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Reports of CDM/JI Feasibility Studies: FY2007

Title of Feasibility Study (FS)Business Survey of the Biomass Use in the Electric Arc Furnace for Steel Manufacture in Indonesia
FYFY 2007
Main Implementing EntityJP Steel Plantech Co.
FS Partner(s)PT The Master Steel Mfg, Pt. JFE Trade Indonesia, JFE Engineering (M) SDN. BHD, YBUL, KYOEI Steel Ltd.
Location of Project ActivityJakarta, Indonesia
Summary of FS ReportPDF (189KB)
Description of Project ActivitySteel companies in Indonesia mainly use electric arc furnaces for melting and refinement of the steel scrap by using the electric energy to manufacture steels for building.. In this process, the coke originated from the fossil fuel is used in quantity of 2-3 % of the steel weight refined to prevent oxidation of scrap, control carbon in steel, and supply auxiliary heat source. On the other hand, oil palm manufacturing industry is in very active in Indonesia and Malaysia. The volume of oil palm wastes generated from this industry is about 4 million ton in every year. Although a part of oil palm wastes is used as fuel or activated carbon raw materials, the rate of abandonment and simple incineration being carried out is large.
The charcoal (PKS Charcoal) manufactured from Palm Kernel Shell (PKS) has the physical properties of high bulk density and high strength, compared with the charcoal of the woody origin, and very close to the coke used for steel manufacture. This project intends to reduce GHG (greenhouse gases) which generates from fossil fuels, based on the principle of Carbon Neutral, by replacing the coke with PKS charcoal.
Targeted GHGCO2
Category of Project ActivityBiomass Utilisation
CDM/JICDM
Duration of Project Activity/ Crediting Period10 years (2009-2018)
Baseline Methodology/ AdditionalityThe PDD draft was made on the basis of New Methodology which is now on pre-validation stage. The Methodology is named as “Emissions reduction through partial or total substitution of fossil fuels with alternative bio-char in steel manufacture with Electric Arc Furnace”, the process is limited to the electric arc furnace which replaces its fossil fuel with PKS charcoal or coconut shell charcoal. There are several cases of project boundaries, but in this case the boundary is limited to the inside of the steel mill of the Host Company, as PKS charcoal shall be supplied from existing plant, where the charcoal is the waste from timber vinegar manufacture. As for Baseline, at first the GHG emission rate from a unit ton of steel by the present fossil fuel use should be defined. In the Baseline scenario, the GHG emission volume shall be calculated by multiplying the unit emission with the annual steel production. In the Project scenario, the GHG emission volume shall be calculated by the actual fossil fuel volume used in the plant and its carbon content. As for the Additionality, the PKS charcoal price is more expensive than a fossil fuel price now, so financial barrier is considered to be cleared. As there is no example of the PKS charcoal use in a commercial scale, Technical barrier condition can also be cleared.
Estimation of GHG Emission Reductions11,220ton/year
Monitoring MethodologyThis is also the New Monitoring Methodology. GHG emission reduction shall be calculated by the volume of reduced fossil fuel use and its carbon content. Verification shall be executed by the procurement report of the fossil fuels and the Host Company’s steel production.
Environmental Impact AnalysisExpansion of the palm oil plantations is criticized as it will reduce the primeval forest. But our case will not intend to expand the plantations but aims at the effective use of the waste. The air pollution, which are worried in a PKS charcoal manufacturing, shall be avoided to meet the emission standards of the Host Country. The PKS charcoal manufacturing process is planned to be the simple labor concentration type from local technology. It can contribute to the local employment with the cheap equipment cost.
Issues and Tasks for Project RealisationPrices of coke and fossil fuels, as well as the price of PKS charcoal, have been increasing in these months. Although these prices are much fluctuating, economical study was done with the most recent coke price 200US$/ton and charcoal price 250US$/ton. Fossil fuel reduction written in the PDD is 3,600 ton/y and it will lead to the GHG emission reduction of 11,220ton-CO2/yr. When CER credit is 20US$/ton-CO2, income from CDM will exceed the cost-up of the fuel price. Supply capacity of the PKS charcoal is enough and the steel industry is very anxious about the coke price increase and shortage. Therefore, the Project has the strong possibility of implementation. The Project requires New Methodology, and the approval of the New Methodology will take 6 months or more, we are assuming that the CDM Project will be registered by January 2009.

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