Preliminary Report on the Results of Biogas Generation Potential And

FINAL REPORT ON ASSESSMENT OF GHG EMISSIONS MITIGATION POTENTIAL IN ANIMAL FARMING SECTOR OF THE REPUBLIC OF ARMENIA

JULY 2010

Developed in the framework of the “Enabling Activities for the Preparation of Armenia’s Second National Communication to the UNFCCC” UNDP/GEF/00035196 Project

Executing agency Ministry of Nature Protection of the Republic of Armenia

Project National Coordinator Aram Gabrielyan

Developed by experts: Artem Kharazyan

Petros Tozalakyan

Table of Contents

Introduction ...... 4

Data collection ...... 4

Data verification ...... 5

Data sorting and database creation ...... 5

Data processing and methodology applied ...... 6

Preliminary calculations ...... 7

Screening of the projects ...... 7

Site visits to the identified farms ...... 8

Development of Project Identification Notes ...... 8

Summary ...... 9

Appendix I – Letter addressed to the Ministry of Agriculture of RA ...... 10

Appendix II – Reply of the Ministry of Agriculture of RA (list of farms) ...... 11

Appendix III – Detailed list of animal and poultry farms presented by MoA ...... 14

Appendix IV – Maps with location of animal and poultry farms ...... 15

Appendix V – Preliminary evaluation of biogas generation and CDM potential for large and medium animal and poultry farms in Armenia ...... 17

Appendix VI – Results of evaluation of biogas and power generation potential and CDM sustainability of the selected animal and poultry farms ...... 18

Appendix VII – Additional information on the identified farms requested by the Foundation ...... 19

Appendix VIII – Project Identification Note for Arzni Poultry Farm ...... 22

Appendix IX – Project Identification Note for Armavir Poultry Farm ...... 46

Appendix X – Project Identification Note for Araks Poultry Farm ...... 68

3 Introduction This document is the final report which summarizes results of the activities performed under the tasks 1-5 of the Cost-Sharing Agreement signed between the Norwegian Vekst Foundation (Vekst Foundation) and the United Nations Development Programme (UNDP) signed on 11 February 2010. The following activities have been performed by the experts within the project implementation period: 1. Identification of agricultural waste resources using information available in the public sources (Ministry of Agriculture, Statistical Service), as well as based on expert data. Creation of a database of large and medium animal and poultry farms operating on the territory of Armenia, which might have potential for improvement of agricultural waste management systems under the Clean Development Mechanism (CDM). 2. Screening of the potential options for implementation of CDM projects based on collected data. 3. Organization of site-visits to the operating farms: collection of detailed information (e.g. type and size of activities, description of animal waste management systems currently used at the identified farms, development plans, financial sustainability, etc.) necessary for final selection of most promising projects. Data collection based on questionnaires. During the selection process the preference is given to those options, which may contribute to the sustainability of Lusakert Biogas Plant Project. 4. Preliminary assessment of identified perspective projects and selection of most promising project sites, in consultation with the Foundation and UNDP/GEF Project Coordinator. 5. Development of three CDM Project Identification Notes (PINs) for selected projects. In the sections below description of each activity performed is given.

Data collection Meetings with the following representatives of the National Statistical Service or RA (NSS RA) and Ministry of Agriculture of RA (MoA) were held in order to identify the proper public source for initial data collection: ¾ Mr. Yuri Poghosyan, Member of the State Council of Statistics of NSS RA ¾ Mr. Arsen Avagyan, Head of Agriculture Statistics Division of NSS RA ¾ Mr. Ashot Hovhannisyan, Head of Animal Breeding Department of MoA RA As a result of the discussions held in NSS it was identified that the NSS collects, processes and summarizes statistical information on animal and poultry farms in Armenia; however, the final published data is on regional (marz) level without further detaliation of farm-specific information. At the same time, according to the statute of the organization, NSS is not allowed to disclose initial source of information, thus, no farm- specific data could be obtained from NSS. For the mentioned reason MoA was identified as an alternative public source of information with possibility to get farm-specific data. This was confirmed by Mr. A.Hovhannisyan during the meeting in the Ministry. Hence, official request letter for provision of data on large and medium animal and poultry farms in the country, as well as on types and number of animals kept at the farms was submitted from the Ministry of Nature Protection, in its function of UNDP project national implementing agency, on February 22, 2010 (Appendix I). In response the MoA provided information on 6 livestock, 5 pig-breading, 8 poultry and 6 sheep-breading farms (Appendix II). No information on number of poultry was provided. Detailed list of farms submitted by the MoA is introduced in the Appendix III. Maps with geographical location of the identified farms are presented in the Appendix IV. An overview of marz specific information on number of animals per type (cattle, including caws; pigs; sheep and goats; horses) and break down of animals per commercial organizations and households for 2009 was prepared based on data available on the NSS website. This information is presented in Table 1 below. Table 1. Number of animals per marzes and per commercial organizations and households Cattle including Marz Unit Pigs Sheep and goats Horses (caws) Aragatsotn, 1000 heads 70.5 (35.0) 6.6 78.9 0.4 Commercial heads 160 (75) 433 - - Household heads 70289 (34900) 6158 78874 431 Ararat 1000 heads 40.7 (17.4) 13.5 69.6 0.6 Commercial heads 100 (40) - - - Household heads 40622 (17329) 13535 69558 545

4 Armavir 1000 heads 43.9 (17.5) 12.7 59.8 0.1 Commercial heads 1170 (73) 3089 - - Household heads 42749 / (17475) 9642 59812 142 Gegharquniq 1000 heads 104.6 (53.4) 6.8 100.1 1.7 Commercial heads 446 (210) - 240 5 Household heads 104110 (53218) 6778 99877 1660 Lori 1000 heads 33.4 (15.9) 8.6 16.1 1.6 Commercial heads 442 (204) 68 - 75 Household heads 32919 (15649) 8558 16122 1567 Kotayk 1000 heads 52.4 (29.7) 12.4 39.5 0.7 Commercial heads 2641 (1193) 5182 2082 73 Household heads 49724 (24735) 7198 37441 577 Shirak 1000 heads 93.6 (45.2) 10.3 71.6 0.5 Commercial heads 95 (32) 110 15 - Household heads 93541 (45215) 10233 71578 529 Syuniq 1000 heads 53.3 (26.5) 4.1 68.2 2.4 Commercial heads 567 (271) 11 - 6 Household heads 52946 (26272) 4069 68236 2339 Vayots Dzor 1000 heads 16.5 (10.1) 1.4 18.0 0.4 Commercial heads - (-) - - - Household heads 16480 (7993) 1162 18016 411 Tavush 1000 heads 33.4 (15.9) 8.6 16.1 1.6 Commercial heads 442 (204) 68 - 75 Household heads 32919 (15649) 8558 16122 1567 TOTAL 1000 heads 584.8 (283.0) 84.8 559.2 11.3 Commercial heads 6154 (2364) 10739 2787 183 Household heads 578625 (280684) 74062 556431 11107 Source: National Statistical Service of RA As it is seen from the table above, the majority of animals are kept in households but not in commercial organizations. Information provided by MoA shows that there are only a few large commercial farms in Armenia with considerable (more then 1000 heads) number of animals (cattle, caws and pigs); whereas the rest are rather small. During the meeting in MoA it was mentioned that number of animals kept in the households usually does not exceed 100-150 heads. That is why only commercial organizations with big number of animals included in the list provided by MoA were considered in this document (see chapter Data sorting).

Data verification For verification of the data received from MoA, the expert team contacted by phone the management of 8 companies owning 10 farms included in the list. Corresponding corrections of number and type of animal population, animal waste management systems applied in the farms, farms locations as well as contact information were made in source data sheet based on information received from the farm owners. For the three companies1 not contacted by the experts, data provided by MoA and rechecked with Animal Breeding Department of MoA was used.

Data sorting and database creation Sorting of the received and preliminary verified2 information was conducted in order to select large and medium farms (promising options) and leave aside those with obviously low potential for biogas generation (small farms). As a result, livestock farms with number of animals less than 150 (S.Yeritsyan PE and

1 Arzni Pedigree PBS OJSC, Multi Agro Ltd. and Puynik PP Plan CJSC. 2 Communication with the management of the farms helped to update and specify the information obtained from the MoA; however, final verification of the data for the selected (most promising) farms took place during the site visits organized and held by the UNDP experts. These visits allowed to get real perception on number of animals and AMW systems applied at the farms (which differs from that obtained during phone communications) and helped to improved the results of final calculations introduced in the PINs (see Appendices VIII, IX and X). That is the reason, why in this context, the word “preliminary” has been used. 5 Agromanproject Ltd.), all sheep breading farms and two pig-breeding farms3 have been excluded from the further data processing stage. Given that there already are ongoing CDM project implemented at Lusakert Poultry Farm, the farm was also excluded from the list. The sorted information was summarized in the database of large and medium animal and poultry farms operating on the territory of Armenia (Appendix V).

Data processing and methodology applied In order to be able to screen the potential options and to identify the most promising projects to be implemented under the CDM, calculation of yearly production of biomass (manure), methane/biogas generation potential as well as GHG emission level in the baseline scenario were performed for the selected farms based on available information. Corresponding parameters, coefficients and methodological approaches presented in “Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories” and “2006 IPCC Guidelines for National Greenhouse Gas Inventories” methodological reports developed by IPCC as well as expert’s assumptions were applied for the above mentioned calculations. In particulate, the following key parameters have been applied for calculation of annual methane and biogas (containing 60% methane) generation potential and biomass formed: ¾ Daily per head volatile solids (VS) excreted for livestock: Cows - 4.13 kg (parameter for Eastern Europe) Other cattle - 2.68 kg (parameter for Eastern Europe) Swine - 0.5 kg (parameter for developed countries) Poultry - 0.1 kg (parameter for developed countries) ¾ Maximum methane producing capacity (Bo) for manure: Cows - 0.24 m3 per kg of volatile solids (parameter for Eastern Europe) Other cattle - 0.17 m3 per kg of volatile solids (parameter for Eastern Europe) Swine - 0.45 m3 per kg of volatile solids (parameter for developed countries) Poultry - 0.24 m3 per kg of volatile solids (parameter for developing countries)

¾ Global Warming Potential of CH4 - 21 3 ¾ Conversion factor of m of CH4 to kilograms of CH4 - 0.67 ¾ Methane conversion factors (MCF) for each type of manure management system and respective climatic (average annual temperature) zone. Selection of the latter parameter plays vital role for evaluation of CDM potential of the identified projects, since this parameter is applied (along with animal population data and average annual temperature of the project site4) for calculation of GHG baseline emissions from manure management systems. IPCC sets specific values for MCF depending on manure management systems applied in baseline (existing) scenario. In particular, 2006 IPCC Guidelines for National Greenhouse Gas Inventories gives definitions for 17 manure management systems and provides corresponding MCF values. Considering the received information and using expert assumptions regarding manure management technologies applied in the identified farms, following types of animal waste management systems (and corresponding values of MCF) have been selected for calculations5. Table 1. Definition of AMWS and respective MCFs AWM System Definition MCF The storage of manure, typically for a period of several months, in unconfined Solid storage piles or stacks. Manure is able to be stacked due to the presence of a sufficient 0.02 amount of bedding material or loss of moisture by evaporation. Pit storage Collection and storage of manure usually with little or no added water typically below animal below a slatted floor in an enclosed animal confinement facility, usually for 0.03 confinements periods less than one year.

3 Sovetashen Pig Breeding Farm, once one of the biggest pig-breeding farms in Armenia with livestock of about 7000 pigs, was closed in 2008 after all animals were destroyed by hog cholera. Information on availability of 600 pigs at the Araks Trchnafabrika OJSC was not confirmed. 4 Data on average temperatures of the regions of Armenia is obtained from manual “Building climatology of RA”, 1996. 5 More detailed information on applied coefficients, values, calculation procedures as well as results of final calculations for the selected farms is provided in the PINs attached to this report. 6 Manure is stored as excreted or with some minimal addition of water in either Liquid/Slurry tanks or earthen ponds outside the animal housing, usually for periods less than 0.17 - 0.25* one year. Uncovered A type of liquid storage system designed and operated to combine waste anaerobic stabilization and storage. Lagoon supernatant is usually used to remove manure 0.66 -0.73* lagoon from the associated confinement facilities to the lagoon. *) depending on annual average temperature It needs to be mentioned that depending on a type of existing manure management system, large biogas generation potential of a farm may not necessarily result in considerable CDM potential. For example, a farm where Uncovered Anaerobic Lagoon AWM system (MCF – 0.68) is used will have 30 times more GHG emission level from the manure management system in the baseline scenario than a similar farm (all other things equal) which utilizes Solid Storage AWM system (MCF – 0.02).

Preliminary calculations All calculations where performed by means of MO Excel model based on available information and using parameters and methodologies suggested by IPCC. Results of the calculations of biomass, biogas and methane generation potential and GHG baseline emission for large and medium farms in Armenia are summarized in Appendix V.

Screening of the projects Results of calculation allowed to carry out screening of the potential options and to make justified selection of the most promising options in terms of the CDM. Annual biogas generation potential of more then 2.5 mln m3 and baseline GHG emission of more then 10000 6 tCO2e were set by the experts as criteria (threshold) for selection of the projects . Based on this assumption 6 farms out of 14 studied meet minimum biogas generation potential conditional requirement; and only 4 farms out of the mentioned 6 ones have high and medium potential for CDM. Results of calculations for the screened (selected) farms are given in the Appendix VI where CDM sustainability of each project is evaluated based on the above mentioned criteria. Taking into consideration high level of GHG emissions in baseline scenario (along with potential for reduction of these emissions as a result of implementation of biogas utilization projects) Araks, Arzni and Armavir farms were proposed by the Vekst Foundation for organization of site visits aimed at final verification of information and development of PINs. Given the vicinity of the Getamech poultry farm to the Lusakert Biogas Plant it was proposed by the Vekst Foundation to organize a site-visit to the farm in order to clarify willingness of the company to provide raw material for LBP. It is not reasonable to develop a PIN for that site due to low level of GHG emissions in the baseline scenario7. The similar situation is with some other plants. In consultation with Vekst Foundation the decision was made to exclude Ashtarak Dzu and Yerevan poultry farms from the further elaboration. In Ashtarak Dzu farm manure is removed from hen-houses and applied to soil as fertilizer. As it was discussed in the document, this system of AWM ensures low level of baseline GHG emission. Moreover, the management of Ashtarak Dzu did not confirm the willingness to cooperate and allow visit the farm. Yerevan Poultry Farm was excluded because of relatively low level of GHG baseline emissions as well as some technical aspects (relatively small territory of the farm, location in the center of the city, no condition for development (increase of) of generating capacities, etc.) indicated by the management of the farm. It needs to be mentioned that the “excluded” farms may be of interest of potential donors/investors who would will to implement regular (non-CDM) biogas utilization and power generation projects. Based on results of biogas generation potential, theoretical potential for electricity and thermal energy generation at the mentioned 6 farms were calculated and presented in the Appendix IV. Data for Arzni,

6 The mentioned thresholds were set by the experts based on their personal experience and agreed with the Vekst. The logic behind these criteria is that the projects must be able to generate commercially justified amount of electricity and thermal energy (more biomass and, thus, more biogas) and, at the same time, the projects have to have considerable GHG mitigation potential (high GHG emissions in the baseline scenario). 7 In Getamej farm manure from the hen-houses (floor keeping) are removed along (mixed) with straw spread on floors and sold as fertilizer mainly to mushroom producers, thus, almost no emission takes place from poultry waste.

7 Armavir and Araks farms were updated and specified after the site visits and represented in the attached PINs.

Site visits to the identified farms Following the requirements of the ToR site visits to the identified farms were organized and held by the experts. Site visits were aimed at final clarification of information on type and number of animals kept at the farms, animal keeping systems, animal waste management systems as well as other data necessary for development of PINs. Another purpose of the site visits was to discuss willingness of the farms either to construct biogas and power generation facilities under the CDM (stand alone projects) or supply raw materials (manure) to the Lusaker Biogas Plant. Meetings with the following representatives of the identified farms were held: • Armen Janvelyan, Director of Arzni Pedigree PSC OJSC • Garnik Danielyan, Director of Armavir Poultry Farm (Armavir branch of Arzni Pedigree PSC OJSC) • Gagik Makaryan, General Director of Araks Poultry Farm (Araks Trchnafabrika CJSC) • David Avetisyan, Financial Director of Getamech Poultry Farm All site visits were informative and successfully. Data requested by the experts was provided freely. Also experts were allowed to take pictures of the sites. Detailed description of the obtained information is given in the attached PINs (see Appendices VIII, IX and X). As per request of the Vekst Foundation, in addition to the key information necessary for development of PINs, the following supplementary information were obtained and incorporated in the summary table in Appendix VII. ¾ Name and coordinates (phone, e-mail) of main owners; ¾ Name and coordinates of management and contact person; ¾ Farms affiliation to a group or main company; ¾ Investments made on the farm during last 2 years. Size of investment and purpose (if possible); ¾ Knowledge of CDM (on a scale of 1-10); ¾ Interest in CDM in relation to own situation (on a scale of 1-10); ¾ Main reasons given for interest or disinterest in building biogas plant; ¾ Interest in being contacted for discussion of biogas project with or without CDM (on a scale of 1-10); ¾ Knowledge of LBP biogas plant (on a scale of 1-10); ¾ Owners general opinion of LBP as a viable business project (on a scale of 1-10); ¾ Assessment of owners ability to finance investment in biogas plant (on a scale of 1-10); ¾ Will the farm itself have need for thermal energy if a biogas plant is built? ¾ Is there entities close by that could use thermal energy, public facility, village, industrial production, greenhouse etc.? ¾ Which farm has biomass delivery potential for LBP?

Project Identification Notes

Development of Project Identification Notes Based on the verified information two PINs for Arzni and Armavir poultry farms were developed and submitted to the Vekst Foundation. The third PIN for Araks poultry farm already developed within the framework of UNDP/GEF “Enabling Activities for the Preparation of Armenia’s Second National Communication to the UNFCCC” project was submitted to the Vekst Foundation by the UNDP project after receiving no objection from the farm management8. All PINs are developed in a standard format and contain the following chapters: ¾ Project participants ¾ Description of CDM project activity ¾ Project organization ¾ GHG emissions

8 PIN for “Recovery of Biogas from Chicken Manure and Thermal (Electrical) Energy Generation in Araks Poultry Factory CJSC” project was developed by the UNDP project in 2009 by request of the Ministry of Nature Protection of RA. Detailed background is provided in the PIN (Annex IV).

8 ¾ Contribution to country sustainable development ¾ Project additionality ¾ Conclusions. All calculations are made based on MO Excel model in accordance with the IPCC requirements and methodologies approved by the CDM Executive Board. Detailed description of performed calculations is given in the attached PINs.

Summary The study shows that both Arzni and Getamech poultry farms may contribute to the sustainability of Lusakert Biogas Plant via supplying raw material (manure); however, more detailed economic and technical assessment of manure supply options is needed to understand attractiveness of that arrangement for LBP9. Arzni farm has agricultural lands where forage crops are cultivated. The major crops cultivated at Arzni are corn and sunflower which substantially impoverish the soil, so that it needs to be fertilized efficiently. Almost all manure produced at the farm is used for fertilization of agricultural lands (about 500-600 ha). The management of “Arzni Pedigree PSC” OJSC is ready to consider possibility of supply of manure as a raw material for LBP under the condition of its exchanged to the similar amount of processed manure (organic fertilizer), however there is need to prove the better fertilization quality of digestate than the original. Possible ways to test the advantage of digestate over raw manure: 1. Direct application of digestate generated at LBP on a pilot agricultural land at Arzni farm. However, the effects will be highly dependent on the maintenance of relevant technological and methodological requirements. 2. Application of aerobically processed manure with maintenance of relevant technological and methodological requirements. In this case it is necessary to evaluate the equivalent amount of manure from the perspective of its effectiveness and economic feasibility. 3. Performance of comparative laboratory analysis. Getamech farm sells all waste generated in the hen-houses (manure mixed with straw) to farmers and mushroom producers, thus, the farm does not experience problems with waste management. According to the information provided by the representative of the farm, management of LBP approached Getamech with request to supply poultry waste; however, the price proposed by Getamech was quite high, so no deal was concluded. Given that Getamech is planning to increase its production capacities within next two years, it may be expected that some part of surplus waste could be delivered to LBP for a reasonable price. This needs to be negotiated between both companies. In the table below the key information and results of the PINs are summarized. Characteristics Arzni Armavir Araks Distance from Yerevan 30 km 40 km 30 km Distance from LBP 5 km 60 km 60 km C* – 3000 C – 3000 S – 600 Type and number of animals S – 4000 S – 4000 P - 880000 P - 184000 P - 276000 L/S UAL AWMS P/R/P UAL P/R/P UAL 1900 tCO2/y (act.) GHG mitigation potential app. 20000 tCO2/y app. 47000 tCO2/y 13000 tCO2/y (opt.) Electricity generation potential 6000 MWh/y 9000 MWh/y 11000 MWh/y Heat generation potential 6000 MWh/y 9000 MWh/y 11000 MWh/y Approximate investments needed 1.5-2.5 mln Euro 2-2.5 mln Euro 3 mln Euro 19000 Euro/y Income from CERs 20000 Euro/y 470000 Euro/y 130000 Euro/y Income from electricity sale 500000 Euro/y 750000 Euro/y 900000 Euro/y *C – cattle; S – swine; P – poultry L/S – Liquid/Slurry P/R/P – Pasture/Range/Paddock UAL – Uncovered Anaerobic Lagoons

9 Estimation of annual volume of manure generated at the farms is given in Annex VII. 9 Appendix I – Letter addressed to the Ministry of Agriculture of RA

Appendix II – Reply of the Ministry of Agriculture of RA (list of farms)

13 Appendix III – Detailed list of animal and poultry farms presented by MoA S O U R C E D A T A Number of Farm / Company Type Phones Farm Location Animals Arzni Village, 1 Arzni Pedigree PSC OJSC C (+374 93) 03-01-01 3000 RA Kotayk marz 8 Baghramyan Str., Arinj 2 Multi Agro Ltd. C (+374 10) 61-67-50 400 Village, RA Kotayk marz 3 Agro Holding Ltd. C (+374 10) 22-69-43 7 Kievyan Str. Yerevan 400 (+374 93) 99-98-68 Syunik Village, 4 Armen-Sarmen Ltd. C 300 (+374 93) 22-57-73 RA Syunik marz Aghavnadzor village, 5 S.Yesayan PE C (+374 93) 68-11-98 150 RA Vayots Dzor marz Arshaluys village, 6 Agromanproject Ltd. C (+374 93) 97-05-10 100 RA Armavir marz Sovetashen Pig Breeding Nubarashen district, 7 PB (+374 93) 40-30-39 7000 Farm Ltd. Yerevan City Arzni Village, 8 Arzni Pedigree PSC OJSC PB (+374 93) 03-01-01 6000 RA Kotayk marz Getamech Village, 9 Getamech Poultry Plant Ltd. PB (+374 10) 63-88-06 3000 RA Kotayk marz 10 Agrospasarkum OJSC PB (+374 10) 74-40-09 3a Sebastia Str., Yerevan 700 Araks Village, 11 Araks Trchnafabrika CJSC PB (+374 10) 46-76-36 600 RA Armavir marz Arzni Village, 12 Arzni Pedigree PSC CJSC P (+374 93) 03-01-01 - RA Kotayk marz Getamech Village, 13 Getamech Poultry Plant Ltd. P (+374 10) 63-88-06 - RA Kotayk marz Lusakert village, 14 Lusakert Poultry Farm P (+374 10) 54-15-25 - RA Kotayk marz Araks village, 15 Araks Trchnafabrika CJSC P (+374 10) 46-76-36 - RA Armavir marz (+374-10) 39-20-99 Aghdzq Village, 16 Ashtarak Dzu LLC P - (+374-10) 39-30-99 RA Aragatsotn marz 17 Yerevan Poultry Farm P (+374 91) 42-26-48 Yerevan City - 18 Armavir Poulty Farm P (+374 93) 03-01-01 RA Armavir Marz - 19 Puynik PP Plan CJSC P (+374 10) 62-24-02 Stepanavan City - Arinj Village, 20 Multi Agro Ltd. SP (+374 24) 62-87-87 2500 RA Kotayk marz 21 Marqaryan Saribek PE SP (+374 94) 83-75-40 RA Lori marz 450 Poqr Mantash village, 22 Khachatryan Leva PE SP (+374 93) 62-30-90 300 Shirak marz 23 Minasyan Spartak PE SP (+374 94) 62-30-90 RA Syuniq marz 300 Aparan, 24 G.Hovannisyan PE SP (+374 98) 88-61-88 200 RA Aragatsotn marz Mets Mantash Village, Shirak 25 Hrashq Fermerayin Khumb SP (+374 94) 30-12-61 150 marz P – poultry; C- cattle; PB – pig breeding; SP – sheep breeding

14 Appendix IV – Maps with location of animal and poultry farms

Appendix V – Preliminary evaluation of biogas generation and CDM potential for large and medium animal and poultry farms in Armenia S O U R C E D A T A C A L C U L A T E D D A T A Biogas Yearly Methane Generation Generation Number Animal Waste Baseline Production of Potential (maximum Potential Farm / Company Type Phones Farm Location of Management Emissions Biomass generation) (60% Animals System (dry matter) methane) 3 3 m kg m tCO2

Araks Village, 1 Araks Trchnafabrika CJSC P (+374 10) 46-76-36 883521 lagoons 35 473 368,15 7 739 643,96 5 882 129,41 12 899 406,60 76227,7 RA Armavir marz Arzni Village, sedimentation 2 Arzni Pedigree PSC OJSC P (+374 93) 03-01-01 350000 14 052 500,00 3 066 000,00 2 330 160,00 5 110 000,00 25883,2 RA Kotayk marz ponds Getamech Village, 3 Getamech Poultry Plant Ltd. P (+374 10) 63-88-06 450000 solid storage 18 067 500,00 5 256 000,00 3 994 560,00 8 760 000,00 1109,3 RA Kotayk marz

4 Armavir Poulty Farm P (+374 93) 03-01-01 RA Armavir Marz 200000 lagoons 8 030 000,00 2 336 000,00 1 775 360,00 3 893 333,33 17255,4 lagoons, daily 5 Yerevan Poultry Farm OJSC P (+374 91) 42-26-48 Yerevan 160000 6 424 000,00 1 868 800,00 1 420 288,00 3 114 666,67 13804,4 spreading (+374-10) 39-20-99 Aghdzq Village, RA 6 Ashtarak Dzu LLC P 140000 solid storage 5 621 000,00 1 635 200,00 1 242 752,00 2 725 333,33 345,1 (+374-10) 39-30-99 Aragatsotn marz

7 Puynik PP Plan CJSC P (+374 10) 62-24-02 Stepanavan city 20000 solid storage 803 000,00 233 600,00 177 536,00 389 333,33 49,3

Arzni Village, 8 Arzni Pedigree PSC OJSC PB (+374 93) 03-01-01 6000 solid storage 1 116 900,00 492 750,00 374 490,00 821 250,00 208,0 RA Kotayk marz

Getamech Village, 9 Getamech Poultry Plant Ltd. PB (+374 10) 63-88-06 1600 solid storage 297 840,00 131 400,00 99 864,00 219 000,00 55,0 RA Kotayk marz

Arzni Village, 10 Arzni Pedigree PSC OJSC C (+374 93) 03-01-01 3000 solid storage 4 103 403,00 809 717,46 615 385,27 1 349 529,10 227,9 RA Kotayk marz

Syunik Village, 11 Armen-Sarmen Ltd. C (+374 93) 99-98-68 1200 liquid / slurry 810 300,00 158 424,60 120 402,70 264 041,00 757,9 RA Syunik marz

8 Baghramyan Str., Arinj 12 Multi Agro Ltd. C (+374 10) 61-67-50 400 liquid / slurry 547 120,40 107 962,30 82 051,37 179 937,20 30,4 Village, RA Kotayk marz C & (+374 10) 22-69-43 Sovkhozayin District, Spitak solid storage and 13 Darik Agroholding Ltd. 300 & 70 410340,3 61893,3 49467,2 105 455,1 23,6 PB (+374 10) 22-74-63 city, RA Loty marz pit storage PB & 1300 & 14 Agrospasarkum OJSC (+374 10) 74-40-09 3a Sebastia Str., Yerevan solid storage 130305,0 57487,5 43690,5 95 812,5 59,9 C 200

Appendix VI – Results of evaluation of biogas and power generation potential and CDM sustainability of the selected animal and poultry farms SOURCE DATA CALCULATED DATA Biogas Yearly Methane Generation Animal Waste Generation Baseline CDM Number of Production of Potential (maximum Farm / Company Type* Farm Location Management Potential (60% Emissions Sustainability Animals Biomass generation) System methane) (dry matter) 3 3 m kg m tCO2 Araks Village, 1 Araks Trchnafabrika OJSC P 883,521 lagoons 35,473,368.15 7,739,643.96 5,882,129.41 12,899,406.60 76227.7 High RA Armavir marz Total 19,272,803.00 4,368,467.46 3,320,035.27 7,280,779.10 26319.0 High Arzni Village, sedimentation P 350.000 14,052,500.00 3,066,000.00 2,330,160.00 5,110,000.00 25883.172 High RA Kotayk marz ponds 2 Arzni Pedigree PSC OJSC Arzni Village, dry storage, C 3,000 4,103,403.00 809,717.46 615,385.27 1,349,529.10 227.9 Low RA Kotayk marz daily spreading Arzni Village, dry storage, PB 6.000 1,116,900.00 492,750.00 374,490.00 821,250.00 208 Low RA Kotayk marz daily spreading Getamech village, dry storage, 3 Getamech Poultry Plant Ltd. P 450,000 18,067,500.00 5,256,000.00 3,994,560.00 8,760,000.00 1109.3 Low RA Kotayk marz daily spreading 4 Armavir Poulty Farm P RA Armavir Marz 200,000 lagoons 8,030,000.00 2,336,000.00 1,775,360.00 3,893,333.33 17255.4 Medium lagoons, daily 5 Yerevan Poultry Farm P Yerevan 140,000 6,424,000.00 1,868,800.00 1,420,288.00 3,114,666.67 13804.4 Medium spreading Aghdzq Village, RA 6 Ashtarak Dzu LLC P 160,000 solid storage 5,621,000.00 1,635,200.00 1,242,752.00 2,725,333.33 345.1 Low Aragatsotn marz P – poultry; C- cattle; PB – pig breeding N Company Biogas Generation Potential, m3 Electricity Generation Potential, MWh/y Thermal Energy Generation Potential, MWh/y** 1 Araks Trchnafabrika CJSC* 12,899,406.60 25,798.8 25,798 2 Arzni Pedigree PBS OJSC* 7,280,779.10 14,561.6 14,561 3 Getamech Poultry Plant Ltd. 18,067,500.00 17,520.0 17,520 4 Armavir Poulty Farm* 8,030,000.00 7,786.7 7,786 5 Yerevan Poultry Farm 6,424,000.00 6,229.3 6,229 6 Ashtarak Dzu LLC 5,621,000.00 5,450.7 5,450 Note: *) for the marked farms electricity and thermal energy generation potentials were recalculated based on finally verified data and incorporated in the attached PINs **) It is assumed that heat/electricity ratio of the applied CHP units is 1. About 1/3 of the thermal energy produced by the unit will be utilized for securing thermal regime of methane tanks. 18

Appendix VII – Additional information on the identified farms requested by the Foundation Farms Arzni Armavir Araks Getamech “Arzni Pedigree Poultry-Swine-Cattle” OJSC XGOUP Union of Legal Entities Ardshininvestbank CJSC10 RA Kotayk marz, Arzni village 40 Miasnikyan Ave, Yerevan 0025, RA 13 Gr. Lusavorich Str., Yerevan 0015, RA Name and coordinates Phone/Fax: +374 24 21228; 20124 Phone: +374 10 524000 Phone: + 374 10 540404 of main owners Mobile: +374 91 401069; 030101 Fax: +374 10 543571 Fax: + 374 10 567486 Email: [email protected] Email: [email protected] Email: [email protected] Website : www.arzni-agro.am Website: www.xgroup.am Website: www.ashib.am Mr. Armen Janvelyan, Director of Arzni Kat Dairy Mr. Gagik Makaryan, General Director of Mr. David Avetisyan, Financial Director of Products Factory Yerevan Poultry Factory OJSC and Getamech Poultry Farm Name and coordinates 25a Moldovakan Str., Yerevan 0096 “Arax Poultry Factory” OJSC Mobile: +374 93 576736 of management Phone/Fax: +374 10 616250 Phone/Fax: +374 10 467585 Mobile: +374 94 576736 (Contact Person) Mobile: +374 91 401069 Mobile: +374 91 422648 Email: [email protected] Email: [email protected] Email: [email protected] Website : www.arzni-agro.am Website : www.xgroup.am Farms affiliation to a group or mother “Arzni Pedigree Poultry-Swine-Cattle” OJSC XGOUP Union of Legal Entities Ardshininvestbank CJSC company 3 8 5 Knowledge of CDM Average knowledge of CDM related issues. Company has been cooperating with the UNDP The management of the farm maintains issues (1-10)11 Armenia on development of PIN since 2009 and communication with LBP and has understanding has good perception of CDM related issues. of CDM issues. About 10 mln Euro investments for installation Investments made on According to the provided information on new European henhouses and auxiliary the farm last 2 years. Ongoing investments for expanding of agricultural investments will be made for reconstruction of equipment (Big Dutchman), reconstruction of old Size of investment and lands, acquisition of new animals and technical. henhouses and increasing population of the farm henhouses, construction of new feed-preparing purpose (if possible) from 90000 to 220000 heads. and other facilities. 5-7 9 3 Interest in CDM for the both farms strongly The company has a strong both in construction of The farm has low interest in CDM because of Interest in CDM in depends on possibility to use digestate (processed biogas generation utility and in implementation specificity of AWM system applied. relation to own manure) as a fertilizer for the agriculture lands of of the project under the CDM. However, final situation (1-10) the company. The key issue to be addressed is decision on CDM will depend on cooperation whether digestate is more efficient then the manure conditions to be proposed by a interested party. currently applied at the farm.

10 Getamech Poultry Farm LLC used to belong to Dvin Concern CJSC. In 2008 because of financial problems the majority of the company’s (farm’s) shares were transferred to a structure representing interest of Ardshininvestbank CJSC which operates the farm as a controlling shareholder. 11 Grades given in this table represent the expert’s opinion. 19 Farms Arzni Armavir Araks Getamech Interest Interest Disinterest Improvement of the quality of fertilizers and increase Introduction of new AWM system and generation Farm uses “dry” method of manure collection so Main reasons given for of productivity of agricultural lands. of electricity and thermal energy. almost no GHG emission took place. Moreover, interest or disinterest in dray manure mixed with straw is sold to building biogas plant mushroom producers for relatively high price, thus, the company doesn’t experience problems with manure management. Interest in being 5-6 7-8 2 contacted by The company may cooperate with all interested The company has been negotiating with a number See previous explanations Vekst/experts for parties including Vekst. The key question to be of companied interested in implementation of discussion of biogas addressed is whether digestate is better fertilized then CDM project. Cooperation with Vekst is possible project with or without raw manure. This needs to be demonstrated to the in case Vekst opposes better conditions. CDM connection (1-10) company within a pilot project. Knowledge of LBP 4 8 6 biogas plant (1-10) Owners general opinion of LBP as a viable 5 5 5 business project (1-10) 3 9 2 Assessment of owners The company does not have financial resources for The company has made 10 mln Euro investments In the nearest future (till 2013) the company will ability to finance construction of biogas plant. During interviews the since 2008 and is planning to make similar invest only in increasing of production capacities investment in biogas management of the company stated that investments within next 2-3 years. The company at the farm. plant (1-10) implementation of project may take place if majority is able and willing to finance investments in See also previous explanations. of investments be made by an interested party. biogas should the project be financially eligible.

Will the farm itself have need for thermal Yes energy if a biogas plant Thermal energy produced by a CHP unit may be used for heating of cattle and hen houses, piggeries, administrative buildings and other facilities. No data for is built? What yearly calculation of yearly need in MWh are available. Actual amount of thermal energy consumption depends on capacity and generation of a CHP unit need in MWh? Is there entities close by Secondary school may Greenhouses locate in the that could use thermal use thermal energy; vicinity of the farm (0.5 There are school and kindergarten located in the All entities are located on in the distance form energy, a village, however it is located km) may use thermal nearby village, which can consume thermal the farm, which makes supply of thermal industrial production, on relatively big energy produced by the energy. technically unreasonable. greenhouse etc.? distance for the farm CHP unit.

Farms Arzni Armavir Araks Getamech Theoretically possible but the management is Possibility to produce interested in getting additional income from Possible Possible Possible only thermal energy electricity sale and, thus, would like to have cogeneration The farm is located The farm is located about 5 km away from about 60 km away from Which farms has The farm is located about 10 km away from LBP LBP which makes LBP which makes The farm is located about 60 km away from LBP delivery potential for which makes manure transportation technically manure transportation manure transportation which makes manure transportation economically LBP taking transport feasible. More detailed evaluation of transportation technically feasible. economically unreasonable due to high transportation costs. cost into account? costs is needed. More detailed unreasonable due to high evaluation is needed. transportation costs. 152000 m3 203000 m3 What new volumes of 187000 m3 Volume of manure Volume of manure 592000 m3 biomass could be Volume mixture of manure and straw (94% 12 produced (94% produced (94% Volume of manure produced (94% humidity) delivered? humidity) calculated for 200000 heads13 humidity) humidity)

12 Data in this line represent theoretical volumes of manure produced at the farms annually, which were calculated based on information on number of animals. 13 The managements of Getamech Poultry Farm and LBP negotiated on possibility to supply poultry waste to LBP; however, the price proposes by Getamech farm for poultry waste (mixture of manure and straw) was higher then LBP expectations and, thus, no agreement on waste delivery were made. 21 Appendix VIII – Project Identification Note for Arzni Poultry Farm

Project Idea Note

Biogas and Power Generation in “Arzni Pedigree Poultry-Swine-Cattle” OJSC

"Enabling Activities for Preparation of Armenia’s Second National Communication to the UNFCCC" UNDP/GEF

YEREVAN 2010 Table of Contents

1. Project participants 24 1.1 Project owner 24 1.2 Applicant / Participant 24 1.3 Project idea developer / consultant 24 2. Description of CDM project activity 24 2.1 Project objective 24 2.2 Description of the proposed project activity and the applied technology for Option 1 25 2.3 Description of the proposed project activity and the applied technology for Option 2 27 2.4 General information on the project proponent 28 2.5 Livestock population 28 2.6 Animal keeping system 28 2.7 Manure management system 29 2.8 Baseline scenario selection 30 2.9 Exchange of technologies and knowledge 30 2.10 Project category and scale according to CDM definition 31 2.11 Location of the project activity 31 3. Project organization 31 3.1 Work organization 31 3.2 Project status and implementation schedule 31 3.3 Expenditures associated with CDM project development and implementation 32 3.4 Investment expenses 32 3.5 Estimated annual operation costs 32 3.6 The annual estimated amount of project turnovers 32 4. Greenhouse gas emissions 33 4.1 Reduced/absorbed greenhouse gases 33 4.2 Selection of methodologies for baseline calculation 33 4.3 Project boundary 35 4.4 Equations used for evaluation of greenhouse gas emission reduction 35 4.5 Methane and biogas production potential 37 4.6 GHG emission reduction calculation 38 5. Contribution to county’s sustainable development 40 5.1 Envisaged social effect 40 5.2 Envisaged environmental effect 40 5.3 Envisaged economic effect 41 6. Project additionality 41 7. Conclusion 41 Annex I. Relative position of LBP and Arzni farm 42 Annex II. Satellite image of Arzni farm 43 Annex III. Monthly average air temperatures in RoA regions 44 Annex IV Calculation of manure production at the Arzni farm 45

1. Project participants 1.1 Project owner Company name “Arzni Pedigree Poultry-Swine-Cattle” OJSC Company type Private company Legal status Open Joint Stock Company Main activities Reproduction and sale of cattle and swine as well as manufacturing of eggs and dairy products Contact person Armen Janvelyan, Director Company address RA Kotayk marz, Arzni village Telephone (+374 91) 40-10-69; (+374 93) 40-10-69; (+374 10) 61-62-50 Electronic mail [email protected] Internet site www.arzni-agro.am 1.2 Applicant / Participant Company name Vekst Project Financing Facility AS Main activities Development and financing of renewable energy projects Contact person Rolf Kevin, Board Chairman Company address Radhusgata 9, 0106 Oslo, Norwey Telephone +47 22708711; +47 92264718 Electronic mail [email protected] Internet site www.vekst.no 1.3 Project idea developer / consultant Organization name "Enabling Activities for Preparation of Armenia’s Second National Communication to the UNFCCC" UNDP/GEF Contact person D. Harutyunyan, Project Manager P.Tozalakyan and A. Kharazyan, Project Experts Organization address #3 Government Building, Republic Square Telephone, fax (+374 10) 58-39-20, 58-39-33 Electronic mail [email protected]; [email protected]; [email protected] Internet site www.nature-ic.am

2. Description of CDM project activity

2.1 Project objective The main objective of the project is to reduce the level of greenhouse gas (GHG) emissions originated from cattle, swine and poultry manure (hereinafter referred as “animal manure”) by improving the animal waste management system (AWMS) currently used in Arzni branch of “Arzni Pedigree PSC” OJSC14. This document considers two following alternative options for achieving the above stated objective. Option 1: Installation and operation of biogas generation facility (digester) where animal manure will be processed and biogas will be generated. The generated biogas will be utilized in the cogeneration system (Combined Heat and Power - CHP) to produce electrical and thermal energy. The generated electrical energy will be supplied to the national distribution grid, thus, replacing electricity generated by fossil fuel thermal power plants presently serving the energy system. Additional objective of the project is production of organic fertilizers from the animal manure. Option 2: Transportation of the animal manure generated at the Arzni farm to the Lusaker Biogas Plant (more information on LBP is given in further sections) where all activities described in the Option N1 (production of biogas, electricity, heat and organic fertilizer) will be performed using already existing and operational capacities (digester, CHP unit, auxiliary equipment, etc).

14 The company has two major branches located in Arzni (RA Kotayk marz) and in Armavir (RA Armavir marz). In this document, activities of Arzni branch are considered only.

The both proposed options will be implemented in the framework of the Kyoto Protocol’s Clean Development Mechanism (CDM). The final decision on selection of the above described options will be made by the project participants based on costs and benefits analysis with consideration of economic and CDM feasibility15 of each option. In the sections below detailed description of the both options is given.

2.2 Description of the proposed project activity and the applied technology for Option 1 In the framework of the project, it is envisaged to reduce emissions of greenhouse gases from the animal waste management system (AWMS) currently applied at the Arzni branch of “Arzni Pedigree PSC” OJSC (hereinafter referred as the “farm”) through anaerobic fermentation of organic animal waste and utilization of the produced biogas in cogeneration system (CHP unit). Capture and utilization of biogas will favor the reductions of greenhouse gas emissions in the farm, in comparison to the presently applied AWMS. The electricity generated by CHP unit will be supplied to the national distribution grid and will contribute to reduction of greenhouse gas emissions from the energy system. The proposed project activity envisages construction and operation of a biogas generation plant on the territory of the Arzni farm. The main units of the plan are as follows: organic waste receiving (homogenization) reservoirs, anaerobic fermentation tank (methane tank - digester), pumps, heat exchangers, moisture trapping, desulphurization and stocking systems, surplus gases flaring facility (open flare), CHP unit, etc. Animal waste collected in the farm will be discharged16 into a receiving tank (see Fig. 1) to ensure the necessary level of homogenization and moisture of the biomass before its placement into an anaerobe digester. The homogenization of the biomass is provided mechanically by the means of mixing machinery located inside of the receiving tank. In order to provide the required level of moisture of the biomass (approximately 90%) corresponding amount of water is added to the receiving tank. It is proposed to build two receiving tanks in the framework of the project, which will enable to continue the technological cycle of biomass discharge and biogas production in case of periodical clean-up (sediments removal), repair or breakdown of one of the tanks. Volume of the tanks will be selected in a way to Fig. 1 Underground receiving tank at Lusakert BP ensure disposal and storage of a three-day volume of biomass generated in the farm. From the receiving tanks biomass is pumped into close anaerobe digester (see Fig. 2), where in the absence of oxygen and under the impact of methanogenic bacteria, the biomass (manure) fermentation takes place. To ensure stable temperature regime established in the digester and avoid breakdown in biogas generation process (especially in wintertime when temperature of the biomass stored in the receiving tank is considerably lower then that in the digester), pre-heating of the liquid manure (biomass) is Pic. 2 Anaerobe digester at Lusakert Biogas Plant applied on the way from receiving tank to the digester. For that reason the liquid manure is pumped from the receiving tank through a heat exchanger (where the biomass is pre-heated up to the necessary temperature) before entering into the digester. Two-level pre-heating system may be also applied ensuring better effectives of the process17. At the first stage of such system the fresh biomass is pre-

15 Rules and procedures as well as eligibility criteria of the CDM established by the CDM Executive Board. 16 Due to favorable topographic position of the farm, gravity loading system is applied currently in the farm for evacuation of liquid manure from poultry houses and piggeries into earthen ponds and sewage system (see Section 2.6). Depending on location of the new biogas plant/raw material loading facility, the similar gravity system may be applied for loading the receiving tank/ supply of raw material, thus, offering transportation cost saving. 17 In some biogas designs the heating of the biomass is done inside the digester tank by circulating hot water through heating coils installed in the tank

25 heated by the warm digestate pumped out of the digester; whereas, in the second heat exchanger the pre-heated liquid manure is heated up to the required temperature by warm water supplied from CHP unit of boiler house. In the digester, biogas is produced by the process of anaerobic digestion of biomass i.e. a series of processes in which microorganisms break down biodegradable material in the absence of oxygen. The composition of biogas varies depending upon the origin of the anaerobic digestion process. Typical composition of biogas is as follows: methane (50-75%), carbon dioxide (25-50%), nitrogen (up to 10%), hydrogen (0-1%), hydrogen sulfide (0-3%) and oxygen (0-2%). The volume of the digester will be selected to secure an adequate Hydraulic Retention Time (HRT)18 to ensure a stable biogas process. In order to reduce heat loses and biogas leakage (project emissions) from the digester, appropriate thermal and leak insulation materials is to be applied. The digester will be equipped with biomass mechanical mixer as well as with systems for removal/evacuation of digestate, solid residues and sediments. The biomass (digestate) from the digester will be moved either directly to the open stabilization lagoons or to storage reservoir, where the residual fermentation and biogas generation takes place (depending on the technology applied usually about 10-15% of the total amount of biogas may be generated in storage reservoir). In the latter case digestate storage reservoir (its upper section) can also serve as gasholder. The storage reservoirs can be contracted either ground-based or underground. From the storage reservoir, the digestate is transported to the open anaerobic stabilization lagoons, situated on the territory of the farm. This process can conditionally be considered as the second phase of biomass processing after the digester. Greenhouse gas emissions from the lagoons will be calculated as project emissions. The biomass processed in the lagoons will be later used as organic fertilizer, for agricultural land fertilization. The biogas produced in the digester is a mixture of a number of gases including hydrogen sulfide (H2S), which represents danger for the CHP engine generator. That’s the reason, why in the framework of the given project activity it is planned to have condensate removal and desulphurization stations. The cleaned and demoistured biogas will be ejected to the gas container (reservoir). The biogas from the gas container will be supplied to CHP unit and to back-up boiler (in case it is installed). The CHP unit consists of reciprocating gas engine (internal combustion engine), electricity generator and thermal module and, thus, allowing simultaneous generation of both electricity and thermal energy. The biogas will be utilized in the gas engine to produce mechanical energy and to power the generator to produce electricity; whereas the thermal module will evacuate heat from a water cooling jacket of the engine and waste gases (exhausts) to turn it into useful heat. The produced electrical energy will be supplied to the distribution electrical grid by the means of a electrical sub-station located on the territory of the farm; whereas thermal energy will be used for Pic. 4 Flare meeting technological heeds of the farm, namely for heating of the digester to ensure necessary temperature regime (in average up to 30% of generated heat is used for this purpose), pre-heating of biomass before its feeding into digester, heating of poultry houses, milking parlor, slaughter-house and other facilities. Excessive heat can be supplied to the thermal energy consumer (school or industry) located in a vicinity of the farm (within 1 km distance). In order to prevent the occurrence of excessive pressure in the system as well as decrease the risk of explosions during the process of renovation/storage of the generator or other machineries, it is planned to install open flaring system meant for combustion of excess gas (Fig. 4). On-site generation of thermal energy will help to reduce consumption of fossil fuels (natural gas) and electricity, thus, reducing so-called project emissions associated with the plant’s technological needs. The back-up boiler will be mainly used for operation of the system and other technical needs in the wintertime or when CHP unit is stopped.

18 Average length of time that a soluble compound remains in a constructed reactor.

The principal scheme of described technological cycle is presented in Fig. 5.

Digester (reactor) Mixer Biogas Poultry-house Lagoon

Storage reservoir Pump

Depending on the project participant’s decision biogas can be utilized for thermal energy generation purposes only. In that case, a boiler house will be installed instead of CHP unit. This option requires less capital and operational costs (in comparison with CHP unit); however, on the other hand, it will reduce cash inflow of the project because of absence of income from sale of electricity as well as Certified Emission Reduction credits (CERs) to be claimed within the project for generation and supply of renewable energy to the national grid. Improvement of animal waste management system and construction of biogas production plant does not require any change in poultry-houses or their physical structure.

2.3 Description of the proposed project activity and the applied technology for Option 2 The second option proposes utilization or enlargement (construction of a second digester) of the capacities of the LBP for processing of the animal manure originated at the Arzni farm. The advantage of the approach is that it allows utilization of existing capacities without making considerable investments associated with construction and operation of the new biogas plant on the territory of Arzni farm as well as with training of the personnel and introduction of new technologies and know- how. Under this option Arzni farm will provide animal manure (raw material) to the LBP in exchange for organic fertilizer generated in the process of animal waste processing at the LBP. Organic fertilizer received from the LBP will be used by Arzni for fertilization of the farm’s agricultural lands where forage crops are cultivated. LBP has been operated under the CDM since 200919. The plant is located in the vicinity of Arzni farm (see Annex II). This fact along with availability of good road infrastructure, give a chance to consider Arzni branch as a potential provider of raw material (manure) for bio-digested operated at LBP, in case decision on such cooperation is made between project participants and management of LBP. However, eligibility of such cooperation under the CDM needs to be studied carefully within a separate document. Within this PIN construction of new biogas and power generation facilities on the territory of the Arzni branch is considered. For implementation of this option decision on the most feasible manure transportation system needs to be made. Manure and fertilizer transportation can be organized either via special trucks circulating

19 Detailed information regarding the project can be obtained visiting Climate Change Information Center’s web page at: www.nature-ic.am

27 between the farms or by means of pumping facility and а manure transportation pipeline built from Arzni to LBP. Final decision on the most appropriate option is to be made by the project participants at the PDD level based on calculation of transportation costs with consideration of the following aspects: liquidity level and daily volume of the biomass, capacity and fuel consumption of trucks, number of rides, electricity consumption by the biomass pumping facility, feasibility of pipeline transportation, etc. Regardless of seceded option, all emissions associated with transportation of biomass (emission from fuels and/or electricity consumption) should be considered as project leakages.

2.4 General information on the project proponent “Arzni Pedigree PSC” OJSC, the largest cattle and pig breeding complex in Armenia and one of the largest poultry keeping farms in the country located in Arzni village of RA Kotayk Region, was established in 1997 on the base of Arzni state farm. In 2001 the company integrated into its structure the Armavir poultry farm (located in RA Armavir Region) which now serves as a branch of “Arzni Pedigree PSC” OJSC where almost half or animals and poultry is kept. The main activities of the company are reproduction and sale of cattle and swine as well as manufacture of eggs and dairy products. The company’s branch establishment “Arzni Kat” Dairy Products Factory under “Arzni Kat” brand produces the dairy products. Arzni farm is also engaged in cultivation of sun flower, corn and lucerne on app. 350 ha of agricultural lands located in the vicinity of the farm. According to the information provided by the farm owners all agricultural residues are used by Arzni for feed preparation, hence, no agricultural waste is available for utilization in the digester with the aim to increase biogas generation productivity. The Arzni branch of the company considered in this document is located about 30 km away from the capital city Yerevan.

2.5 Livestock population As it was mentioned previously all livestock population of the Arzni Pedigree PSC” OJSC is distributed almost equally between Arzni and Armavir branches. The table below provides more detailed information on livestock population in Arzni branch. Table 1. Livestock population in Arzni branch of the company Animal categories Livestock in Arzni branch Cattle, 3 000 including Dairy cows 1000 Non dairy cattle 1200 Young animals 800 Swine 4000 including Less than 30 kg 2000 More than 40 kg 2000 Poultry (Laying hens) 184 000

In addition to the animals mentioned above there are about 25 horses are kept and a small dog kennel is maintained at the farm. However, given relatively small volume of manure received from these animals, their contribution into total biogas generation potential is neglected in the further calculations.

2.6 Animal keeping system The way animals are kept at the farm influences animal waste management (storage and further utilization) system. Grazing season for cattle at Arzni farm lasts from April to October. During this period collection and utilization of cattle manure is not possible. Stabling period for mature animals lasts about 5-6 months. Young animals are kept in stables all the year round. Stables at Arzni farm represent combination of traditional covered cow-houses (where animals can be sheltered from snow and rain) and adjacent open/roofed areas. According to the information provided

28 by the farm management, animals are not kept (confined) in cow-house and are able to move and stay on open areas (yards) at any time. All open areas where animals are kept are covered with hay bedding (spreading). This bedding is building up as manure produced by animals is accumulated there. This process lasts couple of months during which natural composting of manure takes place. Heat generated in the process of manure composting allows keeping animals out of door (at open spaces) even in winter.Pigs and poultry are kept in houses all around the year. Table below provides information on duration of stabling and grazing periods at the farm. Table 2. Duration of stabling and grazing periods at “Arzni Pedigree PSC” OJSC Animal categories Stabling period (months) Grazing period (months) Dairy cows 5-6 6-7 Mature males and females 5-6 6-7 Young animals 12 12 Swine 12 12 Pigs 12 12

2.7 Manure management system Completely all of the partially composted manure of cattle is used for fertilization of agricultural lands. Geographical location of the Arzni farm allows to evacuate liquid manure from piggeries and hen- houses using gravity. Liquid manure from piggeries goes directly (without processing) to the sewerage system. There is technical possibility to redirect liquid manure from piggeries to the earthen ponds where poultry waste in being collected. Liquid manure from hen-houses is discharged into the systems of sedimentation pools made of concrete where solid part of manure is partially separated from liquid and further on collected in earthen ponds (see pictures 1-3). Liquid part of the manure goes to sewerage system and partially to the field located below the earthen ponds (see picture 4).

Picture 1. System of pools and earthen ponds Picture 2. Upper sedimentation pool

Picture 3. Lower sedimentation pool Picture 4. Liquid component goes to sewage One of the manure collection systems located outside of the fenced territory of the farm (see picture 5) and the other within the fenced territory (picture 6). Intensive biogas generation process takes place in earthen ponds (see picture 7). This means that partially (aerobic) fermented manure is applied to agricultural lands; hence, its methane generation

29 potential may be considerably lower (in case the manure is used in spring season). Manure from hen- houses is collected in earthen ponds from October to March. After that period it is applied to fertilize the soil. Removal of the manure from the earthen ponds is performed by excavator. The earthen ponds are field in by turn (i.e. one system is being filed while another is being emptied by excavator). In summer time the earthen ponds are almost empty because intensive utilization of manure.

Picture 5. Concrete and earthen ponds outside Picture 6. Earthen pond inside of the fenced of the fenced territory territory

Picture 7. Biogas generation in a earthen pond Picture 8. Partially emptied earthen pond The poultry waste management system applied in Arzni farm is considered as economically feasible and productive one. However, on the other hand, it is unfavorable from the environmental standpoint, as in the result of organic wastes treatment process occurring in the earthen ponds, substantial amount of greenhouse gases, that is methane (CH4) and nitrous oxide (N2O) is emitted into the atmosphere. At the same time, this system favors the spreading of stench and contagions (more over during summer times) and can bring to underground water pollution.

2.8 Baseline scenario selection Present practice of chicken and pig manure management (disposal in earthen ponds) in Arzni farm is considered the baseline scenario of the proposed project activity.

2.9 Exchange of technologies and knowledge Animal waste management system proposed in the framework of the project activity is highly popular around the world. It enables not only the upgrading of animal manure management system while providing wastes processing in effective and secure manner from the environmental standpoint, but also allows to generate thermal and electrical energy on the basis of individual resources, as well as high quality organic fertilizers. It is planned, that electricity and organic fertilizers20 produced within the proposed project activity (due to technology applied) will be realized in the local market, ensuring the project’s business income. As a result of the project activities, the greenhouse gas Certified Emission

20 Given that all manure generated in Arzni farm is currently used for fertilization of the agricultural lands, it is very much likely that the established practice will continue after the project implementation. Should it be the case, then all digestate received from the digester will be applied for fertilization of soil by the Arzni farm, thus, no fertilizer will be available for sale on the market. This issue is a subject of further discussions between project participants.

Reduction units (CERs) will be considered as a source of additional income, and income generated from its sale/transfer will ensure the project’s economic attractiveness and financial stability. In spite of its effectiveness and trustworthiness, the described technology is still not popular in Armenia, and till this point has been only used in Lusakert poultry breeding factory (Lusakert Biogas Plant CDM project). Given the fact that the proposed technology has already been applied in Armenia the implementation of the proposed project does not bring to the transfer of new technologies and know-how; however, the project will certainly favor wider application of the modern biogas generation technology in RA.

2.10 Project category and scale according to CDM definitions According to CDM definitions, the proposed project activity is classified as N1 “Energy industries (renewable - / non-renewable sources)” & N13 “Waste management and handling” categories. The proposed project is a small scale project activity, because as a result of its implementation the greenhouse gas emissions’ annual reduction will not exceed 60 kt CO2e.

2.11 Location of the project activity The proposed project activity will be implemented either on the territory of Arzni branch of “Arzni Pedigree PSC” OJSC (Option 1: Construction of new biogas plant in Arzni), which is situated nearby Arzni village in RA Kotayk marz, app. 30 km away from Yerevan city or on the territory of Lusaker Biogas Plant CJSC (Option 2: Enlarging the capacity of LBP by building a second digester), which is situated nearby Nor Geghi village in RA Kotayk marz, 25 km away from Yerevan city (see Annex I).

3. Project organization

3.1. Works organization

This document has been developed within the framework of cooperation agreement between UNDP Armenia and the Norwegian Vekst Foundation signed in 2010 and aimed at assessment of potential of mitigation of GHG emissions from animal farming and development of PINs for the most promising options. Within the framework of the mentioned agreement, a site-visit to the Arzni branch of “Arzni Pedigree PCP” OJSC was organized by the contracted experts with the aim to collect and verify information necessary for development of PIN. The present PIN will be studied by the Norwegian Vekst Foundation and “Arzni Pedigree PSC” OJSC and in case of positive decision the further development of the document up to a PDD level will be initiated. 3.2 Project status and implementation schedule Present status of the project Project Idea Note (01.06.2010) Preliminary technical-economic assessment Feasibility study CDM Project Design Document Financial status At present, no funding scheme has been elaborated on project (possible sources of funding) activity. According to the information provided by the “Arzni Pedigree PSC” OJSC representatives, the company will consider possibility to finance the project after assessment of its economic feasibility. In most likelihood the reasonable share of equity financing (in case positives decision on project implementation is made) provided by the project owner may amount up to 20% (in the form of core means and labor and money); whereas the rest 80% of required financial means (borrowed capital) will need to be ensured from other sources such as banks and universal crediting organizations as well as carbon funds and companies interested in obtaining CERs.

Status on receiving necessary The procedure on receiving the necessary permits and licenses permits and licenses required by legislation, will be discussed by involved parties making a positive decision regarding implementation of proposed project activity. Start and end of PDD Start 2010 End 2011 development Project duration Start 2012 End 2030 CERs issuance period Start 2012 End 2020

3.3 Expenditures connected with CDM project development and implementation The following expenses are connected with development and implementation of this project under the CDM: CDM documents development, verification, certification, registration, monitoring and validation, as well as with issuance and future sale of CERs (during the whole period of project implementation) and can make app. 230000 euros (80000 Euro are the lump-sum costs carried out before project implementation, and 150000 euro is the total cost for monitoring, which is realized during project exploitation21). • Development of the CDM Project Design Document – 30000 € • Validation of the project – 25000 € • Registration by the CDM Executive Board – 8000 € • Project monitoring – 15000 € /a year or 150000 € during ten years • Development auxiliary documents and other possible expenses – 15000 €22.

3.4. Investment expenses These expenses are connected with development of the project’s technical-economic justification and working schemes, receiving corresponding permits and licenses, obtaining equipment, importation, installation and regulation, building and assembly jobs implementation, training of operation staff, as well as project implementation management provision. Taking into consideration financial information on “Lusakert Biogas Plant” CJSC and given the scale of the proposed project activity, total capital expenditures expenses needed for materialization of the project under Option 1 (including CDM component, without monitoring expenses) can amount up to approximately 2-2.5 mln Euro. Implementation of the Option 2 will require less investment given the existence of the operational equipment at LBP. However, this option still envisages investment of about 1-1,5 mln Euro mainly for installation of a second digester (if needed) and some auxiliary equipment in LBP as well as for preparation of relevant documentation required by the local legislation and CDM procedures. The accurate assessment and comparison of required investments under the both options may be carried out during the development of the project feasibility study.

3.5 Estimated annual operation costs The annual project implementation expenses include operation and maintenance (materials purchase, paying personnel, social allowances, spare parts and etc.) and project monitoring costs. According to an approximate assessment, the annual exploitation costs make app. 50000 Euro23.

21 The expenditures connected with implementation of project monitoring and preparation of verification reports, are usually considered as operation costs and in comparison to other mentioned (lump-sum costs) expenses, are realized in the process of project implementation (exploitation) once per each year. 22 The provide costs are very rough and need to be revised at PDD development stage. 23 This is indicative estimate of operational costs associated with the Option 1. Presumably, operational costs for the Option 2 (operation on new facilities at LBP and biomass transportation system) may be lower. The both costs need to be clarified more carefully at the PDD development stage.

Given the encouraging tariff (app. 39 dram/kWh including VAT) set by the RA Public Services Regulatory Committee for “Lusakert Biogas Plant” CJSC, which with high probability will be enforced also for this project activity, the annual profit obtained in the framework of the project from the supply of electricity to the national distribution grid will make app. 500.000 Euro. Because of the absence of organic fertilizer market in Armenia, it is not possible to precisely determine the organic fertilizer realization price. Calculation shows that annual volume of swine and poultry manure (94% humidity) produced at the farm amounts up to 134000 m3 (see Annex IV). For rough estimate of income generated from sale of fertilizer current price (50-110 AMD/kg) for biohumus on the Armenian market can be considered. Biohumus is a more effective fertilizer than manure derived from digester after the removal of biogas. However, it includes the substrate (manure) vermicomposting. The assessment of possibility of vermicomposting of digester sludge and development vermicomposting conditions requires additional studies. Taking as a base the current price of CERs (10 euro/CER) in the primary market of carbon credits, the income from the sale of CERs generated within the project will make 18950 Euro for “actual” option and 133070 Euro for “optimistic” option (see explanations provided in the Section 4).

4. Greenhouse gas emissions

4.1 Reduced/absorbed greenhouse gases

Greenhouse gases reduced as a CO2 CH4 N2O result of project implementation HFCs PFCs SF6

4.2 Selection of methodologies for baseline calculation A baseline represents the anthropogenic emissions by sources that would occur in the absence of the proposed project activity. If comparing the baseline with project emissions, the greenhouse gas emission reductions potential can be evaluated. So as to calculate project activity baseline, the following small-scale methodologies approved by the CDM Executive Board were applied: ¾ AMS - III.D – Methane recovery in animal manure management systems (Version 16) ¾ AMS - I.D- Grid connected renewable energy generation (Version 15) The mentioned above methodologies were selected based on the following observations.

The manure processing in traditional earthen ponds brings to direct emission of biogas (60-70% CH4) into the atmosphere. The project activity plans to recover the most share of that biogas, which will favor the reduction of greenhouse gas emissions. In addition, total annual amount of GHG reduction will not exceed 60 kt CO2 thresholds, that is why the proposed activity is a small scale CDM project, that corresponds to the requirements of the applied methodology. Besides that, the project activity corresponds to the following 5 preconditions of III.D type methodology application: a) The livestock population in the farm is managed under confined conditions; b) Manure or the streams obtained after treatment are not discharged into natural water resources (e.g. river or estuaries); c) The annual average temperature of baseline site where anaerobic manure treatment facility is located is higher than 50C; d) In the baseline scenario the retention time of manure waste in the anaerobic treatment system is greater than 1 month, and in case of anaerobic lagoons in the baselines, their depths are at least 1 m;

e) No methane recovery and destruction by flaring, combustion or gainful use takes place in the baseline scenario. Under the described conditions, formally, only manure produced in hen-houses (poultry manure) may be considered within the boundaries of the proposed project activity, since the AMWS applied for cattle and swine manure do not meet the methodology applicability conditions listed above. In particular, conditions (a) and (d) are not met both for cattle (animals are not managed under confined conditions in the course of a year; manure is not disposed in the earthen ponds but is mixed with straw and used as a bedding for animals and being naturally composed within time) and swine (liquid manure from piggeries is evacuated directly into sewer system)24. Given that utilization of cattle manure is associated with animal keeping system applied in Arzni farm, it is hardly to expect that the current AWM practice for cattle will be changed in the future due to implementation of the proposed project. Hence, cattle manure should not be considered as a potential material for biogas generation. On the other hand, existing pipeline infrastructure allows Arzni farm to discharge liquid manure from piggeries directly into earthen ponds (instead of sewer system). Thus, within the scopes of this document, it can be assumed that liquid manure from the piggeries also meet conditionally the requirements of the above described methodology and can be considered both for baseline emission evaluation and for methane generation potential assessment. For the mentioned reasons all further evaluations25 are made only with respect to poultry and pig livestock of the Arzni farm. Another important aspect which is worth to be mentioned in this section is classification of AWMS applied in Arzni according to IPCC classifiers described in the Table 3 below. As it is described in Section 2.7 the current existing AWMS applied in Arzni farm corresponds rather to “Liquid/Slurry” category, since “manure is stored as excreted or with some minimal addition of water in either tanks or earthen ponds outside the animal housing, usually for periods less than one year”. Table 3. Classification and description of some key AWMS according to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories AWMS Description 1 Deep bedding As manure accumulates, bedding is continually added to absorb moisture over a production cycle and possibly for as long as 6 to 12 months. 2 Grazing The manure from pasture and range grazing animals is allowed to lie as deposited, and is not managed. 3 Pit storage below Collection and storage of manure usually with little or no added animal water typically below a slatted floor in an enclosed animal confinement confinement facility, usually for periods less than one year. 4 Anaerobic A type of liquid storage system designed and operated to lagoons combine waste stabilization and storage. Lagoon supernatant is usually used to remove manure from the associated confinement facilities to the lagoon. The water from the lagoon may be recycled as flush water or used to irrigate and fertilize fields. 5 Daily spread Manure is routinely removed from a confinement facility and is applied to cropland or pasture within 24 hours of excretion. 6 Liquid/Slurry Manure is stored as excreted or with some minimal addition of water in either tanks or earthen ponds outside the animal housing, usually for periods less than one year.

24 See sections 2.6 and 2.7 25 For information purposes calculation of baseline emissions and methane generation potential were carried out with consideration of cattle manure; however the results of these calculations have not been incorporated in the final outcome for the reasons explained above.

At the same time, it is assumed26 that the project owner is able to change the current category of AWMS from “Liquid/Slurry” to “Anaerobic lagoons” by means of some technical upgrades (particularly, reconstruction of existing earthen ponds, increase of water proportion and manure retention time). Leaving aside project owner personal motivation for such reconstruction, it should be noted that existence of anaerobic lagoons in the baseline situation will significantly increase the level of GHG emission under the baseline scenario, thus, providing more favorable conditions for CERs generation. Given the mentioned, evaluation of baseline emissions has been carried both for “Liquid/Slurry” (so- called “actual scenario”) and for “Anaerobic lagoons” (so-called “optimistic scenario”) with consideration of coefficients (MCF) corresponding to each of the mentioned categories of AWMS. In such a way, the manure processing in earthen ponds (actual scenario) and traditional open anaerobic lagoons (optimistic scenario) are being considered as a baseline scenarios (the presently applied practice) for the proposed project activity. The organic substances contained in manure are being degraded under anaerobic conditions, which bring to biogas (60% CH4 and 40% CO2) generation and its emission to the atmosphere.

AMS - I.D methodology The biogas containing methane, which is generated in organic wastes anaerobe processing reactor, is accumulated through gas collection system and flared in the CHP unit with the purpose of electricity generation. The generated energy is supplied to the distribution grid and replays the energy generated by fossil fuel thermal power plants serving the Armenia energy system. Combined application of the both mentioned methodologies, enables to claim greenhouse gas emission reduction not only due to manure processing, but also because of generation of “clean” energy.

4.3 Project boundary Manure anaerobic processing facility and power generator are included in the project boundary (see Fig. 9).

CH4 CH4

Methane tank

Figure 9. CDM project boundary

4.4 Equations used for evaluation of greenhouse gas emission reductions

Baseline emissions According to the applied methodologies, the overall baseline emissions are decided by the following formula:

BEtotal, y = BEe, y + BEy

26 This assumption is made as per request of VPFF

35 where: BEe, y - emissions during “y” year (tCO2e/year) connected with electrical energy generation in the baseline scenario

BEy - fugitive emissions in “y” year (tCO2e/year) in the baseline scenario from open anaerobic lagoons

According to AMS - I.D methodology, in the baseline scenario GHG emissions connected with the electricity generation are calculated by the following formula:

BEe, y = EPBIO x CEFgrid where: EPBIO - in the project scenario the electrical energy (MWh) generated by the biogas operated CHP unit and supplied to the national grid CEFgrid - Power system GHG emissions factor (kg CO2e/kWh)

According to AMS - III.D methodology, in the base scenario the greenhouse gas emissions from open anaerobic lagoons are estimated by the following equation:

BEy

where` GWPCH4 – Global Warming Potential of methane (21); DCH4 - CH4 density; LT - Index of all type of birds; MCFj - Annual methane conversation factor (MCF) for the animal manure management system “j” in the baseline scenario; B0,LT - Maximum methane producing potential of the volatile solid generated 3 (m CH4/kg dm) generated by LT type animal; NLT,y - Number of broilers and layers for the year “y”, expressed in numbers; VSLT,y - Annual volatile solid for broilers and layers chickens on a day matter weight basis (kg dm/animal/year) entering during “y” year in animal manure management system; MS%Bl, j - Fraction of manure processed by animal manure management system “j” in the baseline scenario; UFb - non determination coefficient (0.94).

Projected emissions

According to AMS - III.D methodology, projected emissions are estimated by the following equation:

PEy = PEPL,y + PE flare,y + PE power,y where` PEPL,y - Еmissions due to physical leakage of biogas in year “y” (tCO2e); PEflare,y - Emissions from combustion of the biogas steam in the year “y” (tCO2e); PEpower,y - Emissions from the use of fossile fuel or electricity for operation of the installed facilities in the year “y” (tCO2e). According to AMS - III.D methodology, project emissions due to physical leakage of biogas from the animal manure management systems used to produce, collect and transport the biogas to the point of flaring or gainful use is estimated as 10% of the maximum methane producing potential of the manure fed into the management systems implemented by the project activity, as follows:

36 biogas flaring in the flaring facility, or otherwise, the amount of flared biogas will be insignificant. That’s why PEflare,y is considered to be equal to zero. In the framework of the project, in the process of auxiliary equipment operation the emissions connected with electrical energy consumption are estimated by the following equation27:

PEpower,y = ECAux x CEFgrid

where` ECAux - electrical energy consumed by auxiliary equipment (MWh/year) CEFgrid - GHG emission factor of the energy system (grid) (kg CO2e/kWh)

It is planned, that during project activity the electrical energy annual expense of auxiliary equipment will make app. 500 MWh/year28.

Leakages In accordance with the applied methodology, no leakage calculation is required.

4.5 Methane and biogas production potential

Details of calculation of methane and biogas generation potential from the Arzni farm’s animal manure are presented in the Table 4.

Table 4. Calculation of methane and biogas production potential for Arzni farm

Animal Live- VS kg Bo, CH4 CH4 Accounting CH4 CH4 Biogas, category stock, dm/h/ m3/kg formed, formed, days per formed, formed, m3/year, 3 3 (subcategory) heads day VS dm m /day kg/day annum* kg/year m /year CH4 (60%)

A B C D=AxBxC E=Dx0.67 F G=ExF H=DxF H/0.6 Cattle dairy cows 500 4,13 0,24 495,6 332,052 180 59769,36 89208 148680 non dairy 600 3,47 0,17 353,94 237,1398 180 42685,16 63709,2 106182 young 400 2,04 0,17 138,72 92,9424 365 33923,98 50632,8 84388 Subtotal 988,26 662,1342 136378,5 203550 339250 Swine Over 40 kg 2000 0,5 0,45 450 301,5 365 110047,5 164250 273750 Below 30 kg 2000 0,3 0,29 174 116,58 365 42551,7 63510 105850 Subtotal 624 418,08 152599,2 227760 379600 Poultry Layers 184000 0,1 0,24 4416 2958,72 365 1079933 1611840 2686400

Subtotal 4416 2958,72 1079933 1611840 2686400 TOTAL 6028,26 4038,934 1368911 2043150 3405250 *) number of days when manure can be collected

Given justification provided in the previous sections biogas generation potential from swine and poultry (379600 + 2686400 = 3066000 m3/year) are considered in the following calculations.

27 Despite of the fact, that the additional boiler planned in technological cycle operates by natural gas and can appear as an additional source of greenhouse gas emissions, the boiler emissions in the given document are considered inessential and are disregarded in the estimations. The accurate and objective estimation of these emissions is expedient to be carried out in the process of CDM project document development. 28 This figure represents very rough estimate of annual electricity consumption of the plant and does not consider electricity consumption associated with biomass transportation/pumping under the Option 2.

4.6 GHG emissions reduction calculation

Baseline emissions Annual baseline GHG emission reduction from generation of electricity by the CDP unit is equal to:

29 BEe, y = EPBIO x CEFgrid = 6132 MWh/year x 0,26 t CO2e/MWh = 1594 t CO2e/year

330 Where: EPBIO = 3066000 m3/year * 2 kWh/m = 6132 MWh/year.

Details of calculation of GHG emissions in the baseline scenario for “actual” and “optimistic” options are presented in the Tables 5 and 6.

Table 5. GHG emission in the baseline scenario for “actual” option Fraction Methane Annual Volatile of Production Model Animal CH Average Solids, Manure Baseline Manure Management 4 Potential, Correct. category GWP Density, MCF Number of Days* VS Handled Emission BE System CH4 B Factor, y (subcategory) D O Animals, (kg dm/ in (tCO e) CH4 (m3/kgVS Uf 2 N (Head) h/day) BAMMS, b dm) MS%BL G=AxBxCxDxEx A B C D E F G H I FxGxHxI Cattle Liquid/Slurry 21 0,00067 0,19 0,24 500 180 4,13 1 1 238,4 Dairy cows Pasture/Range/Paddock 21 0,00067 0,01 0,24 500 185 4,13 1 1 12,9 Liquid/Slurry 21 0,00067 0,19 0,24 600 180 3,47 1 1 240,4 Mature female Pasture/Range/Paddock 21 0,00067 0,01 0,24 600 185 3,47 1 1 13,0 Liquid/Slurry 21 0,00067 0,19 0,17 400 365 2,04 1 1 135,3 Young animals Pasture/Range/Paddock 21 0,00067 0,01 0,17 400 0 2,04 1 1 0 Swine Over 40 kg Liquid/Slurry 21 0,00067 0,19 0,45 1000 365 0,5 1 1 219,5 Below 30 kg Liquid/Slurry 21 0,00067 0,19 0,29 1000 365 0,3 1 1 84,8 Poultry Layers Liquid/Slurry 21 0,00067 0,19 0,24 184000 365 0,1 1 1 4308,9 TOTAL 5253

29 Grid emission factor for Armenian energy system for 2009. It should be noted that GIF will increase after 2010. 30 Coefficient considering caloric value of biogas and efficiency of CHP unit. Table 6. GHG emission in the baseline scenario for “optimistic” option

Methane Annual Fraction of Production Average Volatile Model Animal CH4 Manure Baseline Manure Management GWPC Potential, Number Solids, VS Correct. category Density, MCF Days* Handled in Emission BEy System H4 BO of (kg Factor, (subcategory) D 3 BAMMS, (tCO e) CH4 (m /kgVS Animals, dm/h/day) Uf 2 MS% b dm) N (Head) BL

G=AxBxCxDx A B C D E F G H I ExFxGxHxI Cattle Anaerobic lagoons 21 0,00067 0,66 0,24 500 180 4,13 1 1 828,4 Dairy cows Pasture/Range/Paddock 21 0,00067 0,01 0,24 500 185 4,13 1 1 12,9

Mature Anaerobic lagoons 21 0,00067 0,66 0,24 600 180 3,47 1 1 835,2 female Pasture/Range/Paddock 21 0,00067 0,01 0,24 600 185 3,47 1 1 13,0 Young Anaerobic lagoons 21 0,00067 0,66 0,17 400 365 2,04 1 1 470,2 animals Pasture/Range/Paddock 21 0,00067 0,01 0,17 400 0 2,04 1 1 0,00 Swine Over 40 kg Anaerobic lagoons 21 0,00067 0,66 0,45 1000 365 0,5 1 1 762,6 Below 30 kg Anaerobic lagoons 21 0,00067 0,66 0,29 1000 365 0,3 1 1 294,8 Poultry Layers Anaerobic lagoons 21 0,00067 0,66 0,24 184000 365 0,1 1 1 14967,8 TOTAL 18185

Given justification provided in the previous sections for the purpose of this study baseline GHG emissions from swine and poultry have been considered in the following calculations of GHG emission reduction potential.

For actual option – 4613.2 tCO2e

For optimistic option – 16025.2 tCO2e Project emissions

Physical leakage of biogas from manure management system makes 10% of the maximum methane producing potential of the treatment system.

PEPL,y = BEy x 10% = 25883 t CO2e/year x 0,1 = 2588 t CO2e/year

In the process of auxiliary equipment operation, the GHG emissions connected with electrical energy consumption are equal to:

PEpower,y = ECAux x CEFgrid = 500 MWh/year x 0,26 t CO2e/MWh = 130 t CO2e/year

In the end, the cumulative project emissions make:

PEy = PEPL,y + PE flare,y + PE power,y = 2588 + 130 = 2718 t CO2e/year

Results of GHG emission reductions to be achieved within the proposed project activity are introduces in Table 7. Table 7 Greenhouse gas emissions reduction in the process of project activity Project Baseline emissions Reduction of greenhouse emissions evaluation Leakages gases emission Year evaluation (tCO2e) (tCO2e) (tCO2e) (tCO2e) actual optimistic actual optimistic 2012 2718 4613 16025 0 1895 13307 2013 2718 4613 16025 0 1895 13307 2014 2718 4613 16025 0 1895 13307 2015 2718 4613 16025 0 1895 13307 2016 2718 4613 16025 0 1895 13307 2017 2718 4613 16025 0 1895 13307 2018 2718 4613 16025 0 1895 13307 2019 2718 4613 16025 0 1895 13307 2020 2718 4613 16025 0 1895 13307 2021 2718 4613 16025 0 1895 13307 In total 27180 461302 160252 0 18950 133070 For estimations of greenhouse gas emission reductions, corresponding parameters and coefficients presented in “Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories” and “2006 IPCC Guidelines for National Greenhouse Gas Inventories” methodological reports developed by IPCC were applied.

5. Contribution to country’s sustainable development

5.1 Envisaged social effect Both the directorate and personnel of “Arzni Pedigree PSC” OJSC, and population of rural communities located in the neighborhood of the poultry factory welcome the proposed project activity, given its positive consequences from the environmental standpoint. The project implementation will favor to demolish the stench from organic wastes spreading from the open lagoons, thus, improving the work conditions of factory’s personnel. At the same time, the project will enable to create new work places requiring corresponding professional qualification.

The manure accumulating at present in the stabilization lagoons leads to the spreading of not only the stench, but also various contagions, as well as the possible pollution of underground waters. Meanwhile, in poultry factory the originated organic wastes processing in anaerobe digester will result in demolishment of contagions and biogas neutralization.

5.3 Envisaged economic effects The project envisages the involvement of app. 2.5 mln. Euro (or app.1-1,5 mln Euro in case of Option 2) of capital investments (partially foreign), which would have not been engaged in case of project absence. In the framework of the project implementation, it is planned to invest up-to-date technologies that are already applied in Armenia, however still do not have wide recognition, which can support to wider application of those technologies in other major livestock and poultry breeding factories. Electrical energy generated in the CHP unit will be supplied to distribution grid by means of one of the existing transformer sub-stations, which to some extent encourages the creation of country’s energy supply diversification and increase of energy safety. As a consequence of manure processing, the usage of organic fertilizer will support the fertility increase of rural-economic lands. The project activity for local communities will also create new work places in the process of construction and exploitation of a biogas plant.

6. Project additionality Environmental projects implementation both international, as well as local experience with modern similar technologies application demonstrates that such projects’ implementation are mainly not feasible, moreover in such countries, where there is no great demand for high quality organic fertilizers. The preliminary assessment of economic efficiency explains that the implementation of the proposed project activity without CDM component essentially reduces its economic attractiveness, making obstacles for the project implementation under existing market conditions. Meanwhile, the profit obtained from CERs sale may improve the economic parameters of the project and increases the attractiveness for local and international investor.

7. Conclusion From the Table 7 it is seen that the proposed project activity is more “attractive” from the CDM point of view under the condition that in the baseline scenario the Arzni farm uses open anaerobic stabilization lagoons as the basic practice of animal waste treatment (so-called “optimistic” option). This is explained by the fact that according to the IPCC guidance GHG generation proceed more intensively in lagoons then in earthen pounds. Thus, it is recommended that the project owner undertake necessary construction works to retrofit existing AWMS upgrading it to the “lagoons” level taking into consideration all technical requirement made for construction and operation of open stabilization lagoons. This will allow to ensure higher level of GHG emissions in the baseline scenario, thus, improving CDM attractiveness of the project. It needs to be mentioned that the results presented in Table 7 are relevant to Option 1 (construction on new biogas plant at Arzni). In case of Option 2 (enragement of LBP capacities) the project emissions from digester as well as electivity and fuel consumption should be revised taking into consideration technical specificities of the second option (particularly, transportation of biomass from Arzni to LBP and backward). This revision should be done at the PDD level.

Annex I. Relative position of LBP and Arzni farm (distance is app. 5 km)

LBP

Arzni

Annex II. Satellite image of Arzni farm

Annex III. Monthly average air temperatures in RoA regions

Annex IV. Calculation of manure production at Arzni farm

Manure Manure Volume of Animal Accounting Livestock, produced, annual manure Farm category days per heads kg production, produced (94% (subcategory) annum* dm/day/h dm/y humidity), m3 A F I J=AxFxI K=J/0.06/1000 Cattle dairy cows 500 180 4,49 404100 6735 non dairy 600 180 3,75 405000 6750 Young 400 365 2,04 297840 4964 Subtotal 1106940 18449 Arzni Pedigree Swine PBS Over 40 kg 2000 365 0,51 372300 6205 OJSC, Below 30 kg 2000 365 0,36 262800 4380 Arzni Subtotal 635100 10585 Branch Poultry Layers 184000 365 0,11 7387600 123127

Subtotal 7387600 123127 TOTALS 9129640 152161

Appendix IX – Project Identification Note for Armavir Poultry Farm

Project Idea Note

Biogas and Power Generation in “Armavir Poultry Fram” OJSC

"Enabling Activities for Preparation of Armenia’s Second National Communication to the UNFCCC" UNDP/GEF

YEREVAN 2010

Table of Contents

1. Project participants 48 1.1 Project owner 48 1.2 Applicant / Participant 48 1.3 Project idea developer / consultant 48 2. Description of CDM project activity 48 2.1 Project objective 48 2.2 Description of the proposed project activity and the applied technology 49 2.3 General information on the project proponent 51 2.4 Livestock population 52 2.5 Animal keeping system 52 2.6 Manure management system 52 2.7 Baseline scenario selection 54 2.8 Exchange of technologies and knowledge 54 2.9 Project category and scale according to CDM definition 54 2.10 Location of the project activity 54 3. Project organization 54 3.1 Work organization 54 3.2 Project status and implementation schedule 55 3.3 Expenditures associated with CDM project development and implementation 55 3.4 Investment expenses 55 3.5 Estimated annual operation costs 56 3.6 The annual estimated amount of project turnovers 56 4. Greenhouse gas emissions 56 4.1 Reduced/absorbed greenhouse gases 56 4.2 Selection of methodologies for baseline calculation 56 4.3 Project boundary 58 4.4 Equations used for evaluation of greenhouse gas emission reduction 58 4.5 Methane and biogas production potential 60 4.6 GHG emission reduction calculation 60 5. Contribution to county’s sustainable development 62 5.1 Envisaged social effect 62 5.2 Envisaged environmental effect 62 5.3 Envisaged economic effect 63 6. Project additionality 63 7. Conclusion 63 Annex I. Relative position of Armavir and Araks poultry farms 64 Annex II. Satellite image of Armavir farm 65 Annex III. Monthly average air temperatures in RoA regions 66 Annex IV Calculation of manure production at Armavir farm 67

1. Project participants 1.1 Project owner Company name Armavir branch of “Arzni Pedigree PSC” OJSC Company type Private company Legal status Open Joint Stock Company Main activities Reproduction and sale of cattle and swine as well as manufacturing of eggs and dairy products Contact person Armen Janvelyan, Director of “Arzni Pedigree PSC” OJSC Garnik Danielyan, Director of Armavir branch Company address RA Armavir marz, Eghegnut village Telephone (+374 91) 40-10-69; (+374 93) 40-10-69; (+374 93) 00-15-20 Electronic mail [email protected] Internet site www.arzni-agro.am 1.2 Applicant / Participant Company name Vekst Project Financing Facility AS Main activities Development and financing of renewable energy projects Contact person Rolf Kevin, Board Chairman Company address Radhusgata 9, 0106 Oslo, Norwey Telephone +47 22708711; +47 92264718 Electronic mail [email protected] Internet site www.vekst.no 1.3 Project idea developer / consultant Organization name "Enabling Activities for Preparation of Armenia’s Second National Communication to the UNFCCC" UNDP/GEF Contact person D. Harutyunyan, Project Manager P.Tozalakyan and A. Kharazyan, Project Experts Organization address #3 Government Building, Republic Square Telephone, fax (+374 10) 58-39-20, 58-39-33 Electronic mail [email protected]; [email protected]; [email protected] Internet site www.nature-ic.am

2. Description of CDM project activity

2.1 Project objective The main objective of the project is to reduce the level of greenhouse gas (GHG) emissions originated from cattle, swine and poultry manure (hereinafter referred as “animal manure”) by improving the animal waste management system (AWMS) currently used in Armavir branch of “Arzni Pedigree PSC” OJSC31. The proposed project activity envisages installation and operation of biogas generation facility (digester) where animal manure will be processed and biogas will be generated. The generated biogas will be utilized in the cogeneration system (Combined Heat and Power - CHP) to produce electrical and thermal energy. The generated electrical energy will be supplied to the national distribution grid, thus, replacing electricity generated by fossil fuel thermal power plants presently serving the energy system. Additional objective of the project is production of organic fertilizers from the animal manure. Given the distance of the Armavir farm from the Lusaker Biogas Plant (about 60 km) this document does not consider supply of animal manure to the LBP (where all necessary facilities for manure processing and biogas generation already exist) as a feasible option for improving AWMS of Armavir farm, because of considerable additional costs associated with transpiration of manure.

31 The company has two major branches located in Arzni (RA Kotayk marz) and in Armavir (RA Armavir marz). In this document, activities of Armavir branch are considered only.

The proposed option will be implemented in the framework of the Kyoto Protocol’s Clean Development Mechanism (CDM).

2.2 Description of the proposed project activity and the applied technology In the framework of the project, it is envisaged to reduce emissions of greenhouse gases from the animal waste management system (AWMS) currently applied at the Armavir branch of “Arzni Pedigree PSC” OJSC (hereinafter referred as the “farm”) through anaerobic fermentation of organic animal waste and utilization of the produced biogas in cogeneration system (CHP unit). Capture and utilization of biogas will favor the reductions of greenhouse gas emissions in the farm in comparison to the presently applied AWMS. The electricity generated by CHP unit will be supplied to the national distribution grid32 and will contribute to reduction of greenhouse gas emissions from the energy system. The proposed project activity envisages construction and operation of a biogas generation plant on the territory of the Armavir farm. The main units of the plan are as follows: organic waste receiving (homogenization) reservoirs, anaerobic fermentation tank (methane tank - digester), pumps, heat exchangers, moisture trapping, desulphurization and stocking systems, surplus gases flaring facility (open flare), CHP unit, etc. Animal waste collected in the farm will be discharged33 into a receiving tank (see Fig. 1) to ensure the necessary level of homogenization and moisture of the biomass before its placement into an anaerobe digester. The homogenization of the biomass is provided mechanically by the means of mixing machinery located inside of the receiving tank. In order to provide the required level of moisture of the biomass (approximately 90%) corresponding amount of water is added to the receiving tank. It is proposed to build two receiving tanks in the framework of the project, which will enable to continue the technological cycle of biomass discharge and biogas production in case of periodical clean-up (sediments removal), repair or breakdown of one of the tanks. Volume of the tanks will be selected in a way to Pic. 1 Underground receiving tank at Lusakert BP ensure disposal and storage of a three-day volume of biomass generated in the farm. From the receiving tanks biomass is pumped into close anaerobe digester (see Fig. 2) where in the absence of oxygen and under the impact of methanogenic bacteria, the biomass (manure) fermentation takes place. To ensure stable temperature regime established in the digester and avoid breakdown in biogas generation process (especially in wintertime when temperature of the biomass stored in the receiving tank is considerably lower then that in the digester), pre-heating of the liquid manure (biomass) is Pic. 2 Anaerobe digester at Lusakert Biogas Plant applied on the way from receiving tank to the digester. For that reason the liquid manure is pumped from the receiving tank through a heat exchanger (where the biomass is pre-heated up to the necessary temperature) before entering into the digester. Two-level pre-heating system may be also applied ensuring better effectives of the process34. At the first stage of such system the fresh biomass is pre- heated by the warm digestate pumped out of the digester; whereas, in the second heat exchanger the

32 The electricity will be supplied to the grid via substation located on the territory of the farm (see picture 10). 33 Due to favorable topographic position of the farm, gravity loading system is applied currently in the farm for evacuation of liquid manure from poultry houses into open anaerobic stabilization lagoons (see Section 2.7). Depending on location of the new biogas plant, the similar gravity system may be applied for loading the receiving tank, thus, offering transportation cost saving. 34 In some biogas designs the heating of the biomass is done inside the digester tank by circulating hot water through heating coils installed in the tank

49 pre-heated liquid manure is heated up to the required temperature by warm water supplied from CHP unit of boiler house. In the digester, biogas is produced by the process of anaerobic digestion of biomass i.e. a series of processes in which microorganisms break down biodegradable material in the absence of oxygen. The composition of biogas varies depending upon the origin of the anaerobic digestion process. Typical composition of biogas is as follows: methane (50-75%), carbon dioxide (25-50%), nitrogen (up to 10%), hydrogen (0-1%), hydrogen sulfide (0-3%) and oxygen (0-2%). The volume of the digester will be selected to secure an adequate Hydraulic Retention Time (HRT)35 to ensure a stable biogas process. In order to reduce heat loses and biogas leakage (project emissions) from the digester, appropriate thermal and leak insulation materials is to be applied. The digester will be equipped with biomass mechanical mixer as well as with systems for removal/evacuation of digestate, solid residues and sediments. The biomass (digestate) from the digester will be moved either directly to the open stabilization lagoons or to storage reservoir, where the residual fermentation and biogas generation takes place (depending on the technology applied usually about 10-15% of the total amount of biogas may be generated in storage reservoir). In the latter case digestate storage reservoir (its upper section) can also serve as gasholder. The storage reservoirs can be contracted either ground-based or underground. From the storage reservoir, the digestate is transported to the open anaerobic stabilization lagoons, situated on the territory of the farm. This process can conditionally be considered as the second phase of biomass processing after the digester. Greenhouse gas emissions from the lagoons will be calculated as project emissions. The biomass processed in the lagoons will be later used as organic fertilizer, for agricultural land fertilization. The biogas produced in the digester is a mixture of a number of gases including hydrogen sulfide (H2S), which represents danger for the CHP engine generator. That’s the reason, why in the framework of the given project activity it is planned to have condensate removal and desulphurization stations. The cleaned and demoistured biogas will be ejected to the gas container (reservoir). The biogas from the gas container will be supplied to CHP unit and to back-up boiler (in case it is installed). The CHP unit consists of reciprocating gas engine (internal combustion engine), electricity generator and thermal module and, thus, allowing simultaneous generation of both electricity and thermal energy. The biogas will be utilized in the gas engine to produce mechanical energy and to power the generator to produce electricity; whereas the thermal module will evacuate heat from a water cooling jacket of the engine and waste gases (exhausts) to turn it into useful heat. The produced electrical energy will be supplied to the distribution electrical grid by the means of a electrical sub-station located on the territory of the farm; whereas thermal energy will be used for Pic. 3 Flare meeting technological heeds of the farm, namely for heating of the digester to ensure necessary temperature regime (in average up to 30% of generated heat is used for this purpose), pre-heating of biomass before its feeding into digester, heating of poultry houses, milking parlor, slaughter-house and other facilities. Excessive heat can be supplied to the greenhouses36 located in a vicinity of the farm. In order to prevent the occurrence of excessive pressure in the system as well as decrease the risk of explosions during the process of renovation/storage of the generator or other machineries, it is planned to install open flaring system meant for combustion of excess gas (see picture 3). On-site generation of thermal energy will help to reduce consumption of fossil fuels (natural gas) and electricity, thus, reducing so-called project emissions associated with the plant’s technological needs. The back-up boiler will be mainly used for operation of the system and other technical needs in the wintertime or when CHP unit is stopped.

35 Average length of time that a soluble compound remains in a constructed reactor. 36 Greenhouses are located at short distance (about 500 m) from the farm and occupy territory of about 1 ha (see picture 9). Given that operation of greenhouses requires consumption of thermal energy almost all the year round, heat generated by the CHP may be constantly supplied to the greenhouses, ensuring high efficiency of power generation unit.

The principal scheme of described technological cycle is presented on the picture below.

Digester (reactor) Mixer Biogas Poultry-house Lagoon

Storage reservoir Pump

Digester Desulphurization heating stations Flare Receiving (homogenization) CHP tank Cleaned and demoisturized gas Dry raw Thermal energy Alternative material loader heat source when CHP is Electrical energy stopped Thermal energy Picture 4. Main units and cycles of a biogas plant Depending on the project participant’s decision biogas can be utilized for thermal energy generation purposes only. In that case, a boiler house will be installed instead of CHP unit. This option requires less capital and operational costs (in comparison with CHP unit); however, on the other hand, it will reduce cash inflow of the project because of absence of income from sale of electricity as well as Certified Emission Reduction credits (CERs) to be claimed within the project for generation and supply of renewable energy to the national grid. Improvement of animal waste management system and construction of biogas production plant does not require any change in poultry-houses or their physical structure.

2.3 General information on the project proponent “Arzni Pedigree PSC” OJSC, the largest cattle and pig breeding complex in Armenia and one of the largest poultry keeping farms in the country located in Arzni village of RA Kotayk Region, was established in 1997 on the base of Arzni state farm. In 2001 the company integrated into its structure the Armavir poultry farm (located in RA Armavir Region) which now serves as a branch of “Arzni Pedigree PSC” OJSC where almost half or animals and poultry is kept. The main activities of the company are reproduction and sale of cattle and swine as well as manufacture of eggs and dairy products. The company’s branch establishment “Arzni Kat” Dairy Products Factory under “Arzni Kat” brand produces the dairy products. Armavir farm occupies territory of 30 ha and is engaged in cultivation of sun flower, corn and lucerne on app. 300 ha of agricultural lands located in the vicinity of the farm. According to the information provided by the farm owners all agricultural residues are used by Armavir for feed preparation, hence, no agricultural waste is available for utilization in the digester with the aim to increase biogas generation productivity. The Armavir branch of the company considered in this document is located about 40 km away from the capital city Yerevan and 10 km away from “Araks Poultry Factory” OJSC, one of the larges poultry farms in Armenia (see Annex I).

2.4 Livestock population As it was mentioned previously all livestock population of the Arzni Pedigree PSC” OJSC is distributed almost equally between Arzni and Armavir branches. The table below provides more detailed information on livestock population in Armavir branch.

Table 1. Livestock population in Armavir branch of the company Animal categories Livestock in Armavir branch37 Cattle, 3 000 including Dairy cows 1000 Non dairy cattle 1200 Young animals 800 Swine 4000 including Less than 30 kg 2000 More than 40 kg 2000 Poultry (Laying hens) 276 000

2.5 Animal keeping system The way animals are kept at the farm influences animal waste management (storage and further utilization) system. Grazing season for cattle at Armavir farm lasts from April to October. During this period collection and utilization of cattle manure is not possible. During the remaining period, in fine weather, animals graze in the vicinity of barns and come back to barns at nigh. Given this fact the average stabling period for cattle (when collection of manure is possible) is considered about 3 months. This is rough but reasonable estimate given weather uncertainties, inequality of manure excretion within a day and other aspects. Pigs and poultry are kept in houses all around the year. Table below provides information on duration of stabling and grazing periods at the farm. Table 2. Duration of stabling and grazing periods at “Arzni Pedigree PSC” OJSC Animal categories Stabling period (months) Grazing period (months) Dairy cows 3 9 Mature males and females 3 9 Young animals 3 9 Swine 12 12 Pigs 12 12

2.6 Manure management system During the stabling period cattle manure is removed from the barns and disposed on the territory in front of the barns. Then, periodically, cattle manure is removed from the site by trucks and applied for fertilization of adjacent agricultural lands38. Swine slurry is firstly collected in the reservoirs located under the piggeries, then it is removed to lagoons located in front of piggeries. Afterwards manure is removed by means of special liquid manure collecting/spreading machine and used for fertilization of soil. Liquid manure from hen-houses is discharged into a system of open lagoons located next to the farm (see pictures 5-6). Some of the lagoons are connected by means of small streamlets allowing removal of surface liquid from one lagoon to another (see picture 7). Geographical location of the Armavir farm allows to evacuate liquid manure from hen-houses using gravity. Cattle manure and swine slurry are collected and stored within the territory of the farm; whereas, all lagoons for chicken manure (about 20) are located outside of the fenced territory of the farm (see Annex II). Manure from hen-houses and piggeries is collected in the lagoons all the year round. Periodically chicken manure is being removed from the lagoons by a special liquid manure collecting/spreading

37 Data on number of animals were provided by the “Arzni Pedigree PSC” OJSC. More careful evaluation of these parameters will be needed at the PDD development stage. 38 Majority of manure is used by Armavir farm for rehabilitation of adjacent saline soils which constitute majority of lands located in Ararat valley. The rest manure is used for fertilization of agricultural lands.

52 machine and applied for fertilization of the lands adjacent to the farm. However, the major part of manure is stored in lagoon for long period. Intensive biogas generation process takes place in the lagoons (see picture 8). This means that partially (aerobic) fermented manure is applied to agricultural lands; hence, its methane generation potential may be considerably lower (in case the manure is used in spring season).

Picture 5. Open lagoons for chicken manure Picture 6. Open lagoons for chikcen manure

Picture 7. Streamlet connecting two lagoons Picture 8. Intensive biogas generation in lagoon

Picture 9. Greenhouses located next to the farm Picture 10. Electrical substation next to the farm The poultry waste management system applied in Armavir farm is considered as economically feasible and productive one. However, on the other hand, it is unfavorable from the environmental standpoint, as in the result of organic wastes treatment process occurring in the earthen ponds, substantial amount of greenhouse gases, that is methane (CH4) and nitrous oxide (N2O) is emitted into the atmosphere. At the same time, this system favors the spreading of stench and contagions (more over during summer times) and can bring to underground water pollution.

2.7 Baseline scenario selection Present practice of animal waste management applied in Armavir farm is considered the baseline scenario of the proposed project activity.

2.8 Exchange of technologies and knowledge

Animal waste management system proposed in the framework of the project activity is highly popular around the world. It enables not only the upgrading of animal manure management system while providing wastes processing in effective and secure manner from the environmental standpoint, but also allows to generate thermal and electrical energy on the basis of individual resources, as well as high quality organic fertilizers. It is planned, that electricity and organic fertilizers39 produced within the proposed project activity (due to technology applied) will be realized in the local market, ensuring the project’s business income. As a result of the project activities, the greenhouse gas Certified Emission Reduction units (CERs) will be considered as a source of additional income, and income generated from its sale/transfer will ensure the project’s economic attractiveness and financial stability. In spite of its effectiveness and trustworthiness, the described technology is still not popular in Armenia, and till this point has been only used in Lusakert poultry breeding factory (Lusakert Biogas Plant CDM project). Given the fact that the proposed technology has already been applied in Armenia the implementation of the proposed project does not bring to the transfer of new technologies and know-how; however, the project will certainly favor wider application of the modern biogas generation technology in RA.

2.9 Project category and scale according to CDM definitions According to CDM definitions, the proposed project activity is classified as N1 “Energy industries (renewable - / non-renewable sources)” & N13 “Waste management and handling” categories. The proposed project is a small scale project activity, because as a result of its implementation the greenhouse gas emissions’ annual reduction will not exceed 60 kt CO2e.

2.10 Location of the project activity The proposed project activity will be implemented on the territory of Armavir branch of “Arzni Pedigree PSC” OJSC, which is situated nearby Eghegnut village in RA Armavir marz, app. 40 km away from Yerevan city.

3. Project organization

3.1. Works organization

39 Only some part of manure generated in Armavir farm is currently used for rehabilitation/fertilization of the agricultural lands. It is very much likely that the established practice of soil fertilization will continue after the project implementation. Should it be the case, then only unused share of digestate (received from the methane tank) will be available for sale on the market. This issue is a subject of further discussions between project participants.

3.2 Project status and implementation schedule Present status of the project Project Idea Note (01.06.2010) Preliminary technical-economic assessment Feasibility study CDM Project Design Document Financial status At present, no funding scheme has been elaborated on project (possible sources of funding) activity. According to the information provided by the “Arzni Pedigree PSC” OJSC representatives, the company will consider possibility to finance the project after assessment of its economic feasibility. In most likelihood the reasonable share of equity financing (in case positives decision on project implementation is made) provided by the project owner may amount up to 20% (in the form of core means and labor and money); whereas the rest 80% of required financial means (borrowed capital) will need to be ensured from other sources such as banks and universal crediting organizations as well as carbon funds and companies interested in obtaining CERs. Status on receiving necessary The procedure on receiving the necessary permits and licenses permits and licenses required by legislation, will be discussed by involved parties making a positive decision regarding implementation of proposed project activity. Start and end of PDD Start 2010 End 2011 development Project duration Start 2012 End 2030 CERs issuance period Start 2012 End 2020

3.3 Expenditures connected with CDM project development and implementation The following expenses are connected with development and implementation of this project under the CDM: CDM documents development, verification, certification, registration, monitoring and validation, as well as with issuance and future sale of CERs (during the whole period of project implementation) and can make app. 230000 euros (80000 Euro are the lump-sum costs carried out before project implementation, and 150000 euro is the total cost for monitoring, which is realized during project exploitation40). • Development of the CDM Project Design Document – 30000 € • Validation of the project – 25000 € • Registration by the CDM Executive Board – 8000 € • Project monitoring – 15000 € /a year or 150000 € during ten years • Development auxiliary documents and other possible expenses – 15000 €41.

40 The expenditures connected with implementation of project monitoring and preparation of verification reports, are usually considered as operation costs and in comparison to other mentioned (lump-sum costs) expenses, are realized in the process of project implementation (exploitation) once per each year. 41 The provide costs are very rough and need to be revised at PDD development stage.

The accurate assessment of required investments under the proposed option may be carried out during the development of the project feasibility study.

3.6 The annual estimated amounts of project turnovers The annual profit of project activity will be drawn from electrical-energy supply to distribution grid, realization of organic fertilizers received as a result of manure processing and from sale of CERs. Given the encouraging tariff (app. 39 dram/kWh including VAT) set by the RA Public Services Regulatory Committee for “Lusakert Biogas Plant” CJSC, which with high probability will be enforced also for this project activity, the annual profit obtained in the framework of the project from the supply of electricity to the national distribution grid will make app. 753.000 Euro. Because of the absence of organic fertilizer market in Armenia, it is not possible to precisely determine the organic fertilizer realization price. Calculation shows that annual volume of swine and poultry manure (94% humidity) produced at the farm amounts up to 203241,5 m3 (see Annex IV). For rough estimate of income generated from sale of fertilizer current price (50-110 AMD/kg) for biohumus on the Armenian market can be considered. Biohumus is a more effective fertilizer than manure derived from digester after the removal of biogas. However, it includes the substrate (manure) vermicomposting. The assessment of possibility of vermicomposting of digester sludge and development vermicomposting conditions requires additional studies. Taking as a base the current price of CERs (10 euro/CER) in the primary market of carbon credits, the income from the sale of CERs generated within the project will make 202447 Euro.

4. Greenhouse gas emissions 4.1 Reduced/absorbed greenhouse gases

Greenhouse gases reduced as a CO2 CH4 N2O result of project implementation HFCs PFCs SF6

42 This is indicative estimate of project operational costs which need to be clarified more carefully at the PDD development stage.

56 the reduction of greenhouse gas emissions. In addition, total annual amount of GHG reduction will not exceed 60 kt CO2 thresholds, that is why the proposed activity is a small scale CDM project, that corresponds to the requirements of the applied methodology. Besides that, the project activity corresponds to the following 5 preconditions of III.D type methodology application: f) The livestock population in the farm is managed under confined conditions; g) Manure or the streams obtained after treatment are not discharged into natural water resources (e.g. river or estuaries); h) The annual average temperature of baseline site where anaerobic manure treatment facility is located is higher than 50C; i) In the baseline the retention time of manure waste in the anaerobic treatment system is greater than 1 month, and in case of anaerobic lagoons in the baselines, their depths are at least 1 m; j) No methane recovery and destruction by flaring, combustion or gainful use takes place in the baseline scenario. Under the described conditions, formally, only manure produced in hen-houses and piggeries (poultry and swine manure) may be considered within the boundaries of the proposed project activity, since the AMWS applied for cattle does not meet the methodology applicability conditions listed above. In particular, conditions (a) and (d) are not met both for cattle (animals are not managed under confined conditions in the course of a year; manure is stored for less then a month period)43. For the mentioned reason, cattle manure should be considered only for evaluation of biogas generation potential and should not be considered for evaluation of baseline emissions. Thus, within the scopes of this document, only liquid manure from the piggeries and hen-houses meet the requirements of the above described methodology and can be considered both for baseline emission evaluation and for methane generation potential assessment44. As it is described in Section 2.7 the current existing AWMS applied in Armavir farm corresponds to “Anaerobic lagoons” category in accordance with IPCC classifiers of AWMS described in the Table 3. Table 3. Classification and description of some key AWMS according to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories AWMS Description 1 Pit storage below Collection and storage of manure usually with little or no added water animal confinement typically below a slatted floor in an enclosed animal confinement facility, usually for periods less than one year. 2 Anaerobic lagoons A type of liquid storage system designed and operated to combine waste stabilization and storage. Lagoon supernatant is usually used to remove manure from the associated confinement facilities to the lagoon. The water from the lagoon may be recycled as flush water or used to irrigate and fertilize fields. 3 Daily spread Manure is routinely removed from a confinement facility and is applied to cropland or pasture within 24 hours of excretion. 4 Liquid/Slurry Manure is stored as excreted or with some minimal addition of water in either tanks or earthen ponds outside the animal housing, usually for periods less than one year.

In such a way, the manure processing in traditional open anaerobic lagoons is considered as a baseline scenario (the presently applied practice) for the proposed project activity. The organic substances contained in manure are being degraded under anaerobic conditions, which bring to biogas (60% CH4 and 40% CO2) generation and its emission to the atmosphere.

43 See sections 2.6 and 2.7 44 For information purposes calculation of baseline emissions potential were carried out with consideration of cattle manure; however the results of these calculations have not been incorporated in the final outcome for the reasons explained above.

4.3 Project boundary Manure anaerobic processing facility and power generator are included in the project boundary (see picture 11).

CH4 CH4

Methane tank

Picture 11. CDM project boundary

4.4 Equations used for evaluation of greenhouse gas emission reductions

Baseline emissions According to the applied methodologies, the overall baseline emissions are decided by the following formula:

BEtotal, y = BEe, y + BEy where: BEe, y - emissions during “y” year (tCO2e/year) connected with electrical energy generation in the baseline scenario

BEy - fugitive emissions in “y” year (tCO2e/year) in the baseline scenario from open anaerobic lagoons

According to AMS - I.D methodology, in the baseline scenario GHG emissions connected with the electricity generation are calculated by the following formula:

According to AMS - III.D methodology, in the base scenario the greenhouse gas emissions from open anaerobic lagoons are estimated by the following equation:

BEy

Projected emissions

According to AMS - III.D methodology, projected emissions are estimated by the following equation:

PEPL,y = BEy x 10% Despite of the fact, that surplus biogas open flaring is envisaged to be installed in technological cycle, the project owner anticipates that the total biogas produced in the digester in reality will be used in the CHP unit for electrical and thermal energy generation, to put it differently, in practice, there will be no biogas flaring in the flaring facility, or otherwise, the amount of flared biogas will be insignificant. That’s why PEflare,y is considered to be equal to zero. In the framework of the project, in the process of auxiliary equipment operation the emissions connected with electrical energy consumption are estimated by the following equation45:

PEpower,y = ECAux x CEFgrid where` ECAux - electrical energy consumed by auxiliary equipment (MWh/year) CEFgrid - GHG emission factor of the energy system (grid) (kg CO2e/kWh)

It is planned, that during project activity the electrical energy annual expense of auxiliary equipment will make app. 500 MWh/year46.

45 Despite of the fact, that the additional boiler planned in technological cycle operates by natural gas and can appear as an additional source of greenhouse gas emissions, the boiler emissions in the given document are considered inessential and are disregarded in the estimations. The accurate and objective estimation of these emissions is expedient to be carried out in the process of CDM project document development. 46 This figure represents very rough estimate of annual electricity consumption of the biogas plant.

Leakages In accordance with the applied methodology, no leakage calculation is required.

4.5 Methane and biogas production potential

Details of calculation of methane and biogas generation potential from the Armavir farm’s animal manure are presented in the Table 4.

Table 4. Calculation of methane and biogas production potential for Armavir farm

A B C D=AxBxC E=Dx0.67 F G=ExF H=DxF H/0.6 Cattle dairy cows 500 4,13 0,24 495,6 332,052 90 29884,68 44604 74340 non dairy 600 3,47 0,17 353,94 237,1398 90 21342,58 31854,6 53091 young 400 2,04 0,17 138,72 92,9424 90 8364,816 12484,8 20808 Subtotal 988,26 662,1342 59592,08 88943,4 148239 Swine Over 40 kg 2000 0,5 0,45 450 301,5 365 110047,5 164250 273750 Below 30 kg 2000 0,3 0,29 174 116,58 365 42551,7 63510 105850 Subtotal 624 418,08 152599,2 227760 379600 Poultry Layers 276000 0,1 0,24 6624 4438,08 365 1619899 2417760 4029600

Subtotal 6624 4438,08 1619899 2417760 4029600 TOTAL 8236,26 5518,24 1832090 2734463 4557439 *) number of days when manure can be collected

Given justification provided in the previous sections, total biogas generation potential from cattle, swine and poultry manure (148239 + 379600 + 4029600 = 4557439 m3/year ) are considered in the following calculations.

4.6 GHG emissions reduction calculation

Baseline emissions Annual baseline GHG emission reduction from generation of electricity by the CDP unit is equal to:

47 BEe, y = EPBIO x CEFgrid = 9114 MWh/year x 0,26 t CO2e/MWh = 2369 t CO2e/year

348 Where: EPBIO = 4557439 m3/year * 2 kWh/m = 9114 MWh/year.

Details of calculation of GHG emissions in the baseline scenario are presented in the Tables 5.

47 Grid emission factor for Armenian energy system for 2009. It should be noted that GIF will increase after 2010. 48 Coefficient considering caloric value of biogas and efficiency of CHP unit.

Table 5. GHG emission in the baseline scenario for Armavir farm Fraction Methane Annual Volatile of Production Model Animal CH Average Solids, Manure Baseline Manure Management 4 Potential, Correct. category GWP Density, MCF Number of Days* VS Handled Emission BE System CH4 B Factor, y (subcategory) D O Animals, (kg dm/ in (tCO e) CH4 (m3/kgVS Uf 2 N (Head) h/day) BAMMS, b dm) MS%BL G=AxBxCxDxEx A B C D E F G H I FxGxHxI Cattle Liquid/Slurry 21 0,00067 0,19 0,24 500 90 4,13 1 1 199,2 Dairy cows Pasture/Range/Paddock 21 0,00067 0,01 0,24 500 275 4,13 1 1 19,2 Liquid/Slurry 21 0,00067 0,19 0,24 600 90 3,47 1 1 120,2 Mature female Pasture/Range/Paddock 21 0,00067 0,01 0,24 600 275 3,47 1 1 19,3 Liquid/Slurry 21 0,00067 0,19 0,17 400 90 2,04 1 1 33,4 Young animals Pasture/Range/Paddock 21 0,00067 0,01 0,17 400 275 2,04 1 1 5,4 Swine Over 40 kg Uncovered anaerobic 21 0,00067 0,68 0,45 1000 365 0,5 1 1 785,7 Below 30 kg lagoons 21 0,00067 0,68 0,29 1000 365 0,3 1 1 303,8 Poultry Uncovered anaerobic Layers 21 0,00067 0,68 0,24 276000 365 0,1 1 1 23132,2 lagoons TOTAL 24538,4

Given justification provided in the previous sections for the purpose of this study baseline GHG emissions from swine and poultry (24221,7 tCO2e) have been considered in the following calculations of GHG emission reduction potential.

Project emissions

Physical leakage of biogas from manure management system makes 10% of the maximum methane producing potential of the treatment system.

PEPL,y = BEy x 10% = 38473,9 t CO2e/year x 0,1 = 3847 t CO2e/year

In the process of auxiliary equipment operation, the GHG emissions connected with electrical energy consumption are equal to:

PEpower,y = ECAux x CEFgrid = 500 MWh/year x 0,26 t CO2e/MWh = 130 t CO2e/year

In the end, the cumulative project emissions make:

PEy = PEPL,y + PE flare,y + PE power,y = 3874 + 130 = 3977 t CO2e/year

Results of GHG emission reductions to be achieved within the proposed project activity are introduces in Table 7. Table 7 Greenhouse gas emissions reduction in the process of project activity Project Baseline Reduction of emissions emissions Leakages greenhouse gases Year evaluation evaluation (tCO2e) emission (tCO2e) (tCO2e) (tCO2e) 2012 3977 24221,7 0 20244,7 2013 3977 24221,7 0 20244,7 2014 3977 24221,7 0 20244,7 2015 3977 24221,7 0 20244,7 2016 3977 24221,7 0 20244,7 2017 3977 24221,7 0 20244,7 2018 3977 24221,7 0 20244,7 2019 3977 24221,7 0 20244,7 2020 3977 24221,7 0 20244,7 2021 3977 24221,7 0 20244,7 In total 39770 242217 0 202447 For estimations of greenhouse gas emission reductions, corresponding parameters and coefficients presented in “Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories” and “2006 IPCC Guidelines for National Greenhouse Gas Inventories” methodological reports developed by IPCC were applied.

5. Contribution to country’s sustainable development

5.3 Envisaged economic effects The project envisages the involvement of app. 2.5 mln. Euro of capital investments (partially foreign), which would have not been engaged in case of project absence. In the framework of the project implementation, it is planned to invest up-to-date technologies that are already applied in Armenia, however still do not have wide recognition, which can support to wider application of those technologies in other major livestock and poultry breeding factories. Electrical energy generated in the CHP unit will be supplied to distribution grid by means of one of the existing transformer sub-stations, which to some extent encourages the creation of country’s energy supply diversification and increase of energy safety. As a consequence of manure processing, the usage of organic fertilizer will support the fertility increase of rural-economic lands. The project activity for local communities will also create new work places in the process of construction and exploitation of a biogas plant.

7. Conclusion From the Table 7 it is seen that the proposed project activity is “attractive” from the CDM point of view under the condition that in the baseline scenario the Armavir farm uses open anaerobic stabilization lagoons as the basic practice of animal waste treatment.

Annex I. Relative position of Armavir and Araks poultry farms (road distance is 10 km)

Annex II. Satellite image of Armavir farm

Annex III. Monthly average air temperatures in RoA regions

Annex IV. Calculation of manure production at Armavir farm

Manure Manure Volume of Animal Accounting Livestock, produced, annual manure Farm category days per heads kg production, produced (94% (subcategory) annum* dm/day/h dm/y humidity), m3 A F I J=AxFxI K=J/0.06/1000 Cattle dairy cows 500 90 4,49 202050 3367,5 non dairy 600 90 3,75 202500 3375 Young 400 90 2,04 73440 1224 Subtotal 477990 7966,5 Arzni Pedigree Swine PBS Over 40 kg 2000 365 0,51 372300 6205 OJSC, Below 30 kg 2000 365 0,36 262800 4380 Arzni Subtotal 635100 10585 Branch Poultry Layers 184000 365 0,11 11081400 184690

Subtotal 11081400 184690 TOTALS 12194490 203241,5

Appendix X – Project Identification Note for Araks Poultry Farm

Project Idea Note

Recovery of Biogas from Chicken Manure and Thermal (Electrical) Energy Generation in “Araks Poultry Factory” CJSC

"Enabling Activities for Preparation of Armenia’s Second National Communication to the UNFCCC" UNDP/GEF

YEREVAN 2009

Table of Contents

1. Project participants 70 1.1 Project owner 70 1.2 Applicant / Participant 70 2. Description of CDM project activity 70 2.1 Project objective 70 2.2 Project activity and applied technology description 70 2.3 Project prehistory (current status) 72 2.4 Baseline scenario selection 75 2.5 Existing infrastructures 75 2.6 Exchange of technologies and knowledge 76 2.7 Project category and scale according to the CDM definitions 76 2.8 Location of the project activity 76 3. Project organization 77 3.1 Works organization 77 3.2 Project status and implementation schedule 77 3.3 Expenditures associated with CDM project development and implementation 78 3.4 Investment expenses 78 3.5 Estimated annual operation costs 78 3.6 The annual estimated amount of project turnovers 78 4. Greenhouse gas emissions 79 4.1 Reduced/absorbed greenhouse gases 79 4.2 Selection of methodologies for baseline calculation 79 4.3 Project boundary 80 4.4 Equations used for evaluation of greenhouse gas emission reduction 80 4.5 GHG emission reduction estimation 82 5. Contribution to county’s sustainable development 83 5.1 Envisaged social effect 83 5.2 Envisaged environmental effect 83 5.3 Envisaged economic effect 83 6. Project additionality 83 Annex I. Scheme of Araks Poultry Farm CJSC 85 Annex II. Satellite image of Araks farm 86 Annex III. Monthly average air temperatures in RoA regions 87 Annex IV Calculation of manure production at the Araks farm 88

1. Project participants 1.1 Applicant / project owner Company name “Araks Trchnafabrika” CJSC – Araks Poulty Factory Company type Private company Legal status Closed Joint Stock Company Main activities Poultry breeding Contact person G. Makaryan, Executive director Company address RA, Armavir marz, Jrarbi village Telephone, fax (+374 10) 54-88-77, 46,75,85 Electronic mail [email protected] Internet site www.xgroup.am 1.2 Project idea developer / consultant Organization name "Enabling Activities for Preparation of Armenia’s Second National Communication to the UNFCCC" UNDP/GEF Contact person D. Harutyunyan, Project manager A. Kharazyan, expert Organization address #3 Government Building, Republic Square Telephone, fax (+374 10) 58-39-20, 58-39-33 Electronic mail [email protected] Internet site www.nature-ic.am

2. Description of CDM project activity 2.1 Project objective The main objective of the project is to reduce the level of greenhouse gas emissions originated from chicken manure; by improving the animal waste management system currently used in “Araks poultry factory” CJSC and by utilizing (flaring) the biogas originated as a result of project implementation in the cogeneration system (CHP): for electrical and thermal energy generation. The generated electrical energy will be supplied to the distribution grid, thus, replacing electricity generated by fossil fuel thermal power plants presently serving the energy system.. Additional objectives of the project are the processing and neutralization of organic wastes (chicken manure) generated in “Araks Poultry Factory” CJSC as well as production of fertilizers. The proposed project activity is envisaged to be implemented in the framework of the Kyoto Protocol’s Clean Development Mechanism.

49 The electricity will be supplied to the grid via substation located on the territory of the farm (see picture 10).

Animal waste collected in the farm will be discharged into a receiving tank (see Fig. 1) to ensure the necessary level of homogenization and moisture of the biomass before its placement into an anaerobe digester. The homogenization of the biomass is provided mechanically by the means of mixing machinery located inside of the receiving tank. In order to provide the required level of moisture of the biomass (approximately 90%) corresponding amount of water is added to the receiving tank. It is proposed to build two receiving tanks in the framework of the project, which will enable to continue the technological cycle of biomass discharge and biogas production in case of periodical clean-up (sediments removal), repair or breakdown of one of the tanks. Volume of the tanks will be selected in a way to ensure disposal and storage of a Pic. 1 Underground receiving tank at Lusakert BP three-day volume of biomass generated in the farm. From the receiving tanks biomass is pumped into close anaerobe digester (see Fig. 2) where in the absence of oxygen and under the impact of methanogenic bacteria, the biomass (manure) fermentation takes place. To ensure stable temperature regime established in the digester and avoid breakdown in biogas generation process (especially in wintertime when temperature of the biomass stored in the receiving tank is considerably lower then that in the digester), pre- Pic. 2 Anaerobe digester at Lusakert Biogas Plant heating of the liquid manure (biomass) is applied on the way from receiving tank to the digester. For that reason the liquid manure is pumped from the receiving tank through a heat exchanger (where the biomass is pre-heated up to the necessary temperature) before entering into the digester. Two-level pre-heating system may be also applied ensuring better effectives of the process50. At the first stage of such system the fresh biomass is pre-heated by the warm digestate pumped out of the digester; whereas, in the second heat exchanger the pre-heated liquid manure is heated up to the required temperature by warm water supplied from CHP unit of boiler house. In the digester, biogas is produced by the process of anaerobic digestion of biomass i.e. a series of processes in which microorganisms break down biodegradable material in the absence of oxygen. The composition of biogas varies depending upon the origin of the anaerobic digestion process. Typical composition of biogas is as follows: methane (50-75%), carbon dioxide (25- 50%), nitrogen (up to 10%), hydrogen (0-1%), hydrogen sulfide (0-3%) and oxygen (0-2%). The volume of the digester will be selected to secure an adequate Hydraulic Retention Time (HRT)51 to ensure a stable biogas process. In order to reduce heat loses and biogas leakage (project emissions) from the digester, appropriate thermal and leak insulation materials is to be applied. The digester will be equipped with biomass mechanical mixer as well as with systems for removal/evacuation of digestate, solid residues and sediments. The biomass (digestate) from the digester will be moved either directly to the open stabilization lagoons or to storage reservoir, where the residual fermentation and biogas generation takes place (depending on the technology applied usually about 10-15% of the total amount of biogas may be generated in storage reservoir). In the latter case digestate storage reservoir (its upper section) can also serve as gasholder. The storage reservoirs can be contracted either ground- based or underground. From the storage reservoir, the digestate is transported to the open anaerobic stabilization lagoons, situated on the territory of the farm. This process can conditionally be considered as the second phase of biomass processing after the digester. Greenhouse gas emissions from the

50 In some biogas designs the heating of the biomass is done inside the digester tank by circulating hot water through heating coils installed in the tank 51 Average length of time that a soluble compound remains in a constructed reactor.

lagoons will be calculated as project emissions. The biomass processed in the lagoons will be later used as organic fertilizer, for agricultural land fertilization. The biogas produced in the digester is a mixture of a number of gases including hydrogen sulfide (H2S), which represents danger for the CHP engine generator. That’s the reason, why in the framework of the given project activity it is planned to have condensate removal and desulphurization stations. The cleaned and demoistured biogas will be ejected to the gas container (reservoir). The biogas from the gas container will be supplied to CHP unit and to back- up boiler (in case it is installed). The CHP unit consists of reciprocating gas engine (internal combustion engine), electricity generator and thermal module and, thus, allowing simultaneous generation of both electricity and thermal energy. The biogas will be utilized in the gas engine to produce mechanical energy and to power the generator to produce electricity; whereas the thermal module will evacuate heat from a water cooling jacket of the engine and waste gases (exhausts) to turn it into useful heat. The produced electrical energy will be supplied to the distribution electrical grid by the means of a electrical sub-station located on the territory of the farm; Pic. 3 Flare whereas thermal energy will be used for meeting technological heeds of the farm, namely for heating of the digester to ensure necessary temperature regime (in average up to 30% of generated heat is used for this purpose), pre-heating of biomass before its feeding into digester, heating of poultry houses, milking parlor, slaughter- house and other facilities. Excessive heat can be supplied to the greenhouses52 located in a vicinity of the farm. In order to prevent the occurrence of excessive pressure in the system as well as decrease the risk of explosions during the process of renovation/storage of the generator or other machineries, it is planned to install open flaring system meant for combustion of excess gas (see picture 3). On-site generation of thermal energy will help to reduce consumption of fossil fuels (natural gas) and electricity, thus, reducing so-called project emissions associated with the plant’s technological needs. The back-up boiler will be mainly used for operation of the system and other technical needs in the wintertime or when CHP unit is stopped. The principal scheme of described technological cycle is presented on the picture below.

Digester (reactor) Mixer Biogas Poultry-house Lagoon

Storage reservoir Pump

52 Greenhouses are located at short distance (about 500 m) from the farm and occupy territory of about 1 ha (see picture 9). Given that operation of greenhouses requires consumption of thermal energy almost all the year round, heat generated by the CHP may be constantly supplied to the greenhouses, ensuring high efficiency of power generation unit.

Consumption of on-site (CHP) generated energy for plant’s technological needs, will enable to avoid fossil fuel (or distribution grid’s electrical energy) additional consumption, which to its extent reduces the projected emissions (leakages). The additional back-up boiler mainly will be used for system operation and other technical needs during the wintertime. The principal scheme of described technological cycle is presented in Fig. 5. Improvement of animal waste management system and construction of biogas production plant does not require any change in poultry-houses or their physical structure.

2.3 Prehistory of the project (present status) “Araks Poultry Factory” CJSC is located nearby Jrarbi village, Armavir marz of the Republic of Armenia, 35km away from Yerevan. The company was established in 1977, built on the base of Jrarat poultry breeding factory, which being one of the biggest factories of ex Soviet Union with annual production of approximately 18-20 thousand tones of poultry meat till the year 1990. During 1990-1995 the factory worked with intervals, and in 1995 it got privatized, and renamed (“Araks poultry factory” JSC) and re-profiled. As a result of being re-profiled in 1997-2000, the factory was mainly occupied with egg production. Later on, in 2001 the company was purchased by X-Group IULP.(International Union of Legal Persons). Due to the investments made by the new owners, the previously stood idle strengths are being rehabilitated. Since 2002, the company has been providing 60-70% of local market’s chicken meat. At present, the poultry factory produces 3500 tones of poultry meat, and the total annual amount of broilers makes app. 3.5 mln birds. According to the company’s development plan, it is envisaged to develop also the egg production, reaching the number of brood-hen till 350,000. “Araks Poultry Factory” CJSC occupies 184 ha of territory and provides workplaces to app. 400 person. The scheme of the factory is brought in Annex I. The investments made for equipment purchase are presented in table 1, as well as the production volume parameters, which allow picturing the factory’s development dynamics. Table 1 Investments and production volume parameters 2005 2006 2007 2008 2009 2010 Equipment purchase, mln. drams 285 270 520 890 1150 1400 Meat production, tones 2100 2300 2650 3200 4000 5600

A close cycle is practiced in the poultry factory, where are broilers breeding and brood-hen care areas, production units for rehabilitation of young breeding, hatchers, bird slaughter, bird slaughter wastes processing unit, factory of mixed fodder, forage analyzing laboratories and other auxiliary production units. At present, the factory practices floor and cage keeping approaches for poultry care and breeding (see Fig. 6). Table 2 shows the future indexes of “Araks Poultry Factory” CJSC, envisaged according to the actual present poultry-houses, birds amount and breeding types and development plan. Table 2 Data on poultry head amount and care Number of Type of Number of Duration of a Total number Type of care nurseries poultry poultry cycle (1 cycle) Present status 7 broilers floor keeping 28000 5.5 (60 day*) 196000 5 parental herds floor keeping 4000 60 week 20000 3 young growth floor keeping 6000 2.5 18000 4 broilerss cage based 50000 3.5 200000 2 brood-hen cage based 43500 80 week 87000 Short-term (till 2010) planned by the development project 4 brood-hens cage based ** 87000 80 week 348000 2 broilers cage based ** 85000 3.5 170000 *) 45 days out of which is for breeding and 15 days for nursery preparation **) animal manure “dry” removal

Fig. 6 Chicken cage and floor based care In case of cage based care the manure is removed from the cages automatically, by the means of scrapers and then, it is washed out of the nursery to the special reservoirs. The liquid manure removal from the reservoirs is done by two 10 tones МТЖ-10 tank-trucks attached to Т-150 type tractors. The removed liquid waste, afterwards, is unloaded 200-250 m away from the poultry- houses into 4 open lagoons (see Fig. 7).

Fig.. 7 The procedure of biomass loading and unloading into the open lagoons The solid materials contained in the biomass accumulated in the lagoons within some time residue on the bottom of these lagoons, and the liquid mass evaporates. The dry mass accumulated within the time on the bottom of the lagoons is removed and realized as fertilizer. In case of floor-based care, the manure is mixed with hay spread on the nurseries’ floors. In case of this approach, the manure is removed without the use of water. The removed manure in dry condition (mixed with the hay) is also put in the stabilization open lagoons, where it is mixed with “damp” manure and is engaged in anaerobe fermentation process. Due to dry manure management approach, it is possible to increase the volume of fertilizer generated because of fermentation production. At present, three out of the four lagoons are mainly used, meanwhile, the forth lagoon is still not loaded (see Fig. 8).

Lagoon N1 Lagoon N2

Lagoon N3 Lagoon N4

Fig.. 8 Open anaerobe stabilization lagoons The three lagoons (N1, 2 and 4) are located outside the road to the left and one of them (N3) to the right. The lagoons on the left side of the road are connected to each other by streams, due to them the biomass reaching to some level is moved self-flowingly from the first (loading) lagoon to the second one and afterwards, to the forth, at present an empty lagoon. The N3 lagoon is isolated and is not connected to the rest of the lagoons. The stabilizing lagoons are not connected to the sewerage system (because of its absence), that’s why the waste waters removal to the sewerage system is not implemented. The lagoons distribution scheme and their approximate volumes are presented in Fig. 9.

Lagoon N4 3 area – 1500 m depth – 1.0 m

Lagoon N2 Main road Lagoon N3 area – 4000 m3 area – 1000 m3 depth – 1.5 m depth– 1.0 m

Biomass unloading Lagoon N1 area – 3000 m3 depth – 1.2 m

Fig.. 9 Distribution scheme of open anaerobe stabilizing lagoons The existing approach of animal waste management is considered as economically feasible and productive system. However, at the same time, it is unfavorable from the environmental standpoint, as in the result of organic wastes treatment process occurring in the open anaerobe lagoons, substantial amount of greenhouse gases, that is methane (CH4) and nitrous oxide (N2O) is emitted into the atmosphere. At the same time, this system favors the spreading of stench and contagions (more over during summer times) and can bring to underground waters’ pollution.

2.4 Baseline scenario selection Present practice of chicken manure management in “Araks Poultry Factory” CJSC is considered the baseline scenario of the proposed project activity. As according to the project implementation schedule, the project start takes place in 2011, then except the currently operating poultry-houses in the baseline scenario are included also 6 new poultry-houses to be constructed and operated in 2010 according to the factory’s development plan (see table 2).

2.5 Present infrastructures It is necessary to mention, that there are a number of infrastructures on the territory of the poultry factory that can be used in the framework of the proposed project activity. Especially, 5 electrical sub-stations of 10/0,4 kV type, which are on the balance of “Araks Poultry Factory” CJSC, and

75 one sub-station of 35/10 kV type, which is under the balance of “Armenia Electrical Networks” CJSC (see Fig. 10). Summing up, in the framework of the project the electrical energy generated in the CHP unit can be supplied to the distribution grid through one of the mentioned sub-stations. As a result, there is no need of building a new sub-station. In the framework of the project, besides, the substations, there are some facilities, as well as machinery and mechanisms exploited in the factory, which will favor the reduction of the projected expenditures.

Fig. 10 Sub-stations of 10/0,4 and 35/10 kW located on the territory of the poultry factory

2.6 Exchange of technologies and knowledge Animal waste management system proposed in the framework of the project activity is highly popular around the world. It enables not only the upgrading of animal manure management system while providing wastes processing in effective and secure manner from the environmental standpoint, but also allows to generate thermal and electrical energy on the basis of individual resources, as well as high quality organic fertilizers. It is planned, that because of the proposed technology application the produced electrical energy and organic fertilizer will be realized in the local market, ensuring the project’s business income. As a result of the project activities, the greenhouse gas Certified Emission Reduction units (CERs) will be considered as a source of additional income, and the money obtained from its sale/transfer will ensure the project’s economic attractiveness and financial stability. In spite of its effectiveness and trustworthiness, the described technology is still not popular in Armenia, and till this point has been only used in Lusakert poultry breeding factory (Lusakert Biogas Plant CDM project53). That’s the reason, why the implementation of the proposed project if does not bring to the transfer of new technologies, still will favor its enhancement and more efficient usage in Armenia.

2.7 Project category and scale according to CDM definitions According to CDM definitions, the proposed project activity is classified as N1 “Energy industries (renewable - / non-renewable sources)” & N13 “Waste management and handling” categories. The proposed project is a small scale project activity, because as a result of its implementation the greenhouse gas emissions’ annual reduction will not exceed 60 kt CO2 ex.

2.8 Location of the project activity The proposed project activity will be implemented on the territory of “Araks poultry factory” CJSC, which is situated nearby Jrarbi village, Armavir marz of the RoA, app. 35km away from Yerevan city.

53 Detailed information regarding the project can be obtained visiting Climate Change Information Center’s web page at: www.nature-ic.am

3. Project organization

3.1. Works organization Board of directors of “Araks poultry factory” CJSC applied to the Ministry of Nature Protection of RA (MoNP) with a request of providing expertise assistance in constructing poultry factory biogas production plant. In the issue of discussion of corresponding specialists representing the company and MoNP, it was decided to assess the expediency of such plant construction in the framework of the Kyoto Protocol’s Clean Development Mechanism. Under the mentioned above issue and based upon the data provided by “Araks poultry factory” CJSC, MoNP and "Enabling Activities for Preparation of Armenia’s Second National Communication to the UNFCCC" UNDP/GEF Project54 experts developed the present CDM Project Idea Note.

In case “Araks poultry factory” CJSC makes a positive decision on project activity implementation, the company will provide the drawing of necessary technical documentation (including, also related to CDM procedure) and receiving of corresponding permits and licenses, as well as will conduct negotiations with local and international financial institutions, so as to find necessary investment means for implementing project activity. So as to provide the efficiency of the mentioned above procedures, “Araks poultry factory” CJSC will periodically consult with CDM Designated National Authority (DNA) (procedural issues), as well as with the experts of “Lusakert biogas plant” CJSC (technical issues).

3.2 Project status and implementation schedule Present status of the project Project Idea Note (15.06.09) Preliminary technical-economic assessment Feasibility study CDM Project Design Document Financial status At present, no funding scheme has been elaborated on (possible sources of funding) project activity. According to the information provided by the “Araks poultry factory” CJSC representatives, the company is ready to provide 30% of necessary financial means in the form of core means and labor, as well as money. So as to provide the rest (70%) of necessary resources, the project owner plans to conduct negotiations with banks, universal credit organizations, as well as with carbon funds and companies interested in obtaining CERs. Status on receiving necessary “Araks poultry factory” CJSC together with the Ministry of permits and licenses Environment of the RA has achieved an agreement on elaboration of CDM Project Idea Note. The procedure on receiving the necessary permits and licenses required by legislation and procedures, will be initiated upon “Araks poultry factory” CJSC making a positive decision regarding implementation of proposed project activity. Start and end of PDD Start 2009 End 2010 development Project duration Start 2011 End 2030 CERs issuance period Start 2011 End 2020

54 The project carried out its activities under the Ministry of Nature Protection of RA and provides the Ministry (CDM Designated national Authority in Armenia) with technical and expert assistance for CDM related activities and, particularly, CDM projects’ assessment.

3.3 Expenditures connected with CDM project development and implementation The following expenses are connected with required by the protocol: CDM documents development, verification, certification, registration, monitoring and validation, as well as with issuance and future sale of CERs (during the whole period of project implementation) and can make app. 230000 euros (80000 Euro are the lump-sum costs carried out before project implementation, and 150000 euro is the total cost for monitoring, which is realized during project exploitation55). • Development of the CDM Project Design Document – 30000 € • Validation of the project – 25000 € • Registration by the CDM Executive Board – 8000 € • Project monitoring – 15000 € /a year or 150000 € during ten years • Development auxiliary documents and other possible expenses – 15000 €.

3.4. Investment expenses These expenses are connected with development of the project’s technical-economic justification and working schemes, receiving corresponding permits and licenses, obtaining equipment, importation, installation and regulation, building and assembly jobs implementation, training of operation staff, as well as project implementation management provision. Taking into base the preliminary assessments made by “Araks poultry factory” CJSC specialists, as well as expert opinion of “Lusakert biogas plant” CJSC technical directorate, the cash expenses connected with proposed project activity implementation (including CDM component, without monitoring expenses) can be estimated to make an equivalent to 4.0 mln. Euro. The accurate assessment of required investments can be carried out during the elaboration phase of the technical-economic justification.

3.6 The annual estimated amounts of project turnovers 56 The annual profit of project activity will be drawn from electrical-energy supply to distribution grid, realization of organic fertilizers received as a result of manure processing and from sale of CERs. Given the encouraging tariff (app. 39 dram/kWh including VAT) set by the RA Public Services Regulatory Committee for “Lusakert biogas plant” CJSC, which with high probability will be enforced also for this project activity, the annual profit obtained in the framework of the project from the supply of electricity to the national distribution grid will make 900000 euros. Because of the absence of organic fertilizer market in Armenia, it is not possible to precisely determine the organic fertilizer realization price. That’s the reason, why based upon an expert opinion, the annual profit from organic fertilizer realization is estimated to be app. 35500 Euro. Taking as a base the current price (10 euro/CER) of CERs in the primary market of carbon credits, the income from the sale of CERs generated within the project will make 472000 euros.

55 The expenditures connected with implementation of project monitoring and preparation of verification reports, are usually considered as operation costs and in comparison to other mentioned (lump-sum costs) expenses, are realized in the process of project implementation (exploitation) once per each year. 56 The parameters presented in this chapter are calculated for current situation (“actual” option). In case of “alternative” option, the presented income indexes will increase (see chapter 4.6).

4. Greenhouse gas emissions

4.1 Reduced/absorbed greenhouse gases

Greenhouse gases reduced as a CO2 CH4 N2O result of project implementation HFCs PFCs SF6

4.2 Selection of methodologies for baseline calculation A baseline represents the anthropogenic emissions by sources that would occur in the absence of the proposed project activity. If comparing the baseline with project emissions, the greenhouse gas emission reductions potential can be evaluated. So as to calculate project activity baseline, the following small-scale methodologies approved by the CDM Executive Board were applied: ¾ AMS - III.D – Methane recovery in animal manure management systems (Version 14) ¾ AMS - I.D- Grid connected renewable energy generation (Version 13)

The mentioned above methodologies were selected based on the following observations.

AMS - III.D methodology The proposed project envisages substituting or re-modifying the current organic wastes (manure) anaerobe processing system of the poultry breeding farm with the purpose of recovery and further flaring of methane. The manure processing in traditional open anaerobe lagoons brings to direct emission of biogas (60-70% CH4) into the atmosphere. The project activity plans to recover the most share of that biogas, which will favor the reduction of greenhouse gas emissions. In addition, total annual amount of GHG reduction will not exceed 60 kt CO2 thresholds, that’s why the proposed activity is a small scale CDM project, that corresponds to the requirements of the applied methodology. Besides that, the project activity corresponds to the following 5 preconditions of III.D type methodology application: k) the poultry is kept in close territories (poultry-houses); l) manure or biomass, generated as a result of its processing, is not being discharged into natural water resources (e.g. into the river); m) the annual average temperature in the site where anaerobic manure treatment facility in the baseline existed is higher than 50C (see Annex II); n) in the baseline case, the minimum retention time of manure waste in the anaerobic treatment system is greater than 1 month, and the depth of anaerobe lagoons should not be less than 1 m (see Fig. 9) o) in case of baseline scenario, the methane recovery or flaring is not being carried out. The manure processing in traditional open anaerobic lagoons is being considered as a baseline scenario (the presently applied practice). The organic substances contained in manure are being degraded under anaerobic conditions, which bring to biogas (60% CH4 and 40% CO2) generation and its emission to the atmosphere.

4.3 Project boundary Manure anaerobic processing facility and power generator are included in the project boundary (see Fig. 10).

CH4 CH4

Methane tank

Fig. 11 CDM project boundary

4.4 Equations used for evaluation of greenhouse gas emission reductions

Baseline emissions

According to the applied methodologies, the overall baseline emissions are decided by the following formula:

BEtotal, y = BEe, y + BEy where` BEe, y - emissions during “y” year (tCO2e/year) connected with electrical energy generation in the baseline scenario

BEy - fugitive emissions in “y” year (tCO2e/year) in the baseline scenario from open anaerobic lagoons

According to AMS - I.D methodology, in the baseline scenario GHG emissions connected with the electricity generation are calculated by the following formula:

According to AMS - III.D methodology, in the base scenario the greenhouse gas emissions from open anaerobic lagoons are estimated by the following equation:

BEy

where` GWPCH4 – Global Warming Potential of methane (21); 3 DCH4 - CH4 density (0.00067 t/m ); LT - Index of all type of birds;

MCFj - Annual methane conversation factor (MCF) for the animal manure management system “j” in the baseline scenario; B0,LT - Maximum methane producing potential of the volatile solid generated 3 (m CH4/kg dm) generated by LT type animal; NLT,y - Number of broilers and layers for the year “y”, expressed in numbers; VSLT,y - Annual volatile solid for broilers and layers chickens on a day matter weight basis (kg dm/animal/year) entering during “y” year in animal manure management system; MS%Bl, j - Fraction of manure processed by animal manure management system “j” in the baseline scenario; UFb - non determination coefficient (0.94).

Projected emissions

According to AMS - III.D methodology, projected emissions are estimated by the following equation:

PEpower,y = ECAux x CEFgrid

where` ECAux - electrical energy consumed by auxiliary equipment (MWh/year) CEFgrid - GHG emission factor of the energy system (grid) (kg CO2e/kWh)

It is planned, that during project activity the electrical energy annual expense of auxiliary equipment will make app. 800 MWh/year.

Leakages In accordance with the applied methodology, no leakage calculation is required.

57 Despite of the fact, that the additional boiler planned in technological cycle operates by natural gas and can appear as an additional source of greenhouse gas emissions, the boiler emissions in the given document are considered inessential and are disregarded in the estimations. The accurate and objective estimation of these emissions is expedient to be carried out in the process of CDM project document development.

4.5 GHG emission reductions estimation

Baseline emissions Annual baseline GHG emission reduction from electricity generation is equal to:

58 BEe, y = EPBIO x CEFgrid = 11113,3 MWh/year x 0,4 t CO2e/MWh = 4445,3 t CO2e/year

GHG emissions from the open anaerobic lagoons in the baseline scenario are equal to:

BEy

= 21 x 0,00067 x 0,94 x 0,7 x 0,32 x 883520 x 0,1 x 365 x 1 = 95538.6 t CO2e/year

To the extent that in the calculations VSLT and BO,LT coefficients were applied for developed countries with envisaged values (0,32 and 0,1 correspondingly), then for providing the conservativeness of the obtained results 0,5 correction coefficient was applied. As a result, actual amount of GHG emissions from the open anaerobic lagoons makes 47769.3 t CO2e/year.

Hence, the baseline cumulative emissions are equal to:

BEtotal, y = BEe, y + BEy = 4445.3 + 47769.3 = 52214.6 t CO2e/year

Project emissions

Physical leakage of biogas from manure management system makes 10% of the maximum methane producing potential of the treatment system.

PEPL,y = BEy x 10% = 47769.3 x 0,1 = 4776.9 t CO2e/year

In the process of auxiliary equipment operation, the GHG emissions connected with electrical energy consumption are equal to:

PEpower,y = ECAux x CEFgrid = 800 MWh/year x 0,4 t CO2e/MWh = 320 t CO2e/year

In the end, the cumulative project emissions make:

PEy = PEPL,y + PE flare,y + PE power,y = 4776.9 + 320 = 5097 t CO2e/year

Results of GHG emission reductions to be achieved within the proposed project activity are introduces in Table 3. Table 3 Greenhouse gas emissions reduction in the process of project activity Project Reduction of Base emissions Outflows emissions greenhouse gases Year evaluation evaluation evaluation emission (tCO2e) (tCO2e) (tCO2e) (tCO2e) 2011 5097 52215 0 47118 2012 5097 52215 0 47118 2013 5097 52215 0 47118 2014 5097 52215 0 47118

58 “Yexegis small hydroelectric power station” CDM project parameter estimated by the means of AMS-I.D methodology registered by CDM executive counsel was applied as a coefficient for grid emissions (http://www.nature-ic.am/ccarmenia/am/?nid=1053). So as to provide preservation of the estimations, this parameter was multiplied by 0.9 correction coefficient.

2015 5097 52215 0 47118 2016 5097 52215 0 47118 2017 5097 52215 0 47118 2018 5097 52215 0 47118 2019 5097 52215 0 47118 2020 5097 52215 0 47118 In total 50970 522150 0 471180

During the estimations of greenhouse gas emission reductions, corresponding parameters and coefficients presented in “Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories” and “2006 IPCC Guidelines for National Greenhouse Gas Inventories” methodological reports developed by IPCC were applied.

5. Contribution to country’s sustainable development

5.1 Envisaged social effect Both the directorate and personnel of “Araks poultry factory” CJSC, and population of rural communities (Jrarat village) located in the neighborhood of the poultry factory welcome the proposed project activity, given its positive consequences from the environmental standpoint. The project implementation will favor to demolish the stench from organic wastes spreading from the open lagoons, thus, improving the work conditions of factory’s personnel. At the same time, the project will enable to create new work places requiring corresponding professional qualification.

5.2. Envisaged environmental effect In the framework of the project, it is planned to generate clean renewable energy, which otherwise, should have been produced by thermal power plants operating by fossil fuel. The latter would support to reduce fossil fuel usage; the project will result in reducing emissions of various particles generated by SO2, NOx and fossil fuel flaring. The manure accumulating at present in the stabilization lagoons leads to the spreading of not only the stench, but also various contagions, as well as the possible pollution of underground waters. Meanwhile, in poultry factory the originated organic wastes processing in pasteurization towers (in case their installation) and anaerobe digester will result in demolishment of contagions and biogas neutralization.

5.3 Envisaged economic effects The project envisages the involvement of app. 4 mln. euro of capital investments (partially foreign) which would have not been engaged in case of project absence. In the framework of the project implementation, it is planned to invest up-to-date technologies that are already applied in Armenia, however still do not have wide recognition, which can support to wider application of those technologies in other major livestock and poultry breeding factories. Electrical energy generated in the CHP unit will be supplied to distribution grid by means of one of the existing transformer sub-stations, which to some extent encourages the creation of country’s energy supply diversification and increase of energy safety. As a consequence of manure processing, the usage of organic fertilizer will support the fertility increase of rural-economic lands. The project activity for local communities will also create new work places in the process of construction and exploitation of a biogas plant.

The preliminary assessment of economic efficiency explains that the implementation of the proposed project activity without CDM component essentially reduces its economic attractiveness, making obstacles for the project implementation under existing market conditions. Meanwhile, the profit obtained from CERs sale (472000 euro/year, which makes 35% of overall annual turnover) improves the economic parameters of the project and increases the attractiveness for local and international investors.

Annex I. Scheme of “Araks Poultry Factory” CJSC

Annex II. Satellite image of Araks farm

Annex III. Monthly average air temperatures in RoA regions

Annex IV. Calculation of manure production at Araks farm

Manure Manure Volume of Animal Accounting produced, annual manure category Livestock, days per kg production, produced (94% Farm (subcategory) heads annum* dm/day/h dm/y humidity), m3 A F I J=AxFxI K=J/0.06/1000 Swine 600 365 0,36 78840 1314 Arax trchnafabrika Poultry 883521 365 0,11 35473368 591223 TOTALS 35552208 592537