New Mechanism Feasibility Study Report (Executive Summary)New
Mechanism Feasibility Study for Energy Efficiency Improvement by
Introducing High-Performance Industrial Furnaces to Aluminum
Industry in India
By Japan Industrial Furnace Manufacturers Association
1. Feasibility Study Implementing Organization Japan Industrial
Furnace Manufacturers Association: Feasibility Study Group Mizuho
Corporate Bank, Ltd.: Support for creation of scenarios and
MRV
methodology Evalueserve U.K. Ltd. (an Indian corporation):
Collection of basic information and support for
coordination/arrangements, etc. for interviews with governmental
entities and private companies
2. Outline of the Project/Activity (1) Description of the
Project/Activity This feasibility study examines the possibility of
realizing a reduction in emissions of greenhouse gases (GHG) by
implementing the project/activity described below in the host
country under a new mechanism, which is being studied for
systemization in the next period framework after 2013. The study
results are summarized as a case study which can serve as a basis
for international negotiations in the future. The co-benefits of
global warming measures and environmental pollution measures, etc.
in the host country are also evaluated. Specifically, the
possibility of realizing the new mechanism in the introduction of
high-performance industrial furnaces in the aluminum industry in
India is examined with regard to the possibility of the
contributing to GHG emission reductions through the
project/activity. High-performance industrial furnaces are
industrial furnaces which are equipped with regenerative type
combustion devices and regenerative burners. By adopting a
combustion technology using high temperature combustion air that
has been preheated by recovering the heat of the exhaust gas, this
technology enables substantial energy savings, low NOx operation,
and homogeneous heating. This technology has been highly evaluated
in Japan, and a total of 1,300 units were in operation as of the
end of 2010. High-performance industrial furnace technology has
also been incorporated in Japanese government policy as an energy
conservation technology, and is one topic of the taxation system
for stimulating investment to promote structural reform in supply
and demand of energy and tax reductions for green investment. In
this study, the feasibility of introducing this high-performance
industrial furnace technology in the aluminum industry in the host
country (India) is examined, the amount of GHG reductions in the
host country is estimated, and the potential for dissemination of
the technology is studied. (2) Conditions in the Host Country 1)
Natural gas pipelines
As stated in India’s 11th and 12th Five Year Plans, extension of
natural gas pipelines is considered an urgent issue. Whether use of
natural gas is possible or not will also have an extremely large
impact on the object of this feasibility study (introduction of
high-performance industrial furnaces in the aluminum
industry).
2) Energy Conservation Act
2
India’s Energy Conservation Act specifies 15 sectors as “Energy
Intensive Industries” where active energy conservation efforts are
to be promoted. The Energy Conservation Act was revised in March
2007, and 9 of these 15 industrial sectors were designated as
“Energy Incentive Industries” (8 industrial sectors excluding the
Railway sector). In these industrial sectors, legal obligations are
placed on “Designated Consumers” (DC) which are defined as
industrial units (plants or factories) having energy consumption
exceeding a certain threshold.
3) Preferential energy conservation measures Existing policies do
not provide preferential tax rates or financial subsidies for
energy conservation. The Bureau of Energy Efficiency (BEE) does not
provide subsidies, etc. for the reason that businesses must be
sustainable. From this viewpoint, expensive energy saving
technologies are not considered attractive. On the other hand, the
BEE recognized the necessity of energy saving measures for
downstream factories and has decided to give attention to
introduction as a separate measure in the future.
4) PAT Scheme The Indian government introduced the PAT Scheme
(Perform, Achieve and Trade: scheme for certifying achievement of
energy conservation targets), under the leadership of BEE. This can
be said a “cap & trade” system for energy consumption. In the
future, the PAT Scheme will be critical for the introduction of
high-performance industrial furnaces (in that it has the potential
for energy conservation incentives for object plants and factories)
and implementation of CDM projects (in the sense that there is a
possibility that additionality cannot be certified because
regulations exist).
5) Global warming measures At present, India’s per capita GHG
emission is 1-1.2 tons. However, even assuming a high economic
growth rate of 8-9% per annum over the next 10-20 years, due to
improvement in baseline energy efficiency, energy conservation, and
changes in technology, this is estimated to increase to 2-2.5 tons
in 2020 and 3-3.5 tons in 2030, and thus is expected not to exceed
the average of the industrial countries. Overall Goal and Master
Plan As NAMA (Nationally Appropriate Mitigation Actions) for the
post-Kyoto Protocol period, the Indian government has reported a
goal of “reducing GHG emission intensity of GDP by 20-25% in 2020
in comparison with 2005.” Therefore, this represents the “overall
goal” for future global warming measures through the year 2020.
National Action Plan on Climate Change (NAPCC) On June 30, 2008,
the Indian government established a “National Action Plan on
Climate Change” comprising 8 missions, incorporating “Energy
savings of 10,000 MW by 2012.”
6) Bilateral Offset Credit Mechanism and post-Kyoto Protocol India
ratified the Kyoto Protocol in 2002 and established a DNA
(Designated National Authority) in 2003. This means that India
implemented a system for promoting CDM at a comparatively earlier
timing than other emerging economies and developing countries.
Following this, India has steadily continued to increase its number
of CDM projects.
(3) Qualification as new mechanism 1) Investment barrier: In
comparison with technologies produced by other countries,
technologies
produced by Japan are high in cost but offer excellent performance
in terms of energy saving, etc. Introduction of regenerative
burners manufactured in other countries, which may be more
realistic in strictly financial terms, invites a decrease in the
GHG reduction rate in comparison with introduction of
high-performance industrial furnaces. Therefore, although
introduction of low efficiency regenerative
New Mechanism FS 2011 – Report
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burners may appear to be more realistic, introduction of a
technology that can achieve a greater reduction should be set as a
qualification as a new mechanism. The high-performance industrial
furnace is a technology which meets this requirement.
2) Technical barrier: The recuperator is a technology that existed
before the high-performance industrial furnace was developed. The
conditions for introduction of the recuperator technology are
easier than those for the high-performance industrial furnace, and
the diffusion rate is also high. On the other hand, operation is an
issue. Among other problems, the survey in India found multiple
examples in which recuperators had been installed, but the amount
of heat recovered was low. Introduction of recuperators, which are
inferior to high-performance industrial furnaces in energy saving
performance, invites a decrease in the GHG reduction ratio in
comparison with introduction of high-performance industrial
furnaces. Therefore, introduction of a technology which is capable
of achieving a larger reduction than the low efficiency recuperator
technology, which may be more realistic in financial terms, should
be set as a qualification as a new mechanism. Again, the
high-performance industrial furnace is a technology which meets
this requirement.
3) General customary barriers: Although the Indian aluminum
industry is an object of the PAT Scheme, specifically, application
of PAT is limited to 10 plants in the industry. In the local
survey, plants which are not included in the PAT Scheme expressed
an interest in energy saving technologies, but because there are no
incentives for implementing energy saving measures, alternatives
with a quick return on investment are given priority, resulting in
a tendency to use outmoded technologies with large GHG
emissions.
(4) Measures for dissemination of the project/activity: 1) PR for
high-performance industrial furnaces at exhibitions, etc.
Recognition (visibility) of high-performance industrial furnaces in
the Indian aluminum industry is low. Accordingly, presentations on
Japanese high-performance industrial furnace technology are
necessary. However, because the Indian aluminum industry is
characterized by a large number of small- and medium-sized
companies, it is necessary to explain the features of
high-performance industrial furnaces at aluminum-related
exhibitions in India.
2) Approaches to Indian academic societies An extremely large
number of papers on the properties of exhaust gas from engine
combustion are presented in academic societies in India, but there
is also a certain degree of recognition of flameless combustion and
high-performance industrial furnaces. Although it appears that the
population of engineers/researchers in this field is not
particularly large, a gradual recognition in the industrial world
is considered possible.
3) Demonstrations (model plants) In the dissemination of
high-performance industrial furnaces in Japan, high-performance
industrial furnaces which were delivered to model plants were
opened to inspection based on advance agreement, and this served as
a useful reference to other companies which were considering
introduction. Similar demonstrations should also be planned in
India.
4) Approaches to Japanese transplants in India In recent years, an
increasing number of Japanese manufacturing industries have
established transplant operations in India. Approaches to these
companies will be effective for business transactions.
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3. Content of Feasibility Study (1) Issues studied 1) PAT
Scheme
At present, the PAT Scheme has been established for 8 industrial
sectors (Cement, Fertilizer, Iron and Steel, Paper and Pulp,
Thermal Power Plant, Chlor-Alkali, Aluminum, and Textiles sectors).
The recent condition of systemization was investigated.
2) Energy saving/emission reduction effects of PAT Scheme The
specific scheme for evaluation and certification of energy savings
in the aluminum industry during a period of large production
increases was studied. The thinking of the Indian government
regarding national energy conservation activities and policies for
secondary (remelt) aluminum ingot makers which are not currently
covered by the PAT Scheme was also studied.
3) Status of energy saving measures at primary (virgin) and
secondary (remelt) aluminum ingot makers
A survey of the status of energy saving measures at each company
and study of the possibility of introducing high-performance
industrial furnaces were conducted.
4) Information on existing industrial furnaces in the Indian
aluminum industry In order to identify promising cases, information
on existing industrial furnaces in the Indian aluminum industry was
summarized and arranged.
5) Operating data on industrial furnaces suitable for conversion to
high-performance industrial furnaces
In order to estimate the effects of introduction and construct a
MRV methodology, the necessary data for model plants must be
collected (fuel type, furnace temperature, exhaust gas temperature,
etc.). Therefore, actual data were collected through site
surveys.
(2) Content of study: 1) Preliminary study
The following items were investigated. Related legal system,
policies, etc. in India Screening of objects of dissemination in
the aluminum sector Collection of information related to industrial
furnaces in India by Japanese industrial furnace
makers Energy analysis
2) Site surveys At model plants, interviews were conducted, the
furnaces which are objects of energy calculations were observed,
and the necessary data were collected (Table 1).
Table 1 List of plants visited
Visit of September 2011 Visit of November 2011 Visit of December
2011 Primary ingot (virgin metal)
NALCO HINDALCO
Wire & bar Sheets
5
Forgings Vanaz Engineers
Bharat Forge The survey also attempted to gain a feeling regarding
the new mechanism while also obtaining
information on recent trends in policy, etc. through interviews
with government agencies, etc. and nonprofit groups, as
follows.
Visit of September 2011 Visit of November 2011 National
government BEE
Local government
NPO TERI
FICCI PCRA
3) Forecast of scales of energy savings and CO2 emission reductions
by dissemination of high-performance industrial furnaces
Energy calculations were made for the industrial furnaces which
were observed at model plants. The types of furnaces for which
conversion to high-performance industrial furnaces would be
possible and the amount of energy savings obtainable by
introduction of high-performance industrial furnaces were
calculated. Based on the results, forecasts were calculated for the
scales of energy savings/CO2 emission reductions by dissemination
of this technology. In addition, data on the amounts of production
and consumption, etc. in each production process in the aluminum
sector were collected in a preliminary study, and the amount of GHG
emission reductions was calculated by estimating energy unit
consumption from those data.
4) Construction of measurement, reporting, and verification (MRV)
methodology for GHG emission reduction effect
Monitoring of industrial furnaces is generally performed by
calculating energy efficiency from the heat balance of the furnace.
However, in actuality, it is difficult to collect all the desired
data in a foreign country. Therefore, a method of estimating energy
efficiency using valid data was constructed based on interviews.
Referring to the existing CDM methodologies (various methodologies,
etc. which attempt to improve energy efficiency on the demand
side), the setting levels for baseline monitoring (monitoring
items, accuracy, frequency, etc.) required in CDM projects were
studied, and based on the results, the MRV methodology required
when applying this technology under a CDM regime was assumed. At
present, meetings of ISO/TC244 “Industrial furnace and associated
processing equipment” are being held, aiming at international
standardization of energy efficiency, with the Japan Industrial
Furnace Manufacturers Association as coordinator, and monitoring
items, etc. are in the process of establishment as ISO standards.
Due to the limitations of the data collected in this study, the MRV
methodology constructed here does not conform to this international
standard. However, it can be shown that the essence of this
methodology conforms to the standard.
5) Study of other effects related to the feasibility of the new
mechanism In order to judge the possibility of realizing the new
mechanism in a multi-faceted manner, items related to securing
environmental integrity (environmental impacts), etc. were also
summarized.
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4. Results of Feasibility Study of the New Mechanism
Project/Activity (1) Emission reduction effect by implementation of
the project/activity
High-performance industrial furnace technology has the merit of
realizing a large energy saving effect. GHG emissions are reduced
by an amount equivalent to the fuel saving. The model plants where
site surveys were carried out in this feasibility study have high
production shares in each production process, and have typical
furnaces which are used in each manufacturing process. It is
possible to calculate the emission reduction effect by
implementation of the project/activity by calculating the energy
saving, etc. in case these furnaces are converted to
high-performance industrial furnaces. The energy saving rate and
CO2 emission reduction are calculated by the following
equations:
Energy saving rate = (QW0 – QW1) / (Calorific value of fuel x Fuel
consumption) x 100 CO2 emission reduction = Current fuel
consumption x Energy saving rate x CO2 emission factor of
fuel
In this equation, QW0 is “heat loss from exhaust gas under the
present condition,” and is obtained by specifying the temperature
of the exhaust gas when the furnace is converted to a
high-performance industrial furnace (installation of regenerative
burners) and calculating the heat loss from the exhaust gas at this
time. QW1 is “heat loss from exhaust gas after conversion to
high-performance industrial furnace.” QW0 and QW1 are obtained by
the following equations, respectively.
QW0: Heat loss from exhaust gas under present condition =
Exhaust gas flow rate x Exhaust gas temperature x Specific heat of
exhaust gas
QW1: Heat loss from exhaust gas after conversion to
high-performance industrial furnace = Exhaust gas flow rate x
Exhaust gas temperature x Specific heat of exhaust gas
In addition, the following calculation is also necessary if the
energy source is also changed, for example, from electricity to
gas, etc.
CO2 emission reduction by fuel conversion =
Power consumption under present condition x CO2 emission factor of
electric power – CO2 emission after conversion to high-performance
industrial furnace
At the present stage, we still do not know if the model plants
where the site surveys were carried out in this feasibility study
will implement the project/activity. However, the emission
reduction effect was estimated for these plants as representative
examples of the Indian aluminum industry. The outlines of the
company and plant, outline of the equipment covered by the survey,
the survey results, and the evaluation of the feasibility of
introducing high-performance industrial furnaces were summarized
for each example. The concrete numerical values are shown in Table
2. It should be noted that we were not able to obtain detailed data
on operating conditions, the effect of openings, etc. in the site
surveys. Therefore, these points were not considered in the
estimations. Furthermore, the estimation methods also differed,
depending on the condition of the data obtained on the object
furnaces.
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Table 2 Representative furnaces and emission reduction effects by
manufacturing process Ma
nu fac
tur ing
Virgin metal ingots
Melting & holding furnace
NALCO 45t/ch-unit 750 Heavy oil 54,000 628.0 30.0% 10,174 793
600,000
Soaking pit HINDALCO 48t/ch-unit 510 Electricity → Gas 17,280
1,490.5 57.0% 14,718 875 78,800 5.0
Remelted metal ingot
Melting furnace
Century NF Casting 5t/ch-unit 800 Heavy oil 6,000 5,401.0 35.8%
11,599 834 70,000 4.5
NAMO Alloys 7t/ch-unit 750 Heavy oil 6,552 4,185.0 23.0% 6,307 451
(Unknown) (Average) 6,276 4,793.0 29.4% 8,953 642 70,000 4.5
Wire & bar,
→ Gas 6,120 1,543.0 51.0% 4,798 376 27,600 5.0
Extrusions
10t/ch-unit 1000 LPG 14,400 3,977.5 36.0% 20,619 1,548 100,000
3.6
Reheating furnace 1t/ch-unit 520 LPG
Castings Melting furnace
Endurnce Technologies
4t/ch-unit 1000 Heavy oil 4,800 7,500.0 33.3% 11,880 854 70,000 3.9
4t/ch-unit 900 Heavy oil 3,744 4,604.0 32.0% 5,515 395
(Unknown)
(Average) 4,272 6,052.0 32.7% 8,698 624 70,000 3.9
Forgings
Reheating furnace BANAZ 0.1t/ch-unit 500 Electricity
(2) Setting of reference scenarios and project/activity
boundary:
At present, the Energy Conservation Act (which took effect in 2002)
and the PAT Scheme (effective in 2011) are the main measures for
promoting energy conservation in India. In the aluminum sector, the
objects of these two systems are the same, and comprise 10 plants.
Mandatory legal energy conservation targets for a 3-year period to
2014 have been set for these object plants. Accordingly, the
reference scenarios can be divided into (1) PAT object and (2)
Non-PAT object. As post-Kyoto Protocol NAMA (Nationally Appropriate
Mitigation Actions), the India Government has reported a target of
“reducing GHG emission intensity of GDP by 20-25% in 2020 in
comparison with 2005.” India established its 12th Five Year Plan
(2012-2016) with this as an overall goal. The country’s National
Action Plan on Climate Change (NAPCC) is positioned under this
Five-Year Plan. However, mainly with the exception of the PAT
Scheme, this does not extend to setting concrete targets for
industry, and thus does not constitute an effective policy for
promoting energy conservation.
1) PAT objects Under the PAT Scheme, baseline emissions and targets
have been set for each Designated Consumer (DC) (Table 3). The
following shows whether the energy consumption of each object plant
(DC) is a potential target for introduction of high-performance
industrial furnaces.
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Table 3 Object plants under PAT Scheme and applicability of
high-performance industrial furnaces
Class 1 Class 2 Plant Applicability of
high-performance industrial furnace
None
Partial (melting in ingot production, etc.)
Integrated processes
Sheets, etc. Rolling 1 plant Partial (reheating)
At virgin metal ingot makers, a smelting process (alumina
production using bauxite, etc. as raw
material) exists in the stage before the refining process. The
smelting process consumes approximately the same amount of energy
as the refining process. Electric power accounts for virtually all
energy consumption in the refining process (manufacture of aluminum
ingots using alumina, etc. as raw material) at the object virgin
metal plants. Therefore, it is thought that energy conservation
efforts at the PAT object plants will be directed toward reducing
consumption of electric power. Accordingly, under the PAT Scheme,
it is considered that energy conservation measures for electric
energy will be carried out, focusing on equipment that cannot be
converted to high-performance industrial furnaces. Thus, in its
present phase (up to 2014), the PAT Scheme does not provide
incentives for reducing energy consumption by introducing
high-performance industrial furnaces. However, in the next phase
(from 2014) and thereafter, there is a possibility that the PAT
Scheme will be expanded to include equipment for which introduction
of high-performance industrial furnaces is possible. Therefore, a
reference scenario was established envisioning this possibility.
Large differences in consumption of fossil fuels at aluminum
refineries are considered to exist, depending on the equipment and
process at individual plants, and for this reason, differences in
energy consumption per unit of production are also extremely large.
Regarding consumption of electric power in the refining process, in
addition to the fact that unit consumption differs by plant, there
is also extremely large room for reduction in comparison with the
“best practice” level worldwide. This is an aspect of the aluminum
refining process where the PAT Scheme is expected to demonstrate
its effectiveness.
2) Non-PAT objects In India, no incentives for implementing energy
conservation currently exist for plants which are not objects of
the PAT Scheme (excluding the cost return associated with energy
conservation). However, in the next phase of PAT (from 2014) and
thereafter, there is a possibility that the energy consumption
threshold for object plants will be lowered. In that case, some
aluminum plants which are not virgin ingot makers may also be
included in the PAT Scheme. Among these, there is a high
possibility that remelt ingot makers, rolling mills, etc. will be
included. The current objects of the PAT Scheme include the
integrated process (one plant) and the rolling process (one plant).
The 3-year energy saving targets for these two processes are 5.61%
and 5.59%, respectively. Accordingly, energy saving of
approximately 5.6% can be assumed as a benchmark for future
New Mechanism FS 2011 – Report
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reduction regulations. 3) Reference scenario
At the present point in time, it is not possible to say that
substantive incentives for introduction of high-performance
industrial furnaces exist at either PAT object plants or non-PAT
object plants. However, as the Indian Government has suggested the
possibility that the PAT Scheme may be expanded in the future, it
is also possible to regard the level of future reduction
regulations (benchmark) as a reference scenario. Therefore, in this
study, an emission reduction of 5.6% was set as the reference
scenario. In this case, the portion of the reduction achieved by
introduction of the high-performance industrial furnace that
exceeds 5.6% will be recognized as a credit.
Figure 1 Energy saving incentives in Indian aluminum industry
4) Setting of project/activity boundary
Based on the basic study and site surveys of the Indian aluminum
industry, the boundary of the project/activity was set as follows.
Virgin metal ingot makers: Melting and holding furnace, soaking pit
Secondary (remelt) ingot makers: Melting furnace Wire rod and bar,
sheet, foil products: Annealing furnace Extrusions: Melting
furnace, reheating furnace Castings: Melting furnace Forgings:
reheating furnace.
Virgin ingot maker Integrated Rolling
Secondary (remelt) ingot maker
Approx.
5.6%
None (however, may be included in objects of PAT in
future)
Aluminum production process
Energy saving target
None Partial None Incentive for energy saving by high-performance
industrial furnace
Exist partially Partial Some Technical possibility of energy saving
by high-performance industrial furnace
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(3) Monitoring methods and plan:
The amount of energy saving which is possible by furnace
improvement is obtained by subtracting the fuel consumption after
improvement from that before improvement. However, various problems
arise because measurement for a certain period (e.g., 1 year) is
necessary, but the amount of material treated during that period is
generally not constant, and various uncertainties in connection
with the operating environment should be considered, for example,
changes in operation due to economic (business) fluctuations. On
the other hand, from the viewpoint of furnace efficiency, the
amount of energy saving (amount of fuel) can be calculated from the
energy U necessary to treat a unit amount of material and the
efficiency of the furnace. In other words, if pre-improvement
furnace efficiency is Epre and post–improvement furnace efficiency
is Epost, the energy saving Usave per unit of material (product) by
furnace improvement is expressed by the following equation.
Usave = U (1 / Epre – 1 / Epost)
Here, Epre, Epost, and U are determined using the terms provided in
ISO/WD 13579-3 (FDIS). The monitoring items are listed in 4.8(1).
However, all of these items are set assuming detailed
calculations of a level exceeding that in ordinary business
transactions. In this study, the essential items in MRV were set so
as to enable construction of an implementation system, while also
securing transparency and traceability. Namely, the essential items
are 5.1.1 Measurement of fuel consumption (Volume), 5.3.1,
Measurement of combustion air volume (Combustion air volume), 5.5.1
Combustion exhaust gas temperature, 5.5.2 Combustion exhaust gas
volume, and 5.6.1 Mass of fixture products and jigs/fixtures for
product handling (Fixture / Mass).
Virgin metal ingots
Secondary (remelt) ingots
Others
Melting furnace
Annealing furnace
11
(4) GHG emissions and reductions: 1) GHG emission reduction under
scenarios of project/activity
Based on the information ascertained to date, the annual production
of each aluminum manufacturing process was estimated, and the total
GHG emission reduction in the Indian aluminum industry was
calculated using the representative furnaces of each manufacturing
process in section 4.3 and their emission reduction effects. The
annual CO2 emission reductions in each manufacturing process are
obtained using the following equation, and the sum total is the
total GHG emission reduction in the Indian aluminum industry.
Annual CO2 emission reduction in manufacturing process = Annual CO2
reduction/unit x Efficiency of high-performance industrial furnace
x (Annual production of manufacturing process / Annual production
per unit)
As a result of this calculation, it was found that a total
reduction of 214,500 tons/year is possible in
the Indian aluminum industry. As a breakdown, the soaking pit in
the virgin metal ingot process and the annealing furnaces in the
wire & bar, sheet, and foil processes accounted for large
percentages. When the emission reduction of 5.6% in accordance with
the reference scenario is subtracted from this result, the credit
framework of this project/activity is 187,200 tons/year (Table
4).
Table 4 GHG emission reduction under scenario of implementation of
project/activity
Manufacturing process
after deduction of
5.6% (10,000 t/y)
Virgin metal ingot
155 Melting and holding furnace 100% Application possible. 2.28
0.43 1.85
155 Soaking pit 100% Conversion of electric heating
to RT high-performance industrial furnace.
7.85 0.77 7.08
Secondary (remelt) ingot 33 Melting furnace 50% Dust treatment is
necessary
for scrap raw material. 1.69 0.32 1.37
Wire & bar Sheet Foil
112 Annealing furnace 100%
6.88 0.76 6.12
Extrusions 12 Melting furnace 100% Application possible. 1.29 0.20
1.09
25 Reheating furnace X 0% Heating temperature is low.
Furnace structure is too small.
Castings 20 Melting furnace 50% In many cases, scale is 1.0
t/charge or smaller. 1.46 0.25 1.21
Forgings 8
Reheating furnace X 0% Little merit, as temperature is
Reheating furnace X 0%
Total 21.45 2.73 18.72 2) GHG emission reductions under future
scenario
In addition to the rapid expansion of production seen in
manufacturing industries in India in recent
New Mechanism FS 2011 – Report
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years, large growth is also predicted in the future. Because the
GHG emission reductions realized by introduction of
high-performance industrial furnaces is proportional to production,
the GHG emission reduction by introduction of high-performance
industrial furnaces in the future was forecast based on predicted
production in 2020. It should be noted that predicted production in
2020 may also change, depending on economic changes, etc.
Therefore, this forecast of GHG emission reductions should be
considered a reference value.
Table 5 Forecast of GHG emission reduction in 2020
Production process Annual production (10,000 t/y) CO2 emission
reduction
(credit framework after deduction of 5.6%) (10,000 t/y)
Present 2020 (max) Present 2020 (max) Virgin metal ingot 155 1,000
8.93 57.6
Secondary (remelt) ingot 33 180 1.37 7.5 Wire & bar
Sheets Foil
112 618 6.12 33.8
Extrusions 25 48 1.09 2.1 Castings 20 72 1.21 4.4 Forgings 8
30
Total 18.72 105.4 (5) Measurement, reporting and verification (MRV)
system for GHG reductions:
An international standard for energy efficiency of industrial
furnaces is now under review in ISO/TC244 (Industrial furnaces and
associated processing equipment), as proposed by Japan (Japan
Industrial Furnace Manufacturers Association). As an MRV system
which can be adopted as an international MRV guideline, it is
desirable to follow the thinking of this international standard.
Due to the timing of the present study, it is not possible to
include an international standard which has been finalized as an
ISO standard for the energy efficiency of industrial furnaces. The
MRV system is presented here using the Working Draft at the present
FDIS stage. As attachments, two ISO/WDs are included separately:
ISO/WD 13579-3: Industrial furnaces and associated processing
equipment – Method of energy balance and efficiency – Part 3: Batch
type aluminum melting furnace, and ISO/WD 13579-1: Industrial
furnaces and associated processing equipment – Method of energy
balance and efficiency – Part 1 General methodology, which contains
many points mentioned as references in the text of ISO/WD 13579-3.
In the following, the MRV system is described using the items in
ISO/WD 13579-3. This MRV system is also applied to equipment other
than batch-type nonferrous melting furnaces in the Indian aluminum
industry. Furthermore, because ISO/WD 13579-1 and ISO/WD 13579-3
have not been finalized as ISO standards yet, changes in some
details are possible in the future. However, as these drafts are
now in the voting phase based on discussion thereof, it is thought
that a consensus has been reached on the main points. In Japan,
methods of calculating energy savings, etc. for industrial furnaces
have generally been established and have an extensive record of
actual use. Because the above-mentioned international standards
were proposed based on those methods, it is considered possible to
apply this methodology to industrial furnace users in India without
problems.
1) Measurement Measurements shall be performed in accordance with
ISO/WD 13579-3, Chapter 5: Measurement
New Mechanism FS 2011 – Report
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method. However, the techniques of those methods are the ideal
form. In actuality, there are many cases where it is difficult to
satisfy all conditions. Therefore, a method by which MRV is
possible without satisfying all conditions is presented. In cases
where it is not possible to measure all items, the “essential
items” for measurements are 5.1.1 Volume, 5.3.1 Combustion air
volume, 5.5.1 Combustion exhaust gas temperature, 5.5.2 Combustion
exhaust gas volume, and 5.6.1 Fixture / Mass. These are monitoring
items that are measured in site observation for establishment of
the specifications of high-performance industrial furnaces by
Japanese industrial furnace makers. Energy saving and other effects
which are calculated using these items are also used in judgments
related to business transactions. Accordingly, MRV based on these
simplified essential items forms the basis for implementation of
the project/activity. Measurement of these essential items by local
industrial furnace users is also possible (Table 6).
Table 6 Measurement related items in ISO/WD 13579-3 – Symbols and
content of items
No. Contents
5.1 5.1.1 5.1.2 5.1.3 5.2 5.2.1 5.2.2 5.3 5.3.1 5.3.2 5.3.3 5.4
5.4.1 5.4.2 5.5 5.5.1 5.5.2 5.5.3 5.6 5.6.1 5.6.2 5.6.3 5.7 5.7.1
5.7.2 5.8 5.9 5.10 5.10.1 5.10.2 5.10.3 5.11
Fuel Volume Sampling, test, analysis and heat value Pressure and
temperature Atomization agent Volume Pressure and temperature
Combustion air and leak-in air Combustion air volume Combustion air
pressure and temperature Leak-in air volume Controlled atmosphere
gas Volume Temperature Combustion exhaust gas Temperature Volume
Method of combustion exhaust gas analysis Fixture Products and
jigs/fixtures for product handling Mass Temperature Scale loss
Temperature of furnace surface Furnace wall Section area of parts
through furnace wall Furnace inner wall temperature Furnace inner
pressure Cooling water Temperature Volume Cooling water pressure
Pneumatic utilities
Essential item Essential item Essential item Essential item
Essential item
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No. Contents
5.11.1 5.11.2 5.12 5.12.1 5.12.2 5.13 5.13.1 5.13.2 5.13.3 5.13.4
5.13.5 5.13.6 5.13.7 5.13.8 5.13.9
Pressure Volume Hydraulic utilities Pressure Volume Electrical
energy Electrical heat sources Fans/blowers RC fans Product
handling equipment and motors Cooling water pumps Air compressors
Hydraulic pumps Auxiliary equipment Control units
2) Reporting
Reporting shall be performed in accordance with ISO/WD 13579-3,
Chapter 6: Calculation. As the thinking on reporting based on the
essential items in the above-mentioned Measurement, the energy
saving rate after conversion to a high-performance industrial
furnace is calculated based on measurements of the combustion
exhaust gas. The reduction of fuel consumption is then obtained by
multiplying the result by the fuel volume, and the GHG emissions
reduction is also obtained (Table 7).
Table 7 Reporting related items in ISO/WD 13579-3 – Symbols and
content of items No. Contents
6.1 6.1.1 6.1.2 6.1.3 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.3 6.3.1
6.3.2
Energy input Heating and combustion energy Sensible heat of
supplied cooling water Energy supplied for machinery and electrical
equipment Consumed energy Consumed heat energy concerning heating
and combustion Heat energy losses emitted from furnace Sensible
heat of discharged cooling water Energy consumed by machinery and
electrical equipment Energy loss by fluid Circulated energy
Sensible heat of combustion air Sensible heat of fuel
3) Verification
Verification is performed in accordance with the table in ISO/WD
13579-3, Chapter 7: Energy supplied for machineries and electrical
equipment” (Table 8).
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Table 8 Verification related items in ISO/WD 13579-3 – Symbols and
content of items No. Contents
7.1 7.2 7.2.1 7.2.2
(6) Securing environmental integrity:
This technology realizes high performance in existing industrial
furnaces or furnaces scheduled for installation. Environmental
loads (CO2, energy consumption, NOx, etc.) are reduced, and no new
environmental loads are imposed. Accordingly, environmental
integrity is secured. In India, businesses are legally required to
make environmental impact assessments, which have different levels
of requirements depending on the investment cost of the project.
After confirmation of the environmental impact assessment, state
governments issue operating permits. Some plants in India have
already applied regenerative burners to actual operating furnaces.
However, older-generation technologies did not consider NOx
emissions. Although India does not currently regulate NOx, the
impact on air pollution is a concern, for example, as a cause of
photochemical smog and acid, etc. Japanese high-performance
industrial furnaces developed by NEDO can be expected to reduce NOx
compare to conventional furnaces with low NOx combustion, and thus
will guarantee a positive effect on the environment.
(7) Other indirect impacts:
No other social, cultural, and economic impacts, including
environmental impacts, associated with the energy savings achieved
by introduction of industrial furnaces or equipment (regenerative
burners, etc.) were foreseen from the beginning of the study, and
no such effects are considered likely at the present stage, when 3
local surveys have been completed.
(8) Comments by stakeholders:
Comments on the new mechanism for introduction of high-performance
industrial furnaces were obtained from government agencies involved
in energy-related policy and groups which may possibly participate
in new schemes such as the new mechanism (Table 9). As no concrete
progress on the scheme of the new mechanism was apparent when the
local surveys were carried out or at the end of COP17, many
comments mentioned effective introduction of energy saving
technologies.
Table 9 Comments by stakeholders
Type Organization Comment
No subsidy scheme for energy efficiency exists. For this reason,
energy efficiency measures must be economically sustainable. From
this viewpoint, expensive energy saving technologies are not
attractive.
However, because the necessity of energy conservation policies for
downstream plants is understood, attention will be given to
introduction as a separate program in the future.
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up
TERI For high-performance industrial furnaces, a method of
introduction with financial assistance from the Japanese government
and building trust by demonstrations in the industry is desirable.
Aluminum manufacturers may invest in this technology after
confirming its performance and energy saving effects. In any case,
dissemination within a short period of time is considered
difficult.
FICCI In introduction of high-performance industrial furnaces in
India, FICCI proposes to be in charge as an Indian consultant;
FICCI is positive toward introduction of high-performance
industrial furnaces and believes it is possible to have a
cooperative relationship in the future.
Regarding bilateral credits, this is still in the conceptual stage
and cannot be compared with CDM, which is an established scheme. It
should also be noted that FICCI performed consulting for CDM
development in 4 projects (biomass, hydro, solar).
PCRA The objects are limited when revamping cost for energy saving
becomes too expensive. Therefore, PCRA feels that promotion of
high-performance industrial furnaces under ESCO schemes may be more
realistic, since many companies in India carry out ESCO projects.
In this scheme, a mutual division not only of profits, but also of
the bilateral offset credit mechanism is desirable.
(9) Project/activity implementation system: 1) Large-scale plants
(Fig. 3)
Large-scale plants have large furnaces as the object of
installation, and a direct response by the industrial furnace maker
is appropriate for contact on the Japanese side. On the other hand,
in India, “virtually all large companies implement energy
conservation measures by working with some type of consultant;
therefore, it is desirable to approach a consulting company when
targeting a major company.” Based on this situation, aluminum
companies should be approached through a local consulting company
when considering industrial furnace projects. Regarding monitoring,
measurements of the essential items mentioned in 4.8(1) can be
performed by the local industrial furnace user. However, these
measurements can also be performed by the Japanese industrial
furnace maker during site observation to decide the specifications
of high-performance industrial furnaces.
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2) Small- and medium-sized plants (Fig. 4)
Due to the large number and comparatively small scale of small- and
medium-sized plants, it is more efficient to establish collective
contacts for industrial furnace makers and industrial furnace
users, respectively. As the Japanese contact, a nonprofit
organization (NPO) is perhaps appropriate. As the Indian contact,
we obtained a feeling that “when adopting high-performance
industrial furnaces in India, there is an idea that Indian contacts
will take charge of consultancy in the future; there is positive
feeling toward the introduction of high-performance industrial
furnaces and a possibility of a cooperative relationship in the
future” and “active exchanges are being conducted with Japanese
energy conservation-related organizations, beginning with the
Energy Conservation Center Japan (ECCJ).” Based on these comments,
we think that placing an Indian NPO such as PCRA in charge of a
consultant is promising. In monitoring, measurements of the
essential items in 4.8(1) can be performed by the local industrial
furnace user, and can also be performed by the Japanese industrial
furnace maker during site observation to decide the specifications
of high-performance industrial furnaces.
India Japan
Audit
18
Figure 4 Project/activity implementation system (case of small- and
medium-scale plants)
(10) Financial planning:
The following cases are assumed in this project/activity (Table
10).
Table 10 Financial planning
Equipment introduced Capacity Fuel
48 t/ch-unit Gas 57.0% 78,800 875 5.0 6,608
2 Melting furnace (secondary metal)
5 t/ch-unit
28 t/ch-unit Gas 51.0% 27,600 376 5.0 3,008
*As the unit price of emission permits, 8 euros/ton is used.
According to interviews with local companies and the Indian
Government, the payback period is as follows (Table 11).
India Japan
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Table 11 Payback period according to interviews with local
companies and
Indian Government Class Company Payback period Remarks
Virgin metal NALCO
No particular benchmarks, etc. for equipment investment.
HINDALCO 5 years or less Do not particularly set the payback period
as a benchmark.
Secondary metal
NAMO Alloys Most important consideration in capital investments is
cost.
Castings RICO AUTO <2 years 3-5 years is excessively long.
Endurance Technologies
Within 3 years For new melting furnace: Within 3 years. For simple
exchange of burners: Within 1 year.
Forgings Vanaz Engineers 2-3 years
Intend to implement an equipment expansion plan in 2-3 years.
Bharat Forge Extrusions Superfine Metals 2-3 years Planning to
expand business 2-3 years from now.
NPOs FICCI Within 3 years As a general business case. PCRA Within 3
years General standard for capital investment in India.
The actual amount of investment and financial plan are still
undecided. However, there are methods that combine self-financing
and bank loans. For loans, borrowing from a Japanese bank is also
assumed, depending on the case.
(11) Measures to promote introduction of Japanese technology: 1)
Efforts to improve recognition (visibility) of Japanese
technology
Because recognition of the high-performance industrial furnace,
which is a Japanese-manufactured technology, is low in India,
efforts to increase the visibility of this technology are
necessary. Increasing the familiarity of the Indian aluminum
industry with the high-performance industrial furnace technology to
a certain level will form the basis for introduction/dissemination
of this technology in the host country. Specific measures include
PR on high-performance industrial furnaces at exhibitions, trade
fairs, etc., approaches to academic societies in India, and similar
efforts.
2) Model projects Model projects are an effective means of
accelerating the introduction/dissemination of a technology with
little or no actual record of deliveries. Considering the timing of
implementation of the new mechanism, early implementation of model
projects is desirable. Support by the government, etc. is required.
Model projects should be carried out at both PAT object plants and
non-PAT object plants. In combination with this, demonstrations
with the cooperation of the plants carrying out the model projects
are effective.
3) Cost reduction/shortening of delivery period by standardization
An international standard for industrial furnaces is currently
under examination by ISO/TC244. However, separately from this,
accumulation of knowledge regarding the common specifications in
each manufacturing process in the Indian aluminum industry and
standardization of high-performance industrial furnaces for the
Indian aluminum industry will contribute to reducing costs and
shortening the delivery period for this technology.
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Although standardization requires more time than other measures, it
will contribute to the competitiveness of all Japanese industrial
furnace makers in the host country market.
4) Domestic PR in Japan In parallel with promotion measures in the
host country, development of domestic PR in Japan to Japanese
manufacturers with operations in India will accelerate
decision-making by industrial furnace users. However, there is a
view in Japan that agreement on the new mechanism is not firm, and
differences in the introduction promotion effect are foreseen,
depending on the status of agreement on the system.
(12) Future outlook and issues: 1) Outlook for timing of start of
project/activity operation
When we explained the high-performance industrial furnace
technology and the new mechanism during the local study and asked
about impressions of the project, etc., we received good feelings
from many companies and groups. On the other hand, when we
requested detailed data on the object furnaces for energy
calculations at model plants, many plants did not provide adequate
data for detailed heat calculations. Although we recognized a
certain degree of interest in high-performance industrial furnaces,
it will be necessary to pass through several stages before the
start of actual project/activity operation. Accordingly, the
outlook for the timing of starting project/activity operation is
unclear.
2) Issue: Shortening period until start of project operation
Several barriers must be cleared before delivery, including the
desire on the Indian side for a shorter payback period than in
Japan, among others. However, as a total judgment of the study
results up to now, if seen from the long-term perspective, it is
possible to introduce Japanese-made high-performance industrial
furnaces in the Indian aluminum industry. However, as mentioned
previously, no outlook for the timing of the start of
project/activity operation has been established, and this is an
impediment to the new mechanism, which assumes that a target
deadline will be set. Precisely because there is no actual record
of deliveries to the Indian aluminum industry, shortening the
period until the start of project operation, including the time
required to eliminate uncertainties, is demanded.
3) Measure: Support by government, etc. If efforts to solve the
above-mentioned problem are limited to the private-sector level,
the results are also expected to be limited. Furthermore, at the
conclusion of COP17 in December 2011, the new mechanism was still
in the study stage, and it is considered that the debate on the
division of roles of government and the private sector will develop
in the future. Based on these points, the importance of government
support is recognized anew, and implementation of that support by
diverse methods is expected.
4) Precondition: Promotion of agreement on new mechanism The
present study is preconditioned on agreement regarding the new
mechanism. However, it is also necessary to consider the risk that
the scheme itself will not be materialized, or its implementation
will be delayed. Initially, when carrying out this study, progress
toward agreement on the new mechanism was expected at COP17.
However, the status of the agreement became more uncertain than was
originally anticipated; for example, no significant progress on the
new mechanism was achieved at COP17, and there were also objections
regarding compliance with the Kyoto Mechanism. Thus, progress
toward agreement on the new mechanism is a key element for
realizing the new mechanism for introduction of high-performance
industrial furnaces in the Indian aluminum industry.
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5. Results of Study on Co-Benefits 1) Cost of environmental
externalities
Attempts to assess environmental externalities were made in Japan
against the backdrop of frequent pollution suits in the 1970s and
the establishment of environmental policy and environmental laws in
response to those problems. More recently, in 2003, a Japanese
version of LIME (Life-cycle Impact assessment Method based on
Endpoint modeling) was published in collaboration by the National
Institute of Advanced Industrial Science and Technology (AIST) and
the national government’s LCA project. For the monetary value used
in calculations of an integrated index (Eco-Index), the monetary
value of damage is calculated by WTP (Willingness to Pay) in order
to avoid damage of environmental impacts (Table 12).
Table 12 Integrated index by monetary conversion used in LIME
Emissions substance Conversion factor (¥/kg) CO2 1.74 NOx
141.22
From the above, it is possible to evaluate the cost of
environmental externalities by reduction of CO2 and NOx as
co-benefit effects in case of dissemination of high-performance
industrial furnaces in the Indian aluminum industry.
2) Calculation of NOx generation In addition to NOx originating
from the nitrogen component in fuels, NOx is also formed by
nitrogen in the air. Therefore, calculations of the amount of NOx
generation are complicated. Calculations also give various values,
depending on the type of fuel, combustion method, and treatment
temperature. Although it is difficult to quantify the NOx reduction
by introduction of high-performance industrial furnaces, an
emission reduction of 30% or more has been confirmed in cases where
high-performance industrial furnaces were introduced in
Japan.
6. Results of Study on Contribution to Sustainable Development in
the Host Country