GREENHOUSE GAS (GHG) INVENTORY

(1)

REPORT

GREENHOUSE GAS (GHG)

INVENTORY

Fibria

Operational Units

Jacareí – Aracruz – Três Lagoas

Forestry – Industrial – Logistics

Carbon Footprint 2014 - Base Year 2013

(2)

Executive Summary

Greenhouse gas inventories are important tools, both to quantify emissions and to develop awareness of the climate change issue. Fibria works with the Carbon Footprint concept, with broadened boundaries. The inventory includes most of the direct and indirect activities related to pulp production. Due to the absence of an all-purpose consolidated methodology, different programs require data and boundaries to be changed. Consequently, in an effort to simplify the practical application of the findings, this report will present the results of this assessment in different templates. Fibria has developed a methodology employing flow layouts to gather and disclose data incorporating basic ISO 14064-1 principles (completeness, transparency, relevance, consistency, precision), clarifying the considered organizational and operational boundaries. Additionally, towards the end of 2010, a tool to improve management capabilities was implemented. This tool generates a report on fossil fuels under scope 1 on a monthly basis. From 2012, emissions have decreased by 5%, 1% proportionally to the lower production level, but still overpassing the 2% target set to 2013, despite the 47% increase in the GRID emission factor. In 2013, Jacareí´s gas turbine was inoperative for six months, affecting results. As in previous years, the contribution of conservation areas in CO2 sequestration is presented.

In 2013, an assessment on the state of conservation of such areas was reviewed. With this new information, the level of uncertainty regarding the sequestration provided by this area reduced to 30% on the 20% updated data from Jacareí forestry base. The other area remained 50%. Base Year for this report is 2011 (according to ISO 14064 definitions),

reference year for the long-term target to double net sequestration. Regarding the Base Year, reduction was of 3,27%, after harmonization of 2011. The table below

summarizes the findings of this assessment. ECF Pulp Carbon Footprint Index: 0.95

tCO2eq/ADT1

Fibria – Summarized Figures (in tones of CO

2

eq)

2012

2011

E

mis

sions

Direct Emissions

1,114,326 -3.3% -4.7%

Indirect emissions – electricity consumption

21,252

+199% +374%

Indirect emissions – truck, rail, barge and

marine transportation

567,230

-10%

-3%

Total Emissions

1,702,808 -5,02% -3,27%

S e ques tration

Sequestration – planted forest

17,004,427

Sequestration – Conservation areas

1,446,694

Total Sequestration (inc. 51% of Conservation

areas)

_17,752,761

Pulp produced (air dried tones)

4,697,500 -1,0% +1,0%

1_{ADT – Air Dry Tone – Pulp at 90% consistency.}

Findings for 2012 and 2011 were updated, following new GWP values, latest emission factors and assumptions made by Fibria, in order to keep them comparable.

(3)

Protocols for Estimating and Reporting GHG Emissions

Various international protocols have been developed to calculate GHG emissions, including the one from the World Resources Institute (WRI) and the World Business

Council for Sustainable Development - WBCSD.

The WRI (World Resources Institute) is a non-governmental organization that operates in conjunction with corporations, enterprises and investors in order to spearhead changes in business practices and find solutions that creatively address socio-environmental challenges.

The WBCSD (World Business Council for Sustainable Development) is a coalition of almost 200 multinational companies that share a commitment to the environment, economic growth principles and sustainable development. Their members represent 34 countries and over 20 industrial sectors and share knowledge over their network on their experiences using the eco-efficiency concept, as well as exchanging ideas with the global business community.

This inventory was based on the following documents prepared by the World Resources

Institute in conjunction with the World Business Council for Sustainable Development.

 “The Greenhouse Gas Protocol – a Corporate Accounting and Reporting Standard – Revised Edition.”

 “Calculation Tools for Estimating Greenhouse Gas Emissions from Pulp and Paper Mills”, from the Climate Change Working Group of the International Council of Forest

and Paper Associations (ICFPA), version 1.3;

 “Calculation Tools for Estimating Greenhouse Gas Emissions from Mobile Combustion”, version 1.2.

 CO2 Emissions from Business Travel, version 2.0.

 Programa Brasileiro GHGProtocol - 2013

The following documents prepared by the IPCC (Intergovernmental Panel on Climate Change) were also used:

 “2006 IPCC Guidelines for National Greenhouse Gas Inventories.”

 “Good Practice Guidance for Land Use, Land-Use Change and Forestry.”

Although there is no standardized definition for “Carbon Footprint,” it is generally understood to be the result of a calculation showing the net greenhouse gas emissions associated with a product, within a broad boundary.

Downstream in our Value Chain, the application of the abovementioned standards in the development of the Carbon Footprint for paper and board products is often unclear, due to the unique attributes of the sector. In order to address this issue, CEPI (Confederation of European Paper Industries) has developed a framework for the development of the Carbon Footprint for paper and board products.

In order to reinforce the long lasting partnership with our stakeholders, results from this Carbon Footprint inventory are also presented according to the CEPI framework for paper and board products.

(6)

GHG Emission Categories

The WRI/WBCSD protocols establish emission categories, to define operational boundaries for accounting purposes. Below, we explain these categories in detail, since the report was based on them.

Scope 1: Direct GHG emissions

Emission sources that are owned or controlled by the company.

 Stationary combustion (generation of steam and electricity using fossil fuels)

 Emissions generated in specific processes such as waste management, fertilizing and soil correction

 Mobile combustion (waste transportation, harvesting and freight activities.)

Scope 2:

Indirect Emissions

Emissions generated from the production of electricity consumed by the company (industrial and forestry)

Scope 3: Other indirect emissions

Emission sources that are not owned or controlled by the company.

 Outsourced transportation

 Outsourced forestry operations (Silviculture, road construction)

 Air travel and Employee commuting  Use of the sold products (Electricity and

Steam) Table 1 – GHG Emission Scopes

Fibria has classified the following items as direct emissions:

 Emissions from the combustion of fossil fuels in stationary equipment (lime kiln, recovery boilers, power boiler);

 CO2 emissions from combustion in transport equipment;

 CO2 emissions from combustion in off-road forestry equipment (Harvest and

Freight);

 CH4 from wastewater treatment;

 CH4 emissions at landfills;

 CO2 and N2O emissions from fertilizing and soil correction;

 CH4 and N2O emissions from combustion of biomass;

Fibria has classified the following items as indirect emissions:  Emissions from purchased electricity;

 Emissions from forestry outsourced operations (silviculture, rail wood freight)  CO2 emissions from employee transportation, including travel.

 Emissions from truck, rail, barge and marine transportation of pulp.

Fibria also considered the sequestration provided by eucalyptus plantations and native forest areas.

Regarding NF3 sources, they were not inventoried in time for this report, and will be

(7)

Equivalent Carbon Dioxide (CO2eq)

The CH4 and N2O emissions are expressed as CO2eq throughout the entire inventory.

Description of Fibria´s Operations

Fibria is one of the largest pulp and paper manufacturing companies in the world, and the leading producer of Bleached Eucalyptus Kraft Pulp (BEKP), from 100% planted forest. The process of continuously calculating the pulp carbon footprint emphasizes its commitment towards more environmental friendly products.

Fibria has forestry operations in six states (Bahia, Espírito Santo, Mato Grosso do Sul, Minas Gerais, Rio de Janeiro, Rio Grande do Sul and São Paulo), and three mills, namely Aracruz, Jacareí and Três Lagoas, as well as a 50% equity stake in the Veracel project, a joint venture with StoraEnso in Bahia state. The facilities supply the global market with high quality pulp, for all paper grades (printing & writing, tissue, board, specialties, etc). The information herein highlights Fibria’s controlled operational GHG emissions in the abovementioned states. This report details the results of this assessment, fulfilling multiple purpose requirements for Greenhouse Gas Emissions disclosure. Additionally, sequestration by native forest areas is accounted for, based on rough estimates, from a comparison between Fibria’s eco-floristic classification and the one by the IPCC. After the comparison, IPCC tier 1 biomass factors were applied to estimate growth and, consequently, carbon sequestration.

The production chain was organized into the following three major flow layouts: forestry, industrial and logistics, wherein the main emission sources were mapped. All emission sources are listed and accounted for in accordance with the GHG Protocol methodology, applying the control-based approach in the pulp mills (facilities under operational control). The sources considered were determined by cut-off criteria2_{. Through this methodology,}

we assure full coverage of the inventory boundaries and its assumptions.

(8)

Forestry Flow Layout

These diagrams represent a summary of the forestry activities related to Aracruz, Jacareí and Três Lagoas mill operations. The process comprises four major activities: nurseries, silviculture, harvesting and transportation.

With regard to waste from the nurseries, effluent is directed to decantation or septic tanks. Regular monitoring is conducted, before the treated effluent is returned to its original environment. Solid waste is donated or reused for landscaping, while other organic matter is disposed in landfills. The quantity of emissions in both cases is insignificant in comparison with the total emissions.

Jacareí

Jacareí´s forestry operations are concentrated in the Paraíba valley and Capão Bonito. The process begins in the nurseries, where the seedlings are cultivated. The mapped sources (Synthetic Fertilizer, Electrical Energy, LPG and Diesel) are related to the activity of preparing the seedlings for planting.

In the next stage of the process, the seedling planting begins. This involves transportation from the nursery to the forest and also includes soil preparation and forestry operations using machinery and fertilizers. Once the forest is planted, it becomes the main carbon dioxide sequestration destination. The amounts sequestered are proportional to the age of the forest.

After approximately seven years, the wood is harvested using specialized equipment and prepared for transport to the industrial facility. In this stage, the principal emission source is diesel. During harvesting, all bark, leaves and other surplus biomass remains on the ground, to preserve soil fertility.

(9)

Aracruz

Aracruz Forestry operations are distributed among the states of Espírito Santo, Minas Gerais and Bahia, and involve a production nursery, where the seedlings are produced, and two distributing warehouses for the seedlings.

Around 80% of the bark, leaves and other surplus biomass remains on the ground, to preserve soil fertility. The rest goes to the mill to be burned as fuel in the power boilers. The process is very similar to the Jacareí operation, and the logs are transported by a diversified set of logistical activities, including not only trucks but also barges and rail.

Três Lagoas

The forestry operation in Três Lagoas comprises a nursery, where seedlings are produced, and silviculture operations. After seven years, harvesting operations produce logs with and without bark, in a forecast proportion of 60%/40%, with the bark intended for use as biomass fuel. Finally, wood is transported to the mill by trucks. The Três Lagoas mill is a greenfield operation, located very close to the forests.

(10)

Industrial Flow Layout

The Industrial diagram represents the stage when the pulp is extracted from the wood, using a method known as the Kraft Process. Among the numerous advantages, from an environmental standpoint, the Kraft Process is self-sufficient in electrical energy, since biomass is the main input used. (For further information on the Kraft Process click on the link: http://en.wikipedia.org/wiki/Kraft_process.)

The main flow consists of a wood cooking process, a bleaching stage, and a final drying stage, in which the direct atmospheric emissions are mainly from the exhaust valves that emit steam. Due to the nature of the reactions occurring during these processes, there is no evidence that these emitted gases have a significant greenhouse effect. Wherever we have a significant emission of greenhouse gases or consumption of fuel, the source is mapped and its emissions accounted for in the inventory.

In terms of monitoring, Fibria fulfills the requirements of each state´s environmental requirements, by monitoring the wood cooking process, bleaching stage and final drying process. The table3_{below summarizes the principal gases present in pulp production.}

Emission Sources

Reduced Sulfur

Compounds Sulfur Dioxide

Nitrogen Oxide Particles Cooking S NS NS NS Washing S NS NS NS Evaporation S NS NS NS Recovery Boiler S S S S Causticizing S NS NS S Lime Kiln S S S S

S = significant; NS = not significant

Table 2 – Sources of emissions in pulp production

During the recovery cycle that occurs in parallel to the main production, several auxiliary processes give off significant emissions from combustion. These processes, which provide sustainability for the main flow, recover 90% of the chemicals consumed by the pulp process. Furthermore, they produce all the steam and electricity used throughout the process, mainly from biomass.

These processes may have different configurations, but their emissions are mainly from recovery boilers, power boilers and lime kilns. At the lime kilns, we also have emissions of biogenic CO2, due to the nature of the process. The amount of biogenic CO2 released is

estimated based on the production of calcium oxide.

The emissions from outsourced chemicals were not included in this inventory, because Fibria is gathering the data from suppliers’ operations.

(11)

With regard to waste, both organic waste and effluent treatments were accounted for. The potential production of methane from industrial effluents was based on the chemical oxygen demand (COD), volume and technology involved. In aerobic conditions, CH4

emissions are insignificant; the main emissions are from sludge decomposition, which is already taken into consideration in the landfill data.

Jacareí

At the Jacareí mill, the process has one wood yard, one digester, two bleaching stages and two pulp drying machines. However, the utilities site is diversified, with different types of auxiliary boilers, using: fuel oil 3A, fuel oil 7A, biomass and natural gas.

At the causticizing plant, methanol produced internally is used as fuel. Part of the CO2

produced in the lime kiln is diverted to a PCC plant, owned by another company.

Effluent is treated by means of an activated sludge system, which is aerobic and, consequently, the greater part of the emissions occur during biomass decay. With regard to landfill disposal, only the biological sludge was calculated as an emission. Other waste, like dregs and grits, are inorganic, generating insignificant quantities of methane emissions. At the Jacareí mill, no CO2 welding is used.

(12)

Aracruz

At the Aracruz site, the main process comprises nine wood processing lines, five bleaching lines and five pulp drying machines, organized internally as three factories: A, B and C. The recovery and utilities processes are condensed. For example, the four evaporation processes are in one box. Moreover, the data employed in the report shows consolidated values.

With regard to the waste from Aracruz, the treatment is conducted through six lagoons, four of which are aerated and two have anoxic zones, with the potential to produce methane. This potential was accounted in the model, and was calculated based on the treated COD and annual flow. Unlike previous years, when the COD reduction was proportionally divided between the six lagoons, through lab analysis it was verified that most of the COD (80%) is reduced in the four previous stages. Therefore, this change is considered in these inventory calculations.

Aracruz waste is disposed in a landfill. However, since there is no activated sludge treatment, the greater part of its waste is inorganic. After the correct treatment, this inorganic waste is returned to the forest, as fertilizer and pH corrector.

(13)

(14)

Três Lagoas

Três Lagoas mill is a state-of-the-art mill, including the best technology available in the kraft process. This is reflected in lower chemical consumption and more energy efficient equipment. It was also designed to consume low carbon intensive fuels and prioritize the use of biomass to generate energy. The Três Lagoas mill is integrated with the local paper mill owned by International Paper. Nevertheless, the utilities are produced and supplied by the pulp process.

Três Lagoas is a single line mill, with one power boiler and one recovery boiler, both running on biomass (bark and black liquor). The lime kiln, for the conversion of calcium carbonate into calcium oxide, runs on natural gas. Heavy fuel oils are employed only for start-up processes. Only water is employed, even for maintenance, since all the pipes are made of stainless steel.

Effluents are treated by means of activated sludge, and the waste from this process, as well as from other parts of the mill, goes into a landfill.

(15)

Logistics Flow Layouts

The final step is the shipping process, after drying. Different methods are employed to transfer pulp to the warehouses at the seaports, where it is exported worldwide.

Main pulp destinations and respective distance to ports operated by Fibria in North America, Latin America, Asia and Europe are shown in the Logistics Flow Layout.

Emissions related to employee commuting are estimated based on itinerary, whenever diesel consumption information is not available. Fibria provides transportation for its employees at all three mills. We have also included air travel, with data supplied by the two air travelling companies on working for Fibria. Fibria has also implemented a system to manage fuel consumption by its rented fleet, making possible to assess consumption by fuel.

Jacareí

In Jacareí, forklifts transport the pulp bales to diesel powered trains and trucks. These trains and trucks transport the pulp to domestic clients and to the Santos seaport, where the pulp is stored. In average, each train composition has 35 carriages. The process of loading onto vessels is done by means of trucks, which transport the pulp close to the vessel, from whence cranes load the pulp bales onto diesel powered vessels. The main destinations are Europe, Asia, North America and Latin America.

(16)

Aracruz

Aracruz is strategically located, about two kilometers from the port of PORTOCEL. The loading of pulp is done by LPG fueled forklifts. Diesel fueled trucks transport the pulp from the mill to the warehouse. From there, the pulp is shipped worldwide on diesel fueled vessels.

Três Lagoas

Três Lagoas’ production is shipped through the Santos seaport. The transportation of pulp is done mainly by rail, where a composition has in average 41 carriages. The process finishes with LPG fueled forklifts and diesel trucks, and the loading of the pulp onto the vessels, for shipment worldwide.

The contributions from all emission sources and the forestry areas that sequester emissions, with their respective data gathering process, referred to in the flow layouts, are included in the Addendum tables and represent the data base for this inventory.

(17)

Fibria – Summarized Figures (in tones of CO

2

eq)

E

mis

sions

1,114,326

Indirect emissions – electricity consumption

21,252

Indirect emissions – truck, rail, barge and marine

transportation

567,230

Total Emissions

1,702,808

S e ques tration

Sequestration – planted forest

17,004,427

Sequestration – Conservation areas

1,446,694

Total Sequestration (inc. 50% of Conservation areas)

17,752,761

Pulp produced (air dried tones)

4,697,500

Biomass emissions

(not calculated as GHG emissions)

11,574,124

This report presents the main calculation principles and findings of the Greenhouse Gas (GHG) Inventory for Fibria facilities.

The account balance [sequestered (planted forest + 51% of conservation areas) minus total CO2 emissions] is 16,049,953 tones of CO2eq. Considering biomass

(18)

Direct Emissions

All data used in this inventory were supplied by Fibria in the files “Data 2013 - Fibria.xlsm”, which is presented in Addenda 2 through 5. Direct emissions, gathered under Scope 1, include industrial and forestry activity (harvesting and freight) emissions.

Scope 1 (tCO2eq) JAC (tCO2eq) ARA (tCO2eq) TLS (tCO2eq) Fibria

Fore

s

try Forestry Operations

72,440 144,022 41,300

257,762

Fertilizers

5,320

29,553

16,620

51,493

Subtotal

77,760 173,575 57,920

309,255

Indus tria l Direct Combustion

313,572 310,389 158,466

782,427

Waste Management

1,882

34,660

6,041

42,583

Internal Transportation

2,768

2,554

1,531

6,853

PCC – CO2 Exported

-7,187

0 -19,605

-26,792

Subtotal

311,035 347,603 146,433

805,071

Total

388,795 521,178 204,353 1,114,326

Table 3 – Direct Emissions Breakdown, by mill.

Indirect Emissions

Indirect Emissions _(tCOJAC

2eq) ARA (tCO2eq) TLS (tCO2eq) Fibria (tCO2eq) S c ope 2 Forestry

117

468

101

686

Industry

17,376

2,550

640 20,566

Subtotal

17,493

3,018

741 21,252

S c ope 3 Rail

1,710

0 11,095

12,805

Road

9,216

549 51,635

64,937

Maritime

104,258 205,287 157,225

466,770

Air

1,091

36

152 1,279

Forestry

6,070

6,641

7,296

20,007

Employee Commuting

475

0

957 1,432

Subtotal

122,820 212,513 231,897

567,230

Total

140,313 215,531 232,638 588,482

(19)

Industrial Activities

Emissions from Stationary Fuel Combustion

Emission calculations for combustion in stationary industrial equipment are presented in the worksheet “Planilha de Cálculo Industrial – Fibria 2013 .xlsm” on the page “Direct – Stationary Combustion” (Refer to Addendum 4b, 10). The CH4 and N2O emissions from

stationary combustion, included in the figures, were calculated on the auxiliary page “Direct – Aux. (Biomass)” (Refer to Addendum 10). The amount of direct emissions from fuel combustion is presented on the page “Summary Table” (Also refer to Addendum 16). This overall total includes the outgoing CO2 to the PCC plant. (See Addendum 14).

Summary

Direct Fuel Combustion, tCO2eq

2013

Total emissions from Recovery Boilers

126,721

Total emissions from Power Boilers

229,673

Total emissions from Lime Kilns

420,209

Total

776,602

Outgoing CO2 to PCC Plant

26,792

Direct Emissions – Stationary Fuel Combustion

749,810

Emissions from Waste Management

Emissions calculations for waste management are presented in the worksheet “Planilha de Cálculo Industrial – Fibria 2013.xlsm” on the page “Waste Management” (Refer to Addendum 12). The amount of direct emissions due to the release of methane from landfills and anaerobic wastewater treatment, totaling 50,693 tCO2eq, is presented on the page

“Summary Table.” (Also refer to Addendum 16). As mentioned before, wastewater treatment at the Aracruz mill is done by means of aerated lagoons. Nevertheless, an anoxic zone may be created in the two last stages of this treatment. Due to this fact, the anoxic zone is treated as an anaerobic process and the equation in the IPCC default methodology described in the “May 2000 Good Practices” document is used in this calculation. Through lab analysis, it was concluded that only about 20% of the organic matter is reduced in the last two stages. Therefore, only 20% of the total COD was considered in the calculation.

B EF OC y kg CH4( / )   Equation 1 Where:

OC = BOD or COD of the feed to the anaerobic system, in kg/year EF = emission factor, default values = 0.25 kg CH4 / kg reduced COD

(20)

Summary

Emissions from Mobile Sources

Emissions from combustion in industrial and cargo transportation systems are presented on the page “Mobile & Transportation” (Also refer to Addendum 15), along with employee commuting and traveling. Calculations were made employing fuel consumption and distances. Under scope 1, covering industrial transportation systems, we have included: waste transportation, forklifts and our rented fleet. Since there is no information regarding forklifts in Santos seaport, the informed consumption for Três lagoas and Jacareí were doubled as a proxy. For air travel, total traveled distance was provided by the two travelling companies at Fibria service, Alatur and Citur. Regarding employee commuting, fuel consumption or distances was provided by two companies which supplies transportation for our employees. At Aracruz mill, fuel for this transportation is supplied by Fibria, and is already included in total fuel emissions. The end result, 6,852 tCO2, is presented on the page “Summary Table” (Please refer to Addendum 16.)

Summary

Emissions from Electricity Consumption

CO2 emissions from the consumption of grid electricity can be estimated by multiplying the

electricity consumption by the averaged emission factor for the Interconnected Grid System, in a monthly basis. Table below sums up monthly values presented on the calculation sheets. The emission factor for 2013 was published by the Ministry of Science and Technology at http://www.mct.gov.br/index.php/content/view/74694.html. It is important to note that the GRID emission factor was 47% higher than in 2012, which goes a long way to explaining the increase in the Scope 2 figures. Also, the problem with one of Jacareí´s turbines, decreasing the mill´s capacity to generate electricity, explains the increase on the imported electricity. Refer to Addendum 13.

Summary

Plant Imported Electricity _{2013 (MWh)} Carbon Emissions _(tCO

2eq)

Jacareí 187,677 17,376

Aracruz 25,484 2,550

Três Lagoas 6,330 640

Total 20,566

Waste Management, tCO2eq

Total emissions from landfills

9,431

Total emissions from anaerobic treatment

41,262

Total

50,693

Mobile Sources, tCO2eq

(21)

Most of the electricity consumed by Fibria is produced on-site by using biomass and fossil fuels (to a lesser degree). At some mills, part of the electricity produced is sold to the grid and supplied to over the fence suppliers. Nevertheless, on a conservative basis, no deduction has been made.

Forestry Activities

Summary

Direct Emissions, tCO2

Total emissions from the use of fossil fuels (Scope 1)

257,762

Total emissions from fertilizing and soil correction

51,493

Total

309,255

Indirect Emissions, tCO2

Total emissions from electricity

686

Total emissions from the use of fossil fuels (Scope 3)

20,007

Biomass Emissions, tCO2

Biofuels

11,019

Sequestration, tCO2

Total of removals by sinks - Eucalyptus

17,004,427

Total of removals by sinks – Conservation Areas

1,446,694

Total (inc. 50% of Conservation Areas)

17,752,761

The calculation principles and findings of Fibria’s Inventory of Greenhouse Gases (GHG), developed for the base year of 2013 for its Forestry activities, are shown below. The inventory of emissions and removals by sinks was based on the following documents: “The

Greenhouse Gas Protocol – a Corporate Accounting and Reporting Standard – Revised Edition”, from the World Resources Institute, and “Calculation Tools for Estimating

Greenhouse Gas Emissions from Mobile Combustion”, “Calculation Tools for Estimating Greenhouse Gas Emissions from Stationary Combustion”; “2006 IPCC Guidelines for

National Greenhouse Gas Inventories” and “Good Practice Guidance for Land Use, Land-Use Change and Forestry”, from the Intergovernmental Panel on Climate Change.

(22)

Emissions from mobile sources

In the forestry area, emissions from fossil fuels are mainly from mobile sources. The greater part of the fuel used is supplied by Fibria, and is reported in Addendum 4b. The table below summarizes the emissions from suppliers that buy their own fuel. The CO2 emissions from

the consumption of fossil fuels are estimated by multiplying the reported consumption by the emission factor for the type of fuel used, as described in the table below. Fibria

employs diesel with 5% Biodiesel. Since for wood rail transportation the calculation is

made indirectly by the total ton.km, no biogenic calculation was made.

Activities BU Type of fuel _used t CO2eq/yr t CO2eq/yr

(biogenic) SILVICULTURE

JACAREÍ Diesel 1,320 63

TRÊS LAGOAS Diesel 3,990 190

Subtotal 5,311 253

FREIGHT ARACRUZ Diesel - Rail 2,237 ROAD CONSTRUCTION ARACRUZ Diesel 4,403 210 JACAREÍ Diesel 4,749 227 TRÊS LAGOAS Diesel 3,305 158 Subtotal 12,458 594

Total tCO

2

eq

20,006

848

Table 5 – Emissions from Scope 3 - Fossil Fuels used in the Forestry Area

Emissions from soil correction

The IPCC Guidelines include the application of carbonates containing lime [such as calcium carbonate (CaCO3) or dolomite (CaMg(CO3)2] on forested land as a source of CO2

emissions. The CO2 emissions are accounted for based on the total amount of lime applied

throughout the year, using the equation below.

Equation 2

Where:

= annual emissions of C from the application of lime in silviculture, in tC/year. To convert tC to tCO2eq: multiply the result by 44/12.

M = annual amount of calcium carbonate (CaCO3) or dolomite (CaMg(CO3)2), in tC/year

EF = emission factor, tC (t of lime or dolomite)-1_{. The emission factor is equivalent to the carbon}

content of these materials (12% CaCO3 and 13% CaMg(CO3)2).

Fibria’s reported consumption of lime in 2013 was 18,164 tons for its forestry activities (Refer to Addendum 7). Therefore, using the formula above, this consumption resulted in emissions of 8,658 tCO2eq. Dolomite Dolomite Limestone Limestone CC M EF M EF C Lime  *  *  Lime CC C 

(23)

Emissions from the Application of Chemical and Organic Fertilizers

Applying nitrogen fertilizers to forestry land results in emissions of N2O, a major

greenhouse gas with an estimated global warming potential 298 times higher than CO2.

N2O emissions are estimated in equivalent tons of CO2 (tCO2eq) using the equation below.

Equation 3

Where:

= direct emissions of N2O resulting from the application of fertilizers containing

nitrogen, in tCO2eq/year.

= amount of synthetic fertilizer used, in tN/year = amount of organic fertilizer used, in tN/year

EF = emission factor for emissions resulting from the addition of N, which is dimensionless.

44/28 = conversion of N2O-N to N2O

298 = Global Warming Potential of N2O, converted into tCO2eq

Chemical fertilizers, including their N content, that are used in the Fibria forests are detailed in “Data 2013 - Fibria.xlsx”. (Refer to Addendum 4a.) Organic fertilizer consumption was not provided and is not included in this inventory.

It should be noted that even though the efficiency of using N is known to be lower than other fertilizers, since N tends to transform quickly into nitrate in the soil, if it is not absorbed by the plants or used by the microorganisms it could be lost through leaching or denitrification. This process can be minimized by controlling soil pH levels (loss is greater in soils with pH levels higher than 5.5) and by using techniques such as direct planting (SPD)4_.

According to FINCK, as quoted by ISHERWOOD5_{, the average percentage of fertilizer}

nutrients absorbed by the crop during the growing season is between 50 and 70% for nitrogen. According to PEOPLES et al, quoted by the same author, the relative importance of NH3 volatilization and denitrification varies considerably, depending on the

agro-ecosystem, type of nitrogen fertilizer used, crop management and prevailing environmental conditions.

Considering the practices adopted by Fibria, including planting in soil that is well aerated - not compacted - and localized fertilizing, the estimated loss of N due to denitrification would be estimated at 30%, resulting in 2,597 tCO2eq of emissions from the use of nitrogen

fertilizers. However, a conservative estimate of all emissions based on the amount of N used will be included in this inventory for accounting purposes. Therefore, emissions resulting from applying the abovementioned fertilizers correspond to 42,835 tCO2eq.

4_{GUILHERME, L.R.G. Depoimento sobre o uso de fertilizantes nitrogenados. In: Meio ambiente e aquecimento: O}

agronegócio é culpado ou inocente. DBO Agrotecnologia. Available at

<http://www.anda.org.br/artigos/capa_II_baixa.pdf> accessed on September 30, 2008.

5_{Isherwood, K.F. O Uso de Fertilizantes Minerais e o Meio ambiente. Trad. ANDA – Associação Nacional para Difusão}

dos Adubos. IFA - International Fertilizer Industry Association: Paris, February 2000. Available at

<http://www.anda.org.br/boletins/fertilizantes_meio_ambiente.pdf> accessed on September 30, 2008.

fert N DIRECT O N2  SN F ON F







_*



_*₄₄_/₂₈_*298 2O F F F EF N _DIRECT_N_fert  _SN  _ON  _CR

(24)

In addition to CO2 emissions associated with the application of fertilizers containing

nitrogen, emissions related to the application of urea during the fertilization has to be considered. From IPCC 2006 Guidelines “adding urea to soils during fertilisation leads to

a loss of CO2 that was fixed in the industrial production process. Urea (CO(NH2)2) is

converted into ammonium (NH4+), hydroxyl ion (OH-), and bicarbonate (HCO3-), in the

presence of water and urease enzymes.” This process is similar to the one occurring when

lime is used for soil correction.

This emission source is calculated using the following formula:

12 / 44 * * 2 C M EF CO  _Emission Equation 4 Where:

CO2-C Emission = annual C emissions from urea application, in tonnes of C/yr-1;

M = annual amount of urea fertilization, in tonnes urea/yr-1_;

EF = emission factor, in tonnes of C (tonnes of urea)-1_{. A default value of 0.20 was used, which is}

equivalent to the carbon content of urea on an atomic weight basis; 44/12 = factor used to convert CO2–C emissions into CO2

As reported by Fibria, during 2013, 14,385 tonnes of urea was used, representing 10,549

tCO2eq.

Emissions from electricity consumption

The calculation of CO2 emissions due to electricity consumption applies the same emission

factor used to calculate this emission source in industrial activities. Nevertheless, since consumption is much lower, the annual averaged emission factor is employed. Also, as in the forestry are there is no contract for energy, information is only available on monetary form. To find consumption in MWh, total expenses are divided by the average price of MWh by region, provided by aneel, the Brazilian energy agency (http://www.aneel.gov.br/area.cfm?idArea=550). The electricity consumption registered in 2013, as well as the associated CO2 emissions, is presented in the table below (Refer to

Addendum 8). BU Consumption (MWh) Emission Factor (tCO2/MWh) Emissions (tCO2eq) ARACRUZ 4,874 0.096 468 JACAREÍ 1,214 0.096 117 TRÊS LAGOAS 1,057 0.096 101 Total 686

(25)

Removal by Sinks (CO

2

Sequestration)

Removal of CO2 by sequestration was accounted for using the formula below. This formula

accounts for the CO2 sequestration in one year by converting volume growth. For

eucalyptus areas, site measuring and modeling estimations were employed to estimate volume.

For conservation areas, IPCC Tier 1 biomass factors were employed (IPCC V4_04_Ch4_Forest_Land) to estimate the sequestration of these areas. This was possible due to a reclassification work, crossing referencing the IPCC and Fibria ecofloristic classifications, employing satellite imagery. In 2013, the classification in Jacareí conservation areas was reviewed, reducing uncertainty to 30% in 20% of the conservations areas. For the remain areas, we have maintained conservatively in 50%. Ongoing

projects intend to improve the quality of conservation area classification, reducing uncertainty in the near future.







    j i j i TOTAL j i G A G CF C j i , , , , Equation 5 (IPCC V4_CH4_Annex II_eq.2.9) Equation 6(IPCC V4_CH4_Annex II_eq.2.10) Where:

= annual increment in the biomass stock, in tC/year = area, in ha

= average annual increment, in t ms/ha/year = carbon fraction of dry material, tC/t ms (0.47)

= average annual increment of aboveground biomass, in t ms/ha/year

= root/shoot ratio, t ms of underground biomass / t ms of aboveground biomass.

Based on the data provided, CO2 sequestration was estimated at 17,004,427 tCO2eq for the eucalyptus plantations and 1,225,372 tCO2eq for conservation areas. In order to

account for areas with plantations less than half years old, one quarter of these areas were considered on the first year data, since they present around 25% of the first year´s biomass (Addenda 3a, 3b, 3c, 6, 9a, 9b, 9c).









   G R G_TOTAL _W 1 G C  j i A_, j TOTALi G , j i CF, W G R

(26)

Graphical Analysis of the Figures

Sources of Direct Emissions

Chart 1 shows that direct emissions from industrial sources represent 70% of the total, followed by forestry activities, waste management and internal transportation.

Chart 1 - Direct Emissions of CO2eq

Emissions by Type of Fuel at Fibria

Chart 2 shows emissions by type of fuel. Compared to the total energy demand, this chart highlights the greater use of renewable fuel. Regarding Fossil fuels, natural gas is the most common one, followed by diesel, due to its use in mobile sources.

(27)

Emissions from Industrial Area

Chart 3 - Emissions from Industrial Area

As expected, lime kilns are the sources of the highest emissions, since there is no substitute for fossil fuel in this area. The use of natural gas in place of fuel oil has been the option to reduce emissions.

Emissions by Transportation System

Marine transportation accounts for 86% of all emissions.

(28)

Sources of Emissions from Forestry Activities

Emissions from fuel consumption account for 67% of total emissions from Forestry activities.

(29)

Performance Analysis

Compared to 2013, there was considerable reduction in emissions (5%), despite the reduction in the production levels (-1%). Data from 2011 and 2012 were updated to meet new GWP, from the forth IPCC assessment. For 2013, unexpected events have affected Jacareí mill. The maintenance of the gas turbine for six months have increased the consumption of electricity from the GRID, and reduced the consumption of natural gas, beyond the expected with the planned projects. Nevertheless, consumption of natural gas have increased by 7% as well as the consumption of fuel oil (6%). Most remarkable was the reduction on the consumption of diesel by the forestry area, 13%. New implementation of harvesting equipment have led to such reduction. Lower production have affected the production of black liquor; on the other hand, biomass consumption has increased by 6%. Such variations are natural to an industrial process, as operation parameters may change year on year. For instance, when the medium radium from forestry area reduces, due to closer plantations, diesel consumption reduces. Nevertheless, is not possible, despite our efforts, to continuously reduce medium radium. Other important impact is the steadily variation on the GRID´s emission factor, which have increased by 47% compared to 2012 and 328% compared to 2011, the Base Year. The major contribution to our emissions is Aracruz mill, an expected result, since it has the largest nominal capacity. Regarding intensity indicators, there was a 4% decrease compared to 2012 and 2011for total emissions, and a reduction in the net sequestration, due to the review on native areas classification.

Table 6 – Fibria Performance

2010 2011 2012 2013 Production 4.511.486 4.656.650 4.737.808 4.697.500 ARACRUZ 456.471 559.630 537.215 521.178 -3% -7% JACAREÍ 394.869 395.642 432.218 388.795 -10% -2% TRÊS LAGOAS 213.945 213.842 182.980 204.353 12% -4% FIBRIA 1.065.285 1.169.114 1.152.413 1.114.326 -3,3% -4,7% ARACRUZ 1.900 660 1.651 3.018 83% 357% JACAREÍ 8.100 3.516 4.989 17.493 251% 398% TRÊS LAGOAS 434 303 471 741 57% 145% FIBRIA 10.434 4.479 7.111 21.252 199% 374% ARACRUZ 285.656 310.744 297.878 212.513 -29% -32% JACAREÍ 92.589 95.680 114.566 122.820 7% 28% TRÊS LAGOAS 146.892 180.389 220.822 231.897 5% 29% FIBRIA 525.138 586.813 633.266 567.230 -10% -3% ARACRUZ 6.014.198 6.015.717 6.292.487 6.117.798 -3% 2% JACAREÍ 2.294.649 2.451.832 2.506.812 2.514.205 0% 3% TRÊS LAGOAS 2.763.621 2.833.041 2.904.403 2.942.121 1% 4% FIBRIA 11.072.468 11.300.590 11.703.702 11.574.124 -1% 2% ARACRUZ 744.027 871.034 836.744 736.709 -12% -15% JACAREÍ 495.559 494.838 551.773 529.108 -4% 7% TRÊS LAGOAS 361.271 394.534 404.273 436.991 8% 11% FIBRIA 1.600.856 1.760.406 1.792.790 1.702.808 -5,02% -3,27% In d ire ct e m is si o n s - sc o p e 3 B io m a ss T o ta l %2013/2011* FIBRIA PERFORMANCE %2013/2012 D ire ct e m is si o n s - sc o p e 1 In d ire ct e m is si o n s - sc o p e 2

(30)

Chart 6 – Direct Emissions, by mill

Chart 7 – Indirect Emissions, by mill

Chart 8 – Other Indirect Emissions, by mill

(31)

Addenda

Addendum 1 – Cut-Off Criterion

In order to establish the boundaries of this work, a cut-off criterion was defined for the inclusion of emission sources, based on minimum consumption, as well as a reliable register. According to the IPCC, one can use 10% of the total amount as a cut-off criterion. Fibria has conservatively adopted a minimum value of 1,000 tCO2eq; converted into

common inputs, one can establish minimum values. Nevertheless, small emission sources with good registry control are accounted for in the inventory.

Source Minimum Limit

Diesel/Gasoline 180,000 Km/yr

Diesel – stationary sources 180,000 liters/yr Diesel – mobile sources 180,000 liters/yr

Electricity 2,000 MWh/yr

LPG 18,000 Kg/yr

Table 7 - Minimum Requirements for Inclusion

Below are listed some sources which were excluded:

Source Value

LPG / Restaurant – ARA 7,200 Kg

Rented Fleet (unknown fuel type) 791,899 Km Diesel / Nursery – TLS 2,776 Liters Biomass / Nursery – JAC 275 tons

(32)

(33)

Addendum 3a – Forestry Sequestration (Aracruz)

The data related to the area were extracted from Fibria’s database, yielding the values presented in the table below. The current annual growth was obtained through the difference between the measurements of two samples.

Native forest contribution was estimated employing IPCC Tier 1 values for biomass estimation, available in IPCC Volume 4, Chapter 4, page 63.

(34)

(35)

(36)

(37)

(38)

(39)

Addendum 4c – Land Transport

(40)

(41)

(42)

(43)

(44)

Addendum 5b – Technical Data

Source: IPCC Volume 4, Chapter 4, Page 63

Parameter Land Unit Project

Value Commercial Active Effective

Areas : Y Partnership Leasing

Own Land

(45)

(46)

Addendum 5c – Root to Shoot Ratio

(47)

(48)

Addendum 7 – Forestry Emissions – Fertilizers and Soil Correction

(49)

(50)

Addendum 9a – CO2 Removal by Sinks

(51)

Addendum 9b – CO2 Removal by Sinks

Jacareí

(52)

Addendum 9c – CO2 Removal by Sinks

(53)

(54)

Addendum 11 – Emissions from Biomass Combustion

(55)

(56)

Addendum 13 – Indirect – Energy Imports ( Purchasing of Grid Electricity) M01 January M02 February M03 March M04 April M05 May M06 June M07 July M08 August M09 September M010 October M011 November M012 December

(57)

(58)

(59)

Addendum 16 – Summary of Industrial Emissions

(60)

Addendum 17 – Uncertainties regarding Emissions and Removals

According to the GHG Protocol Short Guidance for Calculating Measurement and Estimation Uncertainty for GHG Emissions, “one element of GHG emissions data quality

management involves quantitative and qualitative uncertainty analysis. Estimation uncertainty arises any time greenhouse gas emissions are quantified. Therefore all emission or removal estimates are associated with estimation uncertainty”.

Almost all comprehensive quantitative estimates of uncertainty for greenhouse gas inventories, due to the lack of sufficient data for a complex statistical analysis, are limited and imperfect. In other words, despite the most thorough efforts, estimates of uncertainty for greenhouse gas inventories must themselves be considered uncertain. Qualitative analysis, however, can depict the concern taken with data gathering, and also opportunities for data quality improvement.

According to the IPCC, the likely causes of uncertainty in direct measurement are generally related to the measurement techniques used. In the case of indirect measurement the uncertainties are related to the activity data and the emission factor.

In relation to emissions of CO2 from fossil fuel burning in industrial processes and electricity

production, uncertainty of the emission factor is around 9%. Activity data accuracy from Fibria is reported as 5%, since most of it is acquired in the ERP system. Therefore, the global uncertainty is around 10% [root-sum-square technique, GHG Protocol Short Guidance for Calculating Measurement and Estimation Uncertainty for GHG Emissions]. For biomass CH4 and N2O emissions there is a higher degree of uncertainty, mostly

because inherent emissions depend on process conditions, temperature and technology employed. For conservative reasons, this inventory is based on IPCC default data. Assumptions were made by comparison of lower heating value between real process and default IPCC data. Nevertheless, these emissions represent less than 5% of the total. In the forestry sector, uncertainties estimation is even harder to do, due to the lack of detailed studies. Still, in a conservative approach, IPCC default recommendations and emission factors have been used. For liming and urea application, default values consider that all carbon added to the soil is emitted as CO2. For N2O emissions from managed soils,

default IPCC values were also used. Nevertheless, these emissions represent less than 7% of the total direct emissions.

For CO2 sequestration, uncertainty is estimated at around 15% and is related to three

factors: (i) volume estimation on forests less than two years old; (ii) shoot-to-root ratio, which was based on the literature; and (iii) volume estimation, since it is based on the average basic density calculation and forestry inventory sample data, measured on circular plots of 400 square-meters in every 10 ha.

(61)

(62)

GREENHOUSE GAS (GHG) INVENTORY

REPORT