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Implementing Methane Capture in Palm Oil Mill

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Presentation on theme: "Implementing Methane Capture in Palm Oil Mill"— Presentation transcript:

1 Implementing Methane Capture in Palm Oil Mill
- Experiences from Musim Mas By Dr. Gan Lian Tiong, Musim Mas Group Head of Sustainability Presented at the Seminar on Incentives for Sustainability in Agri-business: Sustainable Palm Oil, Sultan Hotel, Jakarta 29th February 2012 A Musim Mas Presentation. Strictly Private and Confidential. Copyright © 2011

2 AGENDA CONTENTS Musim Mas and Sustainable Palm Oil
Experiences in Implementing Methane Capture Discussion Conclusions

3 Our Vision A fully integrated Palm Oil Corporation renowned for
Quality People and Products

4 Our policies on growth:
Musim Mas Corporate Policy Our policies on growth: Edit 4

5 Production of Sustainable Palm Oil
Musim Mas is especially proud of being the FIRST Indonesian plantation to be certified. 1st Smallholders Scheme in West Sumatra received RSPO Certification.

6 Musim Mas’ PME plant integrated with palm oil mills are ISCC certified
Production of Sustainable Palm Oil Musim Mas’ PME plant integrated with palm oil mills are ISCC certified Certified on 7th March, 2011 Estates PO Mills Tank Farm PME Plant

7 MANAGING FOR SUSTAINABILITY Total employment force ± 27,000.
A Uniquely Integrated Business, Capturing margins along the whole Palm Oil value chain Total 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 OPERATIONS Musim Mas shares its value with the local communities so that they can progress in tandem with Musim Mas Group.

8 Managing for Sustainability – Sharing Value
Smallholders Oil Palm Development Programs Riau West Sumatra Scheme Smallholders 7 villages in Riau 819 families Scheme Smallholders 4 villages in West Sumatra 762 families Village Oil Palm Development Programs Riau South Sumatra Central Kalimantan Village Development Program 4 villages in Riau Village Development Program 1 village in South Sumatra Village Development Program 3 villages in Cental Kalimantan

9 Managing for Sustainability – CSR
5 schools Donation for Padang earthquake victims Polyclinics Community Projects

10 Managing for Sustainability – CSR
Orangutan Conservation Projects Elephant Flying Squad Project Tiger Conservation Project

11 Managing for Sustainability – Best Practices Methane capture project
Social Responsibility Management of HCV Areas Reduce GHG Emissions Methane capture project

12 Greenhouse Gas (CO2 ) Emissions
A lifecycle analysis showed that palm oil mill effluent (POME) contributes 55% of the GHG emissions in the palm oil supply chain Source: Int J Life Cycle Asess (2011) 16:

13 Greenhouse Gas (CO2 ) Emissions
This is because methane gas emissions from palm oil mill effluent ponds has high global warming potential (CH4 emissions = 25x CO2) CH4 Therefore we zoom in to find ways to reduce the GHG emissions. A methane capture project was initiated at Musim Mas’ Pankalang Lesung POM.

14 Main Objectives of Pangkalan Lesung Methane Capture Project
Methane Capture in Musim Mas Main Objectives of Pangkalan Lesung Methane Capture Project To 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.

15 Project Location: Pangkalan Lesung POM
15

16 Methane Capture in Musim Mas
Project Milestones

17 Methane Capture in Musim Mas Schematic Diagram of Project Boundary
Project Milestones Submission of Project Design Document (PDD) 11th May, 2010 Schematic Diagram of Project Boundary

18 Methane Capture in Musim Mas
Launching of the Biogas Plant by the Musim Mas Group President Director in February 2011

19 Methane Capture in Musim Mas
19

20 Methane Capture in Musim Mas
Potential Electricity Generation from Pangkalan Lesung Methane Capture Project Mill capacity (TPH) 45 FFB processed (t/year) 270,000 Electricity generation potential (MW) 1.5 Project Design Document (PDD) 11th May, 2010

21 Methane Capture in Musim Mas
Implementation Costs of Pangkalan Lesung Methane Capture Project Investment cost : ca 3 million USD Operation cost : ca 350,000 USD per year Investment cost Project Design Document (PDD) 11th May, 2010

22 Methane Capture in Musim Mas
CO2 emission reductions from Pangkalan Lesung Methane Capture Project 52,397 tones CO2 per year Project Design Document (PDD) 11th May, 2010

23 Methane Capture in Musim Mas
GHG Calculation Methodology – ISCC Document 205

24 Methane Capture in Musim Mas
Return on Equity Pangkalan Lesung’s Methane Capture Project Without CER, negative IRR PDD CER EUR 9.5 price gave 24.3% IRR CER price of 6.6 EUR to meet WACC Current CER price of EUR 4.8 not economical

25 Discussion Environmental 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.

26 Conclusions The 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.

27 THANK YOU A Musim Mas Presentation. Strictly Private and Confidential. Copyright © 2011


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