2AGENDA CONTENTS Musim Mas and Sustainable Palm Oil Experiences in Implementing Methane CaptureDiscussionConclusions
3Our Vision A fully integrated Palm Oil Corporation renowned for Quality People and Products
4Our policies on growth: Musim Mas Corporate PolicyOur policies on growth:Edit4
5Production of Sustainable Palm Oil Musim Mas is especially proud of being the FIRST Indonesian plantation to be certified.1stSmallholders Scheme in West Sumatra received RSPO Certification.
6Musim Mas’ PME plant integrated with palm oil mills are ISCC certified Production of Sustainable Palm OilMusim Mas’ PME plant integrated with palm oil mills are ISCC certifiedCertified on 7th March, 2011EstatesPO MillsTank FarmPME Plant
7MANAGING FOR SUSTAINABILITY Total employment force ± 27,000. A Uniquely Integrated Business,Capturing margins along the whole Palm Oil value chainTotal employment force ± 27,000.Musim Mas is proud to be able to provide livelihood to its employment force.Musim Mas is committed to the well-being of the local community and the environment in which it operates in.MUSIM MAS INTEGRATED PALM OIL OPERATIONSMusim Mas shares its value with the local communities so that they can progress in tandem with Musim Mas Group.
8Managing for Sustainability – Sharing Value Smallholders Oil Palm Development ProgramsRiauWest SumatraScheme Smallholders7 villages in Riau819 familiesScheme Smallholders4 villages in West Sumatra762 familiesVillage Oil Palm Development ProgramsRiauSouth SumatraCentral KalimantanVillage Development Program4 villages in RiauVillage Development Program1 village in South SumatraVillage Development Program3 villages in Cental Kalimantan
9Managing for Sustainability – CSR 5 schoolsDonation for Padang earthquake victimsPolyclinicsCommunity Projects
11Managing for Sustainability – Best Practices Methane capture project Social ResponsibilityManagement of HCV AreasReduce GHG EmissionsMethane capture project
12Greenhouse Gas (CO2 ) Emissions A lifecycle analysis showed that palm oil mill effluent (POME)contributes 55% of the GHG emissions in the palm oil supply chainSource: Int J Life Cycle Asess (2011) 16:
13Greenhouse Gas (CO2 ) Emissions This is because methane gas emissions from palm oil mill effluent pondshas high global warming potential (CH4 emissions = 25x CO2)CH4Therefore we zoom in to find ways to reduce the GHG emissions.A methane capture project was initiated at Musim Mas’ Pankalang Lesung POM.
14Main Objectives of Pangkalan Lesung Methane Capture Project Methane Capture in Musim MasMain Objectives of Pangkalan Lesung Methane Capture ProjectTo reduce GHG emissions in Musim Mas’ palm oil production.To generate electricity from the biogas captured.To obtain Gold Standard in the capture of methane.To register with the UNFCCC for the qualification of CER.
20Methane Capture in Musim Mas Potential Electricity Generation from Pangkalan Lesung Methane Capture ProjectMill capacity (TPH)45FFB processed (t/year)270,000Electricity generation potential (MW)1.5Project Design Document (PDD) 11th May, 2010
21Methane Capture in Musim Mas Implementation Costs of Pangkalan Lesung Methane Capture ProjectInvestment cost : ca 3 million USDOperation cost : ca 350,000 USD per yearInvestment costProject Design Document (PDD) 11th May, 2010
22Methane Capture in Musim Mas CO2 emission reductions from Pangkalan Lesung Methane Capture Project52,397 tones CO2 per yearProject Design Document (PDD) 11th May, 2010
23Methane Capture in Musim Mas GHG Calculation Methodology – ISCC Document 205
24Methane Capture in Musim Mas Return on Equity Pangkalan Lesung’s Methane Capture ProjectWithout CER, negative IRRPDD CER EUR 9.5 price gave 24.3% IRRCER price of 6.6 EUR to meet WACCCurrent CER price of EUR 4.8 not economical
25DiscussionEnvironmental benefits:Palm oil with methane capture has GHG emission value of 7.25 kg CO2eq/Mj which is equivalent to emission savings of 92% as compared with fossil fuel.Operational considerations:High technology threshold: system not easy to operate (this is evident from the fact that many projects even after achieving UNFCCC registration are not running). Out of the 14 companies registered on with UNFCCC only 2 has been awarded the CER.High operation cost: US $ 350,000 per year.Economic consideration:High investment cost (about 30% of the cost of building a new palm oil mill).Return not viable due to low current CER price.
26ConclusionsThe methane capture system can achieve substantial GHG emissions reduction.Due to the high investment/operation cost and low return, the project may not be economically viable at the moment.However, we recommend that large plantations with sufficient financial strength should still consider implementing the methane capture system for the long term benefits to the environment.Musim Mas will continue to implement methane captures in its other palm oil mills, in cognizance with other field practices, to reduce the carbon footprint in the production of palm oil.This is part of the Group’s corporate strategy in the production of sustainable palm oil.