Workshop 3 Energy Efficiency CDM-Projects in China Case Study II Energy efficiency in the steel...

Workshop 3

Energy Efficiency CDM-Projects in China

Case Study II

Energy efficiency in the steel industry

6th December 2006

Simone Ullrich, Fichtner

Beijing, China

€

CO2

€CO2

€

2 Simone Ullrich Tel. +49 711 / 8995 – 327 e-mail: [email protected] www.co2-info.com

Content

Fichtner & steel sector references 1

Overview of steel sector in China & international context2

Regulations in the steel sector in China

Potential CDM projects & carbon benefits

4

3


Fichtner & steel sector references1


Fichtner worldwide

Germany’s largest independent engineering and consultancy company

Founded in 1922 and family owned since then

• Subsidiaries and affiliates, branches and project offices in more than 50 countries

• Project experience in some 160 countries

Figures 2005Head office (Stuttgart)Worldwide

SalesEUR 60 Mio.EUR 95 Mio.

Employeesca. 330ca. 1000

CDM and JI project experience

branches / project offices

India

China

Ukraine

Brazil

MoldovaGeorgia

Bolivia

Bulgaria

Azerbaijan

Indonesia

Mongolia

Armenia

Paraguay Pakistan

Russia


Fichtner’s strengths

Technology know-how

Engineering and consulting

CDM, JI

• Energy• Environment• Water & Infrastructure• Consulting & IT

• Conceptual and decision-making phase

• Engineering and contract award

• Construction• Operation

• Implementation of DNA • Capacity building• Development of PIN, PDD,

Methodology, ERPA• Monitoring• Marketing of CERs, ERUs

CDM & JI services Engineering and consulting services

Fichtner's areas of activity


Our role in the CDM / JI Market

Industry, utilities CDM and JI projects

Fichtner

CO2

€

Plants obliged to take part in EU ETS

CO2 reduction obligation

Demand for certificates from CDM / JI projects

Potential for generation of tradable certificates

Demand for Financing Project partner CDM, JI know-how Buyers of certificates

Fichtner access on the demand side Fichtner access on the supply side

Key clients of Fichtner are obliged to participate at the EU ETS

Fichtner has subsidiaries and associates in each of the three EU countries with the highest CO2 deficits: Italy, Spain, Germany

Existing local structures in CDM, JI countries: branches, project offices, local partners

Experience with projects and authorities in 160 countries

Detailed CDM/JI know-how and experience

Carbon Market - supply sideCarbon Market - demand side


Steel making technology provider:Identification of CDM and JI potential in the Iron and Steel Industry

Developing an overview of the CDM and JI project procedures and the iron- and steel sector in Ukraine, China, India and Brazil and assessment to what extent the CDM respectively JI could be used as drivers in those countries to stimulate the development of CDM/JI projects in the iron and steel industry in those countries. Develop model how CDM / JI can be used within project

Brazil, China, India and Ukraine

Client/project Project description & Fichtner servicesCountry

Steel manufacturer: Reconstruction of a Mini Mill

Ukraine

A mini mill in Ukraine will be reconstructed. The major technical modifications will relate to the steel making furnace and casting technology. The project will result in less resource and energy consumption per tonne of casted steel and reduces GHG emissions. Fichtner develops the JI-PIN, JI-PDD, a new baseline and monitoring methodology, facilitates procedures to receive governmental approval and provides technical input during project validation and methodology approval stage.

Steel references - in context with climate change

German Utility:GHG emission reduction potential in industry sector

Among other sectors, the steel sector was investigated for its future potential to reduce GHG emissions. Several energy efficiency measures and technology modifications were assessed.

Germany


Other steel references

Client Project description / Fichtner servicesCountry

Steel pipes company Handan China Energy Audit

Malayawata Steel Bhd / Megasteel, Amsteel Mills, Anshin Casting, Anshin Steel Industries sdn. Bhd

Malaysia Several Energy Audits

Gia Sang Steel Making and Rolling Plant / Luu Xa rolling steel factory / Thainguyen steel general company (TISCO)

Vietnam Energy

German company working in steel sector Brazil

Project and plausibility appraisal for construction of a new Integrated Steel Plant. Strategy development for set up and conceptual design.

A complete list of steel sector and CDM/JI references can be madeavailable upon request.


Overview of steel sector in China & international context2


Steel production

0

50.000

100.000

150.000

200.000

250.000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

OHF

EAF

BOF

Source: IISI 2004 / 2006

in 1

000

t

• The world crude steel production in 2005 was 1,129.4 million metric tonnes (mmt)• China produced 349.4 mmt in 2005• China is ranked „top“ steel producing country in the world• IISI reports the strongest growth in steel use in China for 2006 (14% increase)


Fuel Consumption in the Iron and Steel Sector

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003Years

%

Heat

Electricity

Blast furnacegasCoke oven gas

Natural gas

Heavy Fuel oil

Diesel

Kerosin

LPG & Ethane

Coke

Anthracite

Coks Coal

Energy Consumption in the Iron and Steel Industry in China

0

200000

400000

600000

800000

1000000

1200000

2001 2002 2003J

Years

GW

h

Energy consumption

98 % of all steel works with annual production of crude steel <500 000 t Specific energy consumption for plants >1 Mio. tcs production/a lower than

country‘s average energy consumption (energy efficiency improves with size) Improvement of energy efficiency in the entire Chinese steel industry up to 46%

possible (compared with 29 BAT from Japan) Average energy consumption in Chinese steelworks: 31.4 GJ/tcs (Phylipsen, 2002) World best: 19 GJ/tcs (OECD/IEA, 2000)


Resource and energy consumption

Electricity consumption in steel production with EAF

0100200300400500600

1995 2000 2001 2002

Years

kWh

/t

In spite of the doubling of EAF steel production since 1995,the electricity consumption is declining. The same tendency is found for the share of coking coal used for pig iron production. These figures either assume an increasing energy efficiency in the sector or inconsistencies in available statistics (IISI and Yearbook 2004 on China Energy Statistic)

Share of coke for pig iron production

0

100

200

300

400

500

600

1995 2000 2001 2002

Years

kg/t


Potential CDM projects & carbon benefits3


CDM projects related to casting

Displacement of slab casters by CSP (Compact Strip Production)

Source: Fichtner 2006

• Energy efficiency improvement: approx. 3 GJ/tcs• 0.5 to 1.5 Mio. tCO2e/a emission reductions if implemented in all Chinese steel mills

that use slab caster today• Estimations applicable for use of natural gas• Carbon value: between 5 to 15 Mio € when 1 CER is valued 10 €• Highest CO2 reductions: Displacement slab caster cold charging by CSP

Displacement ingot caster by slab caster

• Energy efficiency improvement: approx. 0.24 GJ/t - 0.36 GJ/t• 0.3 to 5 Mio tCO2e/a emission reductions if implemented in all Chinese steel mills

that use ingot casters today• Estimations applicable for natural gas• Carbon value: between 3 to 50 Mio € when 1 CER is valued 10 €• Highest CO2 reductions: displacement ingot caster by slab caster, hot charging


air leakage losses

casing losses

Exhaust gas losses

Excessive temperature

Large temperature

gradient

inefficient combustion fuel losses

heat content of fuel

door losses

poor hearth loading

re-treatment of stock

poor scheduling and delays

excessive water cooling

stock losses

conveyor losses

CDM projects related to waste heat recovery

identify heat losses in steel making furnace


pre-heating combustion air,

within burner or remotely by using

external recuperator/regenerator

pre-heating furnace stock prior to

charging (stock recuperation)

use in drying processes

e.g. brick manufacture

hot water generationgeneration of low pressure

steam for process applications

fuel preheating, e.g. HFO

raise steam for

power generation

pre-heating furnace by

waste heat from other furnace

(furnace regeneration)

Identify options for using waste heat

scrap pre-heating


Other CDM energy efficiency / CO2 reduction measures

Component Potential regionsC/CO2 Reduction

Replacement of Open Hearth Furnace by oxygen converter

30-100 Mt C till 2010

States of former Soviet Union, Russia, China

Sources

IPCC, 2001

Replacement of Open Hearth Furnace by oxygen converter

< 5 MtStates of former Soviet Union, Russia, China

IEA/EET Working paper, Challenges in energy and environmental modelling, 2003

Continuos casting and thin slab casting

30-100 Mt till 2010

states that currently apply traditional ingot casters

IPCC, 2001

Increase recycling of scrap metal

200 - 350 Mt CO2/a

worldwideIEA/EET working paper, see above; Jiang et al, 1998

Direct coke blasting into blast furnace

350 Mt CO2/a

worldwideIEA/EET working paper, see above, Chiang et al, 1998

Increasing energy recovery from blast furnace gases

10 Mt CO2/a

worldwideIEA/EET working paper, see above

Replacement of coke ovens with wet coke cooling with coke ovens with dry coke cooling

65 Mt CO2/a


Replacement of inefficient mini blast furnace

50 - 100 Mt CO2/a



Existing Large-scale CDM methodologies for steel sector AM0038: „Methodology for improved electrical energy efficiency of an existing submerged electric arc furnace used for the production of SiMn“, as of 29 September 2006

applicable for: production of silikonmaganese in baseline and project case electricity is purchased from the grid the quality of SiMn produced is not affected by the project baseline data for last three years is available project does not result in increase in production capacity

in general: CO2 emission reduction

= expected fossil fuel savings multiplied by the specific fuel CO2 emission factor

+ expected power savings multiplied by the grid CO2 emission factor


Regulations in the steel sector in China4


Development policy of iron and steel sector until 2020 (20 July 2005)

Chapter 1: General objectives:

§3: further concentration of steel sector is aimed at (e.g. by adjusting the organisational structures, by consolidations, restructuring and extending of plants with special competitive advantage).

A decrease in steel producing enterprises is expected until 2010 by consolidation of bigger companies in 2010, the 10 biggest iron and steel producing groups may supply more than 50% of the national steel

production. In 2020 their supply may succeed 70 %

§5: For the purpose of sustainable development and recycling, environmental protection shall be improved. An appropriate use of resources and a reduction of energy consumption is aimed at. Measures includes in detail:

Use of waste heat and waste water to reduce emissions („zero emissions“) and recycling at steel producing plants

Power production from waste heat Steel producing companies with > 5 Mt of annual steel production shall make efforts to covering their own

power demand and to sell surplus power to the net.

IndexT.c.e.

2005Total energy consumption

Unit0,76

20100,73

20200,70

Energy consumption steel sectorNew water consumption

T.c.e. / t Stahl 0,70 0,685 0,64t <12 <8 <6


Further developing goals in the steel sector

Chapter 10:

No establishment of new Integrated steelworks

Steel production shall be restructured

The construction of separated steel rolling mills is not recommended

Possible extension of existing plants by mergers in areas with competitive advantages (water resources, raw material availability, transportation infrastructure for resource delivery)

New capacity shall replace old production capacities

No expansion of steel production in vulnerable areas (such as areas with scarce water resources as well as metropolitan areas)

Companies located in vulnerable areas are urged to reduce their steel production or shift it to meet the developing statutory requirements of nature and environmental protection.


Engineering

and contract

award

Construction

Operation

Conceptual

study and

decision-

making phase

CDM / JI project phases

Investigation of energy efficiency and emissions reduction

Conceptual studies Economic and technical analysis Feasibility study

Plant engineering Bid evaluation Contract award negotiations Contracts

Project steering (costs, timing) Site management and supervision

Commissioning

Process optimisation Maintenance planning Deployment optimisation

So what ???

Think about energy

efficiency improve-

ment options in your

steel plant asap.

Make use of the CDM !


FICHTNERFichtner GmbH & Co. KG Sarweystr. 3

70191 Stuttgart / Germany

www.fichtner.de

Simone Ullrich

CDM & JI Expert

Phone: +49 (0) 711 8995-327Fax: +49 (0)711 8995-459E-mail: [email protected]

CH4

N2O

SF6PFC

HFC

CO2

www.co2-info.com

Nino Turek

Business Development CDM / JI

Phone: +49 (0) 711 8995-746Fax: +49 (0)711 8995-459E-mail: [email protected]

Martin Hollnaicher

Director Business Development East Asia

Phone: +49 (0) 711 8995-575Fax:+49 (0)711 8995-459E-mail: [email protected]

Thank you for your

attention !


AnnexA


Classification of EE measures according to Capital Expenditure

EmphasisExamplesMeasures

• resetting controls• switch off when not

required• repair leaks• reschedule loads/usage

behaviour of people using existing installed technology at peak energy efficiency

No cost

• maintenance• meters• M&T• simple controls• insulation• training end users

a combination of investment in low cost technology and people involvement

Low cost

• heat recovery systems• combined heat and power• fuel conversion• energy management

systems

investment in high cost technology with some people involvement

High cost

Suitability for CDM

• Small project size• Difficult baseline• Difficult monitoring• No additionality not suitable

• Small project size• Difficult baseline• Difficult monitoring

low suitability

• Medium project size• Baseline & monitor.

manageable• Additionality ? can be suitable

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