PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No.:59292
(The report # is automatically generated by IDU and should not be changed)
Project Name
Region
Country
Sector
Lending Instrument
Project ID
Borrower(s)
Implementing Agency
Environmental Screening
Category
Date PID Prepared
Estimated Date of Appraisal
Completion
Estimated Date of Board
Approval
Concept Review Decision
Other Decision {Optional}
I.
Brazil: N2O Emission Reduction Project
Latin America and the Caribbean
Brazil
Environment
Trust Fund / Carbon Finance
P125006
Rhodia Group
Rhodia Group
[ ]A [X]B [ ]C [ ]FI [ ]TBD (to be determined)
December 14, 2010
February 16, 2011
N/A
Following the review of the project concept on December
21, 2010, the decision was taken to proceed with the
preparation of the operation.
Teams can add more if they wish or delete this row if no
other decisions are added
Introduction and Context
Country Context
Brazil, the largest tropical country, ranks 7th in terms of total greenhouse gas (GHG)
emissions (approx. 1 billion tons of CO2e per year), excluding land use change and
forestry – which, if included, brings the country to the 4th position with a total of approx.
2,841 million tons per year1.
Brazil remains strongly committed to reducing its GHG emissions. In December 2008,
President Lula launched the National Plan on Climate Change (PNMC) 2 , which amongst
other measures calls for a 70% reduction in deforestation by 2017. The PNMC is based
on work of the Interministerial Committee on Climate Change and its Executive Group,
in collaboration with the Brazilian Forum on Climate Change and civil society
organizations. In December 2009, the Brazilian Parliament adopted law 12.187 instituting
the PNMC and setting a voluntary national GHG abatement target of between 36 and
1
World Resources Institute - http://cait.wri.org/cait.php?page=yearly&mode=view&sort=valdesc&pHints=shut&url=form&year=2005&sector=natl&co2=1&ch4=1&n2o=1&pfc=1&hfc=1&sf6=1&update=Up
date (last visited November 16th 2010)
2
Plano Nacional sobre Mudança do Clima http://www.cntdespoluir.org.br/Downloads/Plano%20Nacional%20sobre%20Mudan%C3%A7a%20do%20Clima%
20%28PNMC_MMA%29.pdf (last visited Nov 16th 2010)
38.9% of its business as usual (BAU) projected emissions by 2020 3, which equates to a
reduction of 1 to 1.1 billion tones of CO2e4.
Brazil’s GHG emissions profile is rather unique. Close to 85% of all electricity generated
in Brazil comes from hydropower5. Despite the increasing trend of other electricity
sources and the socioeconomic and environmental constraints of hydropower projects in
general, hydropower will continue to be the main source of electric power in Brazil for
the foreseeable future according to the National Agency for Electric Energy (ANEEL)6.
Transportation is not a major source of GHG emissions in Brazil, due to ethanol
substituting 40% of gasoline fuel7. The energy and transport sectors in Brazil are, thus,
widely based on low-carbon alternatives and current efforts to keep the energy matrix
clean must be acknowledged.
While Brazil’s energy and transportation sectors do not represent major sources of GHGs
- contrary to what is normally found developing countries - the industrial sector plays a
significant role with its high fossil fuel consumption and its associated emissions,
particularly of Nitrous Oxide (N2O). As per Brazil’s last GHG inventory, N2O represents
25% of the total GHG emissions excluding land use change and forestry. Reducing
industrial gas emissions should thus be considered a priority target to reduce overall
emissions while continuing to grow in a sustainable manner.
Sectoral and Institutional Context
The proposed project targets the abatement of N2O in the chemical sector of Brazil.
N2O is generated as a by-product of the adipic acid production process and is emitted in
the waste gas stream. N2O is a powerful greenhouse gas with a global warming potential
(GWP) that is about 300 times greater than the GWP of CO2. N2O emissions are
covered under the Kyoto Protocol’s basket of six regulated GHGs.
The main use for adipic acid is as a component of nylon, and thus, adipic acid
production trends are closely correlated with nylon consumption trends. Rising demand
for engineering plastics has sparked expansion in existing adipic acid capacity in North
America and Western Europe, as well as new facilities in the Asia-Pacific region.
Economic drivers for adipic acid production include new housing starts and nylon
engineering resins in the automotive and electronics industries8. Worldwide, only a few
adipic acid plants exist. The U.S. is a major producer with three companies in four
Appendix II – Nationally Appropriate Mitigation Actions of Developing Country Parties http://unfccc.int/files/meetings/application/pdf/brazilcphaccord_app2.pdf (last visited Nov 16th 2010)
4
What do the Appendicies to the Copenhagen Accord tell us about global greenhouse gas emissions and the
prospects for avoiding a rise in global average temperature of more tha 2°C? Nicholas Stern and Christopher Taylor
March 2010 - http://www.unep.org/PDF/PressReleases/Accord_targets_paper.pdf (last visited Nov 16th 2010)
5
Brazil Low Carbon Study - http://siteresources.worldbank.org/BRAZILEXTN/Resources/3223401277832245764/LowCarbon_Fulldoc.pdf (last visited Nov 16th 2010)
6
http://www.aneel.gov.br/aplicacoes/atlas/energia_hidraulica/energia_hidraulica.htm (last visited (Nov 16th 2010)
7
Brazil Low Carbon Study - http://siteresources.worldbank.org/BRAZILEXTN/Resources/3223401277832245764/LowCarbon_Fulldoc.pdf (last visited Nov 16th 2010)
8
N2O Emissions from Adipic Acid and Nitric Acid Production - http://www.ipccnggip.iges.or.jp/public/gp/bgp/3_2_Adipic_Acid_Nitric_Acid_Production.pdf (last visited Nov 16th 2010)
3
locations accounting for approximately 40% of worldwide production. Other producing
countries include Brazil, Canada, China, France, Germany, Italy, Japan, Korea,
Singapore, Ukraine, and the United Kingdom. Most of these countries have only one
adipic acid plant.
In 1990, adipic acid production was the largest source of industrial N2O emissions. As
of 1999, industrial sources report that almost all major adipic acid producers have
implemented N2O abatement technologies. As a result, nitric acid production is
currently believed to be the largest industrial source of N2O emissions9. Global
emissions of N2O accounted for 9.4% of total global emissions (in 2000) and N2O ranks
as the third most emitted gas amongst the six gases regulated under the Kyoto
Protocol10.
II.
Proposed Development Objective(s)
The development objective of the proposed project is to reduce emissions of N2O, a
powerful greenhouse gas, which would, in the absence of the project, have been emitted
into the atmosphere contributing to the damaging effects of climate change.
III.
Preliminary Description
The French chemical company Rhodia Group owns an adipic acid production plant in
Paulinia, state of São Paulo, Brazil. The adipic acid plant in Paulinia was constructed in
1965 and expanded in 1996 and 2001. As a consequence of the incentives created by the
CDM, Rhodia Group installed a N2O collection and thermal decomposition process
equipment to the operating adipic acid plant in 2006, which did not imply the expansion
of the already existing facility in Paulina. Before that the project had been registered
under the Clean Development Mechanism (CDM) in December 200511. The thermal
decomposition installation reduces GHG emissions compared to a baseline situation in
which N2O would be released to the atmosphere in the waste gas stream. The difference
of the baseline and the scenario with installed N2O oxidizer results in approximately 42
million tCO2e (i.e., Certified Emission Reductions, or CERs in short) for the first
crediting period between 2007 and 2013. Verifications as required by CDM regulations
are being conducted on a regular basis and around 600,000 ERs are currently being
issued every month. Over three dozen verifications and issuances of the project have been
completed by the UN CDM Executive Board so far.
A license to operate was provided by Brazilian authorities in 2005 and has been recently
renewed till 2013. No complaints have surfaced on the project in the five years that it has
been operating. The World Bank’s Spanish Carbon Fund commitment to purchase ERs
will end on December 31, 2013 and the Emission Reduction Purchase Agreement
9
N2O Emissions from Adipic Acid and Nitric Acid Production - http://www.ipccnggip.iges.or.jp/public/gp/bgp/3_2_Adipic_Acid_Nitric_Acid_Production.pdf (last visited Nov 16th 2010)
10
World Resources Institute - http://cait.wri.org/cait.php?page=gases (last visited Nov 16th 2010)
11
UNFCCC: Project 0116 : N2O Emission Reduction in Paulínia, SP, Brazil
http://cdm.unfccc.int/Projects/DB/DNV-CUK1130160031.78/view (last visited Nov 16th 2010)
(ERPA) will define this date as the closing date of the project, clearly identifying the
Bank’s supervision period
IV.
Safeguard Policies that might apply
Safeguard Policies Triggered by the Project
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Involuntary Resettlement (OP/BP 4.12)
Indigenous Peoples ( OP/BP 4.10)
Forests (OP/BP 4.36)
Safety of Dams (OP/BP 4.37)
Projects in Disputed Areas (OP/BP 7.60)*
Projects on International Waterways (OP/BP 7.50)
V.
Yes
X
X
TBD
X
X
X
X
X
X
X
X
Tentative financing
Source: Spanish Carbon Fund
Borrower/Recipient
IBRD
IDA
Others (specify)
($m.)
Total
VI.
No
N/A
Contact point
World Bank {Same as TTL information in AUS}
Contact: Sebastian Martin Scholz
Title: Environmental Economist
Tel: +1-202-458-4117
Email: sscholz@worldbank.org
Borrower/Client/Recipient
Contact: Philippe Rosier
Title: President, Rhodia Energy
Tel: +33 1 53 56 61 01
Email: philippe.rosier@eu.rhodia.com
Implementing Agencies
Contact: Pascal Siegwart
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Title: CO2 Operations Director, Rhodia Energy
Tel: +33 1 53 56 61 32
Email: Pascal.SIEGWART@EU.RHODIA.COM
Contact: Elder Martini
Title: Rhodia Energy Brazil Director
Tel: +55 (11) 3741-7370
Email: Elder.MARTINI@BR.RHODIA.COM
VII. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www.worldbank.org/infoshop