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Reports of CDM/JI Feasibility Studies: FY2004

Title of the researchBio-Diesel Oil Refinery Construction Plan in the Republic of South Africa
FYFY 2004
Main research organizationMitsui & Co., Ltd.
Research partner(s)Austrian Biofuel Institute (Austria), Climate Experts Ltd. (Japan)
Location of the projectSouth Africa
Summary of the research report (PDF)200418.pdf(379kb)
Description of the projectThe Project is to produce and sell bio-diesel oil from Jatropha Curcas seeds - at a rate of 100,000 tons per year - to chemical companies in South Africa and elsewhere, for the purpose of using it as fuel in mixture with the ordinary diesel fuel, thereby to reduce CO2 and SO2 emissions and to gain the carbon credit. In addition, as the Project includes the establishment of Jatropha Curcas plantations for a stable sourcing, it will ultimately create around 50,000 jobs, including the bio-diesel oil refinery and the plantations, thereby contributing to the reduction of the unemployment rate and regional development in the country.
GHGCO2
Sector of the projectBiomass Utilisation
CDM/JICDM
Duration of the project activity/ crediting periodOverall credit period: 10 years
Baseline methodology/additionality1. Baseline methodology
The baseline was established using the lifecycle assessment technique, and it was established as follows:
  • While Jatropha Curcas is cultivated, there will be no additional removal of CO2.
  • Fossil fuel-based diesel oil is used in an amount equivalent to bio-diesel oil to be produced under the proposed project, which will cause emissions of global warming gases.
2. Additionality
  • In South Africa, no project similar to the proposed one is not implemented, which indicates a presence of a technical barrier.
  • Feasibility analysis indicates the IRR of 4.4%, which is much lower than the long-term interest of 11.5% in South Africa. Thus, the project is not attractive to investors unless the carbon credit is created. As a result, there is an economic barrier.
  • In South Africa, bio-diesel oil to be produced under the proposed project is not produced at all, which indicates a presence of a barrier to penetration to customers.
Estimation of GHG emissionsGHG emissions = Baseline GHG emission ■Total project emissions
= 370,000 - 110,000 [tCO2eq/y]
= 260,000 [tCO2eq/y]
GHG reduction is estimated at approximately 260,000 tons per year (tCO2eq), which is equivalent to 2.6 million tons of CO2 for the overall credit period of 10 years
Monitoring methodologyMonitoring will be carried out for the parameters directly related to CO2 emissions. Major items are as follows;
- Consumptions of heavy oil in the refinery (kl)
- Annual sales of bio-diesel oils (kl)
- Consumption of ordinary diesel oils for transportation(kl)
- Consumption of fertilizer at plantation site(tons)
Environmental impactIn the event of construction of the project facilities, environmental impact assessment is required under the Environmental Management Law.
Issues and tasks for project implementationTo implement the proposed project successfully, the following factors are critical; (1) to select good partners; (2) to operate the Jatropha Curcas plantations commercially to ensure steady supply of Jatropha Curcas seeds for bio-diesel oil production; (3) to find markets for two principal products, bio-diesel oil and glycerol/strained lees; and (4) to obtain the carbon credit as expected in order to raise the project’s profitability.
Validation
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