Fuel Switch CDM projects based on Natural Gas

Posted on March 11, 2011 by

Indian economy is highly dependent on fossil fuels such as coal and oil for power generation for both industrial and domestic supply. Thermal Power Plants are the major consumers of Coal in India and are likely to remain significant contributors to the overall energy mix of the country. The  deficiency of power continues resulting in low power supply to the every corner of the country. There is a need to reach to energy security and at the same time manage a switch to cleaner fuels, supplemented by the renewable energy sources such as wind and solar. Our limited coal reserves  and continuously growing demand will require focused strategies on demand management, efficiency upgradation (a National Mission under NAPCC itself) and the optimum use of Cleaner Energy Sources like Natural Gas.

Any project activity can be considered as a clean fuel power project, which uses Natural Gas as a fuel for power generation and export the clean power to grid/or use for captive purpose.  As compared to other highly polluting fossil fuels like coal, NG is less polluting. This power generation substitutes the power generation by National grid (if exported to the grid) which is predominantly operated with coal as fuel.  Since the Carbon Dioxide (CO2) emission due to combustion of Natural Gas is substantially less as compared to combustion of coal, lignite, fuel oil or Naphtha, the project helps in reducing GHG emission and hence eligible to earn carbon credits.

Overview of the CDM projects based on fuel switching to Natural Gas

Switching from high-carbon fuels such as coal, furnace oil etc to low carbon fuel like Natural Gas is covered in Fuel switch  class of CDM projects.  Fuel switch projects have been executed  with fuels such as biomass briquettes and Biogas . There are also a number of projects that are fairly large in size involving switch to natural gas. Fuel switch can be carried out in existing facility (ies) or a new facility/project (Greenfield project). 

  • Global scenario: There are 58 natural gas based fuel switch projects registered under the CDM globally. Total generated annual emission reduction (CER) fall in the range of 1.5-2 Cr CERs/Year (Rs 800-1100 crores per annum). The average size of the projects is around 4lac CERs per annum, indicating the large size of projects. More than 40 lac CER’s translating to a revenue of more than 220 crores INR have been issued to these project at the end of Feb 2011.
  • Indian Scenario: In India there are 13 registered CDM project under the same category which are likely to be generate about 44 L CERs/Year, more than Rs. 237 crores per annum.  Similar to the global distribution, the Indian project average size is 3 lac CERs per annum per project. About 6 L CER’s  worth more than 30 crores INR have been issued to these project at the end of Feb 2011.

Eligibility criteria and CDM project execution steps

  • Baseline establishment: The baseline for the fuel switch CDM project activity is the scenario that sensibly represents the green house gas emissions by the pre-project activity that uses high GHG intensive fuel like coal etc.  Practically it is volume of greenhouse gases that would have been emitted if the project were not implemented. It involves identification of baseline scenario for the proposed project activity and calculations of GHG emission for the baseline (baseline emission). 
  • Demonstration of Additionality: Additionality is the requirement that the greenhouse gas emissions after implementation of fuel switching in the existing or new project activity (CDM project activity) are lower than those that would have occurred in baseline scenario i.e. the most plausible alternative scenario which might be coal, furnace oil, etc.  This alternative scenario may be the business-as-usual case i.e. the continuation of baseline fossil fuel (high GHG intensive fuel) in the absence of proposed CDM project activity
  • Emission Reduction calculations: In fuel switch CDM projects emission reduction is the difference between baseline emissions (GHG emission that would occurred by burning high GHG intensive fuel like coal, furnace oil, etc) and actual project emissions (GHG emission resulted from the combustion of natural gas)
  • Monitoring: It includes measurement, collection, analysis and archiving of greenhouse gas emissions and reduction data from a CDM project

All these activity need to be included in project design document. After validation and verification of CDM project activity, tradable carbon credits can be issued against verified emission reduction.

Brief on Indian CDM projects

Project Title  (Registered CDM projects) Location Technology Capacity Average Annual ER
340 MW Gas based combined cycle power project expansion at Hazira Gujarat Combined cycle 340 MW 3,04,165
Installation of Natural Gas based package cogeneration systems at industrial facilities in Gujarat by Gujarat Gas Company Limited (GGCL), India. Gujarat Package cogeneration 10 MW 16,199
Sintex 7.5 MW Natural gas based package cogeneration project, Gujarat – India Gujarat Package cogeneration 7.5 MW 25,122
Fossil Fuel switch over project activity at Ammonia-IV plant of GSFC Ltd, Vadodara, India. Gujarat Fuel switch from  NG 866
18 MW Natural Gas based community power plant and 2 MW Waste Heat Recovery system Tamil Nadu Individual combustion control and monitoring system with waste heat recovery Tech by Wartsila, Finland 18 MW(+2  MW WHR) 31,872
Fuel switchover from higher carbon intensive fuels to Natural Gas (NG) at Indian Farmers Fertiliser Cooperative Ltd (IFFCO) in Phulpur Village, Allahabad, Uttar Pradesh by M/s Indian Farmers Fertiliser Cooperative Ltd (IFFCO) Uttar Pradesh Fuel switch from  NG 1,86,637
155 MW Gas based combined cycle power project at Hazira Gujarat Combined Cycle 155 MW 1,90,876
Grid-connected Combined Cycle Power Plant of capacity 219.067 MW using Natural Gas/ R-LNG as fuels at Gujarat, India. Gujarat Combined Cycle 219.067 MW 2,14,495
1147.5 MW Natural gas based grid connected Combined cycle power generation project Gujarat Combined cycle 1147.5 MW 31,89,704
119.8 MW Natural Gas based Combined Cycle Power Plant, at Tanjavur, Tamilnadu by M/s Aban Power Company Limited Tamilnadu Combined Cycle 119.8 MW 1,81,153
Switching of fuel from naphtha to natural gas in the captive power plant(CPP) at Dahej complex of Gujarat Alkalies and Chemicals Limited Gujarat 90MW Captive Co- Generation Combined Cycle Power Plant 90MW 99,462
Switching of fuel from Naphtha to Natural gas at United Phosphorus Limited (UPL) Gujarat Fuel switch from Naphtha to NG 41.80 M 55,783

There are 50 CDM projects based on Natural gas under the validation. These projects put together will together generate 1-1.5 Cr/CERs per annum.  (More than Rs 550 crores)

Low GHG intensive fuel like natural gas can be a very good option to reduce GHG emission that occur by conventional coal based power plants. Higher cost involved in such types of power plants and unavailability of constant supply of  natural gas is an another issue. Carbon credits incentive does help such projects to increase the financial attractiveness of the proposal to switch to natural gas.

To know more about Fuel switch CDM project, please contact us at Agneya

Global CDM project statistics

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