Slide2 AGENDA CONTENTS Musim Mas and Sustainable Palm Oil Experiences in Implementing Methane Capture Discussion Conclusions
Our Vision A fully integrated Palm Oil Corporation renowned for Quality People and Products
Musim Mas Corporate Policy Our policies on growth:
Production of Sustainable Palm Oil Musim Mas is especially proud of being the FIRST Indonesian plantation to be certified. 1 st Smallholders Scheme in West Sumatra received RSPO Certification.
EstatesPO Mills Tank FarmPME Plant Certified on 7th March, 2011 Production of Sustainable Palm Oil Musim Mas’ PME plant integrated with palm oil mills are ISCC certified
Slide7 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. MANAGING FOR SUSTAINABILITY A Uniquely Integrated Business, Capturing margins along the whole Palm Oil value chain 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.
Smallholders Oil Palm Development Programs Riau Scheme Smallholders 7 villages in Riau 819 families Village Development Program 4 villages in Riau West Sumatra Scheme Smallholders 4 villages in West Sumatra 762 families South Sumatra Village Development Program 1 village in South Sumatra Central Kalimantan Village Development Program 3 villages in Cental Kalimantan Riau Village Oil Palm Development Programs Managing for Sustainability – Sharing Value
Donation for Padang earthquake victims Polyclinics 5 schools Community Projects Managing for Sustainability – CSR
Management of HCV Areas Managing for Sustainability – Best Practices Reduce GHG EmissionsSocial Responsibility Methane capture project
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: Greenhouse Gas (CO 2 ) Emissions
CH 4 This is because methane gas emissions from palm oil mill effluent ponds has high global warming potential (CH 4 emissions = 25x CO 2 ) Greenhouse Gas (CO 2 ) Emissions Therefore we zoom in to find ways to reduce the GHG emissions. A methane capture project was initiated at Musim Mas’ Pankalang Lesung POM.
Main Objectives of Pangkalan Lesung Methane Capture Project Methane Capture in Musim Mas To reduce GHG emissions in Musim Mas’ palm oil production. To obtain Gold Standard in the capture of methane. To generate electricity from the biogas captured. To register with the UNFCCC for the qualification of CER.
Project Location: Pangkalan Lesung POM
Project Milestones Methane Capture in Musim Mas
Schematic Diagram of Project Boundary Submission of Project Design Document (PDD) 11th May, 2010 Methane Capture in Musim Mas Project Milestones
Methane Capture in Musim Mas Launching of the Biogas Plant by the Musim Mas Group President Director in February 2011
Methane Capture in Musim Mas
Mill capacity (TPH)45 FFB processed (t/year) 270,000 Electricity generation potential (MW)1.5 Potential Electricity Generation from Pangkalan Lesung Methane Capture Project Project Design Document (PDD) 11th May, 2010 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 Project Design Document (PDD) 11th May, 2010 Methane Capture in Musim Mas
Project Design Document (PDD) 11th May, 2010 CO2 emission reductions from Pangkalan Lesung Methane Capture Project 52,397 tones CO 2 per year Methane Capture in Musim Mas
GHG Calculation Methodology – ISCC Document 205 Methane Capture in Musim Mas
Without CER, negative IRR CER price of 6.6 EUR to meet WACC PDD CER EUR 9.5 price gave 24.3% IRR Current CER price of EUR 4.8 not economical Return on Equity Pangkalan Lesung ’ s Methane Capture Project Methane Capture in Musim Mas
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.
The methane capture system can achieve substantial GHG emissions reduction. Conclusions 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.