Project Idea Note The Coke Dry Quenching Project of Xingtai Iron and Steel Group Company Limited Date of Submission：January, 2006 PROJECT IDEA NOTE A. Project description, type, location and schedule Name of Project: The Coke Dry Quenching Project of Xingtai Iron and Steel Group Company Limited Technical summary of the project Date submitted: January, 2006 Objective of the project The objective of the proposed project is energy saving and environmental protection. Red-hot coke is quenched by circulating inert gases within a closed environment, preventing discharge of coke particles, while the heat energy of the red-hot coke is recovered into the waste heat boiler for use as process steam in the factory or generating electricity to grid. The project will reduce the amount of fossil fuel consumption, improve the quality of coke and contribute to the mitigation of global warming. Project description and The coke plant has two coke ovens, the total dry coke production is proposed activities 969700 tons per year. A 110t/h rating power coke dry quenching steam cycle system is installed in the two65-hole and 4.3-meter-height coke ovens to recover the heat of red coke, thus saving the energy. Its annual coke production is 952,000 ton. The total annual steam production adds up to 533,120 ton which could be utilized in production process. . The heat energy of the red-hot coke is recovered into the waste heat boiler for use as generating electricity. The CDQ Steam Power Generating Station has one set of 12MW turbo generator, whose capacity is 12MW. The total power generation capacity is 66.75× 106kWh per year. The proposal project will annually save 39597.65 ton of coal and reduce 66, 750 tCO2-equivalent emission, meanwhile, the coke quality is improved and coke ratio is reduced by 2.0%. Technology to be employed Coke dry quenching equipment (hereinafter called CDQ furnace) is a kind of equipment in which coke dry quenching technology is involved to reclaim coke and release heat energy. CDQ furnace can be used to improve the quality of coke and reclaim red coke, while making heat energy to the effect of energy saving and environmental protection. The proposed activities will adopt Nippon Steel Corporation technology, include CDQ equipment and CDQ waste heat electricity generation system, and one set of grounding dust collecting station will be built to catch a great lot of dust and powder from CDQ production and coke conveyance. This is an outstanding environmentally protective technology on national main industrials. Project developer Name of the project developer Xing Tai Iron and Steel Group Co. Ltd. Organizational category d.private company Other function(s) of the project a.Sponsor Project Idea Note The Coke Dry Quenching Project of Xingtai Iron and Steel Group Company Limited Date of Submission：January, 2006 developer in the project b.Operational Entity under the CDM Summary of the relevant The Xintai Iron and Steel Group Company Limited, is one of the experience of the project largest iron and steel integrated enterprises in China.Since the practice developer of open-up policy throughout China, the Corporation has enjoyed sustained economic growth year by year. The project developer has no experience for CDM project. Address No.233 Qingyuan street,Shijiazhuang,Hebei Province,the P.R.China,050021 Contact person Mr. Jiang Dong, Hebei CDM Project Office Telephone / fax Tel:+86-311-85813891/85877165 Fax: +86-311-85813891 E-mail and web address, if any Hqdong817@163.com,email@example.com Project sponsors (List and provide the following information for all project sponsors) Name of the project sponsor XingTai Iron and Steel Group Co. Ltd. Organizational category d.private company Address (include web address, if No.233 Qingyuan street,Shijiazhuang ,Hebei Province,the any) P.R.China,050021 Main activities Develop and maintain the proposed project Summary of the financials The totally fixed assets of Xintai Iron and Steel Group Co.Ltd. is RMB 3430.53million yuan. Type of the project Greenhouse gases targeted CO2 Type of activities Abatement Field of activities b. Energy demand improvement of energy efficiency of existing production equipment Location of the project Region East Asia & Pacific Country The People’s Republic Of China City Hebei Province Brief description of the location of The project locates in Xintai Iron and Steel Group Co., Ltd that sits the project in the southwest of Xingtai City. Expected schedule Earliest project start date 2007 Estimate of time required before Time required for financial commitments: 2 months becoming operational after Time required for legal matters: 2 months approval of the PIN Time required for negotiations: 2 months Time required for construction: 6months Expected first year of verified Emission Reduction or CER / 2008 ERU delivery Project lifetime 20 years Current status or phase of the ·Feasibility study finished project Current status of the acceptance Letter of No Objection is under consideration. of the Host Country The position of the Host The Host Country Country with regard to the c. signed the Kyoto Protocol. Kyoto Protocol Project Idea Note The Coke Dry Quenching Project of Xingtai Iron and Steel Group Company Limited Date of Submission：January, 2006 B. Expected environmental and social benefits Estimate of Greenhouse Gases Annual: 66,100tCO2-equivalent abated / CO2 Sequestered (in Up to and including 2012: 330,000tCO2-equivalent metric tons of CO2-equivalent) Up to a period of 10 years: 660,000tCO2-equivalent Up to a period of 7 years: 462,000tCO2-equivalent Up to a period of 14 years: 924,000tCO2-equivalent Baseline scenario In this project, the conventional CWQ (coke wet quenching) facilities in the cooling process of iron and steel factories, which are commonly employed in China, will be replaced with CDQ (coke dry quenching) facilities. The heat energy of the red-hot coke is recovered into the waste heat boiler for generating electricity to grid, thus reducing the amount of fossil fuel consumption（coal）. It will lead to reduction of GHG emissions. In the absence of the proposed project, the coal fired captive power plant will be built to supply the electricity power, or the grid- power will be increase output capacity. Therefore, no emission reductions will be achieved in the baseline scenario. Because investment in a CDQ project is more expensive compared to CWQ project, thus, without the income from sales of CER’s, the proposed CDM project activity would not happen，and without the project activity, the conventional CWQ (coke wet quenching) facilities in the cooling process of iron and steel factory would continue. And the waste gas will exhaust to atmosphere directly. The proposed project will lead to reduction of GHG emissions corresponding to 66,100 tonnes of CO2 equivalent per year and 661,000 tonnes of CO2 equivalent during 10 years. The emission reduction will come through waste heat recovery. For sequestration projects only: No Existing vegetation and land use Specific global & local environmental benefits Which guidelines will be applied? No Local benefits The environmental benefits in terms of GHG emission reductions will come from savings of primary fuels (coal) due to the waste heat recovery of the CDQ system. The red hot coke is cooled by Inert gases in the airproof CDQ chamber. With perfect sealing measures and dust collecting system, the dust and powder pollution during the coke discharging will be controlled easily, and the atmosphere pollution and the impact to surrounding equipment can be eliminated. Therefore, the environmental protection of CDQ is better than coke wet quenching system. CDQ is an innovative technology that not only reduces dust, soot and CO2 emissions, thereby contributing to environmental protection, but also achieves great energy savings by recovering waste heat, and is of great benefit to the sustainable development of China. Project Idea Note The Coke Dry Quenching Project of Xingtai Iron and Steel Group Company Limited Date of Submission：January, 2006 Global benefits GHG emission reduction Socio-economic aspects In CDQ process, the sensible heat in red hot is recovered and What social and economic effects utilized in steam form. A great deal of energy can be saved, can be attributed to the project accordingly the heat emission is decreased effectively. Compared and which would not have with coke wet quenching, 83% of sensible heat in red hot coke can occurred in a comparable be recovered in CDQ process. About 1.35GJ heat can be situation without that project? recovered from 1t coke. If the project put into operation, 66.75× Indicate the communities and the 6 10 KWH electricity will be saved, and the quality of CDQ coke is number of people that will benefit improved, and the productivity will be increased by 1％. from this project. About 20,000 persons living in the around of the project will benefit from this project as a result of the improvement of environment. Which guidelines will be applied? No The construction and operation of the proposed project will create What are the possible direct many working opportunities for local people. effects (e.g., employment creation, capital required, foreign exchange effects)? What are the possible other As a new technology, the CDQ equipment is not a well-known effects? For example: concept, so it is a need to provide capacity building in the field of planning and operating the system. This capacity building is part of the project activity. Environmental strategy/ There exists a huge energy saving potential in China, the efficient priorities of the Host Country reduction of the energy consumption will bring about the significant effect on GHG emission reduction. The CDQ technologies will be the emphasis of energy efficiency improvement in iron and steel plant, and in favor of global GHG emission reduction and sustainable development of China。 This technology is encouraged in the development policy for iron and steel industry in China. Therefore it will be supported by the Chinese Government. C. Finance Total project cost estimate Development costs 2.51 US$ million Installed costs 1.16 US$ million Other costs 15.94 US$million Total project costs 19.61 US$million Sources of finance to be sought or already identified Equity XingTai Iron and Steel Group Co., Ltd (19.54 US$million) Debt – Long-term 0 Debt - Short term Bank credit (0.031 US$million) Not identified 0.039US$million Carbon finance contribution 0 sought Carbon finance contribution in 0 advance payments. (The quantum of upfront payment will depend on the assessed risk of the project by the World Bank.) Sources of carbon finance No Indicative CER/ERU or vER 8 US$/ tCO2e Project Idea Note The Coke Dry Quenching Project of Xingtai Iron and Steel Group Company Limited Date of Submission：January, 2006 Price (subject to negotiation ) Total Emission Reduction Purchase Agreement (ERPA) Value A period until 2012 (end of the 2.64US$million first budget period) A period of 10 years 5.28US$million A period of 7 years 3.696US$million A period of 14 years (2 * 7 years) 7.392US$million No If financial analysis is available for the proposed CDM activity, provide the forecast financial internal rate of return for the project with and without the CER revenues. Provide the financial rate of return at the expected CER price above and US$3/ tCO2e. DO NOT assume any up-front payment from the PCF in the financial analysis that includes PCF revenue stream. Please provide a spreadsheet to support these calculations.