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PROJECT DESIGN DOCUMENT FORM FOR CDM PROJECT ACTIVITIES (F-CDM-PDD) Version 04.1

PROJECT DESIGN DOCUMENT (PDD)

Title of the project activity Version number of the PDD Completion date of the PDD Project participant(s) Host Party(ies) Sectoral scope and selected methodology(ies) Estimated amount of annual average GHG emission reductions

Bontang N2O Abatement Project 1.2 01/05/2012 PT Kaltim Nitrate Indonesia Indonesia Sector scope 5: Chemical industries Methodology: ACM00019/Version 01.0.0 149,142 tCO2e

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SECTION A. Description of project activity A.1. Purpose and general description of project activity >> The Bontang N2O Abatement Project (hereinafter referred to as the Project Activity) is to be implemented by PT Kaltim Nitrate Indonesia (hereinafter referred to as KNI) in order to reduce Nitrous Oxide (N2O) emissions from KNIs nitric acid plant located in Bontang, Indonesia. N2O is an unwanted and previously neglected by-product of the nitric acid production process, and is formed during the catalytic oxidation of ammonia in the Ammonia Oxidation Reactor (AOR) of nitric acid plants. N2O is not classified as a toxic or hazardous substance and does not have any economical value in the nitric acid or downstream process. N2O is, however recognized as a greenhouse gas (GHG) with a Global Warming Potential (GWP) of 310 1 compare to Carbon Dioxide (CO2). The Clean Development Mechanism (CDM) provides a financial incentive to abate such N2O emissions from nitric acid plants in developing countries such as Indonesia where there are no regulations requiring such N 2O abatement actions, and where such actions have no other financial incentives and are cost only actions without CDM. The sole purpose of the Project Activity is to reduce N2O emissions in the tail gas from KNIs Bontang nitric acid plant by installing a secondary catalyst inside the AOR. The secondary catalyst converts most of the N2O, which is formed during the ammonia oxidation process, into Nitrogen (N2) and Oxygen (O2), which do not have any adverse impacts on the environment or human health. In addition the N2O emissions in the tail gas from KNIs Bontang nitric acid plant will be monitored with the latest monitoring technology in accordance with the European quality assurance standard for statutory source emission (EN-14181). There are no regulations currently in force in Indonesia requiring the abatement of N 2O emissions from nitric acid facilities. Thus in accordance with ACM0019 (Version 01.0.0), the baseline scenario represents the scenario existing prior to the implementation of the Project Activity, where no secondary or tertiary abatement technology was installed and N2O emissions are directly released to the atmosphere. In the absence of this CDM Project Activity the emissions would go unabated from KNIs Bontang nitric acid plant. The total estimated GHG emission reductions associated with the Project Activity over the crediting period (10 years) are expected to be 1,491,421 tCO2e, with an annual average of 149,142 tCO2e /yr. The Project Activity meets the sustainable development criteria as set forth by the Designated National Authority in Indonesia. The applicability of the impact of the Project Activity to these sustainable development criteria are as follows: Environmental sustainability The Project Activity has no direct impact on the local ecological environment. The Project Activity will not create any pollution (air, water, soil) that exceeds national and local environmental standards. The Project Activity will not have any impact on biodiversity and will not contribute to genetic contamination or pollution. Health and Safety The Project Activity will not impose any health risk to the local community, as there are no hazardous materials. The Project Activity will continuously comply with occupational health and safety regulations.

IPCC, Second Assessment Report (1995)

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Workers will have documented procedures and training for adequate actions to be taken in order to prevent and manage any accident. Economic sustainability The Project Activity has no negative economic effect on the local community and will not lower community income. The Project Activity has no direct connection to any lay-off potential in conformance to existing regulations. The Project Activity will not lower the quality of public services. Social sustainability The local community has been consulted before the start of the CDM project activity. Stakeholder comments and consideration (of comments) are reported and addressed. The Project Activity will not cause conflicts between local communities. Technological sustainability The secondary catalyst technology is a new type of technology and the technology type has been successfully applied in facilities worldwide staring from 2005. The monitoring system is a well proven technology and for example is required by regulations in the EU on industry and power plants. The know-how gained from the project activity will increase the capacity of local specialists and workers, allowing for the expertise to expanded use of such technologies in Indonesia. A.2. Location of project activity A.2.1. Host Party(ies) >> Indonesia A.2.2. Region/State/Province etc. >> East Kalimantan A.2.3. City/Town/Community etc. >> Bontang A.2.4. Physical/Geographical location >> The Project Activity is located in an industrial sector approximately 5 km north of the city of Bontang, Indonesia. The coordinates of the Project Activity are as follows: 010'40.20" N / 11728'59.39" E

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Figure: Location of the Project Activity (Country Map)

Figure: Location of the Project Activity (City Map) A.3. Technologies and/or measures >> KNIs Bontang nitric acid plant is a licensed dual pressure design plant from Uhde with a production capacity of 700t HNO3/day (at an acid concentration of 100%) and started operation in April 2012. The nitric acid produced at the plant is an intermediate product (upstream) for the production of ammonium nitrate (NH4NO3) at the adjacent KNI facility. The Project Activity involves the installation of a secondary N2O abatement catalyst inside the basket of the AOR, right below the primary platinum gauze catalyst. The installation of the secondary N2O abatement catalyst will reduce the concentration of N2O formed after the primary oxidation process. The secondary catalyst will decompose N2O into N2 and O2 gas.

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The Project Activity will utilize a proven secondary N2O abatement catalyst (vendor) selected on the basis that the catalyst has the advantage of: No influence on NOx yield; No signification pressure drop across the secondary N2O abatement catalyst; Proven potential to reduce N2O emissions by >85%; Low operation cost

The figure below shows the location of the secondary catalyst.

Figure: Location of secondary catalyst Besides the secondary catalyst, the Project Activity comprises the installation of an Automated Measuring System (AMS) which continuously monitors N2O concentration and gas flow of the tail gas stream. The AMS will be installed and maintained in accordance with European Norm EN14181. A.4. Parties and project participants Party involved (host) indicates a host Party Indonesia (host) Private and/or public entity(ies) project participants (as applicable) PT Kaltim Nitrate Indonesia (Private entity) Indicate if the Party involved wishes to be considered as project participant (Yes/No) No

Contact details as listed in Appendix 1. A.5. Public funding of project activity >> The Project Activity does not received any public funding from countries included in Annex-I of the UNFCCC, and no public funds from local or national authorities in Indonesia.

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SECTION B. Application of selected approved baseline and monitoring methodology B.1. Reference of methodology >> The Project Activity applies the following approved baseline and monitoring methodology: ACM0019 N2O abatement from nitric acid production (Version 01.0.0). Further, ACM0019 refers to the following tool, which is applied in context of the Project Activity: Tool to determine the mass flow of a greenhouse gas in a gaseous stream (Version 02.0.0). B.2. Applicability of methodology >> The applicability criteria of ACM0019 N2O abatement from nitric acid production (Version 01.0.0) are met by the Project Activity, as follows: The Project Activity introduces N2O abatement measures at the Bontang nitric acid plant. The abatement measures are in the form of a N2O decomposition (secondary) catalyst to be installed within the high temperature zone of the AOR, just below the primary catalyst. Presently, no N2O abatement technology is installed at the Bontang nitric acid plant. Continuous real-time measurements of N2O concentration and the total gas volume flow will be carried out after the abatement of N2O emissions throughout the crediting period by means of an Automated Monitoring System (AMS), which will be installed at the tail gas stack. There are currently no existing laws or regulations which mandate the complete or partial destruction of N2O from nitric acid plants in Indonesia.

B.3. Project boundary Source GHGs NH3 CO2 oxidation at the primary CH4 catalyst gauze N2O NH3 CO2 oxidation at the primary CH4 catalyst gauze N2O Project scenario Operation of a tertiary N2O abatement facility CO2 CH4 N2O Included? No No Yes No No Yes No No No No tertiary abatement facility will be installed in the project Activity therefore this source is not included in the project boundary The Project Activity has no influence on these types of emissions, if present Included, main emission sources The Project Activity has no influence on these types of emissions, if present Included, main emission sources Justification/Explanation

The following flow diagram below indicates a simplified nitric acid production process and the project boundary for the Project Activity consisting of the introduction of a secondary N2O abatement measure.

Baseline scenario

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Figure: Monitoring equipment and location B.4. Establishment and description of baseline scenario >> The baseline scenario for the Project Activity is identified in accordance with the approved consolidated baseline and monitoring methodology ACM0019 (version 01.0.0) entitled N2O abatement from nitric acid production as follows: There are currently no laws or regulations in force in Indonesia, requiring the complete or partial destruction (abatement) of N2O emissions from nitric acid production facilities. In accordance with the Ministerial Decree (State Minister of the Environment no. 13 of 1995)2 N2O is not listed as a regulated parameter for emissions from stationary sources. In this manner Nitrogen Oxide (NOx) is a regulated parameter under the aforementioned Ministerial Decree and as such a Selective Catalytic Reduction (SCR) unit for the abatement of NOx is installed at the Bontang Nitric Acid Plant. The SCR unit has no effect on N2O emissions. In accordance with the methodology ACM0019 (Version 01.0.0) and in the absence of regulations requiring such measures for N2O abatement, KNI has no economic or regulatory incentive to take any actions for the abatement of N2O emissions from the Bontang Nitric Acid plant. Thus, the baseline scenario represents the scenario (business as usual) where the N2O is emitted to the atmosphere without N2O abatement measures installed at the Bontang Nitric Acid plant. B.5. Demonstration of additionality >> The Project Activity is additional in accordance with ACM0019 (Version 01.0.0) as there are no regulations currently in force in Indonesia, requiring the abatement of N 2O emissions, as indicated in

Decision, Minister of the Environment, , No13 of 1995, Standards of Quality of Emission Sources from Stationary Sources, (Indonesia) pg 35

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section B.4, and KNI has no economic incentive to take any N2O abatement measures because this entails capital and operating costs but no financial benefits. A prior consideration notice for start of the CDM Project Activity was submitted to the UNFCCC on March 6, 2012. B.6. Emission reductions B.6.1. Explanation of methodological choices >> The methodological choice for calculating baseline emissions, project emissions, leakage emissions as well as emissions reductions is in accordance with ACM0019 (Version 01.0.0). Baseline emissions Baseline emissions (BEn) are calculated as follows: (1) Where: BEn PNA,n EFBL,N2O,n GWPN2O Baseline emissions in monitoring period n Nitric acid produced in the monitoring period n Baseline N2O emission factor for nitric acid produced in the monitoring period n Global Warming Potential of N2O valid for the commitment period (t CO2e) (t HNO3) (kg N2O / tHNO3) (t CO2e/t N2O)

Determination of the baseline N2O emission factor (EFBL,N2O,n) The baseline N2O emission factor in the monitoring period n (EFBL,N2O,n) shall be determined as a default emission factor EFdefault,y given for each calendar year y for which BEn is calculated (see monitoring tables for EFdefault,y), as follows: (2) Where: EFBL,N2O,n EFdefault,y Baseline N2O emission factor for nitric acid produced in the monitoring period n Default N2O baseline emission factor in the calendar year y of the monitoring period n (kg N2O / tHNO3) (kg N2O / t HNO3)

If the monitoring period n spans across two (or more) calendar years, the baseline emissions (BEn) shall be calculated separately for each calendar year, first establishing EFBL,N2O,n and then applying this to the nitric acid production of that calendar year. Project emissions Project emissions include emissions of N2O which have not been destroyed by the Project Activity. Project emissions (PEn) are calculated as follows: (3) Where:

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PEn PEN2O,n PECO2,tertiary,n

Project emissions in monitoring period n Project emissions of N2O from the Project Activity in monitoring period n Project emissions of CO2 from the operation of the tertiary N2O abatement facility in monitoring period n

(t CO2e) (t CO2e) (t CO2e)

The Project Activity applies secondary N2O abatement technology, and NOT tertiary N2O abatement technology, hence PECO2,tertiary,n is not applicable and is considered 0. Project emissions of N2O from the project plant (PEN2O,n) The amount of project N2O emissions from the Project Activity include one emission source, the N2O contained in the tail gas stream of the plant which is released to the atmosphere, since the Project Activity applies secondary N2O abatement technology. Project emissions of N2O from the Project Activity (PEN2O,n) are calculated as follows: (4) Where: PEN2O,n QN2O,tail gas,n Project emissions of N2O from the Project Activity in monitoring period n Amount of N2O released through the tail gas of the Project Activity to the atmosphere in monitoring period n Amount of N2O released through the by-pass to a tertiary N2O abatement system to the atmosphere in monitoring period n (t CO2e) (t N2O)

QN2O,by-pass,n

(t N2O)

GWPN2O

Global Warming Potential of N2O valid for the (t CO2e/t N2O) commitment period The Project Activity applies secondary N2O abatement technology, hence QN2O,by-pass,n is not applicable and is considered 0. Determination of QN2O,tail gas,n The amount of N2O emissions from the tail gas stream of the project plant shall be determined using the Tool to determine the mass flow of a greenhouse gas in a gaseous stream (Version 02.0.0). In applying the tool, the following provisions apply: Throughout the crediting periods of the project activity, the N2O concentration and volume or mass flow of the tail gas are to be monitored continuously. The monitoring system is to be installed and maintained throughout the crediting period based on the European Norm 14181 (2004), or any more recent update of that standard; The monitoring system should provide separate hourly average values for the N2O concentration and the volume or mass flow of the tail gas based on 2 seconds (or shorter) interval readings that are recorded and stored electronically. These N2O data sets shall be identified by means of a unique time / date key indicating when exactly the values were observed; The correction factors derived from the calibration curve of the QAL2 audit for the monitoring components as determined during the QAL2-test in accordance with EN14181 must be applied to both the N2O concentration and the volume or mass flow of the tail gas. This can either be

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applied automatically to the raw data recorded by the data storage system at the plant or it can be applied to the calculated hourly averages as part of the calculation of project emissions; If data for either the N2O concentration or the volume or mass flow of the tail gas are not available for more than 1/3 of any hour while the plant was in operation, the value for that hour shall be replaced with the maximum value of N2O concentration or volume or mass flow of the tail gas observed during the monitoring period. If data for neither the N2O concentration nor the volume or mass flow of the tail gas are available for more than 1/3 of any hour while the plant was in operation, the maximum value of mass flow of N2O calculated during the monitoring period shall be applied to any such hour. Values observed during five operating hours before and after a plant start-up and shut-down shall not be used for the determination of the maximum values;

The hourly values are then aggregated for the duration of the monitoring period n, as follows: (5) Where: QN2O,tail gas,n Amount of N2O released through the tail gas of the Project Activity to the atmosphere in monitoring period n Mass flow of N2O in the gaseous stream of the tail gas in the hour h Operating hours (t N2O)

FN2O,tail gas,h hn

(kg N2O/h) -

In accordance with ACM0019 (Version 01.0.0), the mass flow of N2O in the gaseous stream of the tail gas (FN2O,tail gas,h) shall be determined using the latest version of the Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (currently Version 02.0.0). The mass flow of a particular greenhouse gas i in a gaseous stream in time interval t (Fi.t)3 is calculated based on measurements of: (a) the total volume flow or mass flow of the gas stream, (b) the volumetric fraction of the gas in the gas stream and (c) the gas composition and water content. The flow and volumetric fraction may be measured on a dry basis or wet basis. The tool covers the possible measurement combinations, providing six different calculation options to determine the mass flow of a particular greenhouse gas (Options A to F). Based on currently available information in relation to the tail gas monitoring system, Option C (volume flow of gaseous stream on wet basis, volumetric fraction on wet basis) of the tool will be applied. The determination of absolute humidity is not required for Option C and as per the tool, and can be neglected: The greenhouse gas i measured under this Project Activity is nitrous oxide, N2O. The mass flow of greenhouse gad i (Fi.t) is determined as follows: (6) Where: Fi,t Vt,wb,n Mass flow of greenhouse gas i in the gaseous stream in time interval t Volumetric flow of the gaseous stream in time interval t on a wet basis at normal conditions (kg gas/h) (m3 wet gas/h)

Fi,t corresponds with FN2O,tail gas,h of ACM0019 (Version 01.0.0)

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vi,t,wb
i,n

Volumetric fraction of greenhouse gas i in the gaseous stream in time interval t on a wet basis Density of greenhouse gas i in the gaseous stream at normal conditions

(m3 gas i/m3 wet gas) (Kg gas i/m3wet gas i)

The density of greenhouse gas i is calculated as follows: (7) Where:

i,n

Density of greenhouse gas i in the gaseous stream at normal conditions Absolute pressure at normal conditions Molecular mass of greenhouse gas i Universal ideal gases constant Temperature at normal conditions

(kg gas i/m3wet gas i) (Pa) (kg/kmol) (Pa m3 / kmol K) (K)

Pn MMi Ru Tn

The following equation is used to convert the volumetric flow of the gaseous stream from actual conditions to normal conditions: (8) Where: Vt,wb,n Vt,wb Pt Tt Pn Tn Leakage As per ACM0019 (Version 01.0.0) any leakage emissions are deemed to be negligible. Emission reductions Emission reductions (ERn) are calculated as follows: (9) Where: ERn BEn PEn Emission reductions in monitoring period n Baseline emissions in monitoring period n Project emissions in monitoring period n (t CO2e) (t CO2e) (t CO2e) Volumetric flow of the gaseous stream in a time interval t on a wet basis at normal conditions Volumetric flow of the gaseous stream in time interval t on a wet basis Pressure of the gaseous stream in time interval t Temperature of the gaseous stream in time interval t Absolute pressure at normal conditions Temperature at normal conditions (Pa) (K) (m wet gas/h) (m wet gas/h) (Pa)

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B.6.2. Data and parameters fixed ex ante >> From: ACM0019 (Version 01.0.0) Data / Parameter Unit Description Source of data Value(s) applied Choice of data or Measurement methods and procedures Purpose of data Additional comment Data / Parameter Unit Description Source of data GWPN2O t CO2e/t N2O Global Warming Potential of N2O valid for the commitment period Relevant decisions by the CMP 310 Decision 2/CP.3 Methodological issues related to the Kyoto protocol (FCCC/CP/1997/7/Add.1)

Calculation of baseline and project emissions Not applicable EFdefault,y kg N2O / t HNO3 Default N2O baseline emission factor in the calendar year y of the monitoring period n ACM0019 (Version 01.0.0) The default N2O baseline emission factor will vary every year. In year 2005 the emission factor will be 5.1 and then it will decrease every year until it reaches a final value of 2.5 in the year 2020. The value of 2.5 will remain constant after 2020, as provided in the following table:
Default Baseline Emission factor kgN2O/tHNO3 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year n 3.90 3.70 3.50 3.40 3.20 3.00 2.80 2.70 2.50 2.50 2.50 2.5

Value(s) applied
Year

Choice of data or Measurement methods and procedures Purpose of data

Specified in ACM0019 (Version 01.0.0)

Calculation of baseline emissions

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Additional comment

Not applicable

From: Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0) Data / Parameter Unit Description Source of data Value(s) applied Compound Nitrous oxide Structure N2O Molecular mass (kg/kmol) 44.02 MMi kg/kmol Molecular mass of greenhouse gas i Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0)

Choice of data or Measurement methods and procedures Purpose of data Additional comment Data / Parameter Unit Description Source of data Value(s) applied Choice of data or Measurement methods and procedures Purpose of data Additional comment Data / Parameter Unit Description Source of data Value(s) applied Choice of data or Measurement methods and procedures Purpose of data Additional comment

Specified in Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0)

Calculation of project emissions Not applicable Ru Pa m3 / kmol K Universal ideal gases constant Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0) 8,314 Specified in Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0)

Calculation of project emissions Not applicable Tn K Temperature at normal conditions Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0) 273.15 K Specified in Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0)

Calculation of project emissions Not applicable

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Data / Parameter Unit Description Source of data Value(s) applied Choice of data or Measurement methods and procedures Purpose of data Additional comment

Pn Pa Total pressure at normal conditions Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0) 101,325 Pa Specified in Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0)

Calculation of project emissions Not applicable

B.6.3. Ex ante calculation of emission reductions >> It should be noted that for certain monitoring parameters (see also B.7.1) no measurements are available at this stage (e.g. tail gas volumetric flow, N2O volumetric fraction in tail gas, tail gas temperature, tail gas flow...etc.). As well the actual N2O formation and efficiency of the secondary catalytic destruction are estimated at this stage. Hence, for the ex-ante calculation of emission reductions, design parameters, as well as conservative assumptions were utilized as noted in this section. Actual project and baseline emissions however will be determined based on measurement results on an ex-post basis. The following data assumptions are applied for the ex-ante calculation of emission reductions: Expected annual nitric acid production of approximately 239,400 tHNO3 (100%)4, based on a design production capacity of 700 tHNO3 (100%)/day and 342 days of operation; Tail gas volume flow is 137,369 m3 wet gas/hr at a temperature of 413.35 K and pressure of 101,000 Pa, as per design5; The tail gas volumetric fraction prior to the installation of the secondary catalyst is 1100 ppm, as per design;6 Expected N2O abatement efficiency of the secondary catalyst is 85%, resulting in a project volumetric fraction after the installation of the secondary catalyst of 165 ppm7;

Baseline emissions Baseline emissions (BEn) are calculated ex-ante as follows:

Letter Nitric Acid Plant Performance KNI, 19 Apr. 2012. Design tail gas flow conditions Flow Diagram Nitric Acid Plant Process for KNI Bontang project. This document is CONFIDENTIAL under license with Uhde Shedden. 6 Design N2O tail gas content prior to the implementation of the Project Activity (1,100 N2O ppm = 0.0011 m3 gas i/m3 wet gas). Design tail gas flow conditions Flow Diagram Nitric Acid Plant Process for KNI Bontang project. This document is CONFIDENTIAL under license with Uhde Shedden. 7 Calculated based on the design N2O tail gas content prior to the implementation of the Project Activity (0.0011 m3 gas i/m3 wet gas),and an 85% N2O abatement efficiency of the secondary catalyst (1,100ppm * (1-0.85) = 165 ppm or 0.000165 m3 gas i/m3 wet gas).
4 5

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Where: BEn PNA,n EFBL,N2O,n GWPN2O Baseline emissions in monitoring period n Nitric acid produced in the monitoring period n Baseline N2O emission factor for nitric acid produced in the monitoring period n Global Warming Potential of N2O valid for the commitment period (t CO2e) (t HNO3) (kg N2O / tHNO3) (t CO2e/t N2O)

BEn Year t CO2e 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Sep) Total Project emissions 72,359 274,592 259,749 252,328 237,485 222,642 207,799 200,378 185,535 185,535 139,151 2,237,552

PNA,n t HNO3 (100%) 59,850 239,400 239,400 239,400 239,400 239,400 239,400 239,400 239,400 239,400 179,550 2,394,000

EFBL,N2O,n kg N2O / tHNO3 3.90 3.70 3.50 3.40 3.20 3.00 2.80 2.70 2.50 2.50 2.50

GWPN2O t CO2e / t N2O 310 310 310 310 310 310 310 310 310 310 310

Project emissions (PEn) are calculated on an ex-ante basis as follows:

Where: PEn PEN2O,n Project emissions in monitoring period n Project emissions of N2O from the Project Activity in monitoring period n PEN2O,n t CO2e 18,653 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 PEn,n t CO2e 18,653 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 (t CO2e) (t CO2e)

Year 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020

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2021 2022 (Sep) Total

74,613 55,960 746,131

74,613 55,960 746,131

Project emissions of N2O from the Project Activity (PEN2O,n) are calculated as follows:

Where: PEN2O,n QN2O,tail gas,n GWPN2O Project emissions of N2O from the Project Activity in monitoring period n Amount of N2O released through the tail gas of the Project Activity to the atmosphere in monitoring period n Global Warming Potential of N2O valid for the commitment period PEN2O,n t CO2e 18,653 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 55,960 746,131 QN2O,tail gas,n t N2O 60.2 240.7 240.7 240.7 240.7 240.7 240.7 240.7 240.7 240.7 180.5 2,407 GWPN2O t CO2e/t N2O 310 310 310 310 310 310 310 310 310 310 310 (t CO2e) (t N2O) (t CO2e/t N2O)

Year 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Sep) Total

The amount of N2O released through the tail gas of the Project Activity (QN2O,tail gas,n) is determined in accordance with the latest version of the Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (currently Version 02.0.0) as follows:

Where: QN2O,tail gas,n FN2O,tail gas,h hn Amount of N2O released through the tail gas of the Project Activity to the atmosphere in monitoring period n Mass flow of N2O in the gaseous stream of the tail gas in the hour h Operating hours (t N2O) (kg N2O/h) (hrs)

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Year 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Sep)

QN2O,tail gas,n t N2O 60.2 240.7 240.7 240.7 240.7 240.7 240.7 240.7 240.7 240.7 180.5

FN2O,tail gas,h kg N2O/h 29.32 29.32 29.32 29.32 29.32 29.32 29.32 29.32 29.32 29.32 29.32

hn hrs 2,052 8,208 8,208 8,208 8,208 8,208 8,208 8,208 8,208 8,208 6,156

The mass flow of N2O in the gaseous stream of the tail gas (Fi.t8) is determined in accordance with Option C of the latest version of the Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (currently Version 02.0.0) as follows:

Where: Fi,t Vt,wb,n vi,t,wb

i,n

Mass flow of greenhouse gas i in the gaseous stream in time interval t Volumetric flow of the gaseous stream in time interval t on a wet basis at normal conditions Volumetric fraction of greenhouse gas i in the gaseous stream in time interval t on a wet basis Density of greenhouse gas i in the gaseous stream in normal conditions Fi,t kg gas/h 29.32 29.32 29.32 29.32 29.32 29.32 29.32 29.32 29.32 29.32 Vt,wb,n m3 wet gas /h 90,485 90,485 90,485 90,485 90,485 90,485 90,485 90,485 90,485 90,485 vi,t,wb m3 gas i /m3 wet gas 0.000165 0.000165 0.000165 0.000165 0.000165 0.000165 0.000165 0.000165 0.000165 0.000165
i,n

(kg gas/h) (m3 wet gas/h) (m3 gas /m3 wet gas) (Kg gas i/m3wet gas i)

Year 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021
8

Kg gas i /m3wet gas i 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96

Fi,t corresponds with FN2O,tail gas,h of ACM0019 (Version 01.0.0)

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2022 (Sep)

29.32

90,485

0.000165

1.96

The density of greenhouse gas i is calculated as follows:

Where:
i,n

Density of greenhouse gas i in the gaseous stream in actual conditions (Pt, Tt) in time interval t Absolute pressure of the gaseous stream in time interval t Molecular mass of greenhouse gas i Universal ideal gases constant Temperature of the gaseous stream in time interval t
i,n

(Kg gas i /m3wet gas) (Pa) (kg/kmol) (Pa m3 /kmol.k) (K) Tn K 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15

Pn MMi Ru Tn Year 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Sep)

Kg gas i /m3wet gas 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96 1.96

Pn Pa 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325

MMi kg/kmol 44.02 44.02 44.02 44.02 44.02 44.02 44.02 44.02 44.02 44.02 44.02

Ru Pa m3 /kmol.k 8,314 8,314 8,314 8,314 8,314 8,314 8,314 8,314 8,314 8,314 8,314

The Volumetric flow of the gaseous stream is calculated as follows:

Where: Vt,wb,n Vt,wb Pt Tt Pn Tn Volumetric flow of the gaseous stream in a time interval t on a wet basis at normal conditions Volumetric flow of the gaseous stream in time interval t on a wet basis Pressure of the gaseous stream in time interval t Temperature of the gaseous stream in time interval t Absolute pressure at normal conditions Temperature at normal conditions (m wet gas/h) (m wet gas/h) (Pa) (K) (Pa) (K)

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Year 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Sep)

Vt,wb,n m wet gas/h 90,485 90,485 90,485 90,485 90,485 90,485 90,485 90,485 90,485 90,485 90,485

m wet gas/h 137,369 137,369 137,369 137,369 137,369 137,369 137,369 137,369 137,369 137,369 137,369

Pt Pa 101,000 101,000 101,000 101,000 101,000 101,000 101,000 101,000 101,000 101,000 101,000

Tt K 413.35 413.35 413.35 413.35 413.35 413.35 413.35 413.35 413.35 413.35 413.35

Pn Pa 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325 101,325

Tn K 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15 273.15

Emission reductions Emission reductions (ERn) are calculated ex-ante as follows:

Where: ERn BEn PEn Emission reductions in monitoring period n Baseline emissions in monitoring period n Project emissions in monitoring period n (t CO2e) (t CO2e) (t CO2e)

Year 2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Sep) Total

Total PEn t CO2e 18,653 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 55,960 746,131

BEn t CO2e 72,359 274,592 259,749 252,328 237,485 222,642 207,799 200,378 185,535 185,535 139,151 2,237,552

ERn t CO2e 53,705 199,979 185,136 177,714 162,872 148,029 133,186 125,765 110,922 110,922 83,191 1,491,421

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B.6.4. Summary of ex ante estimates of emission reductions Year Baseline emissions (t CO2e) 72,359 274,592 259,749 252,328 237,485 222,642 207,799 200,378 185,535 185,535 139,151 2,237,552 10 Project emissions (t CO2e) 18,653 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 74,613 55,960 746,131 Leakage (t CO2e) Emission reductions (t CO2e) 53,705 199,979 185,136 177,714 162,872 148,029 133,186 125,765 110,922 110,922 83,191 1,491,421

2012 (Oct) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Sep) Total Total number of crediting years Annual average over the crediting period

223,755

74,613

149,142

B.7. Monitoring plan B.7.1. Data and parameters to be monitored Data / Parameter Unit Description Source of data Value(s) applied PNA,n t HNO3 Nitric acid produced in the monitoring period n Measurements by project participants and production reports No measurements available at this stage of the project activity. The assumptions for ex-ante emission reduction estimations can be found in section B.6.3. The nitric acid production is measured with a coriolis type mass flow meter, which measure mass flow along with integrated density and temperature measurement values, which are used as a basis for calculation of the nitric acid concentration. The nitric acid at 100% is automatically calculated by multiplying the mass flow with the concentration. In the case that the integrated density and temperature instruments are down (fail) in the a coriolis type mass flow meter, determination of the nitric acid concentration will be manual by trained plant staff using standards laboratory density and temperature measurements taken during the period of down time. Measurements are continuous, and recorded hourly, and totalized for the

Measurement methods and procedures

Monitoring frequency

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QA/QC procedures

Purpose of data Additional comment Data / Parameter Unit Description Source of data Value(s) applied Measurement methods and procedures

monitoring period n The coriolis type mass flow will be maintained and calibrated in accordance with the manufacturers recommendations. Monitoring Management and Quality Assurance procedures will be followed in recording and handling of this data/parameter. Calculation of baseline emissions none hn Number of hours of operation in a monitoring period n Measured No measurements available at this stage of the project activity. The design temperature of the ammonia oxidation burner under the primary gauzes is 890 oC9 and this operational approximate temperature corresponds to the real operation hours of the Ammonia Oxidation Rector. This operational temperature of the oxidation burner is reported continuously to the DCS of the nitric acid plant, via three thermocouple meters. Operation hours are then determined as those hours where upon the measured temperature is in excess of 820 oC as registered by any of the thermocouple meters (noting that three thermocouple meters are installed for redundancy, in the case that one or two fail, the highest value of the operational thermocouples will be used). Measurements are continuous, and recorded hourly The thermocouple meters will be maintained and calibrated in accordance with the manufacturers recommendations. Monitoring Management and Quality Assurance procedures will be followed in recording and handling of this data/parameter. Calculation of project emissions Records to be maintained during the projects lifetime

Monitoring frequency QA/QC procedures

Purpose of data Additional comment

Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0) Data / Parameter Unit Description Source of data Value(s) applied Vt,wb m3 wet gas/h Volumetric flow of the gaseous stream in time interval t on a wet basis Measured No measurements available at this stage of the project activity. The assumptions for ex-ante emission reduction estimations can be found in section B.6.3. Volumetric flow will be measured via a differential pressure (bar) flow meter measuring actual wet flow, and refer to reference to actual temperature (Tt) and pressure (Pt) . Volumetric flow will be continuously measured, and recorded by the Automated Measurement System (AMS). Separate hourly average values for the volume flow of the tail gas based on 2 seconds (or shorter) interval readings that are recorded and stored electronically. Data sets shall be identified by means of a unique time /

Measurement methods and procedures

Monitoring frequency

AOR conditions Flow Diagram Nitric Acid Plant Process for KNI Bontang project. This document is CONFIDENTIAL under license with Uhde Shedden.

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date key indicating when exactly the values were observed QA/QC procedures The flow meter will be maintained and calibrated in accordance with the manufacturers recommendations. The requirements of the latest version of EN-14181 will be applied, as per ACM00019 (Version 01.0.0) Monitoring Management and Quality Assurance procedures will be followed in recording and handling of this data/parameter. Calculation of project emissions None vi,t,wb m3 gas i/m3 wet gas Volumetric fraction of greenhouse gas i (N2O) in a time interval t on a wet basis Measured No measurements available at this stage of the project activity. The assumptions for ex-ante emission reduction estimations can be found in section B.6.3. The volumetric fraction will be measured via a continuous in-situ gas analyser operating on a wet basis. The volumetric fraction will be continuously monitored, and recorded by the Automated Measurement System (AMS). Separate hourly average values for the volume flow of the tail gas based on 2 seconds (or shorter) interval readings that are recorded and stored electronically. Data sets shall be identified by means of a unique time / date key indicating when exactly the values were observed. The meter will be maintained and calibrated in accordance with the manufacturers recommendations. Calibration will include zero verification with an inert gas (e.g. N2 or dry instrument air) and at least one reading verification with a standard gas (single calibration gas or mixture calibration gas). All calibrations gases must have a certificate provided by the manufacturer and must be under their validity period. The requirements of the latest version of EN-14181 will be applied, as per ACM00019 (Version 01.0.0) Monitoring Management and Quality Assurance procedures will be followed in recording and handling of this data/parameter. Calculation of project emissions None Tt K Temperature of the gaseous stream in time interval t Measured No measurements available at this stage of the project activity. The assumptions for ex-ante emission reduction estimations can be found

Purpose of data Additional comment Data / Parameter Unit Description Source of data Value(s) applied

Measurement methods and procedures

Monitoring frequency

QA/QC procedures

Purpose of data Additional comment Data / Parameter Unit Description Source of data Value(s) applied

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in section B.6.3. Measurement methods and procedures Monitoring frequency The temperature of the gaseous stream will be measured via an instrument with a recordable electronic signal. The temperature will be continuously monitored, and recorded by the Automated Measurement System (AMS). Separate hourly average values for the temperature of the tail gas based on 2 seconds (or shorter) interval readings that are recorded and stored electronically. Data sets shall be identified by means of a unique time / date key indicating when exactly the values were observed. The temperature instrument will be maintained and calibrated in accordance with the manufacturers recommendations. The requirements of the latest version of EN-14181 will be applied, as per ACM00019 (Version 01.0.0) Monitoring Management and Quality Assurance procedures will be followed in recording and handling of this data/parameter. Calculation of project emissions None Pt Pa Pressure of the gaseous stream in time interval t Measured No measurements available at this stage of the project activity. The assumptions for ex-ante emission reduction estimations can be found in section B.6.3. The pressure of the gaseous stream will be measured via an instrument with a recordable electronic signal. The pressure will be continuously monitored, and recorded by the Automated Measurement System (AMS). Separate hourly average values for the pressure of the tail gas based on 2 seconds (or shorter) interval readings that are recorded and stored electronically. Data sets shall be identified by means of a unique time / date key indicating when exactly the values were observed. The pressure instrument will be maintained and calibrated in accordance with the manufacturers recommendations. The requirements of the latest version of EN-14181 will be applied, as per ACM00019 (Version 01.0.0) Monitoring Management and Quality Assurance procedures will be followed in recording and handling of this data/parameter. Calculation of project emissions None

QA/QC procedures

Purpose of data Additional comment Data / Parameter Unit Description Source of data Value(s) applied

Measurement methods and procedures Monitoring frequency

QA/QC procedures

Purpose of data Additional comment

B.7.2. Sampling plan >> Data and parameters monitored in section B.7.1 above are not determined by a sampling approach,

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B.7.3. Other elements of monitoring plan >> This monitoring plan follows the monitoring requirements as set out in the approved methodology ACM0019 N2O abatement from nitric acid production (Version 01.0.0) as well as the Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream ( Version 02.0.0). A Monitoring Management and Quality Assurance System (MMQAS) will be developed and implemented by KNI for the Project Activity in order to ensure required consistency, transparency, and quality in monitoring and determination of emission reductions. The structure and provisions of the MMQAS are described in this monitoring plan under the following sub-sections: The operational and management structure; Data collection and archiving; Quality assurance and quality control (QA/QC) procedures.

For specific information on parameters to be monitored and the measurement methods and procedures, monitoring frequency, and other QA/QC procedures, please refer to section B.7.1. of this PDD. Operational and Management Structure KNI will develop an operational and management structure to be put in place to implement the monitoring plan. KNI will designate a CDM team to be responsible for carrying out all relevant responsibilities and roles related to the Project Activity monitoring. The key roles are described below and these responsibilities are incorporated into specific individual positions. The CDM team will consist of both management and technical/operational personal at KNI, and external consultants as required. The management structure consists of 3 levels to guarantee a step by step management of the Project Activity monitoring which will assign concrete responsibilities on the appointed person(s) who will be charged with performing of specific tasks.

Figure: CDM Project Activity Operational and Management Structure (1) CDM Manager will be responsible for the overall oversight and coordination of the projects technical operation and the monitoring of the project activity. (2) Monitoring Manager will be responsible for the overall oversight of the proper monitoring, to include equipment and data management (data collection & transfer, calculations, records keeping, and archiving of data & records). The Monitoring Manager will as well have the responsibility to perform monthly QA checks on data records. (3) Monitoring Staff will be organized on a daily or shift basis and be responsible for ensuring that monitoring equipment is in operation and that daily data is collected and stored.

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(3) Instrument Staff will be responsible for ensuring that monitoring equipment is operating properly in accordance with monitoring requirements, and the such monitoring equipment is calibrated in accordance with such monitoring requirements. Before the start of the crediting period, clear roles and responsibilities will be assigned to the CDM team members involved in the Project Activity. Noting that periodic changes of CDM team members will occur during the crediting period. Data collection and archiving The project will utilize the latest monitoring technology which measures, records, and reports all key monitoring parameters (as defined in section B.7.1.) for the determination of N2O emission reductions as required for verification and issuance. The monitoring parameters are divided into two categories (1) Operational Parameters and (2) Tail Gas Parameters. Operational Parameters are those relating to the normal operation of the nitric acid plant and consist of measuring and recording the total production of nitric acid (PNA,n) and total number of operating hours (hn), please refer to section B.7.1. for more detail on measurement methods. Both parameters are measured continuously and data is stored in the nitric acid plants Distributed Control System (DCS), with redundant data storage. For the Project Activity, raw hourly data values are periodically extracted from the DCS and transferred to Project Activity data sets. In the case that the integrated density and temperature instruments are down (fail) in the a coriolis type mass flow meter, determination of the nitric acid concentration will be manual by trained plant staff using standard laboratory density and temperature measurements taken during the period of down time. Written records will be kept of any manual data collection during the period of down time, which will be transferred to Project Activity data sets. Tail Gas Parameters are those relating to the tail gas emissions of the nitric acid plant and consist of measuring and recording the volumetric flow of the tail gas (Vt,wb), volumetric fraction of N2O in the tail gas (vi,t,wb), temperature of the tail gas (Tt ), and absolute pressure of the tail gas (Pt). Tail Gas Parameters will be monitored through appropriate equipment, please refer to section B.7.1, and an integrated Automated Monitoring System (AMS). All Tail Gas Parameters are measured continuously and data is stored in the computer system of the AMS, with redundant data storage. For the Project Activity, raw average hourly data values are periodically extracted from the AMS and transferred to Project Activity data sets. In addition to applying the Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream (Version 02.0.0), the following conditions apply for the Tail Gas Parameters and AMS: Throughout the crediting periods of the project activity, the N2O concentration and volume or mass flow of the tail gas are to be monitored continuously. The monitoring system is to be installed and maintained throughout the crediting period based on the European Norm 14181 (2004), or any more recent update of that standard; The monitoring system should provide separate hourly average values for the N2O concentration and the volume or mass flow of the tail gas based on 2 seconds (or shorter) interval readings that are recorded and stored electronically. These N2O data sets shall be identified by means of a unique time / date key indicating when exactly the values were observed; The correction factors derived from the calibration curve of the QAL2 audit for the monitoring components as determined during the QAL2-test in accordance with EN14181 must be applied to both the N2O concentration and the volume or mass flow of the tail gas. This can either be applied automatically to the raw data recorded by the data storage system at the plant or it can be applied to the calculated hourly averages as part of the calculation of project emissions; If data for either the N2O concentration or the volume or mass flow of the tail gas are not available for more than 1/3 of any hour while the plant was in operation, the value for that hour shall be replaced with the maximum value of N2O concentration or volume or mass flow of the

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tail gas observed during the monitoring period. If data for neither the N2O concentration nor the volume or mass flow of the tail gas are available for more than 1/3 of any hour while the plant was in operation, the maximum value of mass flow of N2O calculated during the monitoring period shall be applied to any such hour. Values observed during five operating hours before and after a plant start-up and shut-down shall not be used for the determination of the maximum values; All data collected as part of the indicated monitoring will be archived electronically and kept for at least 2 years after the end of the crediting period. Archived data and other project records shall be held in a location separate from the location of the primary data source. Quality assurance and quality control (QA/QC) procedures The introduction and operation of a Monitoring Management and Quality Assurance System (MMQAS) will be the responsibility of the CDM Manager. The MMQAS consists of written guidelines and procedures (e.g. day to day monitoring, QA, maintenance, breakdown, archiving and records keeping etc.) provided to the CDM Team. The MMQAS provides documentation designed specifically for the required monitoring tasks of the Project Activity and strongly benefits the availability and transparency of data streams and processes which are relevant for the Project Activity. All tasks under the monitoring plan will be carried out strictly according to the guidelines and procedures. The MMQAS guidelines and procedures will be developed by the external consultant, and be in accordance with the requirements of the approved methodology ACM0019 (Version 01.0.0), Tool to determine the mass flow of a greenhouse gas in a in a gaseous stream ( Version 02.0.0), and the applicable CDM Project Standard. The CDM Manager will ensure continuous updates of guidelines and procedures as required by the CDM and the Project Activity, and that CDM Team members trained in accordance with updates. CDM Team members will be trained at a minimum once every year, both in class and in practical application regarding the MMQAS. Only trained staff will be members of the CDM Team and only trained CDM Team members will be allowed to perform tasks related to Project Activity monitoring activities. The Monitoring Manager will carry out frequent QA/QC checks on performance, data cross-checking, and data transfer, to ensure that staff are following the MMQAS, and to check the integrity of the monitoring data and calculations. All measurements will be conducted with calibrated measurement equipment according to relevant industry standards and in accordance with manufacturers recommendations. Noting that in particular the Tail Gas Parameters and AMS shall be installed and maintained throughout the crediting period based on the European Norm 14181 (2004), or any more recent update of that standard. SECTION C. Duration and crediting period C.1. Duration of project activity C.1.1. Start date of project activity >> Expected between 01/05/2012 and 01/10/2012: At which time the commercial contract for the secondary catalyst is entered into between KNI and the secondary catalyst supplier. This will mark the date at which the real implementation or construction or real action of a CDM project activity begins. C.1.2. Expected operational lifetime of project activity >> 25 years and 0 months C.2. Crediting period of project activity C.2.1. Type of crediting period >> Fixed Crediting Period

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C.2.2. Start date of crediting period >> 01/10/2012: Which is the expected date of first installation of the secondary N2O abatement catalyst, OR the date of submission for registration, whichever is later. C.2.3. Length of crediting period 10 years and 0 months SECTION D. Environmental impacts D.1. Analysis of environmental impacts >> The project has no significant direct or transboundary negative environmental impacts. The project involves the installation of a secondary catalyst within the existing nitric acid plant which breaks N2O down to elemental nitrogen (N2 gas) and oxygen (O2 gas), both of which are naturally occurring in the ambient atmosphere. The project does not require the use of water, land, fuels, oxidants or any natural resources. The physical installation and removal of the secondary catalyst will be in accordance with supplier recommendations and the internal health and safety procedures of KNI. The secondary catalyst used in the Project Activity will be leased from a supplier (originating outside of Indonesian), and the spent secondary catalyst will be removed and replaced from time to time and be returned to the supplier for refining.

D.2. Environmental impact assessment >> KNI does have an EIA for the KNI ammonium nitrate plant which was finalized in 2007 10 and approved by the Governor of East Kalimantan 11 . Referring to the Indonesian Law No. 32/2009 12 the Project Activity is not listed as a business and/or activity which is likely to give rise to major and significant impacts on the environment, and is small scale in nature. The Project Activity will not change the means of production, production capacity, technical specifications, equipment, land and buildings, and the time and duration of the KNI ammonium nitrate plant. Thus, in accordance with this regulation an Environmental Impact Assessment (EIA), referred to in Indonesia as an AMDAL, is not needed for the Project Activity. The on-going results of the Project Activity will be included in the required environmental reporting of the KNI plant, and thus included in the reported environmental management plan (RKL) and the environmental monitoring (RPL) from the start of the Project Activity. SECTION E. Local stakeholder consultation E.1. Solicitation of comments from local stakeholders >> In order to invite local stakeholders to provide comments on the proposed Project Activity, KNI organized 2 separate stakeholder consultations. A workers stakeholder consultation meeting and a public stakeholder consultation meeting. A general presentation was given during the public and workers stakeholder consultation meetings in order to provide detailed information on the Project Activity.
Environmental Impact Analysis, PT Kaltim Nitrate Indonsia, Dec. 2007. Decision of the Governor of East Kalimantan, No.660.1/K.596/2007. 12 Law No. 32/2009, October 3, 2009 Environmental Protection and Management.
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Public stakeholder consultation meeting In order to ensure that potential stakeholders were informed about the public stakeholder consultation meeting in due time; KNI published notices on April 12th, 2012 in three Indonesian newspapers.13 In addition, 30+ potential stakeholders (e.g. NGOs, academics, key government offices, and industrial neighbours) where identified by KNI and directly invited for the public stakeholder consultation meeting by means of invitation letters. 14 A total of 49 people attended the public stakeholder consultation meeting, which was held on April 19th, 2012 starting at 18:30 and located at Bontang Kuring Restaurant, City of Bontang. Workers stakeholder consultation meeting In order to ensure that respective plant staff were informed about the workers stakeholder consultation meeting, KNI published a notice on the workers notice board in the morning of April 18th, 2012.15 In addition, workers were verbally informed about the workers stakeholder consolation meeting. The workers stakeholder consolation meeting was held on April 18th, 2012 starting at 11:00 and located at the Planning Administration Building in the KNI plant. A total of 18 people attended the workers stakeholder consultation meeting. E.2. Summary of comments received >> Comments related to the CDM Project Activity were provided by meeting participants during a Question and Answer session of each of the stakeholder meetings. There were not negative comments or objections raised relevant to the Project Activity. Public stakeholder consultation meeting The following is a summary of comments received during the public stakeholder consultation meeting: No 1 Comments Kartolo Rimba (LSM Jaringan Pemuda Bontang) requested that KNI hold periodic meetings with the local community regarding its general operations, including helping the community understand environment and safety standards of general operations. Eko Febrian (Forum Komunikasi Remaja Mesjid) asked if there will be laboratory analysis of emissions, and if KNI is to use N2 in the manufacturing process? Harib Abdullah (Dinas Perindustrian Bontang) indicated appreciation for KNI taking steps to improve the environment, and how production will be reported to relevant agencies. Yudha Arfani (BLH Provinsi Kaltim) indicated that the project is related to Law No. 32/2009 and is a positive activity. There are regional/provincial government institutions for promoting climate change related activities, but there are many unfamiliar with such efforts and the provincial government could use input for such efforts. Din Samsiar (Kelurahan Guntung) requested more KNI interaction with the community to inform them about KNIs general operations.

2 3

13

Investor Daily (1), Sinar Harapan (2), Harian Terbit (3); Newspaper ads will be provided to the validating DOE upon request. 14 Example Copy(s) of invitation letters will be provided to the validating DOE upon request. 15 Workers stakeholder meeting notice will be provided to the validating DOE upon request.

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Kasmini (Kasi Trantib Kelurahan Guntung) pointed out that factories bring economic benefits also worries about pollution, and requests KNI to contribute to health assistance for the community. Basyir Ahmad (Kadin Bontang) indicated that the impact of CDM on Bontang City is not clear, and will the compensation from the sale of emission reductions be distributed to the public? As well why are other companies in Bontang not participating in CDM. Prof. Marlon Aipassa (Unlam) asked if the emission reductions from the CDM project will be reported in the RKL/RPL (environmental reporting). As well that the factory be open to the public for KNI to inform about general operations. Mustofa (SMA YPK) asked that KNI educate children about KNI general operations. Awang (Yayasan Bikal LSM-) asked if there was another technology to reduce the N2O emissions, and how to gain access to monitoring reports. Further if the project is related to carbon trading then will the community feel the benefits of this. Juni (BLH Kota Bontang) supports the CDM project. Asked how the reporting (intervals) will be for this CDM project. Further, was the project activity included in the AMDAL and are there any new buildings or plant changes for the project activity. Will KNI participate in managing the environment beyond and in addition to the factory. Ridwan (Dinas Prindakop) asked if there is reporting of progress in plant construction to the municipal government.

8 9 10

11

12

Workers stakeholder consultation meeting The following is a summary of comments received during the workers stakeholder consultation meeting: No Comments Ramli Halim (KNI) asked will the plant operation stop for the installation of the catalyst, and after installation, will there be dedicated software to handle the data collection (including additional equipment)? Once the project is audited and in compliance will KNI get any type of certificate? Finally, will the CDM require a full time job? Ratna Aisha (KNI) asked how big is the investment for the secondary catalyst, and will the data output need to be verified by a certain body? Indra Prasetya (KNI) asked if in CDM it is compulsory to communicate to the local community? The activity can potentially be misunderstood. The project is a good one but how do we communicate this strong positive message to the local community. Agus Salim (KNI) indicated the local community will be interested to know how many more people can be involved in this project? This is a good opportunity for Bontang company to reduce N20, and a good value for KNI , as it will be included into the additional positive criteria of government environmental audits. Has there been an advertisement for the public forum? Technically will the additional catalyst have an increase in pressure load? Eko Pasono (KNI) asked who will be responsible for the process (in terms of accounting) KNI or Orica, and is this investment part of the Bontang plant budget/project or separate? Mangara Sidabutar (KNI) Will there be a press release nationally to highlight the CDM project after implementation?

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E.3. Report on consideration of comments received >> The following the considerations were given to address the comments received by stakeholders at the meetings. Public stakeholder consultation meeting The respective comments received during the public stakeholder consultation meeting where addressed by Mr. Antung Pandoyo (KNI) and Mr. Agus Salim (KNI). A summary of the consideration of comments is as follows: No 1 Consideration of comments There will be another opportunity for KNI to better understand and explore such needs with the community, and a further meeting will be planned for such discussion regarding general operations. In addition to the automatic emission monitoring system, KNI will conduct sampling and laboratory analysis for what is required by regulations. KNI will not use the N2 as a feedstock resulting from the conversion of N2O into N2 and O2. KNI will make efforts to support the activities of the province of East Kalimantan especially for other green projects, and such support can be discussed. Noting that KNIs emission reduction activity under CDM is a form of awareness in support of the green industry program, and that the production of KNI will follow existing regulations. Information about regional institutions supporting climate change activities was appreciated, and that KNI is willing to provide technical assistance for the community fo understand CDM if necessary. There will be another opportunity for KNI to better understand and explore such needs with the community, and a further meeting will be planned for such discussion regarding general operations. There will be another opportunity for KNI to better understand and explore such needs with the community, and a further meeting will be planned for such discussion regarding general operations. The goal of the CDM project activity is to reduce greenhouse gas emissions that can cause global warming, thus having a positive impact on the world and not just the city of Bontang. At current market conditions the compensation from carbon trading can only cover the cost of investment for this project, thus KNI is carrying out the project to help preserve the environment through CDM. KNI could not address the intent of other companies participating in CDM. Reporting of the CDM project activity will be done to relevant agencies including UNFCCC and in the RKL/RPL environmental management reporting. A further meeting will be planned for such discussion regarding general operations. There will be another opportunity for KNI to better understand and explore such needs with the community, and a further meeting will be planned for such discussion regarding general operations. The emission reductions is only done through the use of a catalyst, and other types of technology have a different technical installation requirement and are more expensive.

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Monitoring results can be accessed by anyone at the UNFCCC website. Regarding carbon trading, if there was no CDM then such an activity would only be a cost to KNI. CER prices go up and down, and the methodology allows KNI to only claim approximately 30% of actual emission reductions. The project benefits the community. KNI could not speak for the company PT.PKT. KNI will provide monthly reporting to the authorities if this is required. This CDM project activity is not included in the scope of the AMDAL, and the AMDAL documents are available. Based on existing regulations this CDM project activity does not require a change in the AMDAL or a new one. There is no changing of equipment or new buildings. KNI will carry out a community development project, for example participate in the planting of one million trees for East Kalimantan. Copy of the existing construction reports will be sent to the office of the City of Bontang.

11

12

Workers stakeholder consultation meeting The respective comments received during the workers stakeholder consultation meeting where addressed by Mr Russell Higgins (Orica Australia) and Mr Douglas Marett (Grue + Hornstrup). A summary of the consideration of comments is as follows:

No

Consideration of comments The plan is to stop the plant in October this year (at pt gauze change) to install the secondary catalyst. For the baseline part of calculations existing equipment and the DCS will be used. For the project emissions, an analyser and flow meter is used. A separate data system will be installed and take data from the flow meter and analyser to calculate the project emissions. The measurement and data handling must follow standards and there will be quality procedures that will have to be implemented which KNI staff will be trained on at a later time. Every year KNI will get CER certificates which can be sold, like on a stock exchange. Once the training has been given on the system and the QA procedures, it typically does not take more than 15 minutes for the person responsible to do it each day. There will be a full time person at ORICAAsia (due to several CDM projects) who will manage the whole interface and be an expert in talking to the consultantsetc. The cost of investment is high with several tons of catalyst installed...etc. There are external registered auditors who do verifications. The process is strict so KNI must communicate this to the local community. Two weeks ago we paid visits to all the people to talk to them about the project. We have set up the public forum for tomorrow which will be conducted in Bahasa. We have formally sent out invites as well as gone through the process of advertising in the newspaper. It is believed to be a good project. We have formally sent out invites as well as gone through the process of advertising in the newspaper. There is a slight increase in pressure drop, but no impact on production. We expect it to be without any quality issues. The project is with KNI therefore the right thing to do is to have the credits benefit (cover) KNIs costs, so revenues go there. Any tax on this will go to the Indonesian government. The CDM project is a separate and standalone project from the ammonium nitrate plant After installed in October then KNI will look deeper into the project and decide then if KNI will publicize it further

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SECTION F. Approval and authorization >> The Letter of Approval from the Indonesian Government is not available at the time of submitting the PDD to the validating DOE. -----

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Appendix 1: Contact information of project participants Organization name Street/P.O. Box Building City State/Region Postcode Country Telephone Fax E-mail Website Contact person Title Salutation Last name Middle name First name Department Mobile Direct fax Direct tel. Personal e-mail PT Kaltim Nitrate Indonesia , JI Asia Afrika No 8 Sentral Senayan 1, 6th floor Jakarta 10270 Indonesia +62 21 572 3070 +62 21 572 3080

Antung Pandoyo Project Manager Mr Pandoyo Antung

+62 21 2994 6903 antung.pandoyo@orica.com Appendix 2: Affirmation regarding public funding Refer to section A.5 of this PDD Appendix 3: Applicability of selected methodology Refer to section B.1 of this PDD

Appendix 4: Further background information on ex ante calculation of emission reductions Refer to section B.6.3 of this PDD Appendix 5: Further background information on monitoring plan Appendix 6: Summary of post registration changes None as of April 20, 2012 -----

UNFCCC/CCNUCC

CDM Executive Board

History of the document Version 04.1 04.0 Date 11 April 2012 EB 66 13 March 2012

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Nature of revision Editorial revision to change version 02 line in history box from Annex 06 to Annex 06b. Revision required to ensure consistency with the Guidelines for completing the project design document form for CDM project activities (EB 66, Annex 8).

03

EB 25, Annex 15 26 July 2006 02 EB 14, Annex 06b 14 June 2004 01 EB 05, Paragraph 12 03 August 2002 Decision Class: Regulatory Document Type: Form Business Function: Registration

Initial adoption.