Assistance measures for energy conservation promotion in iron and

steel industry in Japan

Ministry of Economy, Trade and Industry, Japan

November 20th , 2009

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○ “Kyoto Protocol” is the one that had been resolved under United Nations Framework Convention on Climate Change, in the 3rd Conference of Parties （COP3） held in December 1997. In February 2005, Kyoto Protocol came into effect and as for Japan, “6% reduction of Green House Gas (GHG)” was provided as a legally binding promise. After that, Government of Japan (GOJ) had settled on “Kyoto Protocol Target Achievement Plan” according to domestic law, “Law on Promotion of Global Warming Countermeasures”.

○ In such situation, among the segment of industry and energy conversion, Japan Business Federation (Nippon Keidanren) took the head and settled on “Environmental voluntary action plan” in 1997, and hung out the target that “Carbon-dioxide emissions in fiscal year 2010 be controlled to ±0% or less compared with fiscal year 1990”. In addition to the plan above, now, each business of joining or non-joining in the subsidiary of Nippon Keidanren, including the segment of “office” and “transportation”, have settled on “the GHG emission reduction plan”, and consequently, about 80% of the emission of industry and energy conversion sector, about 50% of that of all segment is to be covered in such plan.

○ To stick to the reduction promise of Kyoto Protocol, the targets of these voluntary action plan are to be achieved, and therefore, it would be vitally important for each business to promote the effort to control the amount of GHG emission with improving Energy consumption or Carbon-dioxide emissions unit requirement. As a standpoint of government, in order to improve “ transparency”, “reliability”, and “possibility of accomplishment “ of these voluntary action, GOJ regularly follows-up the performance of each sector in related council as evaluation and verification system toward the plan.

Kyoto Protocol Target Achievement Plan

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○ As for Japan‟s Iron and steel industry, it has settled on voluntary action plan as well. The target is “The energy consumption in steel making process in fiscal year 2010 is reduced by 10% compared with fiscal year 1990, on the assumption of crude steel production 100 million tons”.

○ For others, as part of the contribution to society, the target includes several measures such that “Million ton use of abandoned plastic in steel making process”, “Contribution to society by production or by-product”, and “International technical co-operation”. Furthermore, “Carbon dioxide Capture and Storage from blast furnace gas”, “Reduction technology of iron ore by reformed hydrogen of coke-oven gas”, Japan‟s iron and steel industry promotes the activities for groundbreaking technology development.

Voluntary action plan of Iron and steel industry

89.4

100.0

88.0

90.0

92.0

94.0

96.0

98.0

100.0

102.0

1990

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

▼10.6％

Energy Consumption in Iron and Steel industry Unit energy consumption

(Base point in fiscal year 1990 )

粗鋼 112 100 107 102110 111113 113 118122 100

2,274

2,458

2,3512,389

2,336

2,526 2,425

2,326

2,304

2,253

2,323

1,500

2,000

2,500

1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2010（年度）

(PJ)

前年度比2.9%増

▼4.0% ▼8.0▼10.8▼8.8▼7.9▼6.9▼7.5▼5.4 ▼2.7▼10％

Resource recycling

(plastic, tires and other waste materials)

Higher pct. of hard coal (PCI, coal

moisture control)

Higher energy use (value-added products,

environmental protection, etc.)

Continuous processing/Elimination of steps

(CC, CAPL, etc.)

1970s 1980s 1990s 2000s

Installation of large heat recovery systems (TRT, CDQ, etc.)

More heat recovery/more efficient equipment

More byproduct as recovery

No more petroleum

Revolutionary steelmaking technology(next-generation coke oven)

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○ Iron and steel industry has introduced an array of large-scale energy recovering system such as “Continuous casting equipment”, “Coke Dry Quenching” etc. since the oil crisis in the 70‟s. After the 90„s, the industry has attempted to introduce small-scale abandoned energy recovery system or efficiency improvement of energy consumption also to the equipment replacement.

○ According to the trial calculation by “Research Institute of Innovative Technology for the Earth (RITE)”, the domination of Japan is clearly in terms of the diffusion level of waste heat recovery equipment or privately owned electrical power facilities (CDQ, TRT), by-product gas (COG, LDG) recovery as well.

Current approach on energy conservation in iron and steel industry

International comparison of

equipment diffusion level (2000)

source：Research Institute of Innovative Technology for the Earth

○ Furthermore, as a national project, Japan has been promoting a technology development to reduce a iron ore by hydrogen as substitutes a part of coke. Along with the technology development concerning Carbon dioxide Capture and Storage from blast furnace gas, Japan aims to reduce about 30% of Carbon dioxide emission in steel making process.

Energy Conservation Time Line

0%

20%

40%

60%

80%

100%

Energ

y cons

erva

tion

equ

ipm

ent

dif

fusi

on for B

OF s

teel

(%)

Japan Korea EU (15) U.S. China India

Continuous casting Coke oven gas recovery Basic oxygen furnace

gas recovery

Blast furnace top pressure recovery power

generation(TRT)

Coke dry quenching

100 102

119 120 121 122 123 125 128 130

143

123112

0

40

80

120

160

Japa

n

Kor

ea

Ger

man

y

EU(1

5)

Fran

ce

EU(2

7) UK

China

India

Can

ada

US

Rus

sia

Wor

ld

5

International comparison of energy intensity in iron and steel industry

○ That the energy efficiency of Japan‟s Iron and steel industry is the highest level

in the world is acknowledged worldwide by IEA report etc.. In addition to the

voluntary action in the segment of industry and energy conversion mentioned

above, the legal systems that contribute to the rational use of energy in several

sector or the budget policy measures (following description) support the

improvement of energy consumption and technology transfer, I believe.

source：Research Institute of Innovative Technology for the Earth

Asia-Pacific Partnership on Clean Development and Climate (APP)‏○ Receiving the strong initiative of the United States, APP was started-up in 2005 as a

partnership of public-private sector. The participant country is America, Australia, Canada, China, India, Korea, and Japan.

○ APP set up “the Task Force” in eight field, and has been advancing several projects such as, “Sharing of findings concerning highly effective technology”, “Analysis of reduction potential”, “Development of methodology of target setting” and so on. Seven nations have materialized “the Sectoral approach” that Japan has insisted in UN‟s negotiation, and addressed a practical action that contributes to GHG emission reduction.

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Member countries have shared the best available technologies / best practices for environmental protection and energy saving.22 environmental tech.42 energy-saving tech.

After surveying the diffusion level of the technologies above, APP Steel Task Force calculated the emission reduction potential among member countries in case of full diffusion of 10 highly effective technologies.

Sent energy saving and environmental experts to six steel plants in member countries. Recommended improvement

methods and various detailed advices.

Each plant investigates the introduction of equipment particularly needed, based on specified technologies and improving methods.

Promoting technology diffusion and transfer further is vitally important.

Coke Dry Quenching

36.10① BFG Recovery

0 10 20 30 40

20.89④ CDQ

5.39⑥ CMC

36.09② COG Recovery

5.22⑧ Sinter Waste Heat Recovery

5.42⑤ TRT

3.74⑦ PCI

0.88⑨ Hot Stove Waste Heat Recovery

10.13③ BOF Gas Recovery

5.17⑩ BOF Gas Sensible Heat Recovery

36.10

0 10 20 30 40

36.09

Emission Reduction Potential (May 2009) Performance diagnosis for 3

steel plants in China and 3 plants in India in 2007 & 2008

129 M t-CO2/year

By 10 key technologies

Ministerial Meeting

<Vice Chair><Chair>

Cleaner

Fossil Energy

<Australia><China>

Renewable Energy

and Distributed

Generation

<Canada><Australia>

Power Generation

and Transmission

<USA><China>

Buildings and

Appliances

<S. Korea><USA>

Steel

<Japan><India>

Aluminum

<Australia><USA>

Coal mining

<USA><India>

Cement

<Japan><Canada>

Policy Implementation Committee(PIC)‏<USA>

(Objective) ○ “Law on the Rational Use of Energy” was enacted on purpose of addressing the

necessary measures to secure the effective use of fuel resource, corresponding to economical, social environment, concerning energy use of our country, and to advance overall the rational use of energy among factory, buildings, and machine apparatus,standing with the oil crisis in Japan in 1979.

(Scope)“Factory/workplace”“Transportation”“House/building”“Machine apparatus”

(Requirements)○ The law requests to make an rational use of energy to them with observing the criteria

that competent minister establishes in each field, and for many industries that own factory/workplace, the obligations below are imposed; “Election of energy manager”“Submit of mid/long-term plan”“Regular report of usage condition of energy”, etc.

○ If remarkably insufficient in compared with the above-mentioned criteria, the measures by competent minister such as “instruction”, “making public”, or “order (penal regulations)”, etc. is to be managed.

○ So far, it has been regulated that the scoped enterprise make an effort to improve it‟s energy consumption unit requirement for 1% or more a year on average in mid/long term (3-5year). And furthermore, for a part of type of sector, “Benchmarking Indicator” and “Level that should be aimed” was established in the Annex of “the criteria of factory etc.”, receiving the law revision in May, 2008.

Law on the Rational Use of Energy

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Sub-sector Benchmarking Indicator Target

Specialty steel company

using electric arc furnace

Below 0.36 kl/t (crude oil equivalent)

Sub-sector Benchmarking Indicator Target

Ordinary steel company

using electric arc furnace

Below 0.143 kl/t (crude oil equivalent)

Sub-sector Benchmarking Indicator Target

Steel company using blast

furnace

Below 0.531 kl/t

(crude oil equivalent)

＜ Iron and Steel ＞Steel company using blast furnace

Specialty steel company using electric arc furnace

Ordinary steel company using electric arc furnace

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Total Energy Consumption

Crude Steel Production

Total Energy Consumption of

Steel Production Process

Crude Steel Production

＋

Total Energy Consumption

after Rolling Process

Total Material of Steel Rolling

○ “Benchmarking Indicator” is the one able to evaluate quantitatively the degree of energy conservation of scoped sector, and “Level that should be aimed” is the one that only about 10-20 % of whole enterprise could fill from a present distribution data, under the viewpoint that the level among a upper layer is assumed to be high level.

(Reference) Introduction of bench mark in iron and steel industry

Total Energy Consumption of

Steel Production Process

Crude Steel Production＋

Total Energy Consumption

after Rolling Process

Product Shipped

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(Objective)○ “Law on Promotion of Global Warming Countermeasures” imposes the obligation of the

calculation of emission and the report to government on those who exhaust GHG more than constant amount greenhouse gas. In the system, government section totalize the data submitted and makes it public. This means that scoped enterprise calculate the amount of the exhaust from itself and it leads them to a voluntary action. Also, this system aims to create a promotion /situation for voluntary action of general people and enterprise by making it public or making it visible.

(Methods)○ The government section calculates the information of the emission amount according to “Enterprise”“Type of business”“Administrative divisions”, and makes it public.

○ To the demand from general people and enterprise, the government section offers the information of the amount of exhaust on each office etc. to those need it .

○ In the case that specific enterprises request, they can submit the information about the executed measures for GHG reduction as well. Not report, or report on false, penal regulations is applied for them.

(Requirements)○ Additionally, the law directs the government, concerning the equipment supplied for

business, to make public “a policy guidance” that imposes the scoped enterprise “a effort obligation” to “Select the ones which contributes to the GHG emission reduction”“Use it by a method of reducing the amount of exhaust” “Produce the ones which exhaust little GHG, when manufacturing the product for daily

life”, to all enterprises.

Law on Promotion of Global Warming Countermeasures

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 1 2 3 4 5 6 7 8 9 10 year

○ GOJ have provided a subsidy policy concerning the introduction of the equipment of enterprise, in order to promote the rational use of energy among the segments of industry, public welfare, and transportation. Concretely, for all types of business, the amount of money of 1/3 or 1/2 of occupancy expenses is assisted by the national expenditure when the enterprise introduces an equipment or techniques to be able to expect energy conservation.

○ Additionally, when they acquire the equipment specified by a notification, government provides “a special measures” that the enterprise can select the options that the “7% equivalent value of the acquisition price for equipment is deducted from payment amount of a tax of each enterprise” or “the immediate redemption of acquisition price for equipment at the first year”. GOJ aims at the investment promotion by each enterprise related to energy conservation from respect in enterprise‟s cash flow.

Promotion plan of energy conservation equipment introduction in Japan

Scope of subsidy

Subsidy

(1/3 or 1/2 of occupancy

expenses

The redemption of full amount (100%) becomes possible about the equipment specified by notification at the first year though only a constant ratio of the acquisition price of equipment can be counted in to the loss on corporate accounting at the first year at usual redemption.

Immediate redemptionUsual redemption

Tax system policySubsidy policy

GOJ ＮＥＤＯ*

•New Energy and Industrial

Technology Development Organization