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					                                                Asia Pulp & Paper - Indonesia
                                                Executive Summary of

                                                APP’s Carbon Footprint Assessment


                                                August 8, 2008

                                                www.erm.com




Delivering sustainable solutions in a more competitive world
CONTENTS


    INTRODUCTION                                                  1

    SUMMARY OF CARBON FOOTPRINTS OF APP’S PULP & PAPER
    MILLS (TASK-1)                                                4




ENVIRONMENTAL RESOURCES MANAGEMENT                ASIA PULP & PAPER

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INTRODUCTION


In their efforts to enhance the Corporate Sustainability initiatives, Asia Pulp &
Paper Indonesia (APP) initiated the Carbon Footprint Project for the eight pulp
& paper mills in Indonesia. APP retained Environmental Resource
Management (ERM) Indonesia to develop the Carbon Footprint for each mill
for the financial year 2006. The project also includes identification of
Operational Improvements as well as potential activities for the Clean
Development Mechanism (CDM) under the Kyoto Protocol. To achieve these
objectives, three specific tasks were identified in the scope of work as follows:

•      Task-1: Develop Carbon Footprint for each mill, taking into account
       Carbon Mass Balance in the two of APP’s pulpwood plantation sources
       and eight mill facilities1;
•      Task-2: Assess the options for Operational Interventions, in particular
       improvement of energy efficiency to reduce Carbon Footprint; and
•      Task-3: Identify measures of Carbon offsets through emission reduction
       activities via voluntary actions of possible mechanisms such as Clean
       Development Mechanism (CDM).

This assessment establishes a benchmark for the initial carbon accounting
systems and protocols required for an ongoing process of evaluating “carbon
footprint”. This report provides a firm basis for the ongoing quantification and
qualification of the APP’s contribution of Greenhouse Gases (GHG). This
process will assist APP to help to reduce its own carbon footprint in future and
thus achieve its overall long-term objective to produce carbon neutral paper.

The summary of the resources and GHG emissions for production of paper in
APP’s eight mills in 2006 is shown in the Figure A. The total energy
consumption from fossil fuels amounted to 78,869 TJ to produce 4,102,076
tonnes of paper. The total GHG emissions value from APP’s eight mills
amounted to 6,416,058 tCO2e.

APP pulpmills are supplied by plantation areas located in Riau, Jambi, South
Sumatra and Kalimantan. In 2006 logs for the two pulp mills were primarily
supplied from the plantations in Riau for the Indah Kiat Pulp mill in Perawang
and from the Jambi & South Sumatra plantations for the Lontar Papyrus mill.
There was no significant supply of logs from the Kalimantan plantation for the
two pulp mills. For determining the Carbon Footprint of the mills, only the
sequestration by the plantations in Jambi, South Sumatra and Riau provinces
were considered in the carbon balance. Since Jambi and South Sumatra
plantations supplied logs to the same Lontar Papyrus pulp mill, their
sequestration values have been combined.




1
    The Executive Summary of Task 1 is available to public
ENVIRONMENTAL RESOURCES MANAGEMENT                                  ASIA PULP & PAPER

                                                1
The carbon sequestration value for the APP’s pulpwood plantations supplying
wood to the two pulp mills from Jambi, South Sumatra and Riau provinces
amounted to 10,098,215 tCO2e in 2006. APP’s total pulpwood plantation area in
Jambi, South Sumatra, Riau, and Kalimantan provinces in 2006 was 646,994
hectares. The net total carbon sequestration from these plantations was
12,537,595 tCO2e with the total gross carbon sequestration of 21,226,848 tCO2e.




ENVIRONMENTAL RESOURCES MANAGEMENT                                 ASIA PULP & PAPER

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                                                           Primary Resources in 2006
                                                                                tonne
                                                          Woodchip          10,582,118
                                                          External Pulp       258,034
                                                          Post Consumer
                                                                             1,201,461
                                                          Waste




 Energy Consumption from Fossil Fuels in 2006                                                      GHG Emissions in 2006           Plantation Sequestration in 2006
                                                                  APP's Mills
                                            tera joule                                                               tonne CO2e
                                                                                                                                  Jambi & S Sumatra
Stationary Combustion of Fossil Fuels            75,843                                      Total GHG Emissions -    6,416,058                               -7,102,556
                                                                                                                                  (tCO2e)
Imported Electricity                             2,666         PT Lontar Papyrus             Fossil Fuel Based                    Riau (tCO2e)                -2,995,659
                                                           PT Indah Kiat Pulp & Paper
Mobile Combustion of Fossil Fuels                 361          (IKPP) - Perawang                                                  Kalimantan (tCO2e)          -2,439,380
                                                                 PT Tjiwi Kimia
Total Energy Consumption                         78,869       PT IKPP - Tangerang
                                                                 PT Pindo Deli 1                                                  Net total Sequestration
         ( 2,691,075 tonne of coal equivalent)                   PT Pindo Deli 2                                                                              -12,537,595
                                                                                                                                  (tCO2e)
                                                                PT IKPP - Serang                                                  Gross Total
                                                               PT Ekamas Fortuna                                                                              -21,226,848
                                                                                                                                  Sequestration (tCO2e)
                                                                                                                                  Total Plantation Area
                                                                                                                                                                646,994
                                                                                                                                  (Ha)

                                                                                                                                  C-Footprint considers Jambi and Riau
                                                                                                                                    sequestration of 10,098,215 tCO2e

                                                           Paper Production in 2006
                                                                                tonne
                                                          Jumbo Roll         4,102,076




Figure A          Summary of Resources and GHG Emissions for Production of Paper in APP’s Eight Mills in 2006




                  ENVIRONMENTAL RESOURCES MANAGEMENT                                                                                               ASIA PULP & PAPER

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SUMMARY OF CARBON FOOTPRINTS OF APP’S PULP & PAPER
MILLS (TASK-1)


The development of Carbon Footprint involves determination of total
emissions of Greenhouse Gases (GHG) emitted during the production of
paper. The Carbon Footprint for each mill is expressed as tonne of carbon
dioxide (CO2) equivalent per tonne of paper produced (tCO2e/tonne of paper).

The Carbon Footprint was developed according to the guidelines of the World
Resource Institute (WRI)2, protocol by International Council of Forest and
Paper Associations (ICFPA)3 and Calculation Tools for Estimating Greenhouse
Gas Emissions from Pulp and Paper Mills by Intergovernmental Panel on
Climate Change (IPCC)4.

The boundaries for the Carbon Footprint have been specified for the mills
producing base paper up to the jumbo rolls. Boundaries also extend to the
plantation areas in Jambi, South Sumatra, and Riau provinces which provide
the logs for producing pulp. The carbon footprints have been developed for the
following eight mills:
•    PT Lontar Papyrus
•    PT Indah Kiat Pulp & Paper (IKPP) - Perawang
•    PT Tjiwi Kimia
•    PT IKPP - Tangerang
•    PT Pindo Deli 1
•    PT Pindo Deli 2
•    PT IKPP - Serang
•    PT Ekamas Fortuna



BOUNDARIES

The Carbon Footprinting requires identification of boundaries in terms of time,
space, and organization. The Temporal Boundary defines the time period. The
Operational Boundary defines the space within which the Greenhouse Gas
emissions take place. The Organizational Boundary defines the organization
responsible for the Greenhouse Gas emissions.

Since the assessment was started in mid 2007, in order to ensure the
completion of data required, the Temporal Boundary for this initial Carbon
Footprint assessment has been selected as the production year from 1st January
2006 to 31st December 2006. This Temporal Boundary provides a baseline year



2   World Resource Institute, WRI (2004)
3   International Council of Forest and Paper Associations, ICFPA (2005)
4   Inter-governmental Panel for Climate Change, IPCC(2006)

ENVIRONMENTAL RESOURCES MANAGEMENT

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to evaluate future performance of APP’s efforts to develop actions which are
directed at the vision of Green House Gas emission reduction and “carbon
neutral” paper production in Indonesia.

The Organizational Boundary includes the power generation facilities
associated with each mill. The sole purpose of these power plants is to provide
electricity and steam to the associated mills. Under the contractual agreements
the mills provide the fuel sources to the power plants.

The Operational Boundary for the development of this initial carbon footprint
is divided into three components:
1.   Pulpwood plantation sequestration and harvesting emissions directly
     associated with the mills and calculated up to the point where harvested
     logs are delivered to the mills;
2.   Greenhouse Gas (GHG) emissions associated with the production of Leaf
     Bleached Kraft Pulp (LBKP)5 pulp; and
3.   Greenhouse Gas (GHG) emissions associated with the production of base
     paper, up to jumbo roll.



CARBON FOOTPRINTS WITHOUT SEQUESTRATION

The Carbon Footprints for all eight APP mills based on the operational data
from the mills for 2006 are summarized in Table I. These Carbon Footprints do
not include the sequestration of carbon in pulpwood plantation. The Carbon
Footprints range from a minimum of 0.79 tCO2/t-paper in Pindo Deli 2 to a
maximum of 2.32 tCO2/t-paper in IKPP Perawang with a weighted average of
1.56 tCO2/t-paper for the APP Group. The small footprint of Pindo Deli 2 is
primarily due to the use of natural gas. The large footprint of IKPP Perawang is
primarily due to the use of fossil fuels other than natural gas.

The Carbon Footprint for the pulp & paper sector in North America, excluding
plantation sequestration, is reported to be in the range of 1.46 to 2.20
tCO2e/tonne product (Worrell et al, 2001). Japan’s Oji Paper Group in their
Environmental and Sustainability Report 2006 indicated an integrated carbon
footprint of 1.45 tCO2e/t-paper, without plantation sequestration. The APP
production facilities’ Carbon Footprint of 1.56 tCO2/t-paper, excluding
plantation sequestration, is within the sector average.




5    Leaf Bleached Kraft Pulp – short-fiber pulp used in paper making, typically hardwoods

ENVIRONMENTAL RESOURCES MANAGEMENT

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Table I   Carbon Footprints of APP Pulp & Paper Mills for 2006 (without Plantation
          Sequestration)

                                               Carbon Footprint without
                         Mill                       Sequestration
                                                tCO2e / tonne Base Paper
          PT Lontar Papyrus                              1.19
          PT IKPP - Perawang                             2.32
          PT Tjiwi Kimia                                 1.96
          PT IKPP - Tangerang                            1.69
          PT Pindo Deli 1                                1.39
          PT Pindo Deli 2                                0.79
          PT IKPP - Serang                               1.49
          PT Ekamas Fortuna                              1.12
          Total Weighted Average                         1.56



          CARBON FOOTPRINTS WITH SEQUESTRATION

          To determine the level of sequestration, the carbon balance was also estimated
          for APP’s total plantation in Indonesia for the year 2006. APP’s pulpwood
          plantations are located in Riau, Jambi, South Sumatra and Kalimantan with a
          total area of 646,994 hectares. Plantations in Riau, Jambi, and South Sumatra
          provinces provided logs for the IKPP Perawang and Lontar Papyrus in 2006.
          Hence, these pulpwood plantations were considered for sequestration for
          estimating the Carbon Footprint.

          In order to estimate the net carbon balance for a mill, the following equation
          has been used:


              Net CO2 Emissions = CO2 emissions (from the production of pulp and
              paper) - Net Plantation CO2 Sequestration




          Carbon balance for the APP’s plantation areas is summarized in Table II. The
          total gross carbon sequestration in 2006 from the plantations is equivalent to
          21,226,848 tCO2e. However, due to the CO2 emissions from forest fires,
          harvesting and transportation of logs, as well as biodegradation of logging
          residues in 2006, the total net of carbon sequestration is 12,537,595 tCO2e. The
          plantations of South Sumatra and Jambi were combined since the final
          destination of the wood from these plantations was Lontar Papyrus mill.




          ENVIRONMENTAL RESOURCES MANAGEMENT

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Table II        Net CO2 Flows in APP Pulpwood Plantation in 2006

                                                                            CO2 Equivalent
                                                                          Jambi and
                Carbon Balance Processes               Riau                 South        Kalimantan     Total
                                                                           Sumatra
                                                                                Tonnes
            Tree growth carbon sequestration         9,957,313            8,753,851       2,515,684   21,226,848
            Less CO2 emissions from burnt            -1,655,997           -960,265         -76,304    -2,692,566
            plantations
            Less CO2 emissions from                  -5,210,028           -680,258           0        -5,890,286
            biodegradation of logging residues
            Less CO2 emissions from transport         -95,629              -10,772           0         -106,401
            fuel consumption
            Net Plantation CO2 Flow                  2,995,659            7,102,556       2,439,380   12,537,595



                APP’s Carbon Footprint in 2006, with the plantation sequestration, reduces
                considerably to a weighted average footprint of 0.03 tCO2e/t-paper. The
                reduction of footprint is due to the absorption of CO2 by the APP’s plantations
                in Riau, Jambi, and South Sumatra provinces with the total net sequestration of
                10,098,215 tCO2 for the year 2006. The Carbon Footprint for the individual mill
                with the plantation sequestration is shown in Table III. The Carbon Footprints
                range from a minimum of -7.10 tCO2/t-paper in Lontar Papyrus to a maximum
                of 1.17 tCO2/t-paper in IKPP Serang with a weighted average of 0.03 tCO2/t-
                paper for the APP Group.



Table III       Carbon Footprints of APP Pulp & Paper Mills for 2006 (with Sequestration)

                                                        C-Footprint with
                               Mill                      Sequestration
                                                     tCO2e / tonne Base Paper
                PT Lontar Papyrus                                 -7.10
                PT IKPP - Perawang                                0.75
                PT Tjiwi Kimia                                    0.79
                PT IKPP - Tangerang                               0.51
                PT Pindo Deli 1                                   -2.17
                PT Pindo Deli 2                                   -2.14
                PT IKPP - Serang                                  1.17
                PT Ekamas Fortuna                                 1.12
                   Total Weighted Average                         0.03




                ENVIRONMENTAL RESOURCES MANAGEMENT

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