Clean Development Mechanism Simplified Project Design Document For Small-Scale Project Activities (SSC-CDM-PDD)

CDM-SSC-PDD (version 03)
CDM – Executive Board page 1
CLEAN DEVELOPMENT MECHANISM

SIMPLIFIED PROJECT DESIGN DOCUMENT
FOR SMALL-SCALE PROJECT ACTIVITIES (SSC-CDM-PDD)
Version 03
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: Additionality Screen
Annex 6: Sustainable Development Assessment Matrix
Annex 7: Sustainable Development Indicators to be Monitored

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

>>
MAKATI SOUTH SEWAGE TREATMENT PLANT UPGRADE WITH ON-SITE POWER
-Version 4
-Completed 19/05/2008
A.2. Description of the small-scale project activity:

>>
The Makati South Sewage Treatment Plant Upgrade with On-Site Power Project (hereafter, the
“Project”) that is being developed by Magallanes Bio-Energy Corporation (hereafter referred to as
the “Project Developer” or “MBC”). Philippine Bio-Sciences Co., Inc. (“PhilBIO”) has been
contracted for the project design and engineering. This is an anaerobic digestion sludge treatment
project at the sewage treatment plant (the “STP”) located in Magallanes Village, Makati City,
Philippines (hereafter referred to as the “Host Country”).
Some key technical information of the Project is summarized as followings:
Name of the STP Makati South Sewage Treatment Plant

STP location 100 Victoria St., Magallanes Village, Makati City
STP operating capacity 35,000 m3 sewage/day
The Project Upgrade of the STP’s sludge treatment by installing a ‘Covered In
Ground Anaerobic Reactor’ (or the ‘CIGAR®’); retrofitting an
existing open tank; and
Biogas capture and utilisation for electricity generation.
Project intake Sludge from the STP treatment process
Project capacity Approximately 900 m3 /day
The STP was established in 1960’s serving municipal wastewater generated from around 700
hectares of residential and commercial districts of Makati City. Wastewater coming into the STP
involves a primary sedimentation process to separate the solids from the supernatant stream. The
predominantly low solids liquor flows to a secondary treatment stage (activated sludge process),
which generates a biological sludge. The treated effluent is then subject to chlorine contact before
it is discharged to watercourse. The CDM project activities do NOT include the treatment of the
mainstream wastewater described in this paragraph, but sludge only.
The high solids sludge stream is then treated in a parallel process which forms part of the baseline
and project scenarios. This process generates a considerable volume of biogas everyday. The
current sludge management system of the STP comprises three separate components:
1. Two separate 1960’s vintage anaerobic digesters. These digesters are designed to stabilise
the sludge, reducing odour and organic volatility, and also generate biogas which is high in
methane. The digesters have an average hydraulic retention time (HRT) of 30 days. It is
here that the baseline methane emissions primarily occur and sludge digestion in the
existing plant results in biogas being vented to atmosphere.
2. An open settling tank used to hold sludge after release from the anaerobic digesters, and
prior to treatment in the drying beds.
3. Open drying beds, where the now stabilised wet solids are dried in the open during dry
seasons, and under cover during the rainy season. This final dry cake can be used as soil
conditioner or fertiliser, and is routinely removed by farm owners1. This element of the
solids treatment lies outside the baseline and project boundaries.
Inlet Works Primary

Sewage Sedimentation Clarifier Final Discharge
Aeration Tank Chlorine

Primary Contact
Sludge Secondary
Sludge
Dried
Digester 1 Sludge
Open Settling Tank Drying Beds

Digester 2
Recycled Liquor
Figure 1. Plant Layout at the STP
The Project intervention affects ONLY the current sludge treatment system of the STP. It is
estimated that approximately 900m3 of sludge with a COD of 20,770 mg/L is treated anaerobically
on a daily basis in the sludge treatment system.
A high rate biological treatment system will be installed to enhance the STP’s existing sludge
treatment capacity. The ‘Covered In Ground Anaerobic Reactor’ (CIGAR®) breaks down the
organic components of the sludge in the absence of oxygen in a highly efficient process. High
density polyethylene (HDPE) liners and covers are used in the construction of a purpose built
bioreactor to provide a ‘gas seal’ and to ensure the full integrity of the system. With this bioreactor
design the process can reduce BOD (Biochemical Oxygen Demand), and COD (Chemical Oxygen
Demand), by as much as 95%. Suspended solids, colour and dissolved solids are also reduced. In
addition to the installation of the CIGAR, the existing open settling tank which releases biogas to
the atmosphere, will be retrofitted to ensure collection of biogas.
In the CIGAR system, the biogas recovery process from the degradation of sludge is optimised.
Biogas contains about 65% methane by volume, on average, while the remainder is almost entirely
carbon dioxide, although there are often traces of hydrogen sulphide, nitrogen, mercaptans etc. The
biogas captured by the CIGAR process will be used to generate electricity for use on-site. Three
1
As per III.H, if sludge is used for soil application, any resultant emissions may be neglected
units of biogas fuelled 300 kW engines are projected to produce 1,990 MWh of electricity
annually, satisfying the power requirements of the STP. By the third year of operation (fully
commissioned), it is anticipated that there will be sufficient biogas to operate an additional 100 kW
engine (i.e. 400 kW in total). Any electricity produced which exceeds the demand of the site will
be sold to Magallanes Village, the immediate community. Any further surplus biogas will be flared
until such time as a viable mechanism is established for exporting surplus energy to the national
grid.
It is estimated that the Project will reduce Green House Gas (GHG) emissions by an average of
28,729 tCO2e per year.
The Project will help the Host Country meet its sustainable development goals outlined in the
Philippine Agenda 21 (PA21) with the following:
• Introduction of the latest technology both in sludge treatment and in renewable energy
generation will be demonstrated and will act to drive replication throughout the country’s
water industry as well as in the Asian region;
• Energy self-sufficiency is increased with the use of renewable and indigenous energy
resources, which correspondingly decreases dependence on imported fossil fuels;
• Environmental protection is improved by the capture of fugitive GHGs; specifically methane,

and reduction in the pollution load of potential leachates that would otherwise pollute ground
and surface water;
• A New Financial Mechanism for funding in the renewable energy and waste management
sectors via the Clean Development Mechanism (CDM) improves the financial viability of
marginal projects;
• A healthier and safer work place is developed, with improvements in local air quality, odour,
and the control of combustible methane emissions.
This project makes significant local contributions to the improvement of the local environment, as
the site is located in a densely populated residential area. Project implementation will result in a
reduction in noxious odours emanating from the STP. It will also dramatically reduce the potential
risk of polluting ground water sources. The Project offsets Luzon grid energy (only) and supply to
the local community as well as reduces the need to run emergency diesel generators during the
frequent power cuts, when the grid supply is unreliable.
A.3. Project participants:
Name of Party involved Private and/or public entity(ies) Kindly indicate if the
(*) ((host) indicates a Project participants(*) Party involved
host Party) (as applicable) wishes to be
considered as project
participant
The Government of the
Magallanes Bio-Energy Corporation No
Philippines (host)
The United Kingdom Trading Emissions PLC No
Further contact information for the project participants are provided in Annex I of this document.
A.4. Technical description of the small-scale project activity:

>>
The Project Developer proposes an alternative sludge treatment system to recover methane gas
emissions from existing digestion tanks and the open settling tank, all of which continuously emit
methane. By using a CIGAR®, the biogas recovered from efficient sludge treatment will be used to
fuel 3 engines (100kW each) that will be installed on site.
The CIGAR provides a fully optimised environment for a highly efficient anaerobic process which
breaks down long chain organics in a complex biological process where STP sludge is treated in
the absence of oxygen. This process can reduce BOD by as much as 95% and COD by 80% or
more, converting the biodegradable carbon compounds to Carbon Dioxide and Methane (Biogas).
In addition volatile solids, suspended solids, and colour can also be reduced.
The CIGAR functions as a bio-treatment facility, equalisation tank, and gas holder (see Figure 2).
The low solids effluent from the CIGAR is returned to the inlet works of the STP and fed back to
the STP treatment process. Together with the incoming sewage, it passes through screening,
primary sedimentation, secondary treatment and disinfection. From previous experience, there is
usually no need to remove sludge from the CIGAR.
Influent Effluent
HDPE Cover Biogas
HDPE Liner (if necessary) Soil
Figure 2: CIGAR®
HDPE liners are high quality, resilient, geotextile membranes, used to maintain the integrity of the
CIGAR and to prevent treated sludge from leaching to groundwater. A 0.75mm sheet will be used
to line the digester and a 1.0mm HDPE cover will be used to prevent methane from escaping to the
atmosphere and will collect and store the biogas for use as a fuel.
The biogas produced (65% average methane content) will be used to generate electricity using
three quality 100kW engines (300kW in total), with the option to install additional 100kWe engine
in the third year of operation. Any electricity produced which exceeds the demand of the site will
be sold to the immediate community. Any further surplus biogas will be flared until such time as a
viable mechanism is established for exporting surplus energy to the national grid.
A.4.1. Location of the small-scale project activity:
A.4.1.1. Host Party(ies):

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

>> Metro Manila
A.4.1.3. City/Town/Community etc:

>> Magallanes Village, Makati City
A.4.1.4. Detail of physical location, including information allowing the unique identification
of this small-scale project activity(ies):
>>
Lot 59, Blk 24, 100 Victoria Street, Magallanes Village, Makati City.
GPS coordinates are N14°31.868’, E121°00.764’.
The Makati South Sewage Treatment Plant is located in a 34,262 m2 property inside Magallanes
Village. The village is a modern suburban community situated in the southwestern tip of Makati
City and lies at the junction of two important roads in Metro Manila, namely the South Expressway
and Epifanio de los Santos Avenue (EDSA), making it easily accessible from practically any part
of Metropolitan Manila. Makati City is a first class highly urbanized city belonging to the 13 cities
and 4 municipalities defining Metro Manila or the National Capital Region. It is the prime business
and financial center of the Philippines just a few kilometers away from the international and
domestic airports located in the neighboring cities of Pasay and Paranaque. The geographical
location of the project is depicted in the maps below.
A.4.2. Type and category(ies) and technology of the small-scale project activity:
>>
This project is a small scale CDM project and according to the UNFCCC’s published Appendix B
of the Simplified Modalities and Procedures for Small-Scale CDM Project Activities conforms to
the following categories:
• Project Sectoral Scope 1 – Energy industries (renewable / non-renewable sources)

Type I.D (reference AMS-I.D) – “Grid connected renewable electricity generation” – This
category covers the electricity generation component which will displace electricity from a
local distribution grid that is being supplied by at least one fossil fuel or a non-renewable
energy biomass fired generating unit. The capacity will not exceed 15MW.
• Project Sectoral Scope 13 – Waste Handling and Disposal
Type III.H (reference AMS-III.H) – “Methane recovery in Wastewater Treatment” – This

category covers the methane recovery component of the project by ‘introduction of methane
recovery and combustion to existing sludge treatment systems’. This project will result in
emission reductions lower than 60,000 tCO2e annually. A detailed discussion of the
technology of the project activities can be found in Section A.4.
A.4.3. Estimated amount of emission reductions over the chosen crediting period:
Table 1. Total Emissions Reductions throughout the Crediting Period

Years Annual estimation of emission reductions
in tonnes of CO2e
Year 1 28,729
Year 2 28,729
Year 3 28,729
Year 4 28,729
Year 5 28,729
Year 6 28,729
Year 7 28,729
*After the initial 7-year crediting period, the
baseline will be reassessed, generating a new
estimate of emissions reductions yet to be
determined.
Total estimated reductions (tonnes of CO2e) 201,102
Total number of crediting years 7
ANNUAL AVERAGE OVER THE CREDITING 28,729

PERIOD OF ESTIMATED REDUCTIONS
(TONNES OF CO2E)
The Project results to an estimated average annual emission reduction of 28,729 tCO2e.
A.4.4. Public funding of the small-scale project activity:

>> The Project has not received and is not seeking public funding.
A.4.5. Confirmation that the small-scale project activity is not a debundled component of a
larger scale project activity:
>>
Based on the information provided in Appendix C of the Simplified Modalities and Procedures for
Small-Scale CDM Project Activities, these project activities are not a debundled component of a
larger project activity since the project participants have not registered nor operated another project
in the region surrounding the project boundaries.
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-I.D Grid connected renewable electricity generation (Version 10, Scope 1, dated: 23
December 2006)
AMS-III.H Methane Recovery in Waste Water Treatment (Version 4, Scope 13, 15, dated: 23
December 2006)
B.2. Justification of the choice of the project category:
The project activity qualifies as a small-scale project activity and that it will remain under the
limits of small-scale project activity types during every year of the crediting period.
• Grid Connected Renewable Electricity Generation (AMS-I.D)
For the renewable electricity generation component of the project activities, the generation capacity
is less than 15 MW.
• Methane Recovery (AMS-III.H)
For the methane recovery component of the project activities, the result in emission reduction is
less than 60 ktCO2e annually.
B.3. Description of the project boundary:
The project boundary is defined as the notional margin around each project within which the
Project’s impact (in terms of carbon emission reductions) will be assessed. As referred to in
Appendix B of the Simplified Modalities and Procedures for Small-Scale CDM Project Activities:
• The project boundary for type I.D (AMS-I.D) is the physical, geographical site of the
renewable generation source, in this case, the power plant facility.
• The project boundary for type III.H (AMS-III.H) projects is the physical, geographical site
of the methane recovery facility, in this case, the retrofitted closed tank and the CIGAR®.
For the purposes of this analysis, different boundaries were applied in relation to the elements
contributing to project and baseline emissions:
• Electricity Displacement Emissions: The baseline boundary is the Luzon island of the
Philippines (the Luzon Grid only), within which the grid system operates, whilst also taking into
account emission neutral imports of hydroelectric power into the grid system. The boundaries
include electricity to be displaced by biogas in the project scenario.
• Wastewater Methane Emissions Mitigation: The boundaries are assumed to be the current
sludge treatment system including the open settling tank and the sludge drying beds. (Project &
Baseline)
• Fugitive Emissions through Capture and Flare Inefficiencies: Emissions from the methane
capture and combustion system, optional flare stack and the pipeline are to be considered. (Project
Only)
Figure 4 presents the emissions included in the project boundary of the Project.
Figure 4. Emissions in the Project Boundary
It is assumed that fugitive methane emissions from treated sludge would be negligible since the
liquor would be returned to the STP for secondary aerobic treatment.
B.4. Description of baseline and its development:

As specified in Appendix B:
• The appropriate baseline for project category Type I.D (AMS-I.D) is found in paragraphs 7, 8
and 9.
• The appropriate baseline for project category Type III.H (AMS-III.H) is found in paragraph 7.
• Date of completing the final draft of this baseline section (DD/MM/YYYY): 09/02/2007
The baseline study was prepared by:

Dafei Huang, dafei.huang@eeafm.com and Philippine Bio-Sciences Co., Inc.,
west.stewart@philbio.com.ph, tel: +632 638 2074.
Details of calculations are as follows:
For AMS-I.D: BEgrid : baseline electricity generation emissions (tCO2e/year)
BEgrid = EP BIO * CEFgrid

Where:
Variables Description First 2 years Third year onwards
EP BIO Electricity produced by the biogas generator 1,971 MWh/year 2,635 MWh/year
unit for grid electricity replacement
CEFgrid Emission coefficient for electricity grid (i.e the 0.557 kg 0.557 kg
Luzon grid) (Calculated using ACM0002 CO2e/kWh CO2e/kWh
using Philippine Energy Data for 2003-2005)
For AMS-III.H:
For the case of introduction of methane recovery and combustion to an existing sludge treatment
system, the baseline emissions consist of the existing sludge treatment system without methane
recovery and combustion.
BEy = MEPy,ww,treatment * GWP_CH4 + MEPy,s,treatment * GWP_CH4

Where:
MEPy,ww,treatment methane emission potential of the wastewater treatment plant in the year “y”
(tonnes)
MEPy,s,treatment methane emission potential of the sludge treatment system in the year “y” (tonnes)
The methane emission potentials are calculated as below.
MEPy,ww,treatment = Qy,ww * CODy,ww,untreated * Bo,ww * MCFww,treatment

where:
Variables Description Value/Assumption Source
Qy,ww Wastewater volume 0 m3 Project design
CODy,ww,untreated Chemical oxygen demand of the wastewater 0.02077 tonnes/m3 Monitored
entering the anaerobic treatment
reactor/system with methane capture in the
year “y”
Bo,ww Methane generation capacity of the treated 0.21 kg CH4/kg AMS III.H default
wastewater COD value
MCFww,untreated Methane correction factor for the wastewater 0.0 Table III.H.1 lower
treatment system that will be equipped with values for a well-
methane recovery and combustion managed aerobic
treatment
And,
MEPy,s,treatment = Sy,untreated * DOCy,s,untreated * DOCF * F * 16/12 * MCFs,treatment
where:
Variables Description Value/Assumption Source
Sy,untreated Amount of untreated sludge generated in the 112,828 tonne The actual
year “y” monitored data is
used for ex-ante
estimate as
conservative
approach.
DOCy,s,untreated Degradable organic content of the untreated 0.05 AMS III.H default
sludge generated in the year “y” value
DOCf Fraction of DOC dissimilated to biogas 0.5 AMS III.H default
value
F Fraction of CH4 in landfill gas 0.5 AMS III.H default
value
MCFs,treatment Methane correction factor for the sludge 0.8 Table III.H.1 lower
treatment system that will be equipped with value for anaerobic
methane recovery and combustion digester without
methane recovery
Total baseline emission:

The total baseline emission is the sum of the displaced electricity emissions and the emissions from
the existing sludge treatment system.
BE = BEproject + BEy,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:
>>
The Project conforms to project category III.H since the Project will recover methane from
biogenic organic matter in wastewaters and will result in emission reductions lower than 60 ktCO2e
annually. The Project conforms to project category I.D. since the renewable generating unit will
displace electricity from an electricity distribution system and supply an individual user with a
small amount of electricity and the capacity will not exceed 15 MW. A detailed discussion of the
technology of the project activity can be found in Section A.4.
Market Situation & National Policies

The development of the Philippines’ water supply and sewage treatment falls under the
responsibility of different agencies, both government and private. The Local Water Utilities
Administration’s area of responsibility is the biggest: provincial cities and urban communities with
a population of 20,000 and above. There are 612 water districts serving 14 million rural Filipinos2.
A significant part of the population still does not have access clean, free-flowing potable water,
thus higher priority is given to the delivery of clean potable water to the population rather than on
wastewater treatment.
Most of the local water districts in the Philippines do not have an existing wastewater or sewage
treatment process. Their only provision on wastewater disposal is an article in one of their charters,
which states that “Every member-consumer shall prevent the waste of water. He shall likewise see
to it that waste water shall be disposed in such a manner that it will not be injure the health and
safety of the community.” Over 90% of the generated septage in the Philippines remains untreated.
Most Philippine households have their own septic tanks, which are being emptied by septic haulers
who dispose the collected septic waste in the waterways of a city or province. Old sewer lines also
empty out to the city’s or province’s rivers and creeks.
Two private concessionaires service metropolitan Manila’s water needs, namely: Maynilad Water
Services, Inc. (West Zone) and Manila Water Company, Inc. or MWCI, (East Zone). These
concessionaires abide by the Clean Water Act of 2004 providing for a comprehensive Water
Quality Management and constantly follow discharge parameters and environmental regulations
enforced by Department of Environment and Natural Resources (DENR). These concessionaires
also maintain the region’s sewage treatment and have established the only organized network of
sewers in the Host Nation. The STPs run by these concessionaires are also already the best in the
country, given that on the national level, the responsibility for the disposal of wastewater is
accorded to the consumers. The Makati South STP is the largest that MWCI operates. This project
sees an upgrade and improvement of the existing, standard setting, sludge management systems.
Thus this project points to how the Host Nation may develop to improve its waste water treatment
capability and promote further sustainable development in the country.
Barrier Approach
Alternative baseline scenarios are:

1. Current practices – anaerobic digester without methane capture and power generation
2. Open air settling of septic sludge
3. Direct discharge to an offsite creek or stream
Evidence on the additionality of the proposed project is offered under the following categories of
barriers: (a) investment barrier, (b) technological barrier and (c) common practice.
a) Investment Barrier
The following factors contribute to the investment barrier that these kinds of project face:
• Lack of financial incentive for upgrading the existing STP facility
- Current practice
Since the current sludge treatment system in the STP already passes DENR standards, the need for
an upgrade with a provision for methane recovery and electricity generation is not a priority. The
2
Local Water Utilities Administration, www.lwua.gov.ph
additional cost that will be incurred by the project will rather be spent on the rehabilitation of their
water and sewer lines. It should be noted that sewerage provision in Philippines is limited and
investment finance available to the Manila sewage concession is focussed principally on expansion
of the existing networks. The other water districts have higher priority over water lines in the host
nation. It is quoted from the US Commercial Service’s publication on water and wastewater
treatment market in the Philippines that “Currently, local government units (LGUs) and water
districts (WDs) give higher priority to water supply investments to bridge the significant gap in
unserved demand for safe and reliable water over sanitation investments”.3 The project developer
has experienced difficulties obtaining financing from local banks. Most local banks are not
interested in these projects primarily because of lack of knowledge and experience with the
technology.
- National standards
There is no existing national standard for sewage wastewater treatment. A National Program on
Sewerage and Septage Management is already being developed but no guidelines have been
published yet. The current treatment method in the STP is already considered above industry
standards. Moreover, the current system (business-as-usual scenario) is extremely financially
attractive, given that it functions according to required specifications and the required management
input is already incorporated in the operation of the whole STP. Open air settling of septic sludge
costs less since this can readily be done with the use of locally manufactured steel tanks.
Given the above factors, the STP has no financial incentive to upgrade the existing sludge
treatment system from which the GHG is continuously being emitted.
• Refusal to invest by the project host due to perceived risks
Difficulties in financing have held the development of this project back. Discussions with the
Host (Manila Water Corporation Inc.) and the Developer (Philippine BioSciences Co. Inc.) on this
project initially began in early 20044. After some time, and internal analysis, the Host declined to
accept the risk and invest its own capital in the project.
Arguably the Host is in one of the best positions to assess many relevant project risks, and clearly it
has declined to accept them. An investor faces many risks relevant to a novel project of this kind.
Such risks include project construction risks as well as the risks associated with the ongoing
management of a biological (biogas) system that requires skilled management. One of the most
significant technical challenges is that this project has to be retrofitted onto a 1960’s vintage
sewage treatment site, into an area with a limited land availability and with a high water table
requiring the digester to be built above ground. These are risks the Host have declined to accept.
The biogas digester is also at risk of influents of chemical materials in the sewage system that are
beyond the control of the Project Operator (engine oil, bleach, cleaning products, paints etc).
Construction risk in particular on this project must not be underestimated and include the lack of
experience of developing such a project in the Philippines a site with such a tight land footprint.
Risks of delays and cost overruns may occur as this inexperience in human capital and skills show
themselves.
3
Bebe Montesines, 2007, Philippines: Water and Wastewater Treatment Products and Equipment Market
4
Evidence of correspondence between Host and Developer submitted to DOE
• Difficulties in obtaining financial support locally
Attempts were made to assess financing options, and it became clear that local (and international)
finance was unavailable to finance the project (as evidenced by the letter from BPI5). Subsequently
the Developer approached an international investor to invest in the project, specifically Trading
Emissions PLC (TEP), whose mandate is to invest in CER generating opportunities. TEP has
invested 100% of the capital required for this project.
• Financing by TEP with CDM interest with limited electricity revenue
Magallanes BioEnergy Corporation (MBC) was then established as the special purpose vehicle
(SPV) for this investment by TEP. The project is contracted on a BOT basis.
Electricity revenues are limited by:

1. The inability to sell surplus electricity above the Host’s needs into the grid
2. The capped price of electricity sales to the Host
Under the BOT agreement the project will sell electricity to the Host to satisfy the Host’s on site
electricity demands. The electricity will be sold at a discount to the prevailing cost of electricity,
with a cap on the maximum price to be paid having also been agreed6.
There is potential to utilize surplus biogas to generate additional electricity. However, any sales
outside the Host’s physical boundary (and potential revenue that could be generated) are not
realizable at this time.
No external sales can occur prior to the establishment of open access under the EPIRA Law. The
Electric Power Industry Reform Act (EPIRA) was enacted in 2001, with the aim to provide open
access to fair and free competition. However, 7 years on, the EPIRA implementation has never
actually taken place. A number of conditions must be met before this can happen, including
privatization of large generating assets. At this point in time in the Philippines, electricity
distribution is still effectively a monopoly. There is no expectation that distribution liberalization
will occur in the immediate future, especially as the prioritization is to attempt to open access for
generating assets with in excess of 1MW- it is noted MBC is 300kW7.
Consequently, all surplus biogas will have to be flared.
• Project does not meet TEP’s investment hurdle without CERs.
The IRR of the project was estimated as 17.7% at the time of investment decision (December
2006). TEP has shared documentary evidence of TEP’s internal hurdle rate for this class of
5
A letter from BPI, the Developer’s own bank, setting out the reluctance to finance this specific project and
other similar small scale biogas projects (and citing BPI’s perceived risk) has been submitted to the DOE
6
Cash flow statements have been provided to the DOE, though these are being treated as confidential for
commercial reasons.
7
http://www.congress.gov.ph/download/cpbd/Occasional_Paper_05_EPIRA.pdf
investment8. This hurdle encompasses risks such as country and technology risk. TEP’s investment
strategy (as set out in its 2005 Admission Document) is to acquire access to CERs via both ERPA
and the more risky direct equity type investments where CER flows are available, as seen in this
project. This project return is clearly below the return required by TEP in the absence of carbon.
In essence, the upside to this project is capped due to limited revenue from electricity sales,
whereas downside exposure to risks is very real. Some of the originally identified risks have
already had a detrimental impact on the project. Delays have occurred as a result of the lack of
human capital and experience in implementing projects of this nature in the Philippines. The
project is now behind schedule. Additional capital was therefore required to complete the project.
The IRRs on this project have eroded considerably as a result of these issues such that investment
returns now approach single digits on a core cash flow basis in the absence of carbon.
• Conclusion
Electricity revenues are limited as a result of the lack of enabling regulation to allow sales of
surplus electricity into the grid in the Philippines. The project host has been unwilling to take the
investment risk to develop this project, and the developer has been unable to secure access to local
debt finance as a result of the perceived risks in this project. Consequently, TEP is the only
investor willing to invest in the project, and its publicly stated mandate is to do so in order to seek
access to carbon (CERs).
b) Technology Barrier
Biological treatment of septic wastewater to produce biogas is not a widely practised technology in
the host nation. The original design of the STP included this provision but was not fully
implemented because of the perceived lack of biogas and the lack of technical know how of the
operators. The Project represents a more technologically advanced alternative to the current
practice.
Anaerobic digestion systems are perceived as relatively high risk because their operation is a
function of a biological system, which is neither 100% characterized, nor performance-guaranteed.
The biological system is at constant risk of chemical shocks that can wipe out the methanogenic
anaerobes and biological activity (and subsequently, the waste management and energy production
regimes, which are both keys to commercial operations). This is especially true of urban waste
water treatment, where the disposal of engine oil and other substances that are beyond the control
of the project developer for example into a sewer drain can have dramatic negative affects on
anaerobic digestion activities. Anaerobic digestion systems require constant and on-going precise
management of a variety of elements – influent flows, effluent flows, pH levels, biogas offtake, and
discharge parameters. Overall, the project scenario involves higher perceived risks due to the
performance uncertainty, lack of ability to control fully the influent waste water/sludge quality and
providence and a low market share of the new technology.
c) Common Practice
8
Executed legal documents specifying the hurdle rates for investments of this kind between TEP and the
Developer have been given as evidence of TEP’s hurdle rate to the DOE .
At present, the host nation does not have published guidelines for national sewage and septage
management. The water districts of areas with high density population are the only ones that have
wastewater treatment facilities, which treat around 10% of the total wastewater generated. The
remaining 90% is discharged directly to estuaries and rivers. The common practice for sludge
treatment generated by other water districts is settling in tanks that allow the emission of methane-
containing biogas to the atmosphere. The Project is a higher risk alternative to the business-as-
usual scenario since there has been no experience in successfully utilizing anaerobic technology
with a provision for methane capture and electricity generation for municipal sewage treatment in
the Philippines. Therefore, the Project is not considered a management priority. Priority is given to
the proper management of discharges and its compliance with local environmental regulations
instead, and this is already achieved by the current practice of the STP. From the operator’s
perspective, the current system is a cheap and sufficient way to stabilize the sludge generated from
the STP.
Summary
The current practice in the host nation, technology familiarity, perceived risks of the selected
technology, as well as lack of access to financing or the lack of interest in key business investors
are the prohibitive barriers to the widespread application of the technology involved in the Project
in the Host Nation. These clearly demonstrate that the Project is additional and therefore not the
baseline scenario. The need to seek recourse to international financing motivated by access to
CERs highlights the project additionality.
The barrier analysis above clearly demonstrates that the most plausible baseline scenario is the
existing sludge treatment process.
B.6. Emission reductions:
B.6.1. Explanation of methodological choices:
The project activity is applicable to the baseline and monitoring methodology of Type I.D. – Grid
connected renewable electricity generation under Appendix B of the simplified modalities and
procedures, as it uses renewable biomass to displace electricity from an electricity distribution
system that is or would have been supplied by at least one fossil fuel fired generating unit. It also
follows the eligibility limit of 15MW. The emission coefficient used was a combined margin as
prescribed by ACM0002.
The methane avoidance component of the Project is eligible for Type III.H. – Methane Recovery in
Wastewater Treatment under Appendix B of the simplified modalities and procedures, as it
recovers methane from biogenic organic matter in wastewaters by introducing methane recovery
and combustion to an existing anaerobic wastewater treatment system. The annual emission
reductions are also less than 60 kilotonnes of CO2 equivalent annually.
Emission reductions
For AMS-I.D:
The electricity generated by the biogas times the CO2 emission coefficient for the displaced
electricity from the grid and of the displaced fossil fuel. The grid CEF was calculated using
ACM0002 with Philippine Energy data for 2003-2005.
For AMS-III.H:
For the cases of introduction of an anaerobic wastewater treatment unit with methane recovery and
combustion to an untreated wastewater stream, the emission reduction achieved by the project
activity will be measured as the difference between the baseline emission and the sum of the
project emission and leakage.
ERy = BEy - (PEy + Leakage)
Project direct emissions
For AMS-I.D:
This is not applicable according to Appendix B of the simplified modalities and procedures for
small-scale CDM project activities. Anthropogenic emissions of the project activities are zero (as
this project is utilizing biogas with biogenic origins).
For AMS-III.H:
Project activity emissions consists of:
PEy = PEy, power + PEy,ww,treated + PEy,s,final + PEy,fugitive + PEy,dissolved
(i) PEy,power or the Emissions from electricity or diesel consumption in the year “y”.
PEy,power = Eproject * CEFgrid
(ii) PEy,ww,treated or the Emissions from degradable organic carbon in treated wastewater. Since
feed is pure sludge, this term is zero.
(iii) PEy,s,final or the Emissions from the decay of the final sludge generated by the treatment
systems. As per III.H, if the sludge is controlled combusted, disposed in a landfill with
methane recovery, or used for soil application, this term can be neglected, and the destiny of
the final sludge will be monitored during the crediting period. Also, previous experience with
the technology has not required desludging. Thus, if the need for desludging arises, the
amount of final sludge will be monitored.
(iv) PEy,fugitive, Emissions methane release in capture and flare systems in the year “y”.
PEy,fugitive = PEy,fugitive,ww + PEy,fugitive,s
where:
PEy,fugitive,ww fugitive emissions through capture and flare inefficiencies in the anaerobic wastewater
treatment in the year “y” (tonnes of CO2 equivalent). Considered zero because the
Project only involves sludge treatment system.
PEy,fugitive,s fugitive emissions through capture and flare inefficiencies in the anaerobic sludge
treatment in the year “y” (tonnes of CO2 equivalent).
PEy,fugitive,s = (1 – CFEs) * MEPy,s,treatment * GWP_CH4

where:
CFEww capture and flare efficiency of the methane recovery and combustion equipment in
the sludge treatment (a default value of 0.9 shall be used, given no other
appropriate value)
MEPy,ww,untreated methane emission potential of the sludge treatment Works in the year “y” (tonnes)
MEPy,s,treatment = Sy,untreated * DOCy,ww,untreated * DOC F * F * 16/12 * MCFww,treatment

where:
Sy,untreated amount of untreated sludge generated in the year (tonnes)
DOCy,s,untreated Degradable organic content of the untreated sludge generated in the year (fraction).
It shall be measured by sampling and analysis of the sludge produced, and
estimated ex-ante using the IPCC default value of 0.05 for domestic sludge
MCFww,treatment Methane correction factor for the anaerobic decay of the untreated wastewater
(Higher value of 1.0 is chosen from table III.H.1).
(v) PEy,dissolved or the Emissions resulting from dissolved methane in the treated wastewater
effluent,.
PEy,dissolved = Qy,ww * [CH4]y,ww,treated * GWP_CH4
where:
[CH4]y,ww,treated dissolved methane content in the treated wastewater (tonnes/m3). In aerobic
wastewater treatment default value is zero, in anaerobic treatment it can be
measured, or a default value of 10e-4 tonnes/m3 can be used. Treated wastewater
is sent to STP for further aerobic treatment.
Baseline
Total baseline emissions consists of:
BE = BEy,power + BEy
Leakage
>> As per AMS-I.D, paragraph 12 and AMS-III. H, paragraph 8:
No leakage calculation is required since the equipment is not being transferred to or from another
activity.
B.6.2. Data and parameters that are available at validation:
Data/Parameter: CEFgrid
Data unit: tCO2/MWh
Description: Emission Coefficient of Luzon Grid (the electricity
distribution system)
Source of data used: Philippine Department of Energy (PDOE) –
www.doe.gov.ph
Value applied 0.557
Justification of the choice of data or Calculated according to the most recent ACM0002, using
description of measurement methods publicly available statistic data. Supplied on a separate
and procedures actually applied: spreadsheet.
Simple OM has been calculated for the Luzon grid, given

the low-cost/must run resources constitute less than 50% of
the total grid generation in average of the five most recent
years. Average OM has been calculated for the Mindanao
grid, since the low-cost/must run resources constitute more
than 50% of total grid generation and detailed data is not

available. The calculation of BM for both grids is based on
the five power plants that have been built most recently.
Any comment:
Data/Parameter: S,y,untreated
Data unit: tonnes sludge/year
Description: Amount of untreated sludge generated in the year
Source of data used: Monitored
Value applied 112,828
Justification of the choice of data or The actual monitored data is used for ex-ante estimate as
description of measurement methods conservative approach.
and procedures actually applied:
Any comment:
B.6.3. Ex-ante Calculation of emission reductions
A. Project Activity Emissions = Project Direct Emissions + Leakage

As per AMS III.H and AMS I.D, since the used technology/equipment is not transferred to/from
another activity, leakage effects are not to be considered. The following are the calculations for
project direct emissions.
PE y = PE y, power + PE y,ww,treated + PE y,s,final + PE y,fugitive + PE y,dissolved
(i) PE y,power = Eproject * CEFgrid

= 21.21 MWh/year * 0.557 tCO2e/MWh
= 12 tCO2e/year
(ii) PE y,ww,treated = Qy,ww * CODy,ww,treated * Bo,ww * MCFww * GWP_CH4

= 0 m3/year * 0.001 tonnes/m3 * 0.21 * 0.1 * 21
= 0 tCO2e/year
(iii) PE y,s,final = S y,final* DOC y,s,final* MCF s,final* DOCF* F * 16/12 * GWP_CH4
= 0 tCO2e/year
Table 2 shows the factors and figures used for the following calculations:
(iv) PEy,fugitive = PEy,fugitive,ww + PEy,fugitive,s
PE y,fugitive,ww = (1 – CFEww) * MEPy,ww,treatment * GWP_CH4
PE y,fugitive,s = (1 – CFEs) * MEPy,s,treatment * GWP_CH4
MEP y,s,untreated = Sy,untreated * DOCy,s,untreated * DOCF * F * 16/12* MCF s,treatment
(v) PE y,dissolved = Qy,ww * [CH4]y,ww,treated * GWP_CH4
Table 2. (iv) Fugitive Emissions and (v) Emissions from Dissolved CH4 in treated wastewater
Parameters Value Sources/Remarks
(iv)
PEy,fugitive
Methane fugitive emissions on account of
inefficiencies in capture and flare systems 3,949 Calculated
PE y,fugitive,ww
Fugitive Emissions through capture and flare
inefficiencies in anaerobic wastewater The Project involves the
treatment (tCO2e/year) 0 treatment of sludge only.
PE y,fugitive,s
Fugitive Emissions through capture and flare
inefficiencies in anaerobic sludge treatment
(tCO2e/year) 3,949 Calculated
Capture and Flare Efficiency 0.9 IPCC Default Factor
MEP y,s,treatment
Methane emission potential of the sludge
treatment system in a year (tonnes/year) 1,880 Calculated
Sy,untreated
Amount of sludge for treatment in a year
(tonnes/year) 112,828 Monitored
DOC y,s,untreated
Degradable organic content of the untreated IPCC Default for Domestic
sludge 0.05 Sludge
DOC F
Fraction of DOC dissimilated to biogas 0.50 IPCC Default Factor
F
Fraction of CH4 in Landfill Gas 0.50 IPCC Default Factor
MCF s,treatment
Methane correction factor for the sludge
treatment system that will be equipped with MCF higher value, as per
methane recovery and combustion 1.00 Table III.H.1
(v)
PE y,dissolved
Emission through dissolved methane in
treated wastewater (tCO2e/year) 0
Qy,untreated
Volume of wastewater treated in a year
(tonnes/year) 0 System design
[CH4] y,ww,treated
Dissolved methane content in treated Default value for aerobic
wastewater 0 treatment
Therefore,
Total project emissions = 12 + 0 + 0 + 3,949 + 0 = 3,961 tCO2/year
Table 3. Project Activity Emissions

Emissions from the Project
Year Leakage
Activity in tCO2/year
2007 3,961 0
2008 3,961 0
2009 3,961 0
2010 3,961 0
2011 3,961 0
2012 3,961 0
2013 3,961 0
Total 27,726 0
B. Baseline Emissions
The total baseline emission is the sum of the displaced electricity emissions (AMS I.D) and the
emissions from the sludge treatment (AMS III.H).
BE = BEpower + BEy,grid
For AMS-I.D: BEgrid = EP BIO * CEFgrid
Table 4. AMS-I.D Baseline

Third year
Parameters First two years onwards Source/Remarks
Installed Capacity (kWe) 300 400 Project
760 hours for downtime
Hours in Operation (hours) 8,000 and maintenance
To ensure
Load Availability 83% conservativeness.
Annual Electricity Generation
(MWh/year) 1,992 2,656 Calculated
Electricity Consumption for
System Operation (MWh/year) 21 21 Calculated
Net Electricity Production
(MWh/year) 1,971 2,635 Calculated
Emissions Coefficient (tonne
CO2e/MWh) 0.557 Calculated
AMS-I.D baseline Emissions
(tCO2e/year) 1,098 1,468
For AMS-III.H:
For the case of the introduction of methane recovery and combustion to an existing sludge
treatment system, the baseline emissions consists of emissions from the existing sludge treatment
system without methane recovery and combustion.
BEy = MEPy,ww,treatment * GWP_CH4 + MEPy,s,treatment * GWP_CH4

MEPy,ww,untreated = Qy,ww * CODy,ww,untreated * Bo,ww * MCFww,treatment
MEPy,s,untreated = Sy,untreated * DOCy,s,untreated * DOCF * F * 16/12 * MCFs,treatment
Table 5. AMS-III.H baseline

Parameters Value Source/Remarks
MEP y,ww,treatment
Methane emission potential of the untreated Project involves the treatment of
wastewater (tonnes/year) 0 sludge only
S y,treatment
Amount of untreated sludge treated in the year
(tonnes/year) 112,828 Monitored
DOC y,s,untreated IPCC default for domestic
Degradable organic content of the untreated sludge 0.05 sludge
DOC f
Fraction of DOC dissimilated to biogas 0.5 AMS III.H Default
F
Fraction of CH4 in Landfill Gas
0.5 AMS III.H Default
MCF s,treatment
Methane correction factor for the sludge treatment
system that will be equipped with methane recovery
and combustion 1 AMS III.H Default
MEP y,s,treatment
Methane emission potential of the untreated
sludge (tonnes/year) 1,504 Calculated
GWP CH4 21 IPCC default
AMS-III.H baseline emissions (tCO2e/year) 31,592
Table 6. Total Baseline Emissions

Year Baseline Emissions - I.D Baseline Emissions - III.H Total
2007 1,098 31,592 32,690
2008 1,098 31,592 32,690
2009 1,468 31,592 32,690
2010 1,468 31,592 32,690
2011 1,468 31,592 32,690
2012 1,468 31,592 32,690
2013 1,468 31,592 32,690
Total 9,533 221,144 230,677
C. Emission Reduction
The emission reduction achieved by the project activity will be the difference between the baseline
emissions and the sum of the project emission and leakage.
ER y = BEy - (PEy + Leakage)
Table 7. Project Emission Reductions

Year Baseline Emissions Project Emissions Leakage Emission
(tCO2e/year) (tCO2e/year) Reductions
Methane Power & Methane Power &
Capture Heat Capture Heat (tCO2e/year (tCO2e/year
Generation Generation ) )
2007 31,592 1,098 3,961 0 0 28,729
2008 31,592 1,098 3,961 0 0 28,729
2009 31,592 1,098 3,961 0 0 28,729

2010 31,592 1,098 3,961 0 0 28,729
2011 31,592 1,098 3,961 0 0 28,729
2012 31,592 1,098 3,961 0 0 28,729
2013 31,592 1,098 3,961 0 0 28,729
Total 221,144 9,533 27,726 0 0 202,951
B.7. Application of a monitoring methodology and description of the monitoring plan:
B.7.1. Data and parameters to be monitored:

>>
Data/Parameter: EP BIO,
Data unit: KWh/day
Description: Amount of electricity generated by the project
Source of data: Electricity Meter
Value of data:
Brief description of measurement An electricity meter will be installed on-site. The operator
methods and procedures to be will record this figure daily.
applied;
QA/QC procedures to be applied (if Meter calibration is to be conducted once per annum.
any):
Any comment:
Data/Parameter: Eproject
Data unit: MWh/year
Description: Amount of electricity consumed by the Project system
Source of data: Calculated
Value of data: 21.21
Brief description of measurement In addition to the baseline, the electric appliances in the
methods and procedures to be system include the air conditioner at the power house (2.5
applied; Hp), two blowers (0.5 Hp) and a 40 W light bulb.
Presuming all these will be running 24 hours per day
through out the year, the annual consumption in total would
be 21.21 MWh.
QA/QC procedures to be applied (if In any case additional electric appliance is installed in the
any): system during the crediting period, it should be marked in
the monitoring or maintenance sheet. The CDM project
manager will re-estimate the electricity consumption in a
conservative manner and subtract it from the total amount of
electricity generated.
Any comment: N/A
Data/Parameter: Q fuel
Data unit: m3/year
Description: Volume of biogas sent to generator
Source of data: Gas flow meter
Value of data:
Brief description of measurement This figure will be monitored by a continuous gas flow
methods and procedures to be meter installed on-site. Data will be recorded daily.
applied;
any):
Any comment:
Data/Parameter: Q flare
Data unit: m3/year
Description: Volume of biogas sent to flare
Source of data: Gas Flow meter
Value of data:
Brief description of measurement In the event of a flare installation, this figure will be
methods and procedures to be monitored by a continuous gas flow meter installed on-site.
applied; Data will be recorded daily.
any):
Any comment:
Data/Parameter: % CH4
Data unit: %
Description: Methane content of the biogas
Source of data used: Gas analyzer
Value of data:
Brief description of measurement The methane content of the combusted gas will be analysed
methods and procedures to be with quarterly samples by a portable gas analyzer.
applied;
QA/QC procedures to be applied (if In the event that the methane content of the quarterly
any): samples vary significantly, monthly samples will be taken.
Any comment:
Data/Parameter: T biogas
o
Data unit: C
Description: Temperature of the captured biogas
Source of data used: Gas analyzer
Value of data:
Brief description of measurement The temperature of the captured biogas will be analysed
methods and procedures to be with quarterly samples by the gas analyzer.
applied;
Any comment:
Data/Parameter: P biogas
Data unit: atm
Description: Pressure of the captured biogas
Source of data used: Gas Analyzer

Value of data:
Brief description of measurement The pressure of the captured biogas will be analysed with
methods and procedures to be quarterly samples by the gas analyzer.
applied;
Any comment:
Data/Parameter: DOC y,s,untreated

Data unit: %
Description: Degradable organic content of the untreated sludge
Source of data used: Laboratory report
Value of data:
Brief description of measurement Sampling and analysis of the untreated sludge will be
methods and procedures to be conducted on a quarterly basis, considering the degradable
applied; organic content from a municipal sewage treatment plant
would be fairly stable.
QA/QC procedures to be applied (if An accredited lab will be contracted for the analysis. In the
any): event that two quarterly samples vary significantly, monthly
samples will be taken.
Any comment:
Data/Parameter: S y,final
Data unit: Tonnes/year
Description: Final sludge leaving the Project system
Source of data used: To be weighed and monitored
Value of data:
Brief description of measurement If the need for desludging arises, the amount of final sludge
methods and procedures to be will be weighed and recorded.
applied;
QA/QC procedures to be applied (if In any event of desludging, it will be recorded in a
any): designated form by the operator and the CDM project
manager should be informed.
Any comment:
In the event that there is more biogas is produced than what power generation requires, the Project
has a provision for an optional flare installation.
Data / Parameter: Flare efficiency

Data unit: %
Description: The fraction of methane destroyed. The flare efficiency is
defined as the fraction of time in which the gas is
combusted in the flare, multiplied by the efficiency of the
flaring process.
Source of data to be used: Default value
Value of data 90% for open flare or 50% for closed flare
Description of measurement methods Continuous check of compliance with the manufacturers
and procedures to be applied: specification of the flare device (temperature, biogas flow
rate) will be done. If in any specific hour any parameters is
out of the range of specification 50% of default value
should be used for this specific hour. For open flare 50%
default value should be used, as it is not possible in this case
to monitor the efficiency. If at any given time the
temperature of the flare is below 500 °C, 0% default value
should be used for this period.
QA/QC procedures to be applied: Maintenance of the flare is to be conducted once a year to

ensure optimal operation.
Any comment:
B.7.2. Description of the monitoring plan:
A monitoring team will make regular site audits to ensure that monitoring and operational
procedures are being observed in accordance with the monitoring plan and monitoring protocol.
An operator of the system and power plant facility will be trained on equipment operation, data
recording, reporting, and operation, maintenance, and emergency procedures. He will be in charge
of checking for leaks and of the logging of data. A CDM project manager will consolidate all of the
data monthly to be inputted in a monitoring workbook that has been developed by PhiBIO. Project
participants will keep electronic copies and paper copies for back-up purposes. The records are to
be kept for 2 years longer than the crediting period.
B.8. Date of completion of the application of the baseline and monitoring methodology and
the names of responsible person(s)/entity(ies):
Date of completing the final draft of this baseline section: 09/02/2007 by Dafei Huang,
dafei.huang@eeafm.com and Philippine Bio-Sciences Co., Inc., west.stewart@philbio.com.ph.
SECTION C. Duration of the project activity / Crediting period:
C.1. Duration of the small-scale project activity:

>>
C.1.1. Starting date of the project activity:
>> 01/07/2007
C.1.2. Expected operational lifetime of the project activity:

>> 21y-0m
C.2. Choice of crediting period and related information:

>>
C.2.1. Renewable crediting period:
>>
C.2.1.1. Starting date of the first crediting period:

>> 01/03/2008 or the date of project activity’s CDM registration, whichever is later.
C.2.1.2. Length of the first crediting period:

>> 7y-0m
C.2.2. Fixed crediting period:

>>
C.2.2.1. Starting date:
>>
C.2.2.2. Length:
>>
SECTION D. Environmental impacts:
D.1. If required by the host Party, documentation on the analysis of the environmental
impacts of the project activity:
>> The host country does not require an analysis of the environmental impacts of the project
activities. The Department of Environment and Natural Resources of the host country has issued
the operators for the STP an amendment to the existing Environmental Clearance Certificate
(ECC). This amendment includes the construction of the Waste-to-Energy system at the STP.
Project Proponents will ensure that the Project follows standards as stated in RA 9275 or the
Philippine Clean Water Act of 2004 and RA 8749 or the Philippine Clean Air Act of 1999.
It should be noted that the project activity would generate considerable environmental benefits:
• The CIGAR system decreases GHG emissions through two significant avenues. Prior to the
project activity, the STP relied on the grid for its electric consumption. With the
implementation of the project activity, biogas collected from the degradation of sludge is
used for electricity generation, thus eliminating the demand for grid-fed electricity. In
addition to directly reducing the emission of GHGs by eliminating a source of fossil fuel
combustion, the Project will capture methane (CH4), preventing its release into the
atmosphere.
• The Project improves domestic sludge treatment and disposal. The existing sludge
management system in the STP is already a standard-setting practice in the host country.
Further improvement would translate into enhanced discharged parameters.
• The Project reduces risks of soil and groundwater contamination. With the liners, the
underground aquifer is protected.
• The Project minimizes odour impact from the STP to the surrounding community by
enclosing the sludge treatment process.
• Lastly, since sludge is a constant waste by-product of the STP, the project participant does
not have to worry about the depletion of the raw materials needed for the facility’s
operation or the consumption of the Host Nation’s natural resource reserves.
The Project may serve as a benchmark of future sewage management practices in the host nation.
SECTION E. Stakeholders’ comments:
E.1. Brief description of how comments by local stakeholders have been invited and
compiled:
>>
Organization
An article on the proposed Waste-To-Energy project at the Makati South Sewage
Treatment Plant was posted on PhilBIO’s website last January 10, 2007. It also served as an
invitation to interested parties to attend the stakeholders’ consultation held last January 25, 2007 at
the Max’s Restaurant located in Humabon St. Magallanes Village.
Letters of invitation were faxed or emailed two weeks before the meeting to stakeholders
from the academe (Miriam PEACE, Mapua Inst of Tech, Univ of the Philippines), city’s social
welfare department, city engineers, city’s department of environment and the regional Department
of Environment and Natural Resource (DENR), non-government organizations (SIBAT, WWF,
Greenpeace South East Asia, Makati Fire Safety Foundation), barangay and village officials (local
government units), and the Laguna Lake Development Authority (LLDA). There was also constant
communication between the project proponents and these organizations for confirmation to the
event.
The Meeting
Before the meeting started, a one-page non-technical project description as well as a public
consultation checklist was provided to the stakeholders. A presentation on Manila Water Co., Inc.
(MWCI), the operators of the STP, was given by Ms. Eva Matibag, OIC, Wastewater Department.
On the other hand, Ms. Ellen May Zanoria, PhilBIO/MBC CDM Project Manager, gave a
presentation on Climate Change, Clean Development Mechanism, and the project. The participants
were also informed that the proposed project was going to be registered with the Gold Standard
Foundation, and that they were requested to provide their inputs through the checklist. The meeting
was conducted both in English and Tagalog.
After the presentations, an open forum was held to allow the stakeholders a chance to voice out
their concerns or raise their questions, and for the project proponents to address these concerns.
Kagawad Rey Marquez representing the barangay gave the closing remarks to end the meeting.
E.2. Summary of the comments received:

>> The meeting was attended by 33 participants from the village, barangay, local government
offices, non-government organizations, DENR, LLDA, MWCI, and PhilBIO/MBC. The following
is a summary of the issues raised.
Name Question/Comment/Concer Addressed Measures to Address the Raised

ns Raised to Concerns
Kgwd Junjun There has been MWCI MWCI:
Tumale, concerns/complaints on the Yes, the Project will be implemented to
noise and odor coming off address these concerns.
from the existing STP Before the Project, MWCI has installed
operation. Will the Project an odor control facility at the STP.
help to resolve such issues? The CIGAR will be installed to further
minimize the odor.
To eliminate noise from the site, the
powerhouse will be padded and
soundproofed.
Kgwd Rey 1.Would like to know the Project PhilBIO:
Marquez length of time for project 1. Approximately 10 months.
construction. 2. The Project is only possible due to
2. Will the cost of the project incentive created by the CDM. MWCI is
cause a hike in the water not taking any risks or financial
bills? commitment for the Project. The Project
is financed by TEP for the interests of
the carbon credits. Therefore, it will not
affect the water bills.
Ms. Lennie Is there any market uses for MWCI MWCI:
Borja, LLDA the sludge from the STP? No. We are not marketing the sludge
now. Farmers can get bio-solids from
the STP anytime.
1.Will there be any Project PhilBIO:
monitoring equipment in 1. Yes. Meters and monitoring measures
place? will be in place according to the
2.Will the host community approved methodology and its
have a share on the certified monitoring methodology. Examples of
emission reduction (CERs)? the equipments include sludge
3.Will there be other flowmeter, gas analyzer to measure
community benefits? methane content, gas temperature and
pressure, gas flowmeters to measure
amount of biogas produced, electricity
meters and etc.
MWCI:
2. No. The CERs will compensate for
the capital expenditure, which is
advanced by the carbon buyers from the
UK.
3. Yes. The community benefits would
be the non-increase of the water tariffs,
but improvement of the living
environment, e.g. lessening of the odor
from the STP.
Is there any future plan for a MWCI:
project like this in Rizal Probably not. The other STPs operated
area? by MWCI are quite small. However, we
are trying to retrofit the communal
septic tanks in Rizal to have secondary
treatment facilities.
The plan is not related to the Project.
Will the Project generate Project PhilBIO:
verified or certified emission CERs. When the Project is registered

reductions? with the UNFCCC Executive Board, the
emission reduction generated by the
Project can be certified as CERs.
Mr. Danny Will the Project affect the Project MWCI:
Villas, DES area of the nursery inside the Not significant. The Project will utilize
STP? the existing open drying beds and
minimum land use within the STP
property. After the project, there will
still be an area for the nursery
Kgwd Will the Project bring any Project PhilBIO:
Christine hazards to the community? Very unlikely. We have more than 38
Rivera Will it explode? CIGARs in the country and globally.
Some of them have been operating for
more than 6 years already and none of
them has displayed any indication of a
possible explosion.
We use a team of well-trained and
experienced welders for the construction
to ensure that the CIGAR will be
properly sealed.
Ms. Teresita Do you have security checks Project PhilBIO:
Pingul, in place? How often will you Yes. One CIGAR operator will be
Village check for leakages? posted onsite, while MWCI has 3-4
Manager personnel at the STP round the clock.
The CIGAR operator will perform
perimeter checks twice per day and
PhilBIO field engineers are always
available for maintenance and repair
works.
DENR Was there a clearance issued Project MWCI:
by DENR? Yes. We have an amendment to the
existing ECC of the STP, which now
includes the Project.
Kgwd. Rey The barangay is not the Project MWCI and PhilBIO:
Marquez authority to issue any Thank you!
clearance, but I’d like it to
make it clear, the Project is
very welcome in the
barangay.
Mr. Danny Can PhilBIO answer Project PhilBIO:
Villas, DES questions 1 - 5 in the public 1.No. The Project will not affect natural
consultation checklist? resources or ecosystem.
2.No. No harmful substances will be
used or released by the Project.
3.No. No hazardous or toxic substance
will be released to the air.
4.Insignificant. The only likely noise
source will be the generator. This is to

be addressed by using soundproofed
material on the powerhouse.
5.No. The Project will not lead to risks
of water or groundwater contamination,
but it will reduce such risks.
Kgwd. Will the Project affect the Project MWCI:
Junjun habitat of the migratory birds No. This project will not impact the
Tumale or stray cats seen around the migratory birds and cats.
STP?
Engr. Will the Project affect the MWCI MWCI:
Rodrigo operation of the STP? No. The wastewater treatment process
Tagle will remain the same. The Project will
not cause significant interruption to the
main STP operation.
During construction, what Project PhilBIO:
will you use as drying beds? One of the existing drying beds. There
are two drying beds in the STP facility,
one with cover, one without cover. The
drying bed with cover will not be
changed. It will be usd during the
construction of the Project.
Kgwd. How will the biogas be Project PhilBIO:
Christine created, where will it go, how First to clarify, the biogas is NOT
Reyes will we use it? generated by the Project. The Project is
installed to capture the biogas generated
from the existing sludge treatment
process of the STP.
Biogas is generated from the
degradation of the sludge. Without the
Project, the biogas is fugitively emitting
to the atmosphere. After the installation
of CIGAR, the biogas will be captured
and utilized for electricity generation.
This brings in the benefits of reducing
greenhouse gases emission as well as
supply of clean energy.
DENR How will the other gases that Project PhilBIO:
are produced be treated? There will be insignificant amount of
other gases produced. Any gas produced
will be combusted.
Kgwd Rey We’re happy to see Project PhilBIO and MWCI:
Marquez widespread interest on this Thank you!
project in our community. As
a senior citizen, I’m very
heartened to see the
youthfulness of the people
talking to us about the
environment. We’re very

grateful that MWCI and
PhilBIO are doing a great job
here.
E.3. Report on how due account was taken of any comments received:
>>
A feedback report was sent to all the participants of the Stakeholders’ Consultation to give them a
summary of what had transpired during the meeting and to also address all the concerns that were
raised. Comments and queries were still encouraged when the report was sent out to the attendees.
No negative comments were voiced out and no critical issue was pointed out which opposed the
implementation of the project.
Annex 1
CONTACT INFORMATION ON PARTICIPANTS IN THE PROJECT ACTIVITY

Organization: Magallanes Bio-Energy Corporation
Street/P.O.Box: F. Ortigas Jr. Ave. (Formerly Emerald Avenue)
Building: Strata 100 Building, 19th Floor Unit F
City: Pasig City
State/Region: Metro Manila
Postfix/ZIP: 1605
Country: Philippines
Telephone: (63) 2 638 2074
FAX: (63) 2 631 2044
E-Mail:
URL: www.philbio.com.ph
Represented by:
Title: Director
Salutation: Mr.
Last Name: Guest
Middle Name:
First Name: Justin
Department:
Mobile: (44) 78 5535 2313
Direct FAX: (63) 2 631 2044
Direct tel: (63) 2 638 2074 ext 3
Personal E-Mail: Justin.guest@eeafm.com
Organization: Trading Emissions PLC

Street/P.O.Box: 54-62 Athol Street
Building: Third floor, Exchange House
City: Douglas
State/Region: Isle of Man
Postcode/ZIP: 1M1 1JD
Country: United Kingdom
Telephone: +44 16 2468 1200
FAX: +44 16 2468 1392
E-Mail: eb@tradingemissionsplc.com
URL: www.tradingemissionsplc.com
Represented by:
Title:
Salutation: Mr.
Last Name: Scales
Middle Name:
First Name: Philip
Department:
Mobile:
Direct FAX: +44 16 2468 1392
Direct tel: +44 16 2468 1200
Personal E-Mail: eb@tradingemissionsplc.com
Annex 2
INFORMATION REGARDING PUBLIC FUNDING

The Project has not and will not receive any public funding.
Annex 3
BASELINE INFORMATION
CEF Calculation
The calculations were made in March 2007, with 2005 power statistics as the most recent available
data published in the Philippine Department of Energy’s website. According to AMS I.D version
10, the baseline emission coefficient can be calculated as a Combined Margin (CM) according to
the steps prescribed in ACM0002 version 6. The project is located in Metro Manila, the area where
is only covered by the Luzon Grid.
Step 1. Calculate the Operating Margin emission factor (EFOM,y)

The Simple OM method was used because low-cost/must run resources (like hydro, geothermal,
wind) constitute less than 50% of total grid generation in average of the five most recent
years (see Table A3.1 and Table A3.2).
Table A3.1Gross Power Generation of Luzon 2003-2005 (source: Department of Energy,

Philippines)
Average
Plant 2003 2004 2005 Percentage
2003-2005
Oil Based 3,595,860 4,590,814 2,021,641 3,402,772 8.65%
Combined Cycle 438,755 738,437 90,608 422,600 1.07%
Diesel 2,317,101 2,688,194 1,910,774 2,305,356 5.86%
Gas Turbine 1,737 183 1,433 1,118 0.0028% 82.32%
Oil Thermal 838,268 1,164,000 18,826 673,698 1.71%
Coal 14,351,121 15,548,335 14,653,275 14,850,910 37.75%
Natural Gas 13,139,410 12,384,467 16,860,917 14,128,265 35.91%
Geothermal 2,600,465 3,033,417 2,742,203 2,792,028 7.10%
Hydro 3,847,774 4,296,879 4,331,224 4,158,626 10.57% 17.68%
Renewable (Wind) 0 0 17,469 5,823 0.0148%
TOTAL 37,534,631 39,853,912 40,626,729 39,338,424 100.00% 100%
Table A3.2Calculations of Emissions from Luzon Grid
(A) (B) (C ) (D) (E) (F) (G) (H) (I)

Unadjusted Annual
Combu Actual
2003-2004 Cbon Annual Carbon
Heat Fuel Consumption stion Carbon
Item Electricity Emsn Cbn Dioxide
Rate Impact Efficie Emission
Generation Factor Emission Emission
ncy Impact
Impact Impact
(Cx105
PDOE 5)/10^1
Source Powerstat PDOE AxB 2 IPCC DxE IPCC FxG Hx(44/12)
BTU/k
Unit kWh/yr Wh BTU/yr TJ/yr tC/TJ tC/yr % tC/yr tCO2/yr
Oil Based
Combined
Cycle 422,600,000 6,550 2.76803E+12 2,920 20.2 58,990 99.00% 58,400 214,131
Diesel 2,305,356,333 8,900 2.05177E+13 21,646 20.2 437,252 99.00% 432,880 1,587,225
Gas Turbine 1,117,667 14,400 1.60944E+10 17 20.2 343 99.00% 340 1,245
Oil Thermal 673,698,000 8,600 5.7938E+12 6,112 21.1 128,973 99.00% 127,683 468,172
139,44
Coal 14,850,910,333 8,900 1.32173E+14 3 26.8 3,737,062 98.00% 3,662,321 13,428,510
Natural Gas 14,128,264,667 6,550 9.25401E+13 97,630 15.3 1,493,737 99.50% 1,486,268 5,449,649
TOTAL 32,381,947,000 21,148,933
The Simple OM factor is calculated as the generation weighted average emissions per electricity
unit of all generating sources serving the system, not including low-operating and must-run power
plants:
EFOM,y = 0.653
Step 2. Calculate the Build Margin Emission Factor (EFBM,y). The Build Margin emission factor
was calculated ex-ante based on the most recent information on the five power plants that have
been built most recently (Refer to Table A3.3 and Table A3.4).
Table A3.3 Last 5 Most Recently Built Plants in Luzon
2005 Power
Plant Name Date of
Location Generation
Commissioning
(MWh)
San Roque Hydro May-03 Benguet 605,767

San Lorenzo CCGT Sep-02 Sta. Rita, Batangas 3,441,158
Ilijan CCGT Jun-02 Ilijan, Batangas City 6,550,741
Cawayan Hydro Jun-02 Guinlajon, Sorsogon 916
Casecnan Hydro Apr-02 Pantabangan, Nueva Ecija 402,584
Total Generation 11,001,166
% of Total Generation 27.08%
Table A3.4 The emissions of the Last 5 Most Recently Built Plants in Luzon
Unadjuste Com Annual

2005 Actual
Fuel Carbon d Annual busti Carbon
Power Heat Carbon
Plant Consumpti Emission Carbon on Dioxide
Generatio Rate Emission
on Impact Factor Emission Effici Emission
n (MWh) Impact
Impact ency Impact
BTU/k tC/T
Wh BTU/yr TJ/yr J tC/yr % tC/yr tCO2/yr
San Roque Hydro 605,767
San Lorenzo
CCGT 3,441,158 6,550 2.254E+13 23,779 20.2 480,341 99% 475,538 1,743,638
Ilijan CCGT 6,550,741 6,550 4.291E+13 45,267 20.2 914,399 99% 905,255 3,319,267
Cawayan Hydro 916
Casecnan Hydro 402,584
Total Generation 11,001,166 5,062,905
Based on the above data, the OM is calculated as:
EFBM,y = 0.460
Step 3. Calculate the baseline emission factor (EF,y). The baseline emission factor is calculated as
a combined margin consisting of the combination of operating margin, EFOM,y, and build margin,
EFOM,y. Default weights of 50% are used.
EF,y = 0.557
The project has chosen to calculate the baseline emission factor ex-ante.
Annex 4
MONITORING INFORMATION
Please refer to Section B.7.
Annex 5
ADDITIONALITY SCREEN
A. Previously Announced Projects Screen
CDM was the primary driver for the project during the proposal and pre-investment
analysis stage. All forms of communication and announcements regarding the Project
addressed CDM. No public announcement has been made of the Project going ahead
without the CDM.
B. Additionality Tool
Section B.5 demonstrates the barrier analysis.
C. ODA Additionality Screen
The Project did not and will not receive Official Development Assistance from Annex1
countries.
D. Conservative Approach
IPCC default factors were used for the computation of CERs. As per AMS III.H and AMS
I.D, leakage can be neglected. However, methane capture and flare inefficiencies will be
monitored strictly according to the approved monitoring methodology.
E. Technology Transfer and Knowledge Innovation
The technology used for this project is a fusion of equipments from both Annex 1 and non-
Annex 1 countries. Consultants from UK were hired for technical advice.
Annex 6
SUSTAINABLE DEVELOPMENT ASSESSMENT MATRIX
Component Score (-2 to 2)

• Indicators
Local/regional/global environment
• Water quality and quantity +1
• Air quality (emissions other than GHGs) +1
• Other pollutants 0
(including, where relevant, toxicity, radioactivity, POPs,
stratospheric ozone layer depleting gases)
• Soil condition (quality and quantity) 0
• Biodiversity (species and habitat conservation) 0
Sub total +2
Social sustainability and development
• Employment (including job quality, fulfilment of labour standards) +1
• Livelihood of the poor 0
(including poverty alleviation, distributional equity, and access to essential
services)
• Access to energy services +1
• Human and institutional capacity +1
(including empowerment, education, involvement,
gender)
Sub total +3
Economic and technological development
• Employment (numbers) +0
• Balance of payments (sustainability) +1
• Technological self reliance +1
(including project replicability, hard currency liability, skills
development, institutional capacity, technology transfer)
Sub total +2
TOTAL +7
Annex 7
SUSTAINABLE DEVELOPMENT INDICATORS TO BE MONITORED
SD Indicators Data type Data Data unit Measured (m), calculated

variable (c) or estimated (e)
Employment Temporary number m
Permanent number m
Water quality Organic Loading of the BOD Mg/L m
Treated Wastewater
Water quality COD Mg/L m
Air quality Odor from the STP qualitative e
Human and Site visitors number e
Institutional Capacity

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CDM-SSC-PDD (version 03)

CDM – Executive Board page 1

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: Additionality Screen

Annex 6: Sustainable Development Assessment Matrix

Annex 7: Sustainable Development Indicators to be Monitored

CDM – Executive Board page 2

Revision history of this document

Version Date Description and reason of revision

CDM – Executive Board page 3

SECTION A. General description of the small-scale project activity

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

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

Some key technical information of the Project is summarized as followings:

Name of the STP Makati South Sewage Treatment Plant

CDM – Executive Board page 4

Inlet Works Primary

Aeration Tank Chlorine

Open Settling Tank Drying Beds

Figure 1. Plant Layout at the STP

CDM – Executive Board page 5

• Environmental protection is improved by the capture of fugitive GHGs; specifically methane,

A.3. Project participants:

CDM – Executive Board page 6

The United Kingdom Trading Emissions PLC No

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

HDPE Liner (if necessary) Soil

CDM – Executive Board page 7

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

A.4.1.1. Host Party(ies):

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

A.4.1.3. City/Town/Community etc:

CDM – Executive Board page 8

• Project Sectoral Scope 1 – Energy industries (renewable / non-renewable sources)

• Project Sectoral Scope 13 – Waste Handling and Disposal

Type III.H (reference AMS-III.H) – “Methane recovery in Wastewater Treatment” – This

Table 1. Total Emissions Reductions throughout the Crediting Period

ANNUAL AVERAGE OVER THE CREDITING 28,729

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

CDM – Executive Board page 9

SECTION B. Application of a baseline and monitoring methodology:

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

• Grid Connected Renewable Electricity Generation (AMS-I.D)

• Methane Recovery (AMS-III.H)

B.3. Description of the project boundary:

CDM – Executive Board page 10

Figure 4. Emissions in the Project Boundary

B.4. Description of baseline and its development:

CDM – Executive Board page 11

The baseline study was prepared by:

Details of calculations are as follows:

For AMS-I.D: BEgrid : baseline electricity generation emissions (tCO2e/year)

BEgrid = EP BIO * CEFgrid

BEy = MEPy,ww,treatment * GWP_CH4 + MEPy,s,treatment * GWP_CH4

The methane emission potentials are calculated as below.

MEPy,ww,treatment = Qy,ww * CODy,ww,untreated * Bo,ww * MCFww,treatment

CDM – Executive Board page 12