The Impact of Carbon Credits on
Financial Viability of AIJ/JI/CDM Projects

SUSAKI Ayato, Mitsubishi Research Institute, INC.: susaki@mri.co.jp
ASUKA-ZHANG Shouchuan (Jusen), Tohoku University: asuka@sal.tohoku.ac.jp

November 12, 2000

1st DRAFT

Please do not quote or cite without permission

Abstract
To examine the potential impact of carbon credit revenues on the attractiveness of projects, we
conducted a financial assessment of thirty-five energy projects and one forestry project that havebeen supported with the AIJ/JI/CDM feasibility study subsidy schemes by the Japanese
Government. For scenarios with different carbon credit price, we calculated the payback period,
internal rate of return (IRR), or net present value (NPV) of the projects. The results indicate that:1) majority of energy projects proposed were “plant rehabilitation” and “fuel use change”; 2) ingeneral, financial viability of the projects proposed in the subsidy scheme was not so highconsidering the opportunity cost and transaction cost; 3) revenue from carbon credits will havethe most impact for forestry projects. Therefore, for energy projects that are not very attractive tothe private sector without carbon credits, the additional incentive provided by such revenues may
not be sufficient to induce private investment in many cases.

1. Introduction
The Clean Development Mechanism (CDM) is designed to encourage GHG-mitigating activities
that would not occur otherwise. Article 12.5 of the Kyoto Protocol states that emissions
reductions from CDM projects shall be certified on the basis of reductions in emissions that are
additional to any that would occur in the absence of the certified project activity.1 The likelihoodthat a project would be implemented without CDM certification depends on many factors,
including the expected financial return of the project, the degree of risk, access to project finance,and corporate investment priorities. The hope is that the revenues from Certified Emissions
Reductions (carbon credits), in combination with other benefits that may derive from CDM
certification (such as in public relations or strategic market development), may be enough tomove a “not likely” project into one that is attractive enough to receive investment (Meyers et al.
2000).
However , at a very minimum, the CDM should preserve environmental integrity; i.e., it should
not generate credits for greenhouse gas emission reductions more than what were actuallyobtained. Indeed, to the extent that the “carbon-neutral” CDM scheme generates unwarranted
credits, it will cause a net increase in global carbon emissions. In addition, investment subsidized
by the CDM could destroy the competitiveness of local industries, and achieve only ‘investment
hot air’ – or the claim that investment has helped mitigate climate change, when in fact all
investors have done is to increase market share at the expense of manufactures in the developed
countries (Forsyth 1999).
Another concern is that the cost of forestry project will be cheaper and will crowd out other typesof projects, which results in reducing pressures for needed structural changes in energy
consumption (Chomitz 1998, Meyers et al. 2000). In addition, the inclusion of forestry projects
may have a impact on the regional distribution of investment flows through the CDM. To copewith these concerns, some argue that one option is setting some sort of quantitative cap on theparticipation of forestry projects in the CDM, perhaps proportional to land-use change andforestry’s contribution to greenhouse gas emission (Olander 2000).
For a project developer, the financial value of gaining certification of carbon credits depends onthe value of the carbon credits generated by the project, minus the costs associated with gaining
certification. The value of the carbon credits depends on the amount of credits gained by the
project, the temporal distribution of the credits (those in the future have a lower discounted
present value than those do in the near term), and the unit value of carbon credits.
To examine the potential impact of revenue from carbon credits on the attractiveness of projects,
we conducted a financial assessment of a number of projects that have been proposed by theJapanese companies under the subsidy schemes of the Japanese Government on the feasibility
studies of the possible AIJ/JI/CDM projects in the developing countries2. Thirty-five of these are
1

There exists a range of views as to what might be required for a project to be judged as providing
additional emissions reductions. For an overview of perspectives regarding the impacts of the additionality
on the project, see Baumert (1998).
2
The Ministry of International Trade and Industry (MITI) of the Japanese Government started the schemein 1998 and 40 projects proposal was selected under the criteria that it would have some possibility to be
implemented in the future. Each proposals received around 0.4 million US $ for the feasibility study. In
2000, the number of the projects selected has increased to around 100/year because the other governmental
agencies started the same type of the subsidy scheme. As of October 2000, no projects under the scheme
have been implemented as AIJ/JI/CDM, yet.

2

energy projects, and one is a forestry project in Indonesia.3 For three different scenarios of carbon
credit price, we calculated a payback period, the internal rate of return (IRR) or net present value(NPV) for each project.
Most of the data on project performance and costs were obtained from the project proposal report(NEDO 2000, Sumitomo Lingyo 2000). In addition to our own calculation, we used the Proform,
a computer software developed by the Lawrence Berkeley National Laboratory for IRR and NPV
calculation.4

2. Methods and Key Assumptions
2.1. Scenarios of Carbon Credits Price
In addition to a case without carbon credits, as shown in Figure 1, we analyzed three scenarios forcarbon credit price as Meyers et al.(2000). Each scenario assumes that the Kyoto Protocol takes
effect in 2005, resulting in a significant increase in the value of carbon credits compared to thecurrent price.
•••

Low Growth: The price of carbon credits is $10/tC in 2005, and rises thereafter at 10% per
year.
High Growth: The price of carbon credits is $10/tC in 2005, and rises thereafter at 15% per
year, with a ceiling at $500/tC.
Constant: the price of carbon credit is constant at $20/tC.

Three Scenarios of Carbon Credit Price
600
500
$/tC

400

High Price
Low Price

300

Constant Price

200
100
0
2005 20102015 2020 2025 2030 2035 2040 2045
Year

Figure 1. Three scenarios of the carbon credit price3
4

Whether forestry projects will be eligible for CDM is as yet undecided.
Available at http://eetd.lbl.gov/proform/

32.2. Financial Assessment
The financial analysis uses data on projected costs (capital and operating) and revenues over the
expected lifetime of each project. The projects are assumed to commence operation in January
2005. Revenue from carbon credits is received on an annual basis. We assume that the projects
are financed with full equity of the developers.

3. Results
3.1. Pay Back Period of the Energy Projects
Out of 35 energy projects, 14 projects were related to the power plants, 6 projects to steel plants,
9 projects to the oil refinery, 2 projects to the geothermal power generation, 2 projects to theelectricity distribution, 1 projects to the cement plant, and one is other type (For details, please
see the Appendix 1).

Impact of Carbon Credit Prices on Pay-back period
Projects
0

5

10

15
w/o ET
Low GrowthHigh Growth
Constant

20

25

EPG

EPG

EPG

EPG

EPG

EPG

EPG

EPG

EPG

EPG

EPG

EPG

EPG

EPG

STL

STL

STL

STL

STL

STL

PTR

PTR

PTR

PTR

PTR

PTR

PTR

PTR

PTR

LND

LND

ETF

ETF

CMT

OTR

w/o ET

1

5

7

7

6

8

8

11

14

11

14

14

17

24

3

3

4

5

6

7

4

6

7

8

10

11

12

14

23

4

9

99

99

3

9

Low Growth

1

5

6

6

6

7

7

9

10

10

12

12

14

19

3

3

4

4

5

7

4

5

6

7

9

10

10

11

21

4

7

3

99

3

High Growth

1

5

6

6

6

6

7

9

9

9

11

12

13

18

3

3

4

4

5

7

4

5

6

7

8

10

10

11

20

4

7

3

99

3

6

Constant

1

5

5

6

6

6

7

9

9

9

11

12

13

20

3

3

4

4

5

7

3

5

6

7

8

10

10

11

21

4

7

2

99

3

5

6

Remarks
Cases of carbon credit price are defined as follows;
w/o ET: without Carbon credit
Low Growth: $10/tC on the 1st year, increases 15%/year
High Growth:$20/tC on the 1st year, increases 15%/year
Constant:US$20/tC (US$500 Ceiling)

3 alphabetical codes represent project types as follows;
EPG=electricity generation plant, STL=steel plant, PTR=petroleum plant(oilrefinary), LND=Geothermal electricity power generation, ETF=electricity
distribution, CMT=cement plant, OTR=other type project

Numbers in the table show the payback
perionds(years) of the project. "99" means
the project will not be paid back within its
project period.

Figure 2. Impact of the carbon credit price on the pay back periods

As shown in Figure 2 above, carbon credits’ impact on the projects’ pay-pack periods depends on
the project type. Projects categorized "electricity generation" and "oil refinery" showed scatteredpayback years, such as less than 5 years to 24 years. In contrast, the profitability of "steel
projects" is relatively better than these projects, resulting in a 7-year payback period for the
longest. Other projects categorized as "geothermal electricity power generation", "cement plant",and "other", seemed difficult to generalize profitability due to the extremely limited numbers of

4

the projects. Two projects for "electricity distribution" failed to be paid back during their project
period.
In comparison to the no carbon credit case, some of the “electricity generation” projects haveexperienced a considerable improvement in profitability, i.e. 4-5 years of reduction. These
impacts are observed in the projects with relatively longer period of payback in the no carbon
credit case. In addition, one “unprofitable electricity distribution project” has turned out to be“profitable” (paid back within its project period).
However, 27 projects out of total 35 had the same payback periods as the “Low Growth” cases,
and even the rest of them showed only 1-year improvement. Major reason of the insignificance isthat the relative impact of carbon price affecting on total cash-flow is small5.

3.2. IRR and NPV of the Energy Projects and Forestry Project
Table 1 and Table 2 shows the result of the IRR and NPV calculation of four nearlycommercially-viable energy projects and one forestry project (For other projects, please see the
Appendix 2). As shown, the impact of carbon credits is substantial for the forestry projectcompared to the case of the energy projects.
Table 1. Internal Rate of Return for Energy Projects (%)
Project
descriptiona) Coal-fired
power plant in
China (facility
renovation forenergyconservation)b) Steel plant in
Russia (facility
renovation forenergyconservation)c) Oil refinery in
Russia(facility
renovation forenergyconservation)d) District
heating using
Geothermalenergy in Russia

Without
carbon credits

With carbon
credits$20 constantWith carbon
credits
Low GrowthWith carbon
credits
High Growth

16％

18％

18％

18％

20％

28％

26％

27％

16％

20％

19％

20％

27％

28％

28％

29％

Note:

5

Since the analyses above do not consider returns of debts and interests, the results shown here should beconsidered as optimistic ones. Thus the revenue by carbon credit might have more importance on
profitability of the projects, should these factors be taken into consideration.

5a) Rehabilitation of the coal-fired power plant（300MW) in Shandong Province, China. Baseline scenario
is the case in which the plant generates same amount of the electricity as the previous facility with theprevious efficiency level. Project lifetime is 15 years.
b) Rehabilitation of the steel plant in Pedorovsk, Russia. Baseline scenario is the case in which the plant
generates same amount of the steel as the previous facility with the previous efficiency level. Project
lifetime is 15 years.
c) Rehabilitation of the oil-refinery in Khavarovsk, Russia. Baseline scenario is the case in which the plant
produces same amount of the oil as the previous facility with the previous efficiency level. Project lifetime
is 15 years.
d) Construction of the district-heating system using geothermal power in Kamchaka, Russia. Baseline is theuse of the oil burning and hot water from coal-fired power plant for heating. Project lifetime is 15 years.

Table 2. Net Present Value and Internal Rate of Return for Forestry Project in Indonesia

Project
Plantation inIndonesia

Without carbon
credits

With carbon
credits$20 constantWith carbon
credits
Low Price

With carbon
credits
High Price

NPV:-4,903,000
IRR:7%

NPV:-1,777,000
IRR:14%

NPV:-889,000
IRR:16%

NPV:2,253,000
IRR:21%Note:
Aforestation of five species for the plywood in East-Kalimantan, Indonesia. Baseline is regarded as zero
emission. Only the sequestration by the aboveground biomass is considered. Project lifetime is 30 years.
Revenue is before taxes. We calculated the NPV (US $) with a discount rate of 18%.

4. Conclusion
For developing countries in general, the results indicate that carbon credits revenues will have themost impact for forestry project as pointed out by Meyers et al.(2000). Therefore, for energy
projects that are not sufficiently attractive without carbon credits, the additional incentive
provided by such revenues might not be sufficient to induce private investment in many cases. If
carbon credits have a relatively modest impact on financial viability as we observed with our
calculation, they are obviously a small incentive, especially when weighed against the potential
transaction costs of gaining such credits. If the process of gaining credits is too costly or timeconsuming, many project sponsors may not find it worth the challenge. Therefore, it is probable
that: 1) in many energy projects, regardless of profitability, carbon credit may not work as asignificant subsidy for the project implementation; 2) to enhance the technology transfer anddiffusion of the less cost-competitive but less carbon-intensive energy projects (e.g. renewable
technology), it might be necessary to have special treatment to avoid being shut out from the
CDM market; 3) strictness of the investment additionality test can be differentiated with the typeof the CDM projects.

6References
Meyers S., Sathaye J., Lehman B., O. van Vliet. (2000) “The Impact of Carbon Credits on
Financial Viability of Energy and Forestry Projects in A Developing Country”, draft paper
prepared for the U.S. Environmental Protection Agency, Climate Policy and Program
Division, Office of Economics and Environment, Office of Policy, Planning and
Evaluation.
Baumert K (1998) “Understanding additionality, in Trends and Baselines”, J. Goldemberg and W.
Reid (eds.), UNDP, 1998.
Olander J. (2000) “ Forestry Options in the Clearn Development Mechanism: A Review of theissues for the Andean Countries”, Ecodecision Cia. Ltda., Quito, Ecuador.
Chomitz, Kenneth M. (1998) “The Permanence and Duration Issue in Carbon Offsets based on
Sequestration: Draft Working Paper”, Development Research Group, World Bank,
Washington.
NEDO (2000) “Analysis of the Joint Implementation project feasibility studies”, New Energy andIndustry Development Organization (NEDO), NEDO-GET-9901, Tokyo, 1999.
Sumitomo Lingyo (2000), “Feasibility study on the aforestation projects in East-Kalimantan,
Indonesia for the Clean Development Mechanism”, report prepared for the Environment
Agency of Japan”, 2000.
Forsyth T. (1999) "International Investment Climate Change, Energy Technology for Developing
Countries", The Royal Institute of International Studies, Earthscan, London.

7

Appendix 1: Description of the Energy Projects
(1/7)
NEDO
No.

1

2

3

Project Name

Summary

Energy Conservation of 1.remodelling of heat exchangers system
Nobo-Baku Refineries 2.applying FCC Power Recovery System
in Baku, Azerbaidjan technology

Improvement of thewaste management
system of Tapioka
starch manufacturing
plant

Baseline
Comparing with the current amount ofenergy consumtion

Improve the waste management system of
Tapioka starch manufacturing plants scatteredthroughout the Republic of Indonesia in order toresolve regional pollution problems, and to
reduce the amount of greenhouse effectAmount of CO2 and methane gas emitted
gases(GHGs) emitted to the atmosphere.
from the existing plant
1.Compost Solid wastes(peels, fibres)
2.Aerobic treatment for waste water
3.Recovery of methane gas from waste waterusing aerobic treatment

Energy Conservation ofAmount of CO2 emitted from the existing
Zaporozhye steel plant Improvement of combustion control at hot stoves steel plants due to heat loss from the current
hot stoves.
Waste heat recovery equipment for hot stoves

Amount of CO2 emitted from the existing
steel plant due to heat loss from the current
hot stoves.

Blast furnace top pressure recovery turbine(TRT) power generating equipment

Amount of electricity deducted by
implementing the project and the amount of
CO2 emitted if the existing thermal poweris being used to produce the same amount ofelectricity with the new equipment
installed.

Blast furnace gas recovery equipment

Amount of CO2 emitted from the existing
blast furnace for over one year

Changeover from open hearth furnace to basic
oxygen furnace

Amount of CO2 emitted from the open
hearth furnace

Amount of CO2 emitted from the current
Adoption of continuous casting (CC) in place ofexisting steel plants (specifically from steel
slabbing process
making, blooming and heating process)Improvement of yield in slabs produced byslabbing

Amount of CO2 emitted from the current
steel production

Amount of CO2 emission after the yieldratio improvement due to the project
implementation
Amount of CO2 emitted after the project ofReduction of insertion temperature in direct hot
blooming heat furnace steel charging
charge rolling
temperature increase.
Shortening of track time

Gas turbine cogeneration plant

8

Amount of electricity deducted by
implementing the project and the amount of
CO2 emitted if the existing thermal poweris being used to produce the same amount ofelectricity with the new equipment
installed.

(2/7)
NEDO
No.

4

5

6

Project Name

Summary

Baseline

1. Annual carbon emissions=Carbon
emissions per unit of energy(tC/TJ)*Annual fuel use(Tj/Y)
2.Amount of Oxidized Carbon=amount ofannual carbon emissions*ratio of oxidized
Through modernizing the current refinery, aims
carbonScrap & Build of
to improve the energy efficiency, reduction of
3.Amount of CO2 emissions=amount of
Atyrau Refinery incarbon emission through conservation of energy
oxidized carbon*propotion of CO2 andKazakhstan
as well as improvement of refinery products andcarbon(44/12)
economic benefit.
4.Total amount of CO2 emissions=add up
all the CO2 emissions from individual
equipments and the added up amount is
considered as the total amount of CO2
emissions from the refinery.
For the 399 boilers targeted in the study (out of
1125 registered boilers, excluded the ones which Annual CO2 emissions from the targeted
are small in scale and for generation purposes), 399 boilers (annual capacity operating rate,
conduct partial reconstruction, total
amount of steams generated, efficiency ofConservation of energy
reconstruction, as well as install cogeneration
boilers amount of fuel consumption, andfor boilers
system in order to reduce the consumption ofamount of heat generated from fuels) at thecrude oil by 23 ML per year and for coal 299.8 time of research conducted (1998. 10A
kton per year which would result in CO2
1999.1)
reduction of 791.5 kton per year.
Katowice, Poland steel coking process CDQ device (Case 1)
mine energy
coking process CDQ/CMC device (Case 2)
conservation
coking process CDQ/CMC device (Case 3)
sintering process reconstruction of ignition
furnace

Current performancesintering process recovery of exhaust gas
blast furnace process TRT device
blast furnace process recovery of waste heat fromair heating furnace

7

IGCC
To convert the exsiting old coal-fired power
ACC-operate the existing warm water boiler
plants to a natural gas combined cycle. Targetted and for the shortage of electricity in Warsaw
facilities are the two thermal power facilities in city, assume importing some electricity from
Konin and Kaweczyn cities and the heatother regions.
Conversion of Poland
generation plants of three chemical factories in IGCC-Assume the maximum operation ofcoal-fired power plants
Tarnow, Oswiecim, and Kedzierzyn which are coal fluidized bed boiler
to combined cycle
private power generations. Will consider two
ACC
Assume using theexisting CHP plant andcases in which one will install natural gas
IGCC(case1)
generate the same(ACC)and the other one is coal gassification
IGCC(case2)
amount of electricity(IGCC).
ACC
with the project caseACC9

(3/7)
NEDO
No.

Project Name

Summary

Annual CO2 emissions (ton/year)=electricloss(kW)*annual electric loss
coefficient(MWh/kW)*CO2 emission
coefficient (Gg-C/10^19kcal)*860/(Heatefficienty*10^4)*CO2/C coefficient
1.national grid line annual CO2 emissions(ton/year)=28,533*4229*0.5639*860/(0.4*
10^4)*44/12=54,524
2.33kV electric transmission annual CO2
emissions(ton/year)=1,565.8*4,229*0.5639*860/(0.4*10^4)*44/12
3.6/6kV&400V distribution line

8

Myanmmar national
electric power loss
reduction project9

Optimization ofpipeline system
Conduct repair work to stop the leakage ofincluding gas pipeline
methane and CO2 from Permtransgaz pipelinereconstruction in ordersystemto reduce GHGs in
RussiaCurrent facilities (annual GHGs emissions
from the permatransgaz pipeline system)

Apart from the distillation column and heating
furnace which have already been reconstructed,
the project aims to replace all the otherequipments using Japan's technology including
its modern conservation energy technology.

for the case of liquid fuelCO2 emissions=annual fuel consumption(9.063kt.yr)*net calorific values of residualoil (40.19Tj/kt)*per unit of carbon emission(21.1)*coefficient of oxidized carbon ratio(0.99)*proportion of CO2 andcarbon(44/12)=27,898t/yr=27.898Gg/yr

11

Through renewing the generation device to theConversion of coal-fired
efficient device which use natural gass affluent
power plant to natural
to Sakhalin island, aims to reduce CO2
gas-fired plant inemissions as well as reducing the energy unit
Sakhalin State
price.

CO2 emissions(KtCO2/yr)=annual fuelconsumption(KtCoal/year,ktOil/year,
Nm3NG/year)*CO2 emissionsunit(tC/TJ)*44(kgCO2/kmolCO2)/12(kgC/k
molC)*low order heat generation(kJ/kg or
kJ/Nm3)*coefficient of oxidized carbon
ratio/1,000,000(1/M)(3)12

Russian Konakovo
power plant combined
cycle planannual CO2 emission from the current
devices=CO2 generation from crude oil +CO2 generation from gas
fuel=1970,000+4,430,000+6,400,000tCO2/year

Khabarovsk, Russia

10 refinery energy
conservation

Russian coal-fired

13 power plant CO2
emissions reductions

Aims at reduction of CO2 by improving thetransmission/distribution loss in the power
supply system

Baseline

Renew 4 out of 8 thermal power equipments(300MW) with gas turbine combined cycle
generation device

In 1998, a total of 48 projects were proposed toJapan by RAO EES (ROSSII). 8 of these plants,
except the coal-fired power plants that have been
the subject of special feasibility studies during
the present fiscal year, and one plant studied at
the request of RAO EES ROSII-that is, a total ofnine plants- have been the subject of special casestudies, and their names are as follows:
Current situation with the existing facilities
1.Dorogobuzh Power Plant(rate of utilization set to 70%)
2.Reftinskaya Power plant
3.Verkhne-tagil Power Plant
4.Troitsk Power Plant
5.Novo-Irkutsuk Power Plant
6.Cherpet Power Plant
7.Ulanude Power Plant
8.No.2 Kamchatka Power Plant

10

(4/7)
NEDO
No.

Project Name

14

Khabarovsk, thermal
power plant renewal
work and Joint
Implementation
Feasibility Study

15

Replacing the current energy sources of the hot
Utilizing geothermal
water (fossil fuel power and thermal power
power for the district
the amount of CO2 emitted from fossil fuelplant) with natural geothermal hot water and/or
heating in Kamchatka,
burning in order to supply hot water
Geothermal Heat pump systems (GHP) in orderRussiato reduce the Greenhouse gas emissions.

16

Summary

Baseline

Most of the thermal power plants in Khabarovsk
are old and the generation efficiency is lowering
Current situation of the existing facility
remarkably. In this study, one of those(total amount of CO2 emissions fromgenerating plants, Khabarovsk generation plant
generation plants no.1 and no.3 as well as
no.1, is going to be demolished and as aplants from other districts all added up)
replacement, Khabarovsk no.4 will beestablished.

By replacing fuels from coal to natural gas forno.1 and no.9 heat and power generation plants,
aims to reduce carbon emission unit and reduce
the amount of CO2 emissions.
1.Variation1-Add the natural gas receiving
facility for the existing power generation plant
and revamp the relevant boiler facility with theconversion of the fuel.
2.In addition to Variation 1, revamp the water
Fuel Conversion Project treatment facility which decreases the capability Case1 Amount of CO2 emitted from thefor no.1 and no.9of the heat and electricity supply because of
Operation mode close to the base operation
combined heat andbeing too old.
load
power generation plants 3.Put together the boilers and steam turbine
Case2 Amount of CO2 emitted from theof Irkutsk, Russia
generations(Gas turbine generator is not
Average operation load in 1996 and 1997.
adopted).
4.Dismantle the existing power generation plantand instal a new power generation plant with gas
turbine.
*Between variation 1 and 2, there will be adifference in profitability and cost effectiveness,
however, there will be no difference in theamount of GHGs emissions reductions.

Possible joint-projects

17 for carbon dioxide
reductions in Russia

Magnitogorsk, Russia

18 Steelworks energy
conservation

Amount of CO2 emitted if Uralmash
Renewal of facilities which produce forged steel
produced the targetted amount using theand iron of a Russian heavy machinery
existing facilities. For SveldorvEnergy,
manufacturing company, Uralmash, as well as toamount of CO2 emissions from IV line andimprove the efficiency of generation facilities ofV line (generation facilities are formulated
SveldorvEnergy, a local utility company whichfrom I~V lines in which IV and V lines aresupplies electricity to Uralmash.
renewed).
coking process CDQ device
coking process CMC device
coking process ACC device
sintering process ignition furnace renewal
Blast furnace process TRT device
Actual performance in 1997
steel converter process LDG recovery
metal rolling process heat furnace energy saving
provision
heat furance reduction of electricity
oxygen plant renewal of oxygen plant11

(5/7)
NEDO
No.

19

Project Name

Summary

For the suspended 300 MW coal-fired power
plant construction, install 450MW class
Igunovskaya plant fuelcombined cycle as well as convert fuels toconversion
natural gas in order to reduce the emissions of
GHGs

Baseline
Amount of CO2 emitted from the existing
generation plant as well as the plant which
the construction work has been suspended
from.
CO2
emissions=PGV*FC*4.1868TJ/Tcal*CEF*F
CO*44/12

Renew three power plants in Russia which are
Kirishi Power Station in Leningrad state,
Puskovskaya Power station in Puskov state, and
1.PGV: Power Generation Volume
Iriklinskaya Power station in Orenburg State in
2.FC:Fuel Consumption (Kcal/Kwh)
order to reduce the greenhouse gas emissions. In
3.4.1868TJ/Tcal
particular, improve the heating efficiency and4.CEF: Carbon Emissions factor (tC/TJ)
reduce fuel consumption as a central focus.
5.FCO:Fraction of Carbon Oxidized
6.44/12: Proportion of CO2 and carbon

20

Repowering of gas
based thermal power
plants (three power
plants)21

Achinsk Refinery
energy conservation
project

22

Fuel conversion plan
Convert heat and power generation (coal-fired
from coal to natural gas power plant of 285 MW, heat generation power
for the Amursk heatof 764Gcal/h) to natural gas and reduce theand power station
greenhouse gas emissions.

23 Kuznetsk steel works
converter installation

Energy efficiency of the Achinsk refinery is low
with the average of 60 to 70%. Thus it results in CO2 emissions without the project that isfuel consumption that is more than normallyestimated from the amount of fuelsrequired. This project aims to conserve energy in consumption.
this refinery.
CO2 emission from both heat and power
generation. For power generation, use 1993
as a base year in the existing power plant,
and for heat generation, use 1998 as a baseyear.

cutback basic steel production to 2million tonnes Amount of CO2 emissions from energy
per year.
consumption for the year 1998.
Assume that the annual production of basic
Suspension of open-hearth furnace no.1 andsteel is 2million ton per year, considered the
production increase for the electric furnace no.2 CO2 emissions from both electric and openand establishment of electric furnace no.3.
hearth furnace using their 1997 performancefor the rate of utilization.

24

Total plan of thermal
power plantrehabilitation in
maritime provinces

The objectives of the project comprises thefollowing;
1. Replacement and extension of the boilers at
Vladivostok Thermal power plantno.2(Vladivostok TPP), which at present has atotal electric capacity of 575 MW and amaximum heat supply capacity of 1300 Gcal/h.
2.Shutdown of the existing Partizansk Thermal
Power Plant (Partizansk TPP), which at present CO2 emissions=annual fuel consumption
has a total electric capcity of 212 MW and a(Kt/y)*the amount of carbon with in fuels
maximum heat supply capacity of 80 Gcal/h, and (Ct/kt)*imperfect combustion adjustment
construction of new Partizansk Power Plant.
coefficeint*44/12
3.New construction of Ussuriisk Thermal Power
Plant (Ussuriisk TPP), the construction of theplant which at present has been suspended.
Through the conversion of fuel and by the higher
efficiency of the new equipment which will
result from implementation of the above plan,
the project aims to achieve a significant
reduction of GHGs emissions.

12(6/7)
NEDO
No.

Project Name

Renewal of

25 Schekinskaya thermal
power plant

Renewal of

26 Ryazanskaya thermal
power plant

Master plan for the

27 boiler renewal in
Novgorod Province

Summary

Schekinskaya power plant TPP block 1 (units
annual CO2 gas emissions (ton)8,9,&10) and Novomoskovskaya TPP block 1
annual CO2 gas emissiosn=amount of
which contains 100MW generation plants. The carbon consumed*carbon imperfect
above devices are old and require renewal. For combusion adjustment
the Novemoskovskaya TPP, install 800MW class coefficient*3.667(convert carbon to CO2
gas turbine combined cycle generation plant in unit)=984,062(tC)*0.995*3.667=3,590,514
order to improve heat efficiency.
(ton)
Renewal of old generation plants in RyazanskayaAmount of CO2 emitted from the existing
and also with the fuel conversion aim to reduce
plant
the greenhouse gas emissions.

Most of the local governments' boilers houses
specialized in the heat supply system are as old
as 30 years, thus they suffer from low thermal
efficiency and because most of these are either
coal-fired or crude oil-fired boilers, theynegatively affect the workload and the safety ofthe plant workers. Thus the project aims to
mitigate such problems as well as to reduce thegreenhouse gas emissions.

28

In order to reduce greenhouse gases, the project
Renewal of heating
aims to investigate the plausible ways of energy
furnace in oil refineriesconservation for heating furnace in oil refineriesof Kuiibyshev, Syzran,of Kuiibyshev, Syzran, and Novokuibyshev all
and Novokuibyshev
located in samara state.

29

Methane recovery andusage from coal mines
in China

Waste heat power

30 generation from the
Chinese cement plant

Baseline

1.the amount of CO2 emissions per 1MW ofcoal-fired boiler
18.7(annual energy consumed by a boiler
per 1MW of
output(TJ/MW*Y)*25.8(amoount of carbon
comprised(tonC/TJ))*0.98=1,734(tonCO2/
MW*Y)
2.the amount of CO2 emissions per 1MW of
crude oil-fired boiler
18.7*21.2*(44/12)*0.99=1,439
3.the amount of CO2 emissions per 1MW ofnatural gas-fired boiler
14.4*15.3*(44/12)*0.995=804
the amount of CO2 emissions=amount offuel consumption with oil conversion unit
(kton/year)*the energy unit of fuels(42.08TJ/kton)*emissions unit ofcarbon(20.0ton-C/TJ)*fraction of carbon
oxydized(0.99)*proportion of CO2 andcarbon (44/12)

investigated the availability of methanol, city gas
and electric generation from methane recovered the amount of methane emission expectedfrom the Yangquan coal and Panjiang coalfrom the existing facility in the year 2000
mining leakages.
the amount of annual fossil fuelconsumption (t/y)=annual electricity
consumption(kW)*annual operationdays(day/year)*24(h/day)*coefficient of oilconversion(kcal/kWh)*4.1868(kJ/kcal)/crude oil net calorific
The cement industry utilizes a vast amount ofvalues(TJ/kt)/10^6energy, thus efficient use of heat energy isannual CO2 generated(t/y)
required. Most of the large sized cement plants=annual consumption of fossil fuels fromin Japan are equipped with a waste heat power
the existing power generation*Chinese
generation unit.
crude oil net calorific Values
As China is one of the largest cement producers(TJ/kW)*Carbon emission factor*Fractionin the world, it is essential to investigate theof Carbon Oxidized*CO2/Ccoefficient/10^3effect of installing waste heat power generation-Tongling Cement Plant in Anhui Provinceunits for the cement plants.
annual fossil fuel consumption(t/y)=4667(kW)*330d/y*24h/d*2,646(kcal/kWh)*4.1868(kJ/kcal)/42.62(Tj/kt)/10^6=96,070(t/y)
annual CO2 emissions(t/y)=96,070(t/y)*42.62(TJ/kt)*20(TC/TJ)*0.99*(44/12)/10^3

13

(7/7)
NEDO
No.

Project Name31

the diffusion of
Fluidized bed cementkiln system in China

investigate the effect of converting the existingvertical shaft kiln process of two cementcompanies in China with fluidized bed cementkiln system developed by center for coalutilization Japan.

32

Joint implementation
project feasibility study
for CO2 emission
reduction by Keio
University

Conduct a comprehensive study to find ways to
avoid urban environment pollution due to coalburnig and to assess potential methods to reduce
CO2 and other greenhouse gas emissions and(the amount of emissions are stated but noconsider ways to improve the efficiency of heat equation provided)
supplying businesses in Beijing. The study will
limits its target on home stoves, decentralizedboilers, and heat sypplying businesses.

331)the amount of CO2 emissions resulting
from generating the power from coal-fired
power plant in order to supply electricity
for the existing oil refinery.
2)CO2 emissions from utilizing petroleum
Feasibility study of
By installing IGCC(integrated gasification
coke residues.
CO2 emissions
combined cycle) in the Nanjing Refinery of*the emissions from 2) will differ according
reductions using the
Jinling Petrochemical Corporation, it enables theto different methods, thus it requires topetroleum coke residue refinery to utlize the residue (of petroleuk coke)calculate emissions by assuming 4different
generated as fuel for
as fuel for power generation, thus results in CO2
cases as follows;
power generation inemissions reductions from the existing power
1.case 1-utilize all as burning fuels
Chinese oil refineries
plants.
2.case2-utilize all as power generation
3.case3-utilize all in such a way so that CO2
will not be emitted
4.case4-utilize some for burning fuels,
power generation, and for other purposes.

34

Probability ofrationalization and joint
Installation of scrap preheating system to electric
execution of energy use
furnace steel plants for Wuyang Iron and Steelin Chinese steel
Co. Ltd, Tianjin Steel Pipe Corp., Shanghai
Current performanceindustry(study on the
Pudong Iron&Steel(group)CO., Ltd., Shanghai
introduction of scrap
No.5 Steel(Group)CO., LTDpreheating system forelectric furnace)

35

Investigating thefeasibility to increase
the efficiency of theexisting coal-fired
power plants in China

Reduce the CO2 emissions from coal-fired
generation by increasing the generation
efficiency of the existing plants.

CO2 emissions from the plants prior to theirrenewal (consider two cases after the
renewals, one with no changes in theutilization ratio of power plants and theother with the 80% increase in theirutilization ratio).

36

Rehabilitation of
300MW coal-fired
power plants in China

Improve the efficiency of energy utilization in
the following three 300MW coal-fired power
plants:
1. Shandong Province Zouxian Power Plant
2. Anhui Province Luohe Power Plant, and3.Henan Province Yaomeng Power Plant

Current performance

37

38

39

Improvement of the
low-grade coal quality
in Chongqing city in
China in order toreduce CO2 emissions(researched thepossibility of coalbiomass briquette
production)
A study of BFG
MONO-firing gas
turbine combined cycle
power plant application
for the steel mill of
China
Energy conservation
project for electric
furnaces of the Shen
Yang Iron and Steel
Complex in Liaoning
Province

Summary

Baseline

the amount of CO2 emitted from theexisting kiln system

Aims to improve air pollution due to the coalburning in Chongqing and reduce CO2 emissions the amount of CO2 emitted from coals
through installing bio-briquette production
without using bio-briquettetechnology.

Aims to reduce CO2 emissions by applying 1100 CO2 emissions from the coal-fired power
degrees celcius class combined cycle power plant plants

weed out electric furnace that are small in scaleor are old, and convert furnace that are energy
efficient and are environmentally sound.

14

Assume the increase in yield ratio throughinstalling some new facilities to the current
performance and consider that as baseline.

Appendix 2: Calculation Result of Energy projects(1/2)
Payback Years
#

1

2
3
5
8
9

Name of
Project

Case

Category

crude oil distilling
apparatus for
Nobo-Baku oil
refineries
FCC equipment forEnergy Conservation of Nobo-Baku Refineries in Baku, Nobo-Baku oil
Azerbaidjan
refineries
crude oil normalpressure distilling
apparatus for
Nobo-Baku oil
Improvement of the waste management system of
Total 10 plants
Tapioka starch manufacturing plant
Energy Conservation of Zaporozhye steel plant
Conservation of energy for boilers
Myanmmar national electric power loss reduction project
Optimization of pipeline system including gas pipeline reconstruction in orderto reduce GHGs in Russia

Total plan of thermal power plant rehabilitation in24
maritime provinces

25 Renewal of Schekinskaya thermal power plant
26 Renewal of Ryazanskaya thermal power plant28

Renewal of heating furnace in oil refineries ofKuiibyshev, Syzran, and Novokuibyshev

High

4

27%

34%

32%

33%

OIL

11

10

10

10

5%

7%

7%

7%

OIL

7

6

6

6

13%

17%

16%

18%

OTR
STL
GEO
ETF

9
4
9
N/A

5
4
7
2

6
4
7
3

6
4
7
3

8%
28%
8%
N/A

19%
30%
14%
68%

17%
30%
13%
43%

19%
30%
15%
48%

ETF

N/A

N/A

N/A

N/A

N/A

-7%

-6%

-3%

OIL
EPG

6
1

5
1

5
1

5 16% 20% 19%
1 105% 106% 105%

20%
105%

EPG

14

11

12

11

6%

8%

9%

12%

GEO

4

4

4

4

27%

29%

28%

29%

EPG

8

6

7

6

13%

17%

17%

18%

EPG

8

7

7

7

13%

15%

15%

15%

STL
EPG

5
5

4
5

4
5

4
5

20%
21%

28%
24%

26%
24%

27%
25%

OIL

8

7

7

7

10%

14%

13%

14%

EPG

11

9

9

9

8%

11%

11%

13%

STL

6

5

5

5

18%

22%

21%

22%

EPG

7

5

6

6

16%

20%

20%

21%

EPG

17

13

14

13

4%

7%

8%

10%

EPG
EPG
EPG

24
7
14

20
6
13

19
6
13

18
6
12

2%
15%
6%

3%
18%
7%

4%
18%
8%

6%
19%
10%

Kuiibyshev oil
refinery

OIL

12

10

10

10

3%

7%

7%

8%

Novokuibyshev oil
refinery

OIL

10

8

9

8

6%

10%

9%

10%

Syzran oil refinery

OIL

14

11

11

11

2%

5%

5%

6%

CMT

3

3

3

3

35%

40%

38%

39%

Modernization of
Uralmash steel mills

19 Igunovskaya plant fuel conversion

23 Kuznetsk steel works converter installation

Const
Low
ant

4

Variation 4 case 2
Fuel Conversion Project for no.1 and no.9 combined heat power plant no.1
16
and power generation plants of Irkutsk, Russia
Variation 4 case 2
power plant no.9

Fuel conversion plan from coal to natural gas for the
Amursk heat and power station

w/o
ET

3

15 Utilizing geothermal power for the district heating in Kamchatka, Russia

22

High

4

only rerestructuring heat
11 Conversion of coal-fired power plant to natural gas-fired plant in Sakhalin
Khabarovsk, thermal power plant renewal work and Joint 30 years of coal
14
Implementation Feasibility Study
firing21 Achinsk Refinery energy conservation project

Const
Low
ant

OIL

10 Khabarovsk, Russia refinery energy conservation

Possible joint-projects for carbon dioxide reduction in
17
Russiaw/oET

IRR (%)

crude oil distilling
apparatus case 1,
Bitumen equipment,
boiler equipment
electricity power
charge：0.0153US$/kWh
After modernization
Vladivostok
Thermal PowerPartizansk Thermal
power plant
Ussuriisk Thermal
Power Plant
case 1case 230 Waste heat power generation from the Chinese cement plant15

(2/2)
Payback Years#

Name of
Project

Probability of rationalization and joint execution ofenergy use in Chinese steel industry(study on the34
introduction of scrap preheating system for electric
furnace)

36

Rehabilitation of 300MW coal-fired power plants in
China

Case

Category

Wuyang Iron andSteel Co. ltd
Tianjin Steel Pipe
Corp.

w/o
ET

Const
Low
ant

IRR (%)

High

w/o
ET

Const
Low
ant

High

STL

3

3

3

3

40%

43%

42%

42%

STL

3

3

3

3

35%

37%

37%

37%

Zuoxian Power
plant

EPG

6

6

6

6

16%

18%

18%

18%

Luoher Power plant

EPG

11

9

10

9

5%

8%

8%

8%

Yaomeng Power
plant

EPG

14

12

12

12

1%

4%

4%

5%

*Category:
EPG= Electric Power Generation, STL=Steel Project, OIL=Oil Refinery, GEO=Geothermal Electricity Power Generation,
ETF=Electricity Transfer, CMT=Cement, OTR=Other*Emissions Trading
w/o = no emissions trading, Low =Low Growth, High=High Growth16