zsl

Musim Mas

Establishing biogas plants to process Palm Oil Mill Effluent

Introduction:

Greenhouse Gas (GHG) reduction and energy cost savings are two issues that are becoming increasingly important to businesses in a wide variety of sectors, including the oil palm industry. The Musim Mas Group is taking steps to capture methane gas – a waste gas which is 21 times more potent than carbon dioxide – from its palm oil mills.

Methane Capture Facility at Pangkalan Lesung, Pekanbaru, Riau Province, Sumatra, Indonesia

Methane Capture Facility at Pangkalan Lesung, Pekanbaru, Riau Province, Sumatra, Indonesia

Mills generate waste in the milling process, for example, the palm oil mill effluent (POME). POME is a thick brownish liquid that contains organic matter, solids, oil and grease. POME is harmful for the environment if it is discharged untreated. The conventional industry practice of processing POME is to keep the waste liquid in open-air treatment ponds, subjected to anaerobic digestion. This process can release large amount of GHG, particularly methane gas, into the atmosphere.

The biogas capture system solves this issue by capturing the methane gas generated by the POME in the pond. The pond is tightly sealed with a High Density Polyethylene (HDPE) material to capture the methane gas. The methane gas is subsequently used as an alternative fuel to diesel, generating electricity for the mills and estates.

One of the Group’s palm oil mills in Pangkalan Lesung (Pekanbaru, Riau Province) has been fitted with this methane capture facility for electricity generation since 2010.  The Musim Mas Group has about 100,000 ha of planted area (oil palm plantation) in Sumatra and Kalimantan with eight palm oil mills. Going forward, similar facilities at the Group’s remaining palm oil mills will commence within the next year.

The following is the result of an interview of Musim Mas staff including: Dr. Gan Lian Tiong (Head of Sustainability), Mr. Ooi Ling Hoak (Head of R&D), and Mr. Herman Tandinata (Deputy Production Director) by Michal Zrust, (ZSL Biodiversity and Palm Oil Project Manager) and Philip Rothrock (ZSL Assistant Researcher).

Biogas engine, which is also a type of internal combustion engine

Biogas engine, which is also a type of internal combustion engine

1. What were the primary motivations for developing the initial biogas plant? What internal goals were set for the project? 

Our primary motivation is our President Director’s commitment to mitigate the environmental impact by our operational practices, and seek opportunities from sustainable practices.

We seek to mitigate the environmental impact of our mills by reducing the greenhouse gas (GHG) emission from the operations, particularly by capturing the waste gas (methane). The captured methane gas is used to generate electricity and provide a sustainable, cheaper and more reliable electricity supply to the workers’ quarters and other amenities on the estates.

Our ambition reflects certain internal goals:

  • Reduce dependency on fossil fuel;
  • Implement biogas projects for all our current as well as future mills and estates;
  • Earn certified emissions reduction (CER).

2. Describe communication between different levels of management between the board of directors, operational managers, and workers regarding this project. How were decisions reached? Were strategies altered to accommodate issues found by workers operating the methane digester?

A special purpose CDM Committee was formed to look into the matter. This committee comprises personnel from all relevant departments. The committee met regularly to identify and address any issue, make decisions and obtain approval from the President Director.

The CDM committee conducted site visits to other palm oil mills that have already been fitted with biodigesters, to help us implement and build knowledge capacity among our staff. The committee developed an internal working paper before the methane reactor was developed.

3. What alternatives to the biodigester were considered?

We studied many other systems but concluded that the biodigester system was the most suitable for us. Our success in implementing the first project within 12 months strengthened our belief in the technology.

4. How did Musim Mas justify the installation of a methane digester when compared with alternatives given the large initial investment of capital required (without seed funding and revenues from certified emission reductions)?

Most of the development costs were self-funded by Musim Mas, as part of our commitment to reduce GHG emissions and incorporate sustainable practices into our business.

In addition, the Danish Ministry of Climate and Energy, Danish Energy Agency, funded the development of the PDD (Project Design Document), registration with UNFCCC and Gold Standard, and verification of emission reductions up till 2012.

5. How did the location of the mills and access to the energy grid influence the development of the biogas plant?

The location of the mills and access to the energy grid did not influence the development of the biogas plants.

Firstly, palm oil operations in Indonesia are generally self-sufficient in energy by using by-products (oil palm biomass) as energy feedstock to generate electricity. The biogas plant provides an alternative fuel to generate electricity, in addition to the current method of generating electricity.

Secondly, the electricity generated from the captured biogas provides the energy needs of our mills and estates. We do not sell electricity to the energy grid.

6. Were there any unexpected problems or delays in establishing the methane digester? If so, how were they overcome and what lessons are applicable for the establishment of future biogas digesters?

The process of establishing the methane digester was generally smooth. We took about one year to get the first system up and running. We were on schedule without any significant unexpected problem or delay. For example, as the ability to sell the carbon credits indicates the successful start of the project, the start date of the crediting period was brought forward from 1/11/2011 to 14/10/2011 – the project was brought forward by two weeks. Hence, the length of the crediting period changed from 1/11/2011 – 31/10/2018 to 14/10/2011 – 31/10/2018.

Nonetheless, any new project will always have its own set of challenges. The most significant issue was convincing our people to prioritise the project. As the project involved different people from different departments and functions, it takes effort to coordinate the work between these different groups of people.

However, this issue was quickly resolved, because of the commitment from the top management team. Our top management team has done the economic due diligence earlier, and found that the benefits outweighed the costs of implementation. Hence, the management team was keen to see the project succeed, especially our President Director.

Other challenges include the usual teething problems of any engineering project, which include reworking earlier assumptions and fine-tuning the blueprint for the project.

7. What were some of the challenges of meeting the requirements and expectations of the funders, RSPO standards, CDM requirements, etc.? What lessons were learned about how to improve the process for preparing for CDM validation audits and the RSPO surveillance audits?

The methane capture project meets Criterion 5.6 of the RSPO Principles and Criteria standards.

As the funders of the project wish to purchase the registered credits from the project, the main criterion for the funders was to have a successful registration and verification of the project.

On the challenges of the project, the UNFCCC requirements for CDM projects are very stringent and time-consuming to undertake. We were required to monitor:

  • the flow of the waste water entering the biodigester;
  • chemical oxygen demand of POME before and after entering the anaerobic digester as well as before entering the aerobic treatment ponds;
  • quantity of sludge when desludging of the anaerobic digester is carried out;
  • quantity of biogas used by by biogas engine and flare;
  • methane content of biogas;
  • quantity of diesel fuel combusted for biogas plant.

The CDM Committee Members and our consultants have gained experience from our first biogas (CDM) project, helping us rework our earlier assumptions and fine-tune the implementation of the project. This has helped us in implementing other projects.

8. How many employees were involved in the monitoring, installation, maintenance, and planning of the methane digester and how did it impact their responsibilities, workloads, and expertise? How might the costs be different for developing methane digesters for larger mills?

The projects are handled by local contractors who hire mainly local workers, excluding a few skilled technicians. The monitoring and maintenance of the projects require 3 new staff and 14 new worker.

The methane capture project affirms our commitment to incorporate sustainable practices into our operations. We see sustainability as both a risk and an opportunity for the Group. Hence, though the cost of implementing these projects may seem high at first glance, we understood the long term value of reducing our dependence on fossil fuels, and ultimately keep our operating costs low.

Even though we are installing methane capture facilities for different production capacities, variable costs, and potential revenue, the cost of establishing facilities at larger mills (90 t/h) is not significantly different from those of smaller ones (45 t/h).

9. What are the fixed and variable costs of the methane digester?

The fixed cost of the first methane digester project is projected to be between US$ 3 – 4 million, with the operating costs falling between 3 and 4 US cent/ kilowatt hour of electricity produced.

An internal analysis concluded that it will take approximately 10 years to recover the investment costs for the methane digester, assuming that there is no income generated from the carbon credits, and the methane digester provides electricity for internal use, not the national energy grid.

10. Has the CDM validation impacted the marketability of Musim Mas’s products (including buyer interest, willingness to pay premiums, access to new markets and customers)?

Although these CDM projects have contributed toward the Group’s vision of pursuing sustainable and environmentally responsible activities, we have yet to benefit financially from our customers.

11. How did the establishment of this biogas reactor impact existing environmental monitoring systems? How did the data change after the installation of the digester? Did the collection of this new data help contribute to improvements in operational procedures, identification of risks, employee awareness, etc.?

With the establishment of our first biogas reactor, we have implemented continuous monitoring of the POME and biogas flow, its chemical oxygen demand, methane captured and utilized, as well as other operating parameters.

This monitoring is documented for management efficiency and control, as well as for the verification of CER. The anaerobic digester removes about 90% of COD before the treated POME is discharged into the conventional ponds.

Data on the results of our monitoring can be found at http://cdm.unfccc.int/Projects/DB/DNV-CUK1297330109.8/view (greenhouse gas emissions monitoring results summarized in the table below)

Year

Electricity consumption

Wastewater treatment system

Sludge treatment system

Treated wastewater discharged into river

Biogas released in the capture system

Flaring

Stored Biomass

Total Emissions

T CO2e

t CO2e

t CO2e

t CO2e

t CO2e

t CO2e

t CO2e

t CO2e

Baseline Emissions

0

           30,831

No desludging yet

0

N/A

N/A

N/A

           30,831

Project Emissions

32

             3,418

0

3,538 (default value from UNFCCC)

6,793

0*

13,781

N/A: not applicable

We implemented HIRA (Hazard Identification Risk Assessment) and conduct regular training on Occupational Safety and Health.

 

List of Attendees:

Musim Mas – Mr. TK Lim, Dr. Gan Lian Tiong, Mr. Ooi Ling Hoak, and Mr. Herman Tandinata.

ZSL- Michal Zrust, Biodiversity and Palm Oil Project Manager and Philip Rothrock, Assistant Researcher

Date 27th September 2012

Summary table:

Motivations for Change Options for Change Difficulties Faced Proposed Solutions
1 Reduce greenhouse gas emissions for CSR; generate electricity for mills, remove dependency on external fuel and diversify energy resources (Presidential Decree No 4 Year 2010) Write internal working paper identifying best options; install anaerobic digester to significantly reduce release of GHG emissions from settling process; use biogases from digester to produce electricity Lack of company experience with anaerobic digesters, insufficient expertise Hire personnel with previous experience with anaerobic digesters; conduct site visits to other company sites where the biogas system is already in place;
2 Recover costs for instillation of anaerobic digesters; justify costs to investors Register and validate project under CDM to attract certified emission reduction credits; High installation costs versus revenues; unable to recover upfront costs for ten years; validation and verification process can be expensive Rely on economies of scale to improve upon and replicate success in other mills by relying on expertise and same auditors; make institutional priority via CSR financial commitment