Price Increase O&M Costs 4.00% per year
Table B.5.6 IRR Results

Benchmark 12.13%
Project IRR without CER 9.96%
Project IRR with CER 12.49%
As shown in table B.5.6, the IRR of the project activity is 9.96 % which is below the benchmark of
12.13 %. In this case, DGKCC would not invest into the project, because the expected return is below the
commercial lending rate in Pakistan. With the CER revenues, the IRR of the project activity crosses the
benchmark value which is more attractive for the project owner to invest.
Sub-step 2d: Sensitivity analysis
To show the robustness of the results, a sensitivity analysis is carried out for the variation of the decisive
variables of the project activity. These are the initial project investment, grid electricity cost, yearly O&M
cost, major overhaul costs, and operational hours. The results of the sensitivity analysis are shown in
Table B.5.7
Table B.5.7 Sensitivity Analysis
11
The input values for estimating yearly increase in grid electricity price have been taken from Annual Energy
Outlook 2007 (AEO 2007) (www.eia.doe.gov) and Pakistan Energy Yearbook. Detailed calculation file has been
provided to DOE.
27
Project IRR without Project IRR without

Key Variables CER CER
+10% -10%
Project Investment 8.13% 12.01%
Grid Electricity Cost 11.82% 7.93%
Project O&M Costs 9.32% 10.59%
Project Overhaul Costs 9.95% 9.97%
Operating hours 11.82% 7.93%
The sensitivity analysis shows that the results of the Investment analysis are robust. For a change of +/-
10% in project investment, grid electricity cost, O&M cots and overhaul cost, the IRR for the project
activity is still below the benchmark, thus strengthening the conclusions about the additionality of the
project activity. In all the cases analyzed above, the Project IRR is below the benchmark and would not
be considered as economically attractive by DGKCC.
Step 3: Barrier analysis
Investment analysis has been selected to demonstrate the additionality of the project activity. Step 3
“Barrier analysis” is optional and has not been considered for assessment & demonstration of
additionality of the proposed CDM project activity.
Step 4: Common practice analysis
Sub-step 4a: Analyze other activities similar to the proposed project activity:
The geographical area chosen for this analysis is the whole country, Pakistan. Most of cement factories in
Pakistan tend to produce the required electricity in their captive power plants and use grid electricity as a
backup option only or as source of additional electricity supply to meet the peak demand12. At the time of
the investment decision of the project, in all the cement factories, the waste heat from the clinker
production process was only used for pre-heating the raw materials and the major portion was vented to
the atmosphere. The waste heat recovery and utilization system for power generation was not in operation
in any cement factory of the country.
Table B.5.8 shows the total number of cement plants (29) in operation as of Sep 2010. Out of the twenty
nine plants, only eight (Sr. No. 22 to 29) are those where waste heat recovery system has either been
installed or is being implemented for power generation; among these eight plants, six (Sr. No. 24 to 29)
belong to the category of either registered CDM projects or have been published on UNFCCC website for
global stakeholder consultation; therefore, as per the guidance provided in step 4a of the Tool for the
Demonstration and Assessment of Additionality (Version 5.2), these are not considered in the common
practice analysis. Hence, only two cement plants, Attock Cement (Sr. No. 22) & Fecto Cement (Sr. No.
23), fall into the category of similar options and is discussed in the next section
Table B.5.8: Cement Plants in Pakistan13

Sr. No. Name of the Cement Plant
12
Source: Platt‟s Database 2007. Extract from relevant section is provided to DOE.
13
Source: http://www.apcma.com/pages/data_productioncapacity.html, accessed on Sep 24, 2010
28
1 Askari Cement Limited - Wah

2 Askari Cement - Nizampur
3 Bestway Cement Limited - Hattar
4 Dandot Cement Limited - Jehlum
5 Dewan Hattar Cement Limited - Hattar
6 D.G.Khan Cement Limited - Chakwal
7 Fauji Cement Company Limited - Fateh Jang
8 Flying Cement Limited - Lilla
9 GharibWal Cement Limited - Jehlum
10 Kohat Cement Company Limited - Kohat
11 Mustehkum Cement Limited - Hattar
12 Lafarge Pakistan Cement Company Limited - Chakwal
13 Pioneer Cement Limited - Khushab
14 A.C. Rohri Cement Limited - Rohri
15 Al-Abbas Cement Limited - Nooriabad, Dadu
16 Zeal Pak Cement Limited - Hyderabad
17 Dadabhoy Cement Industries Limited - Nooriabad, Dadu
18 Dewan Cement Limited - Dhabeji
19 Javedan Cement Limited
20 Pakistan Slag Cement Limited
21 Thatta Cement Limited - Thatta
22 Attock Cement Pakistan Limited - Hub Chowki, Lasbela
23 Fecto Cement Limited - Sangjani
24 Bestway Cement Limited - Chakwal 14
25 Cherat Cement Company Limited-Nowshera 15
26 D.G.Khan Cement Limited - D.G.Khan
27 Lucky Cement Limited - Pezu 16
28 Maple Leaf Cement Factory Limited - Daudkhel 17
29 Lucky Cement Limited, - Indus Highway, Karachi 18
Sub-step 4b: Discuss any similar Options that are occurring:
Only two waste heat recovery based activities, which are similar to the project activity, have been
identified above. However, according to the Project Proponent‟s knowledge of the cement sector, Attock
Cement and Fecto Cement have also implemented waste heat recovery project only after considering the
benefits of CDM19.
14
http://cdm.unfccc.int/Projects/DB/TUEV-SUED1269600034.75/view
15
http://cdm.unfccc.int/Projects/Validation/DB/Y1EJLWQAP09NS8CD2M6YHC5BKIGHT4/view.html
16
http://cdm.unfccc.int/Projects/Validation/DB/95H1A0HXY2G5482CYRPB2WJM8ITS1V/view.html
17
http://cdm.unfccc.int/Projects/Validation/DB/YW549ZAEG1IIP5DDVUIE42U3ZZ5CAH/view.html
18
http://cdm.unfccc.int/Projects/Validation/DB/4KAY98DK2HVFNSMYSYTR1OBBPIOQ53/view.html
19
Both these projects (Fecto & Attock Cement) have submitted prior CDM consideration intimations to UNFCCC.
29
The analysis provided above shows that no WHR project has been implemented without prior
consideration of the revenues generated by carbon credits 20. Hence it can be concluded that the recovery
and utilization of waste heat from the clinker production process for power generation is not a common
practice in Pakistan cement industry.
As explained in the Investment Analysis, the present project would not be economically attractive without
the consideration of the CER revenue and would not be realised. Since all necessary steps of the Tool are
satisfied, we can make a conclusion that the Project Activity is fully additional.
B.6. Emission reductions:
B.6.1. Explanation of methodological choices:
The emission reductions of the project activity were calculated according to AMS-III.Q.
Baseline emissions
In the situation where the electricity is obtained from a specific existing power plant or from the grid,
baseline emissions can be calculated as follows:
BEelec , y  f cap * f wcm *  ( EGi , j , y * EFElec ,i , j , y ) [1]

j i
Where:
BEelec,y Baseline emissions due to displacement of electricity during the year y in tons of
CO2
EGi,j,y The quantity of electricity supplied to the recipient j by generator, that in the
absence of the project activity would have been sourced from ith source (i can be
either grid or identified source) during the year y in MWh, and
EFelec,i,j,y The CO2 emission factor for the electricity source i (i=gr (grid) or i=is (identified
source)), displaced due to the project activity, during the year y in tons CO2/MWh
fwcm Fraction of total electricity generated by the project activity using waste energy.
This fraction is 1 if the electricity generation is purely from use of waste energy.
If the boiler providing steam for electricity generation uses both waste and fossil
fuels, this factor is estimated using equation (7). If the steam used for generation
of the electricity is produced in dedicated boilers but supplied through common
header, this factor is estimated using equation (7)/(9).
Note: For project activity using waste pressure to generate electricity, electricity
generated from waste pressure use should be measurable and this fraction is 1
fcap Capping factor to exclude increased waste energy utilization in the project year y
due to increased level of activity of the plant, relative to the level of activity in the
20
A confirmation of the fact that WHR based electricity generation is not a common practice in Pakistani cement
sector was provided by DNA Pakistan to the DOE
30
base years before project start. The ratio is 1 if the waste energy generated in
project year y is same or less than that generated in base years.
fcap shall be estimated according to the corresponding section of ACM0012.
As the project activity will displace grid electricity the parameter EGi,j,y corresponds to EGgr,y and the
emission factor EFelec,i,j,y corresponds to EFElec,gr,y.
Calculation of EFElec,gr,y
According to the baseline scenario the displaced electricity is supplied by a connected electrical grid and
so it should be determined using the “Tool to calculate the emission factor for an electricity system”
Version 02.2.0.
Electricity baseline emission factor (EFGrid, CM, BL) is calculated ex-ante as a combined margin consisting
of a combination of operating margin (OM) and build margin (BM) factors according to the following
steps:
STEP 1: Identify the relevant electricity systems;

STEP 2: Choose whether to include off-grid power plants in the project electricity system (optional);
STEP 3: Select a method to determine the operating margin (OM);
STEP 4: Calculate the operating margin emission factor according to the selected method;
STEP 5: Calculate the build margin (BM) emission factor,
STEP 6: Calculate the combined margin (CM) emission factor.
Step 1 – Identify the relevant electricity systems
Pakistani DNA has not published any delineation of the project electricity system and a connected
electricity system. Moreover, the criteria provided in the “Tool to calculate the emission factor for an
electricity system” under Step 1 do not result in a clear grid boundary as
1) a spot market for electricity does not exist in Pakistan

2) there is no official data available with regard to the operation of the transmission line between
different electricity systems.
In such cases, the “Tool to calculate the emission factor for an electricity system” (Version 02.2.0)
suggests “to use a regional grid definition in the case of large countries with layered dispatch systems
(e.g. provincial/regional/national)” to distinguish a connected electricity system. In Pakistan, the
electricity supply business is a sort of monopoly of two companies. For Karachi city and adjoining areas
of Sindh and Balochistan, it is under Karachi Electric Supply Corporation (KESC). For rest of the
Pakistan it falls under Water and Power Development Authority (WAPDA). In 1998, as part of the
government‟s privatization policy, the National Transmission & Despatch Company (NTDC)21 “was
organized to take over all the properties, rights and assets obligations and liabilities of 220 KV and
500KV Grid Stations and Transmission Lines/Network Transmission Lines/Network owned by Pakistan
Water and Power Development Authority (WAPDA). Both NTDC and KESC operate their own
transmission networks but they are also physically interconnected to each other at two points 22 and trade
21
cf. www.ntdc.com.pk
22
One is the Jamshoro - BinQasim link in East of Karachi and other is HUBCO-KESC link in West of Karachi.
31
electricity in significant amounts23 in a sort that they both together constitute the national grid system,
which becomes the project electricity system also.
The project activity is connected to the grid of Multan Electric Power Company Limited (MEPCO),
which is one of nine newly created distribution companies24 and connected to NTDC, which is part of the
national grid system.
Step 2: Choose whether to include off-grid power plants in the project electricity system (optional)
The “Tool to calculate the emission factor for an electricity system” (Version 02.2.0) allows the project
participant to choose between the following two options to calculate the operating margin and build
margin emission factor:
Option I: Only grid power plants are included in the calculation
Option II: Both grid power plants and off-grid power plants are included in the calculation.
Option I is chosen as data is publicly available only for grid power plants.
Step 3 – Select a method to determine the operating margin (OM)
The “Tool to calculate the emission factor for an electricity system” (Version 02.2.0) offers four options
for the calculation of the Operating Margin emission factor(s) (EFgrid,OM,y):
(a) Simple OM, or

(b) Simple adjusted OM, or
(c) Dispatch Data Analysis OM, or
(d) Average OM.
Information to carry out a detailed dispatch data analysis is not publicly available; therefore the dispatch
data analysis OM is not selected for the proposed project and the Simple OM option is chosen.
The Simple OM requires that the share of low-cost/must-run resources constitutes less than 50% of the
total net electricity generation of the national grid. In Pakistan, the share of low-cost/must-run resources
usually constitutes less than 50% of the total net electricity generation of the national grid.
According to the “Tool to calculate the emission factor for an electricity system” (Version 02.2.0), for
simple OM, the emission factor can be calculated using either of the two following data vintages:
 Ex ante option: For grid power plants, a 3-year generation weighted average, based on the most
recent data available at the time of submission of the CDM-PDD for validation, without
requirement to monitor and recalculate the emissions factor during the crediting period. For off-
23
Actually 32% of total electricity supply in KESC in the year 2006/7 was purchased from NTDC. Cf.
PEPCO/National Transmission & Despatch Co. (NTDC)/Planning Power Department (NTDC) 2008: Electricity
Marketing Data (Power Systems Statistics), 32nd issue, Updated up to 30th June 2007. p. 90
24
http://www.nepra.org.pk/lic_distribution.htm
32
grid power plants, use a single calendar year within the 5 most recent calendar years prior to the
time of submission of CDM-PDD or
 Ex post option: The year in which the project activity displaces grid electricity, requiring the
emission factor to be updated annually during monitoring. The data required to calculate the
emission factor for year y is usually only available later than six months after the end of year y.
Project proponents employ “ex-ante vintage for grid power plants” for its operating margin calculation.
Step 4 - Calculate the operating margin emission factor according to the selected method
The simple OM emission factor is calculated as the generation-weighted average CO2 emissions per unit
of net electricity generated (tCO2/MWh) by all generating power plants serving the system, not including
low-cost/must-run power/units. The “Tool to calculate the emission factor for an electricity system”
(Version 02.2.0) offers two options for the calculation of the Simple OM.
Option A: Based on the net electricity generation and a CO2 emission factor of each power unit; or
Option B: Based on the total net electricity generation of all power plants serving the system and the fuel
types and total fuel consumption of the project electricity system
Option B can only be used if:
(a) The necessary data for Option A is not available; and

(b) Only nuclear and renewable power generation are considered as low-cost/must-run sources and
the quantity of electricity supplied to the grid by these sources is known; and
(c) Off-grid power plants are not included in the calculation (i.e if Option I has been chosen in Step
II)
In the Pakistani public available data, CO2 emission factor for each power generation unit is not available.
Only nuclear and renewable generation are considered as low-cost/must-run sources; furthermore, the
quantity of electricity supplied to the grid by these sources is known. Finally, off-grid plants are not
considered in the calculation; therefore, Option B is chosen.
For Option B, the Simple OM emission factor is calculated based on the net electricity supplied to the
grid by all power plants serving the system, not including low-cost / must-run power plants / units, and
based on the fuel type(s) and total fuel consumption of the project electricity system:
 FC
i
i, y * NCVi , y * EFCO 2,i , y
EFGrid , OM simple, y = [2]
EGy
Where:
EFGrid, OM simple, y is the simple operating margin CO2 emission factor in year y (tCO2/MWh)
33
FCi,y is the amount of fossil fuel type i consumed in the project electricity system in
year y (mass or volume unit)
NCVi,y is the net calorific value (energy content) of fossil fuel type i in year y (GJ / mass
or volume unit)
EFCO2,i,y is the CO2 emission factor of fossil fuel type i in year y (tCO2/GJ)
EGy is the net electricity generated and delivered to the grid by all power sources
serving the system, not including low-cost / must-run power plants / units, in year
y (MWh)
i are all fossil fuel types combusted in power sources in the project electricity
system in the baseline period
y is rhe relevant year as per the data vintage chosen in step 3.
On the basis of the data available, the operating margin emission factor (three-year generation-weighted
average) is:
EFGrid, OM, BL = 0.724 tCO2/MWh
Step 5 - Calculate the build margin (BM) emission factor
In terms of vintage of data, project participants can choose between one of the following two options:
Option 1. For the first crediting period, calculate the build margin emission factor ex-ante based on the
most recent information available on units already built for sample group m at the time of CDM-PDD
submission to the DOE for validation. For the second crediting period, the build margin emission factor
should be updated based on the most recent information available on units already built at the time of
submission of the request for renewal of the crediting period to the DOE. For the third crediting period,
the build margin emission factor calculated for the second crediting period should be used. This option
does not require monitoring the emission factor during the crediting period.
Option 2. For the first crediting period, the build margin emission factor shall be updated annually, ex-
post, including those units built up to the year of registration of the project activity or, if information up to
the year of registration is not yet available, including those units built up to the latest year for which
information is available. For the second crediting period, the build margin emissions factor shall be
calculated ex-ante, as described in option 1 above. For the third crediting period, the build margin
emission factor calculated for the second crediting period should be used.
In accordance with the ex-ante calculation of the operating margin (see Step 3), Option 1 is chosen.
The sample group of power units m used to calculate the build margin consists should be determined as
per the following procedure, consistent with the data vintage selected above:
34
(a) Identify the set of five power units, excluding power units registered as CDM project activities,
that started to supply electricity to the grid most recently (SET5-units) and determine their annual
electricity generation (AEGSET-5-units, in MWh);
(b) Determine the annual electricity generation of the project electricity system, excluding power
units registered as CDM project activities (AEGtotal, in MWh). Identify the set of power units,
excluding power units registered as CDM project activities, that started to supply electricity to
the grid most recently and that comprise 20% of AEGtotal (if 20% falls on part of the generation
of a unit, the generation of that unit is fully included in the calculation) (SET ≥20%) and determine
their annual electricity generation (AEGSET-≥20%, in MWh);
(c) From SET5-units and SET≥20% select the set of power units that comprises the larger annual
electricity generation (SETsample); Identify the date when the power units in SETsample started to
supply electricity to the grid. If none of the power units in SET sample started to supply electricity
to the grid more than 10 years ago, then use SETsample to calculate the build margin. Ignore steps
(d), (e) and (f).
Otherwise:
(d) Exclude from SETsample the power units which started to supply electricity to the grid more than
10 years ago. Include in that set the power units registered as CDM project activity, starting with
power units that started to supply electricity to the grid most recently, until the electricity
generation of the new set comprises 20% of the annual electricity generation of the project
electricity system (if 20% falls on part of the generation of a unit, the generation of that unit is
fully included in the calculation) to the extent is possible. Determine for the resulting set
(SETsample-CDM) the annual electricity generation (AEGSET-sample-CDM, in MWh);
If the annual electricity generation of that set is comprises at least 20% of the annual electricity
generation of the project electricity system (i.e. AEGSET-sample-CDM ≥ 0.2 × AEGtotal), then use the
sample group SETsample-CDM to calculate the build margin. Ignore steps (e) and (f).
Otherwise:
(e) Include in the sample group SETsample-CDM the power units that started to supply electricity to the
grid more than 10 years ago until the electricity generation of the new set comprises 20% of the
annual electricity generation of the project electricity system (if 20% falls on part of the
generation of a unit, the generation of that unit is fully included in the calculation);
(f) The sample group of power units m used to calculate the build margin is the resulting set
(SETsample-CDM->10yrs).
As shown in the attached EXCEL file, AEGSET-5-units is largely below AEGSET-≥20%, so SET≥20% is selected
as SETsample. Also, given that there are not CDM power plants that can be included and the SET sample
includes plants that are operating since more than 10 years, SETsample is equivalent to SETsample-CDM->10yrs.
Then the build margin emissions factor is the generation-weighted average emission factor (tCO2/MWh)
of all power units m during the most recent 3 years (2004-05, 2005-06, 2006-07) for which power
generation data is available, calculated as follows:
35
m
 EG * EF
m, y EL , m , y
EFGrid , BM , y = [3]
 EG
m
m, y
Where:
EFGrid, BM, y is the Build Margin CO2emission factor in the year y (tCO2/MWh)
EGm,y is the net quantity of electricity generated and delivered to the grid by power unit m in the
year y (MWh)
EFEL,m,y is the CO2 emission factor of power unit m in year y (tCO2/MWh)
m are the power units included in the build margin
y is the most recent historical year for which the power generation data is available
The CO2 emission factor of each power unit m (EFEL,m,y ) should be determined as per the guidance in step
4 (a) for the simple OM, using options A1, A2 or A3, using for y the most recent historical year for which
power generation data is available, and using for m the power units included in the build margin.
If the power units included in the build margin m correspond to the sample group SETsample-CDM->10yrs, then,
as a conservative approach, only option A2 from guidance in Step 4 (a) can be used and the default values
provided in Annex 1 of the Tool shall be used to determine the parameter ηm,y.
On the basis of the data available, option A2 is used:
Using this method, the EFGrid, BM, BL in Pakistan is calculated as 0.242 tCO2/MWh.
Step 6 - Calculate of the combined margin emission factor
The calculation of the combined margin (CM) emission factor (EFgrid,CM,y) is based on one of the
following methods:
(a) Weighted average CM; or
(b) Simplified CM.
The weighted average CM method (option A) should be used as the preferred option.
The simplified CM method (option b) can only be used if:
 The project activity is located in a Least Developed Country (LDC) or in a country with less than
10 registered projects at the starting date of validation; and
 The data requirements for the application of step 5 above cannot be met.
Method (a), weighted average CM, is selected.
Therefore, the combined margin emission factor is calculated as follows:
EFgrid,CM,y = wOM * EFgrid,OM,y + wBM * EFgrid,BM,y [4]
36
Where:
EFGrid, BM, y is the build margin CO2 emission factor in the year y (tCO2/MWh)
EFGrid, OM, y is the operating margin CO2 emission factor in the baseline period (tCO2/MWh)
wOM is the weighting of operating margin emissions factor (%)
wBM is the weighting of build margin emissions factor (%).
The default weights are as follows: wOM = wBM = 0.5.
On the basis of these weights the combined margin emission factor is calculated, and fixed ex-ante:
EFGrid,CM,BL = 0.483 tCO2/MWh
Calculation of fwcm
The electricity generation of the project is purely from use of waste heat, then according to the
methodology fwcm= 1.
Calculation of fcap
According to the requirements of AMS.III.Q the capping factor fcap should be calculated using proper
equations from ACM0012.
As an introduction to the element of conservativeness, this methodology requires that baseline emissions
should be capped irrespective of planned/unplanned or actual increase in output of plant, change in
operational parameters and practices, change in fuel type and quantity resulting in an increase in
generation of waste energy. In case of planned expansion a separate CDM project should be registered for
additional capacity. The cap can be estimated using the three Methods described below. Project
proponents shall use Method-1 to estimate the cap if data is available. In case of project activities
implemented in a new facility, or in facilities where three-year data on production is unavailable, Method-
2 shall be used. In case the project proponents demonstrate technical limitations in direct monitoring of
waste heat / pressure of waste energy carrying medium (WECM), then Method-3 is used.
Method-1
Where the historical data on energy released by the waste energy carrying medium is available, the
baseline emissions are capped at the maximum quantity of waste energy released into the atmosphere
under normal operation conditions in the three years previous to the project activity.
Method-2
The manufacturer‟s data for the industrial facility shall be used to estimate the amount of waste energy
the industrial facility generates per unit of product generated by the process that generates waste energy
(either product of departmental process or product of entire plant, whichever is more justifiable and
accurate). In case any modification is carried out by the project proponent or in case the manufacturer‟s
37
data is not available for an assessment, this should be carried out by independent qualified/certified
external process experts such as a chartered engineer on a conservative quantity of waste energy
generated by plant per unit of product manufactured by the process generating waste energy. The value
arrived based on above sources of data, shall be used to estimate the baseline cap (fcap). The
documentation of such assessment shall be verified by the validating DOE.
Method-3
In some cases, it may not be possible to measure the waste energy (heat, sensible heat, heat of reaction,
heat of combustion etc.), enthalpy or pressure content of WECM. Therefore there is no historic data
available for these cases. These cases may be of following two types.
Case 1: The energy is recovered from WECM and converted into final output energy through waste heat
recovery equipment. For such cases fcap should be the ratio of maximum theoretical energy recoverable
using the project activity waste heat recovery equipment and actual energy recovered under the project
activity (using direct measurement). For estimating the theoretical recoverable energy, manufacturer‟s
specifications can be used. Alternatively, technical assessment can be conducted by independent
qualified/certified external process experts such as chartered engineers.
Case 2: The energy is recovered from WECM in intermediate energy recovery equipment using an
intermediate source. For example, an intermediate source to carry energy from primary WECM may
include the sources such as water, oil or air to extract waste energy entrapped in chemicals (heat of
reaction) or solids (sensible heat). This intermediate energy source is finally used to generate the output
energy in the final waste heat recovery equipment. For these cases fcap is the ratio of maximum
theoretical intermediate energy recoverable from intermediate waste heat recovery equipment and actual
intermediate energy recovered under the project activity (using direct measurement). For estimating the
theoretical energy, manufacturer‟s specifications can be used. Alternatively, technical assessment can be
carried out by independent qualified/certified external process experts such as chartered engineers.
Since there is no historical data on parameters of the waste energy from the cement clinker production
and it‟s not possible to measure it due to different technical reasons Method-3 for fcap calculation was
chosen. Since there are heat exchangers in the project scenario where waste energy is transferred from
WECM to water for steam generation and further production of electricity case 1 of Method-3 for fcap
calculation was used.
Following equation should be used to determine fcap:
QOE ,BL
f cap  [5]
QOE , y
Where:
QOE , BL Output/intermediate energy that can be theoretically produced (in appropriate unit), to be
determined on the basis of maximum recoverable energy from the WECM, which would
have been released (or WECM would have been flared or energy content of WECM
would have been wasted) in the absence of CDM project activity
QOE , y Quantity of actual output/intermediate energy during year y (in appropriate unit)
38
In the proposed project, the theoretical electricity output QOE , BL is 70,088 MWh/year. The actual output
electricity QOE , y will be determined ex post by actual measurement. Since the project activity isn‟t
operational yet there is no reason to believe that the energy recovered will be different from the
theoretical value for which the waste heat recovery system has been designed. Therefore, the ratio is
assumed to be 1 for ex ante calculations and will be settled ex post.
Project Emissions
According to paragraph 14 of AMS-III.Q, project emissions include emissions due to combustion of

auxiliary fuel to supplement waste gas and emissions due to consumption of electricity by the project
activity.
Likewise, it is stated in paragraph 15 of AMS-III Q that if the waste gas contains carbon monoxide or
hydrocarbons, other than methane, and the waste gas is vented to the atmosphere in the baseline
situation, project emissions have to include CO2 emissions due to combustion of the waste gas
There is no auxiliary fuel combusted in the project activity to supplement waste gas and the turbogenset
consume its own electricity for auxiliary needs. Similarly, the project activity does not incinerate any
waste gas to generate energy. Therefore, the project emissions are considered zero.
PE y  0 . [6]
Leakages
The project activity only involves installation of new equipment; no retrofit or replacement will take place
and hence no existing equipment can be transferred outside the project boundary. Since no transfer of
equipment is considered in the project activity, the leakages are: LE y  0 .
Emission reductions
Emission reductions are calculated as follows:
ERy  BE y  PE y  LEy [7]
Where:
ER y Emission reductions in year y (t CO2e/yr)
BE y Baseline emissions in year y (t CO2e/yr)
PE y Project emissions in year y (t CO2/yr)
LE y Leakage emissions in year y (t CO2/yr)
Since LE y  0 the equation 7 could be considered as:

ER y  BE y  PE y  f cap  f wcm  EG gr, y  EFElec , gr, y  0 
[8]
 1  1  70,088  0.483  0  33,845 tCO 2e
39
B.6.2. Data and parameters that are available at validation:
Data / Parameter: QOE , BL

Data unit: MWh/yr
Description: Output electricity that can be theoretically produced, to be determined on the
basis of maximum recoverable energy form the WECM, which would have
been released in the absence of the project.
Source of data used: Steam Turbine Manufacturer Specifications
Value applied: 70,088
Justification of the The value (70, 088) is based on 9.36 MW of net electricity generation by steam
choice of data or turbine for 7,488 hrs/yr
description of
measurement methods
and procedures actually
applied :
Any comment:
Data / Parameter: fwcm

Data unit: %
Description: Fraction of total energy generated by the project activity using waste energy.
This fraction is 1 if the energy generation is purely from use of waste energy in
the project generation unit.
Source of data used: Project Plan/Design
Value applied: 100
Justification of the The electricity generation of the project is purely from use of waste heat, then
choice of data or according to the methodology fwcm= 1 or 100%.
description of
measurement methods
applied :
Any comment:
Data / Parameter: COEFHFO

Data unit: tCO2/TJ
Description: Emission Coefficient of HFO
Source of data used: Table 2.3 “Default Emission Factors for Stationary Combustion in
Manufacturing Industries and Construction”, Chapter 2: Stationary Combustion,
2006 IPCC Guidelines for National Greenhouse Gas Inventories
Value applied: 77.4
Justification of the Given that local value is not available, IPCC default value is used
choice of data or
description of
measurement methods
applied :
Any comment: Used to calculate the grid emission factor
40
Data / Parameter: COEFdiesel

Data unit: tCO2/TJ
Description: Emission Coefficient of diesel
Value applied: 74.1
choice of data or
description of
measurement methods
applied :
Data / Parameter: COEFcoal

Data unit: tCO2/TJ
Description: Emission Coefficient of coal
Value applied: 96.1
choice of data or
description of
measurement methods
applied :
Data / Parameter: COEFNG

Data unit: tCO2/TJ
Description: Emission Coefficient of Natural Gas
Value applied: 56.1
choice of data or
description of
measurement methods
applied :
Data / Parameter: NCVHFO

Data unit: TJ/t
41
Description: Net Calorific Value of HFO

Source of data used: Table in appendix 7.4 of Pakistan Energy Year Book 2007
Value applied: 0.04077
Justification of the Public available source for the grid emission factor calculation
choice of data or
description of
measurement methods
applied :
Data / Parameter: NCVDiesel

Data unit: TJ/t
Description: Net Calorific Value of diesel
choice of data or
description of
measurement methods
applied :
Data / Parameter: NCVCoal

Data unit: TJ/t
Description: Net Calorific Value of coal
Source of data used: Table M-1 in appendix of WAPDA statistics
choice of data or
description of
measurement methods
applied :
Data / Parameter: NCVNatural Gas

Data unit: TJ/MMCFT (terajoule per million cubic feet)
Description: Net Calorific Value of natural gas
choice of data or
description of
measurement methods
applied :
42
Data / Parameter: FCHFO

Data unit: t
Description: Annual consumption of HFO by national grid
Source of data used: Pakistan Energy Year Book 2007
Value applied: 2004-05 2005-06 2006-07
3,397,940 4,187,015 6,697,651
choice of data or
description of
measurement methods
applied :
Data / Parameter: FCDiesel

Data unit: t
Description: Annual consumption of diesel by national grid
Value applied: 2004-05 2005-06 2006-07
54,641 31,967 42,908
choice of data or
description of
measurement methods
applied :
Data / Parameter: FCCoal

Data unit: t
Description: Annual consumption of coal by national grid
Value applied: 2004-05 2005-06 2006-07
179,887 149,334 164,397
choice of data or
description of
measurement methods
applied :
Data / Parameter: FCNatural Gas

Data unit: MMCFT (million cubic feet)
Description: Annual consumption of natural gas by national grid
43

Value applied: 2004-05 2005-06 2006-07
507,398 491,766 433,672
choice of data or
description of
measurement methods
applied :
Data / Parameter: EGHFO

Data unit: GWh
Description: Annual gross electricity generated on HFO by national grid
Value applied: 2004-05 2005-06 2006-07
13,390 18,811 27,883
choice of data or
description of
measurement methods
applied :
Data / Parameter: EGdiesel

Data unit: GWh
Description: Annual gross electricity generated on diesel by national grid
Value applied: 2004-05 2005-06 2006-07
126 57 142
choice of data or
description of
measurement methods
applied :
Data / Parameter: EGcoal

Data unit: GWh
Description: Annual gross electricity generated on coal by national grid
Value applied: 2004-05 2005-06 2006-07
175 129 136
choice of data or
description of
measurement methods
44

applied :
Data / Parameter: EGNatural Gas

Data unit: GWh
Description: Annual gross electricity generated on natural gas by national grid
Value applied: 2004-05 2005-06 2006-07
43,472 41,286 35,811
choice of data or
description of
measurement methods
applied :
Data / Parameter: EGnuc

Data unit: GWh
Description: Annual gross electricity generated by nuclear plants in national grid
Value applied: 2004-05 2005-06 2006-07
2,795 2,484 2,288
choice of data or
description of
measurement methods
applied :
Data / Parameter: EGhydro

Data unit: GWh
Description: Annual gross electricity generated by hydro plants in national grid
Value applied: 2004-05 2005-06 2006-07
25,671 30,862 31,953
choice of data or
description of
measurement methods
applied :
Data / Parameter: ECnuc

Data unit: GWh
Description: Annual auxiliary electricity consumption by nuclear plants in national grid
45

Value applied: 2004-05 2005-06 2006-07
258 216 223
choice of data or
description of
measurement methods
applied :
Data / Parameter: EChydro

Data unit: GWh
Description: Annual auxiliary electricity consumption by hydro plants in national grid
Value applied: 2004-05 2005-06 2006-07
76 92 94
choice of data or
description of
measurement methods
applied :
Data / Parameter: ECthermal

Data unit: GWh
Description: Annual auxiliary electricity consumption by thermal power plants in national
grid
Value applied: 2004-05 2005-06 2006-07
2,968 3,155 3,306
choice of data or
description of
measurement methods
applied :
Data / Parameter: EI
Data unit: GWh
Description: Annual net imports from other grids outside the host country
Value applied: 2004-05 2005-06 2006-07
109 146 171
choice of data or
description of
46
measurement methods
applied :
Data / Parameter: EFElec , gr

Data unit: t CO2e / MWh
Description: Emission factor of the grid
Source of data used: Pakistan Energy Yearbook 2004 – 2007
Justification of the
choice of data or
description of Calculated as per “Tool to calculate the emission factor for an electricity system
measurement methods / Version 02.2.0”
applied :
Any comment: The detailed calculation of the grid emission factor is provided in Section B.6.1.
B.6.3 Ex-ante calculation of emission reductions:
According to the analysis made in B.6.1, the emission reduction of the project is:
ER y  BE y  PE y  LE y  f cap  f wcm  EG gr, y  EFElec , gr, y  EC pr, gr, y  EFElec , gr, y  LE y 

[9]
 1  1  70,088  0.483  0  0.483  0  33,845 tCO 2e
B.6.4 Summary of the ex-ante estimation of emission reductions:
The annual & total estimation of emission reductions for the fixed crediting period of 10 years (from
01/01/2012 to 31/12/2021) is provided below:
Table B.6.4.1: Ex-ante Estimation of Emission Reductions

Estimation of Estimation of Estimation of
Estimation of
project activity baseline overall emission
Year leakage
emissions emissions reductions
(tonnes of CO2 e)
(tonnes of CO2 e) (tonnes of CO2 e) (tonnes of CO2 e)
Year 1 0 33,845 0 33,845
Year 2 0 33,845 0 33,845
Year 3 0 33,845 0 33,845
Year 4 0 33,845 0 33,845
Year 5 0 33,845 0 33,845
Year 6 0 33,845 0 33,845
Year 7 0 33,845 0 33,845
Year 8 0 33,845 0 33,845
Year 9 0 33,845 0 33,845
Year 10 0 33,845 0 33,845
Total
0 338,450 0 338,450
(tonnes of CO2 e)
47
B.7 Application of a monitoring methodology and description of the monitoring plan:
B.7.1 Data and parameters monitored:
Data / Parameter: QOE , y

Data unit: MWh
Description: Net electricity output generated by waste heat recovery based steam turbo-
generator during year y in MWh
Source of data to be
Electricity generation log sheets of DGKCC
used:
Value of data 70,088
Description of Measurement will be recorded from energy meter having %error of 0.2%. E&I
measurement methods section will be responsible to calibrate the meter after every two years. QMS
and procedures to be procedures will be followed in measurement and reporting of values. Data will be
applied: archived electronically and on paper.
QA/QC procedures to QA/QC procedures will be followed in recording & reporting of this parameter
be applied:
Any comment:
B.7.2 Description of the monitoring plan:
Monitoring plan involves metering the electrical energy produced by the project activity. Based on that,
fcap will be determined according to Case 1: method 3 of ACM0012 as illustrated in section B.6.1 of the
PDD.
Data will be hourly collected by the operators. Shift engineers verify and prepare daily production log
sheet which includes daily electricity generation. At final stage, Senior Manager verifies the data.
Procedures for data collection and auditing, in order to determine and verify the emissions reductions
achieved by the project activity, will be described in the Monitoring Plan.
Data will be collected for the duration of the crediting period (10 years) and stored for a minimum of two
years after the end of the crediting period or the last issuance of CERs for the project activity, whichever
occurs later. An electronic spreadsheet model may be used for archiving electronic data.
In case some data is missing or incorrect, it will be reconstructed or rectified based on the information
sought from the historical data record which is similar in terms of operating conditions and parameters.
The staff responsible for project monitoring will complete the electronic worksheets on a monthly basis.
Given that some of these data may be collected more frequently, data will be aggregated to allow monthly
inputs into the spreadsheet. The spreadsheet automatically provides annual totals in terms of emission
reductions achieved.
Table B.7.2: Designation of the personnel involved in monitoring plan

Data Collection Initial Data Final Data Data Auditing
48
Verification and Verification

Designation Frequency
Log Preparation
Shift Operator Shift Engineer Senior Manager Internal Auditors Annually
The person in charge of the project monitoring will conduct annual internal audits, checking the above
mentioned procedures for collecting data.
The person in charge of quality assurance would make sure that all the equipment used for measuring data
are properly and timely calibrated. Each equipment/meter should have a calibration tag attached to it
showing equipment name, model, date of last calibration and the date when next calibration is due. To
ensure the reliability of the data, calibration of all measuring devices would be done according to a
planned calibration.
B.8 Date of completion of the application of the baseline and monitoring methodology and the
name of the responsible person(s)/entity(ies)
Date of Completion (DD/MM/YYYY): 10/03/2010
Table B.8.1: Name of Responsible Entities

First Climate (Switzerland) AG Carbon Services (Private) Limited
Stauffacherstrasse 45 19 Davis Road, 2nd Floor, Al Maalik,
CH-8004 Zurich Lahore
Switzerland Pakistan
URL: www.firstclimate.com URL: www.carbon.com.pk
Contact person: Mr. Nikolaus Wohlgemuth Contact person: Mr. Omar Malik
Email: nikolaus.wolhlgemuth@firstclimate.com Email: omar.malik@carbon.com.pk
Both, First Climate (Switzerland) AG and Carbon Services (Private) Limited, are project participants.
SECTION C. Duration of the project activity / crediting period
C.1 Duration of the project activity:
C.1.1. Starting date of the project activity:
October 18, 2007 is the starting date of the project activity and it corresponds to date of contract between
DGKCC and the Supplier of WHR equipment.
C.1.2. Expected operational lifetime of the project activity:
20 years, 0 months
49
C.2 Choice of the crediting period and related information:
C.2.1. Renewable crediting period
C.2.1.1. Starting date of the first crediting period:
Not applicable
C.2.1.2. Length of the first crediting period:
Not applicable
C.2.2. Fixed crediting period:
C.2.2.1. Starting date:
01/01/2012 or the date of CDM registration of the project activity, whichever comes later.
C.2.2.2. Length:
10 years, 0 months
SECTION D. Environmental impacts
D.1. If required by the host Party, documentation on the analysis of the environmental impacts
of the project activity:
According to the host country regulations, the project activity had to receive an Environmental Approval
from the Environment Protection Department of the local government, upon submission of an Initial
Environmental Examination (IEE) Report by the project proponent.
The IEE points out that the project will be beneficial to the environment as utilization of waste heat and
thus lower consumption of fossil fuels is made possible by the new technology. No negative
environmental impacts are to be considered, as the technology to be adopted is mature and safe, once
appropriate operation and maintenance procedures are in place.
The environmental analyses conducted by DGKCC for the project are consistent in demonstrating that the
project activity is expected to remain fully compliant with NEQS (National Environmental Quality
Standards). In fact, it is expected that pollutant emissions (both of local concern and global concern, such
as CO2) will reduce from the current levels.
D.2. If environmental impacts are considered significant by the project participants or the host
Party, please provide conclusions and all references to support documentation of an environmental
impact assessment undertaken in accordance with the procedures as required by the host Party:
50
Neither the project participants nor the host Party have any concern about negative environmental impacts
associated with the project activity, given that project activity aims at reducing the local and global
environmental impacts of the industrial site where the project activity is to be implemented.
IEE Report and the accompanying approval request letter were submitted to EPA which issued the
approval letter after review of the report. The approval letter does not raise any particular issue with
regard to the environmental impact of the project.
SECTION E. Stakeholders’ comments
E.1. Brief description how comments by local stakeholders have been invited and compiled:
In addition to CDM requirements by UNFCCC, the stakeholder consultation meeting is also required by
the Designated National Authority (DNA) of Pakistan for issuance of Host Country Approval. The
Stakeholder consultation meeting was held on October 24, 2008 at D.G. Khan Cement Factory and was
open to anybody willing to participate (private citizens, representatives of associations, interest groups,
unions, public authorities, NGOs, etc.).
Stakeholders were informed about the project activity through specific advertising published by the
project owner in local newspaper. The advertisements were also displayed on the notice boards at
DGKCC. Advertisement is shown in Annex 5.
The meeting was introduced by the representative of the project owner who explained in details the
project activity and stimulated the debate and the expression of comments. Pictures of the Meeting are
shown in Annex 6.
E.2. Summary of the comments received:
Comments from the stakeholders were collected in written form during and after the meeting. These are
summarized in the table below.
Table E.2.1: Translated Summary of the Comments

Stakeholder’s Designation/ Comments/Views about
No. Qualification Address
Name Profession the Project
1. Installation of this plant
will save valuable national
Kofli Sattai, resources.
Faqeer Member of Union 2. New employments will
1 Matric
Muhammad Union Council Council, create tendency of getting
Bahadurgarh children educated.
3. Living standard of locals
will improve.
1. Electricity will be saved.
2. We will consume avoided
Megawatts from WAPDA.
Muhammad Basti Kofli 3. We‟ll have clean
2 Transporter Primary
Ibrahim Sattai environment.
4. Opportunity of micro
entrepreneurships will be
available.
51
1. Environmental betterment
Servicing in will reduce diseases.
3 Nazir Ahmed Health Primary Kofli Sattai 2. Environmental pollution
Department will reduce.
Basti 2. Employment opportunities
Abdul Majeed
4 Agriculturist Primary Laghari, DG will be available.
S/O Rahim Bux
Cement 3. It will lead to betterment of
environment
1. New job opportunities will
not require any relocation.
2. Employment opportunities
5 Ghazi Khan Transporter Primary Kofli Sattai will be available to our
children.
3. It will create awareness of
education.
E.3. Report on how due account was taken of any comments received:
Most of the comments received were expressing a positive opinion of the project. The personnel at D.G.
Khan Cement Company explained in detail the technical, environmental and social consequences of
utilization of waste heat recovery for power generation. The stakeholders were satisfied, and were
supportive to the project. In conclusion, no concerns were expressed by the stakeholders, which
eventually expressed appreciation for initiative of D.G. Khan Cement Company Limited
52
Annex 1
CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

Organization: D.G. Khan Cement Company Limited
Street/P.O.Box: 53 – A, Lawrence Road
Building: Nishat House
City: Lahore
State/Region: Punjab
Postfix/ZIP:
Country: Pakistan
Telephone: +92 42 111 11 33 33
FAX: +92 42 6367414
E-Mail:
URL: www.dgcement.com
Represented by:
Title: Chief Executive Officer
Salutation: Mr
Last Name: Mansha
Middle Name:
First Name: Raza
Department:
Mobile:
Direct FAX: +92 42 6367414
Direct tel: +92 42 111 11 33 33
Personal E-Mail: rmansha@dgcement.com
Organization: Carbon Services (Private) Limited

Street/P.O.Box: 2nd Floor, Al Maalik,
19 Davis Road
Building:
City: Lahore
State/Region: Punjab
Postfix/ZIP:
Country: Pakistan
Telephone: +92-42-36313235 / 36313236
FAX: +92-42-36312959
E-Mail:
URL: www.carbon.com.pk
Represented by: Mr. Omar Malik
Title: Director
Salutation: Mr.
Last Name: Malik
Middle Name:
First Name: Omar
Department:
Mobile: +92-300-8463743
Direct FAX: +92-42-36312959
53
Direct tel: +92-42-36313235 / 36313236

Personal E-Mail: omar.malik@carbon.com.pk
Organization: First Climate (Switzerland) AG

Street/P.O.Box: Stauffacherstr.45
Building:
City: Zurich
State/Region: Zurich
Postcode/ZIP: 8004
Country: Switzerland
Telephone: +41-44-298 2800
FAX: +41 44-298 2899
E-Mail: info@firstclimate.com
URL: www.firstclimate.com
Represented by:
Title: Board Member
Salutation: Mr
Last Name: Lüchinger
Middle Name:
First Name: Alexander
Department:
Mobile:
Direct FAX: +41 44 298 28 99
Direct tel: +44 44 298 28 07
Personal E-Mail: alexander.luechinger@firstclimate.com
54
Annex 2
INFORMATION REGARDING PUBLIC FUNDING
No public funding is sought for the project.
55
Annex 3
BASELINE INFORMATION
Fuel Characteristics:
Fuel Characteristics
NCV of Natural Gas Based on Analysis BTU/ft3 922
Density of Natural Gas kg/Nm3 0.658
NCV of HFO Based on Analysis BTU/lb 17,505
NCV of Diesel BTU/lb 18,600
Density of diesel kg/Ltr 0.8438
NCV of HFO TJ/ton 0.041 Conversion in TJ/ton

NCV of Diesel MJ/Ltr 36.51 Conversion in TJ/ton
NCV of Natural Gas MJ/Nm3 34.35 Conversion in TJ/ton
Emission Coefficient for HFO tCO2/TJ 77.4 2006 IPCC Value

Emission Coefficient for Diesel tCO2/TJ 74.1 2006 IPCC Value
Emission Coefficient for Natural Gas tCO2/TJ 56.1 2006 IPCC Value
Emission Factor of Captive Power Plant:
Emission Factor for Captive Power Plant
YEAR 1 YEAR 2 YEAR 3 TOTAL

Electricity generated by captive power plant on HFO MWh/yr 93,233 82,968 28,279 204,480
Electricity generated by captive power plant on NG MWh/yr 0 33,727 159,817 193,544
Total electricity generated by captive power plant MWh/yr 93,233 116,695 188,096 398,025
HFO consumption t/yr 20,523 18,167 6,338 45,028

Diesel consumption Ltrs/yr 310,619 245,124 177,460 733,203
Natural gas consumption Nm3/yr 0 7,535,982 37,680,540 45,216,522
Weighted average coefficient of captive power plant t CO2/TJ 67.68

Emission factor of captive power plant t CO2/MWh 0.55
Efficiency of the existing power plant % 44.16%
Designed Efficiency of Existing Power Plant

Wartsila 20V34SG Genset
Heat rate of Wartsila 20V34SG gensets kJ/kWh 8,153
Efficiency of Wartsila 20V34SG gensets % 44.16%
Niigata 18V32CLX Genset
Heat value of HFO for efficiency test kCal/kg 10,200
HFO consumption g/kWh 194.5
Heat rate of Niigata 18V32CLX gensets kJ/kWh 8,306
Efficiency of Niigata 18V32CLX gensets % 43.34%
Emission Reduction:
56
Emissions Reduction Calculations

Project Emissions PEy tCO2/yr -
Baseline Emissions BEy tCO2/yr 33,845
Emissions Reduction ERy tCO2/yr 33,845
Project Emissions
Total Project Emissions PEy tCO2/yr -
Baseline Emissions
Grid Electricity Avoided EGGrid MWh/yr 70,087.68

Grid Emission Factor EFGrid tCO2/MWh 0.483
ER by Displacement of Grid EBGrid tCO2/yr 33,845
Total Baseline Emissions EBy tCO2/yr 33,845
57
Annex 4
MONITORING INFORMATION
Detailed monitoring plan and information has already been provided in Section B.7.
58
Annex 5
Advertisements for stakeholders‟ consultation meeting are shown below.
59
60
Annex 6
Pictures of stakeholders‟ consultation meeting are shown below.
61
62
63
64
-----
65

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PROJECT DESIGN DOCUMENT FORM (CDM-SSC-PDD) - Version 03

CDM – Executive Board

CLEAN DEVELOPMENT MECHANISM

A. General description of the small scale project activity

B. Application of a baseline and monitoring methodology

C. Duration of the project activity / crediting period

Annex 2: Information regarding public funding

Annex 3: Baseline information

Annex 4: Monitoring Information

Annex 5: Advertisements for Stakeholders‟ Meeting

Annex 6: Pictures of Stakeholders‟ Meeting

CDM – Executive Board

Revision history of this document

Version Date Description and reason of revision

CDM – Executive Board

SECTION A. General description of small-scale project activity

A.1 Title of the small-scale project activity:

A.2. Description of the small-scale project activity:

CDM – Executive Board

The project activity will result in sustainable development of the following:

 significant reduction in the emissions of Greenhouse Gases and other environmental

 alleviation of poverty by providing labour employment opportunities to the local community

 cost reduction for generating electricity as no additional fuel is used

 introducing modern technology in the country (technology transfer)

A.3. Project participants:

CDM – Executive Board

A.4. Technical description of the small-scale project activity:

A.4.1. Location of the small-scale project activity:

A.4.1.1. Host Party(ies):

Islamic Republic of Pakistan

A.4.1.2. Region/State/Province etc.:

A.4.1.3. City/Town/Community etc:

Khofli Sattai, District Dera Ghazi Khan

A.4.1.4. Details of physical location, including information allowing the

The project is located at:

D.G. Khan Cement Factory

The company is headquartered at:

Nishat House, 53 – A, Lawrence Road,

The location of the project is illustrated in the figures below.

CDM – Executive Board

Figure A.4.1.4.1: Location of the Project

CDM – Executive Board

Type III. Other project activities

Table A.4.3.2: Major Equipment of Project Activity

Capacity: 12.2 tph

CDM – Executive Board

Capacity: 20.0 tph

Manufacturer = Nanjing Turbine and Capacity: 12.235 MVA

The schematic of project activity is as under:

Figure A.4.3.1: Schematic of Project Activity

Waste heat Steam Steam

CDM – Executive Board

Table A.4.4.1: Emission Reductions over the Crediting Period

A.4.4. Public funding of the small-scale project activity:

There is no public funding available for the project activity.

(a) With the same project participants;

CDM – Executive Board

SECTION B. Application of a baseline and monitoring methodology

AMS Type III. – “Other Project activity”

 Tool for the demonstration and assessment of additionality (Version 05.2)

B.2 Justification of the choice of the project category:

No. Condition Project Activity/Baseline Applicability