2021-12-08

CLEAN DEVELOPMENT MECHANISM – SRI LANKA’S

PERSPECTIVE

ABSTRACT

Nature always prefers the balance in every aspect and there are natural mechanisms to
maintain this balance such as wind which balances the difference in pressure,
photosynthesis and respiration to harmonize the CO 2 and O2 levels. This harmony was
drastically affected by manmade processes and nature balances them out with adverse
effects such as floods, melting the glaziers, increasing sea levels ect.

Understanding this better truth, Kyoto Protocol was established as a mechanism to reduce
Green House Gasses (GHG). As a developing country, Sri Lanka can actively participate in
this mission by reducing emissions by turning to renewable power sources, adopting
energy efficient technologies and moving to the industries which reduce the emissions.

This study investigates about the Kyoto protocol putting special focus on Clean
Development Mechanism (CDM), and discusses about the methodologies that Sri Lanka
can participate in this mission by selecting an actual small hydro power project as a case
study.

Keywords: CDM, Small Hydro, Sri Lanka, Kyoto Protocol, Green House gas, CO2 Emission

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TABLE OF CONTENTS

ABSTRACT.............................................................................................................................1
Table of Contents....................................................................................................................2
List of Figures..........................................................................................................................3
List of Tables...........................................................................................................................3
1 Introduction......................................................................................................................4
1.1 Objectives..................................................................................................................6
2 METHODOLOGY.............................................................................................................8
2.1 Information Gathering................................................................................................8
2.2 Definition of Parameters............................................................................................8
2.3 Baseline Methodology Procedures............................................................................8
3 Waltrim Hydro Power Project – Case Study....................................................................9
3.1 Introduction to the Project..........................................................................................9
3.2 Socio-Environmental Impacts of the Project............................................................13
3.3 Applicability for CDM...............................................................................................14
3.4 Baseline Scenario....................................................................................................16
3.5 Demonstration of Additionality.................................................................................16
3.5.1 Investment Analysis..........................................................................................18
3.5.2 Barrier Analysis.................................................................................................19
3.6 Calculation of the Emission Factor..........................................................................21
3.7 Calculation of the Leakage......................................................................................21
3.7.1 Assumptions and Data......................................................................................21
3.8 Calculation of reduction in emission........................................................................23
3.9 Financial Benefit......................................................................................................24
3.10 Establishing Monitoring Method...........................................................................24
4 Results and discussion..................................................................................................25
5 Conclusion.....................................................................................................................26
6 Reference.......................................................................................................................27

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LIST OF FIGURES

Figure 1-1 Illustration of CDM..............................................................................................................4

Figure 3-1. 50% Probable Flow Duration Curve at the Diversion at Kothmala Oya............................8
Figure 3-2. Project Layout – Waltrim SHP.........................................................................................10
Figure 3-3. Innundation Area of the project........................................................................................14
Figure 3-4. Methodology for demonstrate and assessment of additionality (UNFCCC, 2008b)........16
Figure 3-5. Annual Rainfall from 1980-2007......................................................................................19

LIST OF TABLES

Table 3-1. Emission Factor for Diesel generators (EB 50 I.D. /Version 15, October 2009)...............15
Table 3-2.Details of the Transportation of the Materials and Other Items..........................................20
Table 3-3.Operation hours of the site generator and construction machinery.....................................21
Table 3-4.The Average Emmissions fom Fuel (USDOE 2009).........................................................21
Table 3-5.CO2 Emissions by Transportation......................................................................................22
Table 3-6.CO2 CO2 Emissions by Generator and Heavy Machinery.................................................22
Table 3-7. Motoring Procedure............................................................................................................23

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1 INTRODUCTION
Planet Earth is one of a Natural system that is intelligently designed and fine tuned to
support the life forms. Any disturbance to the natural system will destabilize the entire
system and consequently leads to fiasco. The natural environment has been exploited by
human being to meet their need primarily energy need. Our ancestors used limited amount
of energy to meet their heating and lighting requirements but modern society uses energy
for many purposes. Industrial revolution in the 18 th century paves the way for technological,
economical and social developments at a rate that had never been experienced before in
the history. It is obvious that any development is closely related with energy; new forms of
energy sources have been discovered, developed and utilized to meet the ever increasing
energy demand since the industrial revolution.

Among the energy sources, fossil fuels have been the most economical and effective
source to meet the energy demand for various purposes such as industrial, transport,
heating and amusement in the form of electricity and heat. The fossil fuels need to be
burned to release the energy stored in but burning process is the major anthropogenic
source for emitting many Green House Gases (GHS) into atmosphere. Unprecedented
emission of GHS shifted the equilibrium of earth’s atmosphere from its original position
consequently changed the hydrology and meteorology cycles which are in contact with the
atmosphere. This phenomenon is called as Climate Change and became a hot topic in
political and economical and technological arenas.

Impact of Climate Change is not limited to local or regional scale but to global scale that’s
why it is important to all. There are various mechanisms are in place to reduce and stabilize
emission of GHG. Clean Development Mechanism is one of a mechanism adopted by
many countries as a tool for reducing GHG. In this project, we are going to briefly analyze
how Sri Lanka can contribute to abate the impacts of climate change and in return the
benefits it can receive.

What is Clean Development Mechanism?

In 1997, Member countries of United Nation gathered at Kyoto conference to discuss about
stabilization of Green House Gases (GHG) in atmosphere which induced global warming
and consequently changed the climate. At the end of the conference, most of the member
countries conceptually agreed to reduce the GHG level 5% below the level at 1990 by
accepting a protocol called Kyoto Protocol. Kyoto protocol is a protocol to the United
Nations Framework Convention on Climate Change (UNFCC). UNFCC is an international
treaty with primary objective of stabilizing GHG in the atmosphere by reducing
anthropogenic emission of GHG. There are six GHG  and these are translated into CO2
equivalent to calculate the GHG emission reduction.

The Clean Development Mechanism (CDM) is a mechanism under the Kyoto Protocol for
promoting and enhancing technology transfer and investment from industrialized countries
to the developing world for projects focused on mitigating emissions of greenhouse gases.
It provides tool and strategies for industrialized countries to invest in emission-reducing
projects in developing countries.


There are 4 gases CO2, CH4, NOx, SF6 and 2 groups of gases hydrofluorocarbons and perfluorocarbons.

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The resulting Certified Emissions Reductions (CER) credits (1 CER equivalent to 1 ton of
CO2) can be used by industrialized countries towards their own compliance with the
emission limitation targets set forth by the Kyoto Protocol. Green House potential of the
gases is expressed in terms of Green House potential of CO 2.

CDM is a tool that stimulates both emission reduction and sustainable development. In
order to calculate the amount of carbon emission reductions for these projects, it is
necessary to compare emissions with those in a baseline scenario representing the
situation that would have occurred in absence of the project activity. This not a simple task
as the nature of the project changes from to another. In this project, we are going to
analyze how and where this tool can be used and impact of this tool in national economy
and sustainable development.

Being a developing country, Sri Lanka can contribute to this mechanism and in return it can
have economical benefits introduced by Kyoto protocol. Sustainable power generation is a
major area that Sri Lanka can focus with related to CDM. Small hydro power industry is a
well established industry in Sri Lanka and has huge potential in participating in CDM.

BASELINE CDM CDM

EMISSION EMISSION EMISSION

REDUCTION CAP CAP
(CREDITS) INCREASES
E
M
I
S E E E
S M M M
I I I I
O S S S
N S S S
I I I
O O O
N N N

PROJECT IN HOST COUNTRY EMISSION CAP INDUSTRIALISED COUNTRIES

Figure 1-1 Illustration of CDM

1.1 Objectives

The first objective of this project is to get an overview about Kyoto Protocol and its deferent
mechanisms for reducing GHG. Kyoto Protocol is an international agreement under the

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UNFCC. Under this agreement, the industrial countries (Annex 1) are committed to reduce
GHG to set targets. The protocol was adopted on 11 December 1997 and came into force
on 15 February 2005. The emission targets should be achieved during the period of 2008-
2012. Many countries those who signed the protocol have ratified it but United States of
America, the highest emitter of the GHG, has withdrawn from the protocol and has no
intension to ratify it.

Under this protocol, the countries shall meet their targets primarily by implementing national
measures. However there are three additional market-based mechanisms are offered to
meet the targets. The mechanisms are:

1. Emission Trading

2. Joint Implementation

3. Clean Development Mechanism

According to Article 17 of the protocol, the emission trading is a market-based mechanism

to trade the spare emission units. The trading can take place among intra-company,
domestic or international level. According to Article 4.2 and 6 of the Kyoto Protocol, the
Joint Implementation (JI) is a market-based implementation mechanism, allowing Annex I
countries to implement projects jointly that limit or reduce emissions, or enhance sinks, and
to share the Emissions Reduction Units (ERU).As defined in Article 17 of the protocol, CDM
enable the countries in Annex-1 to finance the sustainable development projects in non-
Annex 1 countries (Host Countries) in order to meet their emission reduction targets.

The second objective of this project is to obtain thorough understanding about Clean
Development Mechanism and its procedures. The CDM is supervised by the CDM
Executive Board (CDM EB), international authority acting under the supervision of the
UNFCCC. The CDM EB is responsible for issuing emissions reduction units for approved
CDM project activities, known as Certified Emissions Reductions (CERs).

The project activity has to be met the following criteria to eligible under the CDM:
(i) be carried out voluntarily with the approval of both Parties involved;
(ii) produce real, measurable results, and long-term benefits related to the mitigation
of climate change;
(iii) result in reductions that are additional to those that would have occurred in the
absence of the project activity; and
(iv) help the host country to achieve its sustainable development goals.

CDM projects can only be carried out with the involvement of the designated national
authorities (DNAs) of the Annex I Party and the Host Country involved and having been
validated, verified and certified by a Designated Operational Entity (DOE) accredited by the
CDM EB.

The CDM Process

Step 1 - Project Identification

Step 2 - Project Formulation

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Step 3 - National Approval
Step 4 - Validation
Step 5 - Registration
Step 6 - Monitoring
Step 7 - Verification and Certification
Step 8 - Issue of CERs

The third objective of this project is to find the ways that Sri Lanka can participate in CDM.
Studies show that small scale CDM projects are most suitable one for Sri Lanka. The
following type of projects has been taken into consideration.

1. Renewable energy projects under 15 MW

2. Energy efficient projects that reduce consumption up to 15 GWh per year

3. CO2 abatement of 15 kTon

Among these three projects the first option is the most suitable one for Sri Lanka because
of high potentials to develop small hydro power plants. The baseline scenario for these
projects will be diesel fired power plant.

The forth object of this project is to get an overview about small hydropower sector and
related GHG emissions. This is very vital for estimating emission reduction.

The fifth objective is to identify the methodology for small hydropower project to participate
CDM using a case study. Approved streamlined procedures and standardized baseline for
small scale projects will be used.

The sixth and final objective is to identify the difficulties to obtain the CDM as far as Sri
Lanka concern.

Scope of the project:

For the sake of simplicity the scope is limited to grid connected small hydro (renewable)
electricity generation in Sri Lanka.

2 METHODOLOGY

2.1 Information Gathering

    CDM – Almost all the information and methodologies are clearly described in
UNFCCC web site and information related to CDM and small hydro power is
gathered from the web site. The methodologies that are considered for this project
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are: Simplified modalities and procedures for small-scale CDM project activities,
combined tool to identify the baseline scenario and demonstrate additionality and
tool to calculate the emission factor for an electricity system.

2.2 Definition of Parameters

Parameter SI Unit Description
EFgrid,CM,y tCO2/MWh Combined margin CO2 emission factor for the project electricity system in year y
Build margin CO2 emission factor for the project electricity system in
EFgrid,BM,y tCO2/MWh
year y
EFgrid,OM,y tCO2/MWh Operating margin CO2 emission factor for the project electricity system in year y

2.3 Baseline Methodology Procedures

Project participants shall apply the following six steps:

STEP 1: Identify the relevant electricity systems.
STEP 2: Choose whether to include off-grid power plants in the project electricity system
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: Identify the group of power units to be included in the build margin (BM).
STEP 6: Calculate the build margin emission factor.
STEP 7: Calculate the combined margin (CM) emissions factor.

    Small hydro power industry in Sri Lanka – Interviews from the experts in the
industries, referring project reports, and current and historical data of hydro power
generation.

(UNFCCC 2009C)

3 WALTRIM HYDRO POWER PROJECT – CASE STUDY

An actual small hydro project which is going to be constructed in the future will be studied
as a case study. Eligibility of the CDM activities, relevant methodologies and tools specified
by UNFCCC will be used to calculate the emission factor and establishing the additionality.
Further monitoring method for emission reduction will be established in this study.

3.1 Introduction to the Project

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This project is developed by private party in Sri Lanka and has been granted with a Letter
of Provisional Approval by The Sri Lanka Sustainable Energy Authority (SEA) which is the
project approval body and a Letter of Intent (LOI) awarded by The Ceylon Electricity Board
the power trader presently holds the monopoly in electrical power trading to construction
and operation of a Grid connected Small Hydro power Project of 1622 kW capacity.

This project will harness the energy of the water flowing in the Kothmala Oya. Acording to
the topology of the area this project can enjoy 25 meter gross head. Design discharge is
8.5 cubic meters per second. At the diversion point the stream has 175 km2 of catchment.
Average annual rain fall is 1900mm/year. The flow duration curve is given is F3-1.

16

14

12

10
Flow/[m3/s]

0
0 10 20 30 40 50 60 70 80 90 100
Precentage time of the Year

Figure 3-2. 50% Probable Flow Duration Curve at the Diversion at Kothmala Oya

The project features an ogee type gravity weir spanning 55 meters across the river, with a 2
meters high weir having a base width of 3 meters reducing to 1 meter at weir crest level.
The weir will be fitted with a scour gate at the base to release accumulated mud and silt
and will also incorporate a regulatory opening at the base in order to release the minimum
quantity of water to downstream of the weir as directed by the Central Environment
Authority of Sri Lanka. This will be a run-of –river type project where there is no reservoir
involved in this project.

On the extreme right edge of the weir, the intake structure will be constructed incorporating
the usual trash racks and intake gates which is virtually the start of the headrace channel.

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The open, on ground headrace channel will be made of reinforced grade 25 concrete and
will be 1600 meters long. The channel will have a bed width of 3 meters and the wall height
including the free board will be 1.7 meters. Although the channel construction will be on
ground, in order to minimize slope excavations, the channel will be designed in such a way
to cross gullies on aqueduct sections where ever possible. The 1600 meter channel will
convey water to the fore-bay tank, made of grade 25 reinforced concrete, half embedded
on ground for better stability.

Water from the fore-bay tank will be routed to the turbines installed at the power house, via
a 340 meters long 1450 mm diameter twin penstock line and the penstock pipes will be
made of 8 mm thick carbon steel. The twin turbines installed in the power house made to
the highest standards as per the machinery supplier’s designs and specifications, will be
direct coupled to the matching electrical generators delivering 1,622 kW of electricity to the
national grid. The water thru the turbines will be released back to the river via a tail race
channel to be excavated. Layout of the project the project is given in F3-2.

Figure 3-3. Project Layout – Waltrim SHP

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The generated electrical power will be first fed to the national grid at 33kV level. An outdoor
switchyard will be used for this purpose. Protection will be as per G59 standards as defined
in IEE regulations.

Design Details & Energy Waltrim SHP

Design flow 8.500 m3/sec

Exceedence 22%
Catchment 175 km2
Gross Head 25.0 m

Channel length 1,800 m

Effective head 23.2 m

Gravitational force 9.81 kg/ms2

Penstock length 140 m
Penstock diameter M 01 1.425 m
Penstock diameter M 02 1.425 m
Flow speed in penstock @ design flow 2.66 m/s
Penstock major head loss 0.376 m
Penstock minor head loss 0.217 m
Net Head 22.6 m

Site installed capacity 1,935 kW

no. of machines 2

Turbine power out no. 1 841 kW

Turbine power out no. 2 841 kW

Generator power out no. 1 811 kW

Generator power out no. 2 811 kW

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Plant Design capacity 1623 MW

Plant factor 48.1%

Energy produced per year 6,830,518 kWh

6.83 GWh

3.2 Socio-Environmental Impacts of the Project

Major environmental impacts associated with this hydropower project can be analyzed in
several aspects. Short-term negative impacts are the main anticipated impacts, which
mainly arise during the construction of the project. Anticipated short-term impacts are soil
erosion, dust and noise pollution, aquatic pollution and health hazards. Adopting
appropriate mitigation measures such as careful movement of materials, maintaining
gazetted pollution levels and educating construction workers can effectively mitigate such
short-term impacts. These short–term impacts are typical in any construction activity.
Further project layout has been finalized in a way that no resettlements are involved in this
project.

Short-term positive impacts include creation of new jobs and income generation
opportunities for local people.

Long-term negative impacts are mainly related to reduction of water flow between the
intake and the tailrace. But a small stream joins the main river along the affected river
segment between the weir and powerhouse. Therefore the reduction of water flow is not
significant but it is proposed to maintain a minimum base flow as per CEA regulations
throughout the year for better environmental healthiness.

Long-term positive impacts are reduction of emissions of green house gasses especially
CO2, creation of permanent jobs for local people and localized supply of energy to meet the
growing demand. Also, the project company aims to develop activities with regard to the
social welfare among the plantation workers. The net benefits of these activities cannot be
under estimated due to the present socio-economic conditions generally prevailing in estate
labor communities.

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3.3 Applicability for CDM

Considering the project type and the capacity this project is eligible for Small Scale CDM
and the all the criteria are given in “Indicative simplified baseline and monitoring
methodologies for selected small-scale CDM project activity categories” (I.D. /Version 15,
October 2009). Hydro Projects are classified in this section and all the run-off-the-river
projects where the capacity is less than 15MW is eligible for this criterion. If the project has
a reservoir then it should be tested for power density as below.

“2. Hydro power plants with reservoirs that satisfy at least one of the following conditions are
eligible to apply this methodology:
• The project activity is implemented in an existing reservoir with no change in the volume
of reservoir;
• The project activity is implemented in an existing reservoir, where the volume of reservoir
is increased and the power density of the project activity, as per definitions given in the
Project Emissions section, is greater than 4 W/m2;
• The project activity results in new reservoirs and the power density of the power plant, as
per definitions given in the Project Emissions section, is greater than 4 W/m2.”
(EB 50 I.D. /Version 15, October 2009)

As Waltrim SHP is a run-of-river project there is no reservoir involved and the capacity is
less than 15 MW, this project is eligible to apply for Small Scale CDM without considering
the power density. Figure F3-3 shows the inundation area due to the construction of the
weir.

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Figure 3-4. Innundation Area of the project

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3.4 Baseline Scenario

This project is identified as a substitute for power generation from fossil fuel. Energy
source mix for electrical generation is given in table T.3.X which is published by CEB.
Emission factor can be calculated by the data using below table.

Table 3-1. Emission Factor for Diesel generators (EB 50 I.D. /Version 15, October 2009)
Emission Factor for Diesel generators (EB 50 I.D. /Version 15, October 2009)

Table I.D.1

Emission Factors for diesel generator systems (in kg CO2e/kWh*) for three different levels of
load factors**

Case : Mini-Grid with 24 i) Mini-grid with Mini-gird with storage

hour Service temporary service (4-
6 hr/day
ii) Productive
applications
iii) Water Pumps
Load Factors[%] 25% 50% 100%
<15kW 2.4 1.4 1.2
>=15<35kW 1.9 1.3 1.1
>=35<135kW 1.3 1.0 1.0
>=135<200kW 0.9 0.8 0.8
>200kW 0.8 0.8 0.8
*A conversion factor of 3.2 kg CO2 per kg of diesel has been used (following revised 1996 IPCC
Guidelines for National
Greenhouse Gas Inventories)
**Values are derived from fuel curves in the online manual of Retscreen lnternational’s PV 2000
model, downloadable
from http://retscreen.net/
***Default values

3.5 Demonstration of Additionality

To be qualified in CDM activities project should be additional. In other words the project
participants should prove that without CDM activity, the project is not likely to implemented
because there can be other alternatives to this project which are more likely to be
implemented but the emission for those alternatives are higher than the above said project.
This is done by identifying alternative to the project, investment analysis, barrier analysis
and common practice analysis. This methodology is clearly described in Figure 3-4 below.

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Step 01: Identification of the

project activity consistent
with mandatory laws and
regulations

Step 2: Investment Analysis Step 3: Barrier Analysis

Does sensitivity analysis (1)Is there at least one
concluded that the proposed barrier preventing the
CDM project activity is implementation of the
No proposed project activity
unlikely to be the most
financially attractive or is without the CDM;
unlikely to be financially (2) Is at least one alternative
attractive? scenario, other than
proposed by any of the
Optional identified barriers?
Yes
Yes
No
Step 04: Common Practice
Analysis
(1) No Similar activities can
be observed?
No
(2) If similar activities are
observed, are they essential
distinctions between the
proposed CDM project
activity and similar activities
that can reasonably be
explained?

Yes

Project is Additional Project is not additional

Figure 3-5. Methodology for demonstrate and assessment of additionality (UNFCCC,

2008b)

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In this study, diesel powered electricity generation is considered as the alternative to the
project.

3.5.1 Investment Analysis

This is done to demonstrate the additionality of the project by determining whether the
proposed project is not the most economically/financially attractive or the project is
economically/financially feasible without the sales of certified emission reductions.

Several guidelines for the investment analysis are given below.

 Investment analysis should not be limited to the proposed CDM crediting period and it
should be the technical life time of the project. In general it should be minimum 10 year
and maximum 20 years. Both project IRR and equity IRR are preferred.
 Fair value of the assets should be included in the end of the assessment period.
 Depreciation reductions used for taxation calculations should be added again when
calculation of IRR and NPV.
 Cost of finance is not included in IRR calculations
 In the calculation of equity IRR only the portion of investment costs which is financed by
equity should be considered as the net cash outflow
 Local commercial lending rate of Weighted average of Cost of Capital can be used as a
bench mark for the analysis
 If there is only one possible project developer, internal benchmarks of the company or
expected rate of return can be used as a benchmark. In this case this should prove
those benchmarks.
 Sensitivity analysis should be done for the variables that can change the project cost or
project revenue by 20%

After investment analysis if the project participant can demonstrate that the project is not
financially viable with comparing specified benchmarks project is considered as Additional
and eligible for the CDM activities.

Actual investment analysis is not done in this study because it is out of the scope of study
area.

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If the project is not additional according to the investment analysis barrier analysis can be
done.

3.5.2 Barrier Analysis

The barrier is defined by UNFCCC is as below

“If this Step is used, determine whether the proposed project activity faces barriers that:
(a) Prevent the implementation of this type of proposed project activity; and
(b) Do not prevent the implementation of at least one of the alternatives.
The identified barriers are only sufficient grounds for demonstration of additionality if they
would prevent potential project proponents from carrying out the proposed project activity
undertaken without being registered as a CDM project activity.
If the CDM does not alleviate the identified barriers that prevent the proposed project
activity from occurring, then the project activity is not additional”

(UNFCCC, 2008b)

Barrier Analysis is categorized to 4 sectors as below

 Investment Barrier
Similar activities are done by private parties because of the support of grants or non
commercial finance terms.
No capital is available domestically or internationally because of the risks prevailing in the
country. Credit rating can be a good example.

 Technological Barrier
Lack of skilled labor which leads to a risk in malfunctions or under performance
Lack of infrastructure
Risk of technological failure
Less awareness of the technology in the region

 Barriers due to prevailing practice

Risk of being “first of its kind”

 Other barriers

Considering above barriers and their relationship to Waltrim SHP, technological barrier and
the barriers due to prevailing practice is not relevant because Small hydro power in not a
new concept for Sri Lanka. Further there are lot of skilled workforce in this country and
Small hydro power is established industry in the country.

However, barrier analysis can be done with reference to the thermal power purchase price
and other benefits enjoyed by thermal power producers in Sri Lanka. Further, uncertainty of

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the rainfall expected by hydrological study is also can be considered as another risk that
can be seen as a barrier for the project implementation. Hydrological predications are done
based on 30 year rainfall and flow data. However, there is a clear trend in reduction in
rainfall in the area and the moving average for annual rain fall for ten years is plotted in
figure 3-5.

Annual Rainfall from 1980-2007

3000

2500
R a in fa ll/[m m ]

2000

1500
Annual Rainf all/[mm]
1000
10 per. Mov. Avg. (Annual
Rainf all/[mm])
500
1975 1985 1995 2005
Ye ar

Figure 3-6. Annual Rainfall from 1980-2007

3.6 Calculation of the Emission Factor

With reference to the Table 3-1 the emission factor can be taken as 0.8 kg CO2e/kWh.
Hydropower being renewable power source, it can be considered as there is no emission

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except for reservoir. Waltrim SHP, being a run-off-river type project where there is not
emission related to reservoir.

3.7 Calculation of the Leakage

Project leakage is the emission from the fossil fuel due to activities of the project. At the
time of the operation of the project there will be no emissions due to project activities.
However, at the construction period lot of material transportation is involved and this emits
CO2 and need to be quantified.

3.7.1 Assumptions and Data

To calculate the CO2 leakage following assumptions were made after discussions with
industry experts.

Average fuel consumption of a heavy duty truck = 4km/Liter Diesel

Average fuel consumption of a 350kVA Generator = 10 Litre/ Hour
Average fuel consumption of a Excavator = 10 Litre/ Hour

Further Materials and the machinery will be transported from below locations; travel
distance and no of trucks are as below.

Table 3-2.Details of the Transportation of the Materials and Other Items

Travel
Distance (Up
No of Transport and
Item/Material Containers From down)/[km]
Sand 50 Mahianganaya 100
Metal 50 Nanuoya 30
Steel 7 Colombo 350
Cement 10 Colombo 350
Penstock 20 Colombo 350
Machinery 5 Colombo 350
Total 142    

Operation hours of the site generator and construction machinery are as below
Table 3-3.Operation hours of the site generator and construction machinery

  No. of hours
Generator 300
Heavy
Machinery 150
Total 450

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Table 3-4.The Average Emmissions fom Fuel (USDOE 2009)

The amount of carbon dioxide released into the atmosphere by a vehicle is
primarily determined by the carbon content of the fuel. However, there is
a small portion of the fuel that is not oxidized into carbon dioxide when the
fuel is burned. The Environmental Protection Agency (EPA) has published
information on carbon dioxide emissions from gasoline and diesel which
takes the oxidation factor into account and is based on the carbon content
used in EPA’s fuel economy analyses.  

Table 11.11
Carbon Dioxide Emissions from a Gallon of Fuel
       
Grams Kilograms Pounds
  per gallon per gallon per gallon
Gasoline 8,788 8.8 19.4
Diesel 10,084 10.1 22.2

Source:
U.S. Environmental Protection Agency, “Emission Facts: Average Carbon
Dioxide Emissions Resulting from Gasoline and Diesel Fuel,”
February 2009. (Additional resources: www.epa.gov/OMS)

Therefore CO2 emission from a litre of fuel is taken as 2.61 kgCO2/liter.

Table 3-5.CO2 Emissions by Transportation

Travel
Distance (Up No. CO2
No of Transport and Liters emission/[kg
Item/Material Containers From down)/[km] /[lt] ]
Mahianganay
Sand 50 a 100 1,250 3,263
Metel 50 Nanuoya 30 375 979
Steel 7 Colombo 350 613 1,599
Cement 10 Colombo 350 875 2,284
Penstock 20 Colombo 350 1,750 4,568
Machinery(E&M) 5 Colombo 350 438 1,142
Total 142     5,300 13,833

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Table 3-6.CO2 CO2 Emissions by Generator and Heavy Machinery

No. of hours No. Liters CO2

  used /[lt] emission/[kg]
Generator 300 3,000 7,830
Heavy
Machinery 150 1,500 3,915
Total 450   11,745

Total Emissions during the project construction = 25,578 kgCO2

= 26 tCO2e/y

3.8 Calculation of reduction in emission

ERy = BEy –PEy – LEy

Where:
ERy Emission reductions in year y (t CO2e/y)
BEy Baseline Emissions in year y (t CO2e/y)
PEy Project emissions in year y (t CO2/y)
LEy Leakage emissions in year y (t CO2/y)

In this project the base line emission, is taken as 0.8 kg CO2e/kWh and the annual energy
generation is estimated as 6.83 GWh/year. Further project emission is zero as there is no
emission in hydro power projects.

Even though the leakage emission is calculated for construction period it happens once in
the project life time and at the time of operation there will be no leakage emissions. Further
comparing the annual emission reduction with the leakage it can be considered as
negligible. Therefore LEy is also considered as negligibly small.

ERy = 0.8 * 6.83 * 1000 - 0 - 0

ERy = 5464 (t CO2e/y)

3.9 Financial Benefit

Present market price of CER is proximately 20 Euro/CER (Reference).

Assuming that Waltrim SHP would find a buyer to sell CER at 17 Euro

Revenue per year from CER = 17 Euro * 5,464 (t CO2e/y)

= 92,888 Euro/Year

Present Power Purchase Price = 0.0858 Euro/kWh

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Revenue from Power sales = 0.0858 Euro/kWh * 6.83 * 106 kWh/year

= 585,773 Euro/year

CER revenue as a percentage of

Power sales revenue = 92,888/585,773 * 100 %

= 15.85 %

3.10 Establishing Monitoring Method

Monitoring procedure has to be established to ensure the certified emission is done as per
the project development document and below procedure is suggested to Waltrim SHP.

Table 3-7. Motoring Procedure

Data/Parameter Power Generation

Data Unit kWh
Description This is the total no. of units generated for particular time period
Source of Date Energy meter installed by CEB and the E&M equipment supplier
Measurement Meter reading should read at 00:00 hours of the every first day of
Procedure(If any) the month and that meter reading should subtract from the next
months meter reading which is taken at the same time of the first
day of the next month.
The balance is the Power Generation for the month.
Monitoring Monthly
Frequency
QA/QC As the reading is taken from the two meters it should be compared
and make sure there is not discrepancies between them. Further
measurement can be crosschecked with the sold energy.
Daily meter reading should be noted for the propose of identifying
any malfunction of the meters
Comments -

In addition to above following procedure should be followed to ensure the proper monitoring
of the emission reduction.

 All the data has to be achieved at least for 2 years from the end of the crediting period
 As the power generation is highly related to emission reduction is should be recoded
continually. Hourly readings are most preferred.
 All the measuring equipments and related equipment should be national or IEC certified
and should be calibrated according to the manufactures recommendations or at least
once in 3 years

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4 RESULTS AND DISCUSSION

Following finding of the study is summarized as below.

Waltrim SHP can apply for CDM activities under Small Scale CDM methodology. Further, it
comes under the Grid Connected Renewable Electricity Generation. Being run-off-river
scheme it is eligible for this criteria without considering the power density.

Fossil fuel based power generation can be used as a baseline. Additionality may be proved
by demonstrating that the project is financially not viable. However investment analysis is
not included in this study.

In case of failure of demonstrating additionality after investment analysis barrier analysis

can be done. Technological barrier and barriers due to prevailing practice is not applicable
for this project. Risk of investment and the uncertainty of the hydrological prediction can be
demonstrated as investment barriers and can be used for proving additionality.

Important Parameters

Emission Factor for Waltrim Power Project - 0.8 kg CO2e/kWh

Leakage Emission -
Emission Reduction - 5,464 (t CO2e/y)
Revenue per year from CER - 92,888 Euro/Year
CER revenue as a percentage of
Power sales revenue - 15.85 %

According to the results, Waltrim small hydro power project can be a good candidate for the
CDM project activities. Eligibility and the emission reduction is pretty straight forward and
all the methodologies are fully described in the UNFCC documentation.

In this case, being well established industry in Sri Lanka, having subsidized power
purchase and other benefits like tax exemptions, proving the additionality by investment
analysis will be tricky.

However, demonstrating the risk involved in the investment or the uncertainty of the
hydrological predictions can be used to prove the additionally.

As there is no hard and fast rule for demonstrating this risks and inability of quantifying
those risk is disadvantage and one can argue about the significance of those risks. The
service of a specialized carbon trader may be required in this juncture.

Considering the financial benefits as per the calculations will convert lot of financially not
viable of marginally viable projects to financially attractive projects. Investors will consider
lot of high risk ventures in this field because of the benefit that they can get form CDM
activities.

Even though there are highly attractive benefits by participating in CDM activities, only 2
small hydro projects in Sri Lanka which have participated in the CDM activities and

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presently enjoying the benefits in return of reduction of emission of GHG. Following factors
can be the reason for this situation.

 Less awareness of the CDM and its benefits

 Less expertise in CDM activities available in Sri Lanka
 As the foreign expertise needed in this matter the initial cost is very high
 No validator (DOE) is available in Sri Lanka and there for the cost of validation is also
high

5 CONCLUSION

As per the study, Waltim SHP has good potential to participate in CDM activities. Most
important and the trickiest step would be demonstrating the Additionality. According to the
percent market rates, one CER can sell at approximately 20 Euros. Considering that fact
this as additional financial benefit which is 16% of the power purchase revenue.

Considering the small hydro power industry, CDM activities can be used to implement lot of
projects which are not viable, marginally viable or projects that involve high risks.
Awareness of the CDM activities should increase in the country.

Finally, Kyoto protocol will successful only if there is a significant benefits to the Green
industries because they should be attractive to the investors who initiate the projects.
Knowledge about the mechanisms like CDM is also a critical factor where they should be a
part of company strategies in private sector.

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6 REFERENCE

UNFCCC (2008a), Combined tool to identify the baseline scenario and demonstrate
additionality(Version 02.2), United Nations Framework Convention on Climate Change,
Germany, available at www.unfccc.int , Last modified 26.08.2008, as accessed 10.11.2009

UNFCCC (2008b), Tool for the demonstration and assessment of additionality (Version
05.2), United Nations Framework Convention on Climate Change, Germany, available at
www.unfccc.int , Last modified 26.08.2008, as accessed 10.11.2009

UNFCCC (2008c), Tool to calculate baseline, project and/or leakage emissions from
electricity consumption (Version 01), United Nations Framework Convention on Climate
Change, Germany, available at www.unfccc.int , Last modified 16.05.2008, as accessed
10.11.2008

UNFCCC (2009a), Indicative simplified baseline and monitoring methodologies for selected
small-scale CDM project activity categories (I.D. Version 15), United Nations Framework
Convention on Climate Change, Germany, available at www.unfccc.int , Last modified
16.10.2009, as accessed 10.11.2009

UNFCCC (2009b), Indicative simplified baseline and monitoring methodologies for

selected small-scale CDM project activity categories (Version 12.1), United Nations
Framework Convention on Climate Change, Germany, available at www.unfccc.int , Last
modified 16.10.2009, as accessed 10.11.2009

UNFCCC (2009c), Tool to calculate the emission factor for an electricity system (Version
02), United Nations Framework Convention on Climate Change, Germany, available at
www.unfccc.int , Last modified 16.10.2009, as accessed 10.11.2009

USDOE (2009), Transportation Energy Data Book, U.S. Department of Energy, Energy
Efficiency and Renewable Energy, 1000 Independence Ave., SW, Washington, DC 20585,
available at http://cta.ornl.gov/, last modified 29.06.2009, and accessed 21.11.2009

Feasibility Report -Waltrim Small Hydropower Project, Sunshine Power (Pvt) Limited

Initial Environmental Examination Report – Waltrim Small Hydro Power Project, Sunshine
Power (Pvt) Limited

Mr. Prabath Wickramasinghe, Sunshine Power (Pvt) Limited, Consultant, Personal

communication at 17th November 2009

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