# NATIONAL KEY ECONOMIC AREAS

(NKEA)

NATIONAL BIOGAS IMPLEMENTATION (EPP5)

BIOGAS CAPTURE AND CDM PROJECT IMPLEMENTATION FOR

PALM OIL MILLS

Updated: June 2011

# CONTENTS
Page



# 1.0 Introduction

1.1 Purpose 1

1.2 National Key Economic Area s (NKEA) 1

1.3 NKEA: Palm Oil 2



# 2.0 EPP 5: Build Biogas Facilities At Mills Across Malaysia

2.1 Biogas as Potential Renewable Energy (RE) : Why Embark on Biogas C apture? 3

2.2 Benefits of Biogas Capture 3

2.3 How to Capture Biogas? 4

2.4 Comparison of Biogas Capture Technologies 5

2.5 Total Potential of Biogas from POME 6

2.6 Utilization of Biogas Capture 7

2.7 Technical Configurations of Biogas Utilization in Palm Oil Mills 7

2.8 Option s for Utilization 8

2.8.1 Combined Heat and Power (CHP) 8

2.8.2 S team generation only 10

2.8.3 E lectricity generation 12

2.8.4 Other potential applications 16

2. 9 Incentives for Renewable Energy (RE) 17

2.10 Technology Provider s For Biogas Implementation 18



# 3.0 Clean Development Mechanism (CDM) 2 0

3.1 Benefits of CDM project in Malaysia 2 0

3.2 Estimated of CER from Biogas CDM Project s 2 1

3.3 National project CDM criteria 2 1

3.4 List of CDM Consultants in Malaysia 2 3

Disclaimer:

Information contained herein are given in good faith to assist the oil palm industry in considering and evaluating biogas projects. Readers are advised to check to confirm facts, figures and other information contained herein and seek independent professional advice. We welcome any feedb ack to constantly improve this booklet.

## NKEA: EPP 5 Updated: June 2011

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# 1.0 INTRODUCTION

1.1 Purpose

The purpose of this document is:

 To encourage palm oil mills in Malaysia to implement biogas trapping and utilisation

 To inform palm oil millers on the benefits of biogas trapping and provide the relevant

information to facilitate planning and implementation

. The importance of biogas trapping is evident from its inclusion as one of the eight Entry

Point Projects (EPPs) of the palm oil sector under the National Key Economic Areas

(NKEA)

.



# 1.2 N ational Key Economic Area s (NKEA)

Malaysia is to focus on 12 NKEA s to boost the economy and achieve a high income status by

2020. These 12 NKEAs are the core of the Economic Transformation Programme (ETP) and

will receive prioritised g overnment support including funding, top talent and Prime

Ministerial attention. In addition, policy reforms such as the removal of barriers to

competition and market liberalisation will be carried out

. There will be dedicated att ention

from the Prime Minister and fast

- track mechanisms to resolve disputes or bottlenecks in

implementing the NKEAs.



## National Key Economic Area

(NKEA) Economic Sectors

Oil , gas and energy



### Palm Oil

Financial services

Wholesale and retail

Tourisms

Information and communication technology

Education

Electrical and electronics

Business services

Private healthcare

Agriculture

Greater Kuala Lumpur

## NKEA: EPP 5 Updated: June 2011

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# 1.3 NKEA : P alm Oil

Malaysia’s palm oil industry is one of the important industries of the nation and it is the

fourth largest contribu tor to the national economy. It currently accounts for RM53 billion in

Gross National Income ( GNI )

. The Palm Oil NKEA is targeted to increase by RM125 billion

to reach RM178 billion by 2020. As a major contributor to economic growth, the Palm O il

NKEA programme plan s to implement eight core Entry Point Project s ( EPPs ) span ning the

palm oil value chain . The palm oil core EPPs are as follows ;

Palm Oil NKEA Programme

Upstream productivity and sustainability EPP 1 Accelerated replanting to clear backlog of old, low yielding palms

EPP 2 Increase the national fresh fruit bunches

(FFB) yield

EPP 3 Improve workers’ productivity through the

introduction or scale up new techniques

EPP 4 Increase national average oil extraction rate

(OER)

EPP 5 Build biogas facilities at mills across

Malaysia

Downstream expansion and sustainability EPP 6 Shift Malaysia’s focus towards high value
oleo derivatives

EPP 7 Emphasise early commercialisation of

second generation biofuels

EPP 8 Expedite growth in food & health

- based

downstream segment

EPPs No.5 aims to achieve the installation of biogas facilities in all p alm oil mills in Malaysia by

202 0

.

## NKEA: EPP 5 Updated: June 2011

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# 2.0 EPP 5: BUILD BIOGAS FACILITIES
AT MILLS ACROSS MALAYSIA

2.1 Biogas as Potential Renewable Energy (RE) : Why embark

on biogas capture?

I t is important for the palm oil industry to capture biogas from palm oil mill effluent

( POME ) . The reasons and benefits of biogas capture are many. These include additional

revenues from sale of surplus energy and carbon credits. Furthermore, reducing the carbon

footprint through biogas capture enable s competitive market access of palm products

particul arly palm biodiesel to environmentally

- sensitive markets such as the European Union

and the United State s

.



# 2. 2 Benefits of Biogas Capture

 Reduces GHG emissions i.e methane and CO 2



###  Reduces land use for POME treatment

 Generates additional revenue in the palm oil mill ing process OBJECTIVES

OF BIOGAS CAPTURE

- added revenue

- reduced carbon footprint 

### To reduce 

### greenhouse (GHG) emissions generated from POME 

### To comply with 35% GHG emission savings requirement for biodiesel under the EU Renewble Energy Directive To produce electricity for the grid connection

To convert POME to

renewable energy for in

- house or peripheral use

To utilize biogas as renewable fuel to replace fossil fuel/diesel for generating steam or electricity

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###  Eligible for Clean Development Mechanism (CDM) application

 The CDM project transforms GHG emission reduction into cash through sale of

carbon credits

 Reduce s global and local environmental impact

 Encourage s technology innova tion and R&D

Reduce s dependence on fossil fuel, and enhances fuel diversity and security of energy supply

.



# 2.3 H ow to C apture Biogas ?

B iogas capturing from POME has attract great attention across the palm oil industry due to

the vast potential of methane recovery for use as a clean renewable fuel as well as for the

mitigation of GHG emissions which is recognized by the CDM scheme under the Kyoto

Protocol for certified emission r eduction s (CER) or carb on credits.

Biogas capturing from POME can be carried out using a number of various local or foreign

technologies. The c losed

- tank anaerobic digester system with continuous stirred

- tank reactor

(CSTR), the methane fermentation s ystem employing special microorganisms and the

reversible f

low a naerobic baffled r eactor (RABR) system are among the technologies offered

by the technology providers.

Ponding system for palm oil mill effluent (POME) treatment and covered lagoon technology

## NKEA: EPP 5 Updated: June 2011

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# 2. 4 Comparison of Biogas Capture Technologies

Name of technology provider System Life term (years) HRT

(days) Final discharge Volume of biogas generated BOD (mg/L) COD

(mg/L)

Keck Seng flow
stirred tank reactor (CSTR) Continuous >20 18 250

- 500 8000

- 12,000 ~0.35 Nm 3 

### per kg of COD

Majurutera stirred
tank reactor (CSTR) Complete 10

- - - 20 m 3 

### per tonne
of POME

BEE High efficiency

methane fermentation system 20

- 25 9 50

- 270 1400

- 2500 >2 6

- 30 m 3 

### per

m 3 

### of POME

SIRIM (pilot scale) Reversible flow

anaerobic baffled reactor (RABR) >20 10

- 15

- 6000 0.23 Nm 3



### UPM

- FELDA

Kyushu Institute of Biogas Technology Semi

- commercial

closed anaerobic digester 25 10

- 2000 20 m 3 

### of biogas
/ m 3 

### of POME

Ronser Bio

- Tech and Shanghai

Jiaotong University

on zero
- discharge

treatment technology AnaEG

(Combination of
UASB and EGSB technologies) >20 4

- 2000 > 0.5 Nm 3 

### per reduced COD volume (based
on 90% COD removal rate)

Biotec Asian
International Sdn
Bhd Covered lagoon

biodigestter 22

- - 23m 3 

### /tonne
POME



### Several systems to generate biogas from POME have been developed using both local and

foreign technology. The technologies are summarised as follows;

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# 2. 5 Total Potential of Biogas from POME

The estimated potential energy generated from biogas in Malaysia is 1.88 million MWhr of

electricity which is equivalent to 261 MW of the potential power based on 21% efficiency in

a steam plant (based on yield of FFB in 2009 ).

Material Production Rate Quantity

FFB (m il. tonnes) 85.71

Effluent 67% of EFB 57.42 million tonne
= 57.42 million m 3



### Biogas 28 m3 m - 3 

### 1607.76 million m 3



### Biogas CV at 35°C
Total heat value 20 MJ m - 3



### 1607.76 x 20 million MJ
= 32155.2 million MJ 32155.2 million MJ
8.93 million MWhr
*1MWhr = 1 MJ/3600

Power Output 21% of heat output 8.93 million MWhr x 21%
= 1.88 million MWhr

Power plant size Plant operates 300 days year - 1 

### = 7200 hr year - 1 

### 1 880 000 / 7200
= 261.11 MW

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# 2. 6 Utilization of Biogas

Biogas can be used for all applications in place of natural gas. Since most boilers do not

require high quality gas specification s, the use of biogas in boilers is most encouraged and

ha s been increasing rapidly. Stationary engines of pump s, generators and power tools are also

a popular option for the utilization biogas. In vehicle fuel, upgrading of the biogas quality is

necessary. Upgrading the biogas includes the reduction of H 2 

### S concentration and CO 2



### . Connecting the electricity generated to the nati onal electricity grid is another profitable way

of utilizing the biogas, which is in tune with the target set in the Malaysian Fifth Fuel Policy

o f achieving 5% of national grid

- connected electricity generation from renewable sources.



# 2.7 Technical Con figurations of Biogas Utilization in Palm Oil

Mills

There are various ways of utilizing POME biogas in palm oil mills. With the proper technical

configuration and system, biogas generated from the POME can be directly converted into

useful energy either f

or heat , electricity or both. The setting up of biogas plant s in palm oil

mills would be useful to mills that require additional power for other plants in the palm oil

mill such as the EFB fibre plant or kernel crushing plant, as well as for grid

- connectio n under

the Small Renewable Energy Power (SREP) Programme

The biogas can be also upgraded and stored as a natural gas for utilization in vehicle s used in

the palm oil mills. Options of biogas utilization in palm oil mills are briefly described in the

fol lowing section.

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# 2.8 Option for Utilization

2.8.1 For Combined Heat and Power (CHP) for production of steam and

electricity (direct thermal and electricity generation)

Palm biogas can be co

- fired with oil palm biomass in the existing palm oil mill boiler. Steam

produced from this co

- firing process is used to generate electricity using the steam turbine

and low pressure steam that leave s the turbine will be used for the milling process. The boiler

will require some modifications especially the feedi ng part of the biogas into the boiler

chamber. The use of biogas which is an efficient fuel with high CV will sig nificantly reduce

or eliminate the usage of palm shell. The use of mesocarp fibre may also be reduced. The

excess palm biomass in particularly palm shell may be sold to other industries that require

solid fuel for their CHP plant. An example of a CHP plant is the plant in Ulu Kancho ng Palm

Oil Mill.

## NKEA: EPP 5 Updated: June 2011

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## ULU KANCHONG PALM OIL MILL BIOGAS PLANT

FOR CO

- FIRING IN BIOMASS BOILER

Table 1: Economic Analysis of UKPOM Biogas Plant

( based at 250,000 t FFB/ year)

Item Cost Investment cost (include biogas plant and boiler adaptation) RM7,000,000

O& M Cost (include CDM monitoring and verification) RM475,000/year

Revenues (based on the selling of Shell @ RM130/t, fibre @ RM30/and CER @ Euro 10/ton) RM2,100,000/year

Payback Period 4.3 years
Internal Rate of Return, IRR % (with
CDM ) 23 The biogas plant of Ulu Kanchong Palm Oil Mill (UKPOM) is a collaboration project between the owner Gan Ten g Siew Realty Sdn
Bhd (GSTR) and Biotec Internatio nal Asia Sdn Bhd (807700

- A)

- (BIA) as a technology provider. Biotec International, the parent company of BIA was founded in 1984 in Belgium. The Ulu Kanchong biogas project is BIA’s first biogas plant in South East
Asia. Biotec is an established technological provider with activities
i n integrated organic matter man agement and environmental
solutions for tr opical agro

- industrial effluent . The scope of business and R&D activities includes effluent treatment, biogas capture, energy use and consultation for Clean Development Mechanism based projects.

Biotec started co nstruction of the biogas plant for UKPOM in 2009

. The plant was built using covered lagoon technology (Figure 1) commissioned in February 2010 and started its commercial operation since June 2010. The plant consists of three main
systems

, - palm oil mill ef fluent ( POME ) cooling system; biod igester system which based on Biotec Covered Lagoon technology and biogas utilization system. The plant was designed to cater for POME produced from the processing of 350,000 tonne s fresh fruit bunches (FFB) or equivalent to 280,000 tonnes of POME/year . The general technical description of the plant is illust rated and summarized in Figure 2

. General Description of the UKPOM Biogas Plant

 A joint v enture project between GTSR & BIA

 Designed capacity for 350, 000 TFFB/year with methane production of 5.25 mil Nm3/ year

 Capacity of c overed lagoon bio

- digester : 32,000

m 3

 Could cater flowrate of POME 1 200 m 3 /day with
min. 2 7 days of hydraulic retent ion time

 90% of methane produced is combusted in the
biomass boiler while 10% is flared

 3 units of burner with capacity 1000 Nm 3 /hr
installed at the boiler

 Max. flow rate of biogas to boiler is 1.800

Nm 3 /hr

 Max. flow rate of biogas to flare is 1.800 Nm 3 /hr

 Average biogas yield : 25 Nm 3 /tonne FFB

Figure 3 : 3 x 100 m 3 /hr biogas burner and flaring unit installed at the
mill Figure 1 : Covered lagoon biodigester installed at the mill Figure 2 : Process flow diagram of biogas plant

Technical Configuration and Performance of the System

Bio

- digester system

A c over ed lagoon type of anaerobic biodigester was installed at the
mill with the objectives to reduce the investment cost and ease the operation procedure

. The lagoons are sealed at their bottom with a waterproof liner (geomembrane). The plant is also equipp ed with mixing and sludge purging systems to ensure that the POME is evenly distributed, mixed and discharged. The top geomembrane captures and stores the biogas generated during the anaerobic digestion of POME

. The system offers an efficient operation, a larger gas storage and less maintenance and operation cost s . The COD removal of the system is approximately at 90% efficiency and treated effluent of the biogas plant is sent to the existing open lagoon system for further degradation and polishing, with t he final discharge registering BOD of 40 to 80 ppm. Average biogas production from the system is 25

Nm 3 (or 15 Nm3 of methane) for every tonne FFB processed. Five
percent purged sludge from the anaerobic digester can be transferred
and used as fertiliser a fter a sufficient retention time.

Biogas Utilization System

– Co firing and Flaring

Biogas produced is channel led and co

- fired with palm biomass in the boiler using three units of burners. This direct and low cost investment of biogas utilization reduc es the use of oil palm biomass in particular palm shell. Shell displacement is about 2.9 % of total FFB processed. Additional income is made via the selling of the palm shell and fibre.

In terms of environmental impact, the utilization of biogas has impro ved the boiler’s smoke opacity to less than 20 % consistently as compared to about 40%. In addition, more than 50% reduction of the dust and particulate concentration in the flu e gas emitted from the
boiler is achieved

. A unit of stainless steel flare was a lso installed in order to combust excess biogas especially during the maintenance period of boiler and mill.

## NKEA: EPP 5 Updated: June 2011

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## 2. 8.2 S team generation only (thermal energy generation)

Production of steam using biogas as fuel can be carried out either by firing the biogas (with

or without other fuels) using either high or low pressure boiler. One of efficient ways to

produce heat or steam from biogas is by using a package boiler. As the package boiler is

designed to use natural gas and fuel oil, the utilization of biogas in a package boiler is

considered as a direct and simplest method to produce energy from biogas without major

modification s required. Biogas can also be co

- fired with nat ural gas and fuel oil and as such

would reduce the consumption of these much more expensive fuels. The existing boiler at

palm oil mills may also be used to generate steam with co

- firing approach but again some

modifications are required. An example of the use of biogas in package boilers is Keck Seng

(M) Sdn. Bhd.

## NKEA: EPP 5 Updated: June 2011

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## BIOGAS PLANT OF KECK SENG ’S INTEGRATED PALM OIL
COMPLEX FOR STEAM PRODUCTION & UTILIZATION

Keck Seng (Malaysia) Berhad , (KS) operates an integrated palm oil mill complex located in Masai, Johor. The complex consists of a palm oil mill, kernel crushing plant, palm oil refinery and other plants for downstream activities ( Figure 1 ). Due to highly energy demand mainly
from re finery processing and a vision to maximize the use of in

- house renewable energy sources, KS has installed and operates a biogas plant to cater for the energy requirement of the whole complex.

An anaerobic digester system was designed, built and commissioned in 1984 for the treatment of high

- strength palm oil mill effluent (POME) . To date, the total tank capacity of the biogas plant is 10, 400 m 3 consisti ng of 2 floating and 2 fixed roof tank s ( Figure 2 and 3 ). The flowrate of each plant is 500 m 3 /day. T he biogas generated is used as fuel for boiler s and chiller s for the refinery. After years of successful operation, KS licensed its unique anaerobic digester system for biogas generation and capture to Novaviro Technol ogy Sdn Bhd,

to commercialise the system.

Technical Configuration & Economic Analysis of Biogas Utilization

 Average yield of biogas generated from the system is 28 m 3 /tonne
POME

 Biogas generated is used as fuel for boilers and vapour absorption chillers of the refinery.

 Diesel displacement of high pressure boiler ( Figure 4 ) about 4000 l/day and MFO saving for package steam boiler ( Figure 5 ) of 2500
l /day.

 Displacement of electrically powered chillers by biogas

– operated vapour absorption chillers. Significant saving in electricity consumption from 700 kW to 23.50kW only.

 Saving made from diesel and MFO.

 Saving made from the displacement of electrica l powered chillers (annual consumption of 3, 850, 000Wh / year )

 GHG saving Figure 2 : Floating top closed anaerobic digester at KS Figure 1 : Keck Seng (M) Bhd

– integrated palm oil complex

Figure 4 : Geka boilers

– heating capacity 1.23 MW/h at 70 barg
and 320C

Figure 5 : Mechmar boiler

– steaming capacity 20 000 lb/hr at 150psi

Figure 3 : Design specification of anaerobic digestion of Keck Seng

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## 2.8.3 E lectricity generation

An i nternal combustion engine such as a gas engine or a diesel engine can be coupled to an

alternator to use biogas for electricity generation

. Generating electricity using a gas engine is

proven with thermal efficiency ranging from 35 to 42%. The electricity energy may be for

internal uses or grid connection. The biogas can also be used in a diesel genset and this may
reduce the diesel consumption up to 70%. However, this approach requires some engine

modification including to the feeding parts, air intake device and fuel setting. An example of

power generation for internal use i s the Tee Teh P alm O il Mill, Rompin, Pahang.

## NKEA: EPP 5 Updated: June 2011

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## Biogas Environmental Engineering Sdn. Bhd. (BEE) High Efficient Methane Fermentation System for Electricity Generation

Parameter Performance
characteristics

Raw effluent COD (ppm) BOD (ppm) Final discharge COD (ppm) BOD (ppm) 44 000

- 83 000
14 000

- 34 000

1400

- 2500
50

- 270

Composition of biogas Methane (%) Carbon dioxide (%) Hydrogen sulphide (ppm) 56

- 64
35

- 41
217

- 1418
Volume of biogas (m 3 m - 3 POME) 26.6

– 30.0 Biogas Environmental Engineering Sdn Bhd (BEE) is a company engaged and specialized in research, engineering design, construction and management of methane renewable energy development and environmental protection. The company core business is utilization of anaerobic digestion technology to process industrial organic waste water from food and beverage industries, concentrated animal farm operations and palm oil mills.

A biogas harnessing system developed in collaboration between Biogas Environmental Engineering Sdn . Bhd. (BEE) and Malaysian Palm Oil Board (MPOB) has been installed, and is currently in operation at Tee Teh Palm Oil Mill, Rompin, Pahang (Figure 1). The biogas harnessing system is a highly efficient methane fermentation system using the USR employing

s pecialty microorganisms. The biogas system consists of a cooling pond, two acidification ponds, a concrete

- steel digester tank or an enameled assembly tank, a biogas floating storage tank and a discharging pond (Scheme 1). Evaluation/monitoring of the biog as system performance over a year with sampling of 42 sets of wastewater showed that the system is technically mature, and is highly efficient, with a COD/BOD removal rate of 90

- 95% and a biogas production rate of 27

- 30 m 3 per m 3 of POME (Table 1).

Biogas Utilization

- Electricity Generation

The biogas captured is led through the biogas piping system from the top of the anaerobic digester tank to the biogas storage tank. The gas is first run through the splitter of gas and water to remove the condensate water, and then directed to the gas engi ne for electricity generation after desulfurization. The combustion chamber of the gas generator installed at Tee Teh Palm Oil Mill ( Figure 2 ) showed evidence of having been in operation for > 10000 h without any damage. The gas generator is in 24 h
operat ion and the electricity generated is supplied to the workers’ quarters of the mill.

Economic Analysis

The investment cost for the installation of the biogas trapping facility is estimated to be RM 4

- 6 million, depending on the capacity of the palm oil mill. A payback period of 2

- 4 years can be
achieved with revenues from on

- grid electricity generation amounting to 1

- 1.5 MW, sale of saved palm fibre, biofertilizer production, and savings from reduced diesel consumption. Figur e 2

. Condition of the combustion chamber of a gas generator using biogas for > 10000 h Figure 1. Biogas storage tank and high efficient methane

fermentation system

Scheme 1. Biogas system for POME

Technical Characteristics Table 1. Performance characteristic of the biogas system

1 ) Life span of materials used i.e. steel concrete or enamel tank is more than 30 year s ; 2) High loading factor 6~8 kg COD/m 3 d

, thus implies:

a. Shorter HRT compared to other systems (CSTR system, COD loading f actor 3~4 kg COD/m 3 d);
b. Smaller volume of digester tank is required to treat POME,
and hence a lower construction cost. 3) COD, BOD reduction rate of 90%~95% (assessment by M POB) 4) The quality of biogas produced is good:
 H 2 S content: 217

- 1418 ppm

- Other systems has higher H 2 S
 CH 4 content > 60%
 Water content is low
5 ) The system, with less moving parts, is easier to operate at a stable level; reinforced concrete steel or enamel sheet are better erosion

resisting materials, thus very much lower the maintenance cost.

## NKEA: EPP 5 Updated: June 2011

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## Economic Analysis of Biogas and Energy Production from a Typical 60
tonne FFB / hour Palm Oil Mill (based on electricity sales )

Material Production Rate / C onversion factor Quantity

FFB 60 t/hr or 432, 000 t/yr

Effluent @ 65% of FFB processed 39 t/hr or 39 m 3 

### /hr

Biogas @ 28 m 3 

### / m 3 

### POME 1092 m 3 

### /hr

Potential energy from biogas @ 20000 kJ/m 3 

### 21840000 kJ/hr or 6067 kJ/s
or kW

Power Output / size of power plant @ 30% of thermal efficiency 1.8 MW

Potential electricity to the grid @ 80% utilization factor x 7200 hrs/year ( 300 days x 24 hrs) 10,368,000 kWhr /yr

Potential electricity
sales @ RM 0.21/kWh RM 2.18 million /yr or RM 45.72 million for 21 yrs.

Total CAPEX @ RM 9 million / MW RM 16.2 million

Total OPEX/ year @ 4% / year of CAPEX RM 648,000 / year

Net profit per year (Annual electricity sales

– OPEX) RM 1.532 million per year

Payback period RM 16.2 / 1.532 10.6 yrs

Internal rate of Return (IRR) - 9%

## NKEA: EPP 5 Updated: June 2011

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## Flow Chart for Applying Connection to Utility’s Distribution System

15

## NKEA: EPP 5 Updated: June 2011

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## 2.8.4 Other potential applications

Biogas generated from POME can also be upgraded and used for other potential applications

especially for external usages include the following:

 Use as a compressed natural gas (CNG) which can be an alternative for natural gas

vehicles (NGV). This CNG can be used as alternative fuel for vehicles used in palm

oil mills such as forklift, lorry etc

 Feeding into natural gas (NG) pipeline or bottling and transporting for industrial use.

 For other operational units that require energy such as vapour absorption chiller, h ot

water and hot air production; biodiesel plant, EFB fibre plant and kernel c rushing

plant

 For future 2 nd 

### generation biofuel projects such as production of hydrogen, biomethane

etc

## NKEA: EPP 5 Updated: June 2011

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# 2.9 Incentives for Renewable Energy (RE)

Commercial and industrial business entities which are involve d in the energy business using

renewable energy (RE) resources for generation of electric power eligible to apply for fiscal

incentives.

• The PS provides exemption from income tax ( 25 % from 2009 onwards) on 100 % of statutory income for 10

years

.



### • Accumulated losses abd unabsorbed capital allowances incurred during the pioneer period can be carried forward and deducted againts post pioneer income of the

company

. 

### Pioneer Status (PS)

• Under ITA, 100 % of qualifying capital expenditure incurred within 5 years can be utilized against 100 % of the statutory income for each year of assestment

.

• Unutilised allowances can be carried forward to subsequent years until fully utilised

. 

### Investment Tax Allowance

(ITA)

• Companies intending to sell all the energy generated to its related companies or any other companies are 

### eligible for ;

• ( 1 ) PS with tax exemption of 100 % of

statutory income for 10 years

• ( 2 ) ITA of 100 % for 5 years to be offset

against 100 % of the statutory income

• Companies intending to generate RE for own consumption are eligible for ;

• ( 1 ) ITA of 100 % for 5 years to be offset

against 100 % of the statutory income

• Companies intending to sell all the energy generated

to its related companies or any other companies and 

### for its own used are eligible for ;

• ( 1 ) PS with tax exemption of 100 % of

statutory income for 10 years for energy sold

• ( 2 ) ITA of 100 % for 5 years to be offset

against 100 % of the statutory income for the hole project 

### Eligible Activities for PS and

ITA

• Companies generating RE can also apply for import duty and sales tax exemption on imported machinery, equipment, materials, spare parts and consumables used directly in the generation process and that are not produced locally

.

• Exemption of tax on revenue from sale of CERs 

### Import Duty and Sales Tax 

### Exemption

## NKEA: EPP 5 Updated: June 2011

18 | P a g e 

# 2.10 Technology Provider s for Biogas Implementation

Company Address Contact Number

Biogas Environmental Engineering Sdn

. Bhd

. 28

- 3, Jalan 1/116B Sri Desa Entrepreneurs Park

, O ff Kuchai Lama

, 58200 Kuala Lumpur , Malaysia. Tel

. : +603

- 7984 2422
Fax: +603

- 7984 2896

Ronser Bio

- Tech Sdn. Bhd. C708, Metropolitan Square, Jalan PJU 8/1, Bandar Damansara Perdana
, 47820 Petaling Jaya, Selangor , Malaysia. Tel

. : +603

- 7728 8999
Fax: +603

- 7725 3300

Sirim Bhd

. (Environment and Bioprocess Technology Centre) 1, Persiaran Dato’ Menteri Section 2, P.O. Box 7035

, 40911 Shah Alam, Selangor , Malaysia. Tel

. : +603

- 5544 6552
+603

- 5544 6556
Fax: +603

- 5544 6590

Custom

- Craft Sdn. Bhd. No.5, Jln Kipas 34/9 Bukit Kemuning, Light Ind. Park, Seksyen 34,
40000 Shah Alam, Selangor, Malaysia. Tel

. : +603

- 5880 7611

Fax: +603

- 5880 7616

Eco

- Ideal Consulting Sdn.

Bhd. Suite C

- 7

- 2, Wisma Goshen, Plaza Pantai, Jln 4/83A Off Jln Pantai Baharu, 59200 Kuala Lumpur, Malaysia. Tel

. : +603

- 22848102

Fax: +603

- 22848102

Bio gas International Sdn.

Bhd. 24

- 2
, Medan Setia 2
, Plaza Damansara, Bukit Damansara
, 50490 Kuala Lumpur, Malaysia. Tel

. : +603

- 20 925626

Fax : +603

- 20931241

Varec Biogas 29

- A, Jalan Kenari 17E, Bandar Puchong Jaya, Puchong

, 47100 Selangor , Malaysia. Tel

. : +603

- 8076 5778

Fax: +603

- 8076 5773

Enviro

- LIFT Services Sdn

. Bhd

. 6B
, Jalan Astaka L U8/L Bukit Jelutong Business and Technology
Centre
, 40150 Shah Alam
, Selangor
, Malaysia

. Tel: +603

- 78463682
Fax: +603

- 78463615

Elco Management
Consultants Sdn. Bhd. No 11

- 3 B Jalan PJU 1/3C

, Sunwaymas Commercial Centre, 47301 Petaling Jaya, Selangor

, Malaysia

. Tel

. : +607

- 352 9002

Fax: +607

- 352 800 2

Q2 Engineering Sdn. Bhd. Unit 8

- 01 , Block E, Phileo Damansara 1 No. 9, Jalan 16/11, Off Jalan Damansara
, 46350 Petaling Jaya, Selangor
, Malaysia

. Tel

. : +603

- 7 665 3788

Fax: +603

- 7665 3799

CST Engineering Sdn. Bhd. 8

, Jalan Pendidik U/31, Hicom Glenmarie Industrial Park, 40000 Shah Alam, Selangor, Malaysia

. Tel

. : +603

- 5569 5514

Fax: +603

- 5569 5529

Kim Loong Resources

Berhad Unit No. 203, 2nd Floor, Block C, Damansara Intan, No. 1, Jalan SS 20/27, 47400 Petaling Jaya , Selangor, Malaysia. Tel

. : +603

- 7118 2688

Fax: +603

- 7118 2693

## NKEA: EPP 5 Updated: June 2011

19 | P a g e 

### Company Address Contact Number

Aquarius S ystem (M) Sdn.

Bhd. 6B

, Jalan Astaka L U8/L, Bukit Jelutong Business and Technology Centre

, 40150 Shah Alam, Selangor

, Malaysia

. Tel

. : +603

- 7846 3682
Fax: +603

- 7846 3615

Choon Hin Enviro n mental
Sdn. Bhd. No. 6

- 10, Jalan Jati
, 86000 Kluang , Johor, Malaysia. Tel

. : +6012

- 760 2999

Fax: +607

- 773 7626

BELL Group of Companies No 125, Jalan SS15/5A, 47500 Subang Jaya, Selangor , Malaysia. Tel

. : +60 3

- 5634 3888

Fax: +60 3

- 5634 0723

Global Strategic Sdn. Bhd

. N o . 5

- 2 Second Floor, Jalan 3/76D, Desa Pandan
, 55100 Pandan
, Selangor , Malaysia

. Tel

. : +603

- 9284 2030
Fax: +603

- 9285 2030

Green & Smart Sdn. Bhd. No. 40

- 2, Jalan Tun Sambanthan 3, Brickfields, 50470 Kuala Lumpur, Malaysia

. Tel

. : +603

- 2260 1477
Fax: +603

- 2260 1478

AES AgriVerde Services (Malaysia) Sdn

. Bhd

. Suite 23.01
, Level 23
, Centrepoint South Mid Valley City
, Lingkaran Syed Putra
, 59200 Kuala Lumpur
, Malaysia

. Tel

. : +603

- 2287 9868
Fax: +603

- 2287 6998

Biox Carbon Level 8 (Lot A), MNI Twins

- Tower2 No.11, Jalan Pinang, 50450 Kuala Lumpur , Malaysia. Tel

. : + 603

- 2163 6299

Fax: + 603

- 2163 7299

Konzen Enviroment Sdn

. Bhd

. No. 1, 2 nd Floor, Jalan Singa E 20/E, Section 20,
40300 Shah Alam
, Selangor , Malaysia. Tel

. : +603

- 5548 8898
Fax : +603

- 5542 8898

Majutera Sdn

. Bhd

. C1

- 11

, 1 st Floor

, Dataran Ara Damansara

, Jalan PJU 1A/20B,

47301 Petaling Jaya, Selangor

, Malaysia. Tel

. : +60 3

- 7846 8509
Fax: +603

- 7842 2376

YTL

- SV Carbon Sdn

. Bhd

. Level 4, Annexe Block, Lot 10 Shopping Centre, 50, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia. Tel

. : +603

- 2144 7200
Fax: +603

- 2144 7573

Sime Darby Plantation Sdn

. Bhd. 14th Floor, Wisma Consplant I

, No. 2, Jalan SS 16/4

, 47500 Subang Jaya

, Selangor , Malaysia. Tel

. : +603

- 5631 7133
Fax: +603

- 5636 7588

Biotech International Asia
Sdn. Bhd

. SVP

- 5, Jalan Cinta Kasih, Country Heights, 43000 Kajang, Selangor, Malaysia. Tel

. : +603

- 8737 3700
Fax: +603

- 8737 3720

Rhodia Sdn

. Bhd

. Level 3, Block B Peremba Square Saujana Resort, Seksyen U2,
40150 Shah Alam

Biopower Climate Care Sdn Bhd Level 41, Vista Tower, The Intermark
182 Jalan Tun Razak 50400 Kuala Lumpur Tel

. : +603

- 2690 1506

Fax: +603

- 2690 1301

## NKEA: EPP 5 Updated: June 2011

20 | P a g e 

# 3.0 C LEAN DEVELOPMENT MECHANISM

(CDM)

The Clean Development Mechanism (CDM) is a scheme under the Kyoto Protocol, United

Nations Framework Convention on Climate Change (UNFCCC) which helps developing

countries achieve sustainable development through the sale of certified emission reductions

(CER), or carbon credits, to developed and industrialized countries. The CDM scheme was
introduced by Kyoto Protocol ;

 To stream fund and technology to developing countries so they can meet sustainable

dev elopment target s,

 To encourage the developed country to invest in carbon emission reduction project s

that meet the P rotocol’s target



# 3.1 Benefits of CDM project in Malaysia

For Malaysia, the CDM is facilitated by Conservation and Environmental Management

Division (CEMD) of the Ministry of Natural Resource s and Environment (NRE) as
Designated National Authority (DNA). Malaysia ’s DNA and CEMD serve as a secretariat for

evaluation of CDM projects via the establishment of a National Committee on CDM

(NCCDM) and two Technical Committee s i.e The Technical Committee on Energy and The

Technical Committee on Forestry. The CDM project activities bring the following benefits;

 Helps developed countries meet their emission reduc tion targets under the Kyoto

Protocol

 Helps the palm oil industry meet increasingly stringent sustainability

requirements.

 The CDM project transforms reduction of emission of CO 2 

### and methane into cash

flow

 The CDM approval mechanisms are able to create n ew commodity in the form of

CERs

## NKEA: EPP 5 Updated: June 2011

21 | P a g e 

# 3.2 Estimated CER from Biogas CDM Project s

Reduction of 1 tonne of CO 2 

### equivalent generates 1 tonne CER.

Estimated CERs generated for a 60 t/hr mill = 30,000

– 40,000 tonnes CO 2 

### eq
Estimated revenue generated for each mill = RM1.5 million per year (based on €10/tCO 2 

### e) (for 21 years)

Mills are advised to consult an established and reliable CDM consultant to assist in CDM

application s

.



# 3. 3 National project CDM c riteria

Criterion 1 Project must support the sustainable development policies of Malaysia

and bring direct benefits towards achieving sustainable development

Criterion 2 Project implementation must involve participation of Annex I

party/Parties as CER buyer. In addition they are encouraged to participate as equity or technology provider

Criterion 3 Project must provide technology transfer benefits and/or improvement

of technology, including enhancement of local technology

Criterion 4 Project must fulfil all condition s underlined by th e CDM Executive

Board as follow :
- i. Voluntary participant
ii. Real, measurable and long

- term benefits related to mitigation of climate change; and
iii. Reductions in emissions that are additional to any that would occur in the absence of the certified project activity

Criterion 5 Project proponent should justify the ability to implement the proposed

CDM project activity

## NKEA: EPP 5 Updated: June 2011

22 | P a g e 

# CDM PROJECT CYCLE

Develop a project activity

Approval by the Host and Investing Party

Validation and registration of the CDM project activity

Monitoring of the CDM project

Verification, certification
and issuance of CERs

Distribution of CERS CDM project participants (PPs) develop a CDM project activity. Consider various conditions associated with developing a CDM project activity from the project planning stage. Draft a Project Design Document (CDM

- PDD) with all required elements.

Project participants obtain written approval of voluntary participation from the Designated National Authority (DNA) of each Party involved regarding the project activity that project participants wish to implement as a CDM project activity.

Validation is the process of independent evaluation of a project activity carried out by designated operational entity (DOE).

Registration is the formal acceptance of a validated project as CDM project activity. Registration process is done by the CDM ex ecutive board (EB).

PPs collect and archive all relevant data necessary for calculating GHG emission reductions by the CDM project activity, in accordance with the monitoring plan written in PDD.

Project participant report to the DOE the results of monitoring of the CDM project activity and calculated emission reductions based on the results of monitoring activity.
DOE verifies the results of mo nitoring and the resulting emission
reductions.
DOE certifies the emission reductions based on the results of verification The EB issues CERs equal to the verified amount of GHG emission
reductions. CERs can be issued for emission reductions by a project activity. The issues of CERs in accordance to with the distribution agreement.

2% of the CERs will be deducted as the share of proceeds to assist developing country Parties that are particularly vulnerable to the
adverse effects of climate change. CERs will be distributed among PPs.

## NKEA: EPP 5 Updated: June 2011

23 | P a g e 

# 3.4 List of CDM Consultants in Malaysia

No. CDM CONSULTANT COMPANY CONTACT

1 Mr. Ilango S. Bharathi

. YTL SV Carbon Sdn. Bhd

. Level 4 Annex Block Lot 10 Shopping Centre 50, Jalan Sultan Ismail 50250 Kuala Lumpur , Malaysia. Tel

. : +6 03

- 2144 7200

Fax: +6 03

- 2144 7573
Mobile : +6 017

- 202 6456 ilango@ytl.com.my

2 Dr. B.G. Yeoh EcoSecurities Malaysia Sdn

. Bhd

. Mid Valley City No. 1, Medan Syed Putra Utara
59200 Kuala Lumpur , Malaysia. Tel

. : +6 03

- 2282 0612

+6 03

- 2282 06 32

Fax: +6 03

- 2282 0652
Mobile : +6 012

- 3112 289

+6 013

- 3306 863 bgyeoh@ecosecurities.com

3 Mr. Bhavna Khandhar Perenia Carbon
Unit 509 Block B
Phileo Damansara II

, Jalan Section 16 46350 Petaling Jaya

, Selangor , Malaysia. Tel

. : +6 03

- 7950 5521

Fax: +6 03

- 79552 110
Mobile : +6 012

- 2039 240 bhavna.khandhar@pereniacarbon.com

Australia Office:
Level 7

, 111 Pacific Highway North Sydney
NSW 2060 Ausutralia

. Tel

. : 61 99261702
Fax: 61299261799

4 Mr. Arthur Wayne House
@Ibrahim Averest Agriculture & Farming Sdn

. Bhd

. Suite 5D08 Emerald Hill Cangkat Bukit Indah 2 , Bukit Indah 68000 Ampang , Selangor, Malaysia. Tel

. : +6 03

- 4270 6312
Mobile : +6 012

- 9154 546 wayne@fiurthgeneration.ca house.wayne@gmail.com

5 M r. Soon Hun Yang Eco

- Ideal Consulting S dn. B hd.
Suite C

- 7

- 2, Wisma Gosen,
Plaza Pantai 5 Jalan 4/83A
Off Jln Pantai Baru 59200 Kuala Lumpur, Malaysia

. Tel

. : + 603

- 7876 8102
+603

- 2284 8102

Fax: + 603

- 2284 8103
Mobile : +6 019

- 8188 102

6 M s. Rose Ariffin Environmental Resources Management
Unit 19

- 06

- 01, 6 th Floor

PNB Damansara
19

, Lorong Dungun Damansara Heights
50490 Kuala Lumpur , Malaysia. Tel

. : +6 019

- 3309 192

7 D r. Tong Soo L ong Enviro

- Lift Services Sdn. Bhd.
6B Jalan Astaka L U8/L Bukit Jelutong Business and Technology Centre
40150 Shah Alam , Selangor, Malaysia. Tel

. : + 603

- 7846 3682

Fax: + 603

- 7846 3615

8 M r. Henrik Rytter Jensen 36th Floor, Menara Maxis Kuala Lumpur City Centre
50088 Kuala Lumpur , Malaysia. Tel

. : +6 012

- 3023 914

9 M s. Sheila Sharma ENVIRON Consulting Services (M) Sdn.

Bhd. A307, Phileo Damansara 2 15, Jalan 16/11
46350 Petaling Jaya , Selangor, Malaysia. Tel

. : +6 012

- 2068 654

## NKEA: EPP 5 Updated: June 2011

24 | P a g e No. CDM CONSULTANT COMPANY CONTACT

10 M r. Kim Kean Hong KYOTO Energy Sdn

. Bhd

. (Malaysia Representative Office) Unit SVP4, Jalan Cinta Kasih Country Heights, 43000 Kajang, Selangor , Malaysia. Tel

. : + 603

- 8739 0240

Fax: + 603

- 8739 0235
Mobile : + 6012

- 4991 896

11 M s. Tee Hui Yong
Senior Consultant GHD Perunding Sdn Bhd
22 nd Floor The Mall Putra Place
100 Jln. Putra
50350 Kuala Lumpur , Malaysia. Tel

. : + 603

- 2332 3886

Fax: + 603

- 2332 3990 huiyong.tee@ghd.com

12 M r. Leong Kwok Yan Leong Partnership Advocates &
Solicitors Suite 501, Block E

, Phileo Damansara 1 9, Jalan 16/11 46350 Petaling Jaya, Selangor , Malaysia. Tel

. : +6 03

- 7955 4030

Fax: +6 03

- 7955 9681 leongky@leongpartnership.com

13 M s. Michelle Chan Mercuria Welstar Enterprise Co. Ltd 88 Soi Bangna

- Trad 30 Bangna

- Trade Road Bangna, Bangkok, Thailand

. Tel

. : 00662

- 770

- 3993
668

- 5642

- 3993
6012

- 3161900
Fax: 00662

- 398

- 9339

14 Mr. G erald Hamaliuk GenPower Carbon Solution Services (Malaysia) Sdn. Bhd. Level 22, Unit A

- 22

- 13
Menara UOA No.5, Jalan B angsar Utama 1 Selangor, Malaysia. Tel

. : + 603

- 2282 6841
Mobile : + 6017

- 2472 917 ghamaliuk@gpcarbonsolutions.com

15 Mr. Rober C Y Cheong TUV NORD (Malaysia) Sdn. Bhd. No.20 Jalan Tiara 3, Tiara Square
Taman Perindustrian UEP 47600 Subang Jaya

, Selangor, Malaysia Tel

. : +6 03

- 8023 2124

Fax: + 603

- 8023 4410
Mobile : + 6012

- 5010 066 rober.cheong@tuv

- nord.com

16 Ms

. Vi chitra Thiyagarajah AES AgriVerde Level 20, Menara Standard Charted 30, Jalan Sultan Ismail 50250 Kuala Lumpur , Malaysia. Tel. : +6 03

- 2117 5070
+603

- 2117 5071
Mobile : +6 017

- 2404 054 Vichitra.thiyagarajah@aesagriverde.com

1 7 Mr. Mohamad Irwan

Aman Mitsubishi UFJ Morgan Stanley Securities,
P.O. Box 92 Pejabat Pos Bandar Baru Bangi 43650 Bandar Baru Bangi, Selangor Malaysia. Tel

. : +6 03

- 8873 1235

Fax: +6 03

- 8890 3911
Mobile : +6 019

- 2577 189
irwan

- aman@cefc

- consulting.com.my

## NKEA: EPP 5 Updated: June 2011

25 | P a g e 

### For more information www.mpob.gov.my



### General Enquiry

Director

- General Malaysian Palm Oil Board (MPOB)
Tel: +603

- 87694400
Fax: +603

- 89259446



### Technical Enquiry Engineering and Processing Division Malaysian Palm Oil Board (MPOB)
Tel

. : +603

- 8925 9592
Fax: +603

- 8925 2971