CDM Potential of Electric Power Sector and Energy Intensive Industry in China

7/28/2019 CDM Potential of Electric Power Sector and Energy Intensive Industry in China

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Keio University/Tsingua University

3E Joint Pro ect 1999-2003

1

CDM Potential of CDM Potential of Electric Power Sector andElectric Power Sector and

EnergyEnergy--intensive industriesintensive industriesin Chinain China

Outcome of 5-Year Joint Study

of Keio University/Tsinghua University

Sponsored by NEDO (New Energy andIndustrial Technology Development

Organization) Japan



Keio University/Tsingua University 2

Members of Joint Research Team

• Keio UniversityMitsutsune YAMAGUCHI, Professor, Faculty of Economics

Osamu KAWAGUCHI, Professor, Faculty of Science and Technology

Minoru FUJII, Senior Technical Advisor, Hitachi Engineering Co., Ltd.

Yasuhiro KONNO, Senior Technical Advisor, Hitachi Engineering Co., Ltd.

Kuniyuki NISHIMURA, Research Director, Mitsubishi Research Institute, Inc.Shuta MANO, Staff Researcher, Mitsubishi Research Institute, Inc.

• Tsinghua UniversityLu Yingyun, Professor, 3E Research Institute

Liu Deshun, Professor, Institute of Nuclear Energy Technology

Ma Yuqing, Professor, 3E Research Institute

Zhao Yong, Associate Professor, 3E Research Institute

Zhou Sheng, Lecturer, 3E Research Institute

Tong Qing, Assistant Professor, 3E Research Institute

• Members of the 3E CDM Committee in Japan

• Various staffs in Electric Power Companies in China




Purpose of the study

• Contribute sustainable development of

China through promoting CDM activities

• Establish a methodology of estimating

CO2 emission reduction potential

• Provide reliable figures of emissionreduction potentials and costs of CDM inChina to prospective investors worldwide


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Characteristics of our study

• Thorough bottom-up approach

• Technology-based• Based on the actual data (especially in electricpower plant cases)

• Intense cooperation of Keio-TsinghuaUniversities as well as Academia, Industry andGovernments

• Best mix of climate and technology experts,mechanical engineers, research institute,business society of both countries



Targeted sectors and reason

• Targeted sectors

Power GenerationIron & Steel

Paper & Pulp

Cement

Oil Refinery and Chemicals

• ReasonMajor CO2 emitters



Process of analysis

Study and select CDM model plant and technologyStudy and select CDM model plant and technology

Estimate CO2 reduction of model plantEstimate CO2 reduction of model plant

Estimate CO2 reduction potential in ChinaEstimate CO2 reduction potential in China

Calculate CO2 reduction costsCalculate CO2 reduction costs

Estimate CO2 reduction potential in Chinacorresponding to various costEstimate CO2 reduction potential in Chinacorresponding to various cost

Calculate Baseline emissions (existing emissions)Calculate Baseline emissions (existing emissions)



CDM potential in electric power

plants（Keio & Tsinghua U.）• Collection of basic data of all power plants in

North China (Tsinghua University and power plants in North China)

• Classification of power plantsGroup 1：50 MW units Scrap & Build Option

Group 2：100，200 MW units ModificationGroup 3：300 MW units Fuel switching

The above 3 groups account for 75% of total capacity in North China

• Selection of model units/technologies, collectionof detailed data, thereafter implementation of site survey

• Price of fuel (gas price is about 8 times higher than coal）



Estimation of CO2 reductions

• Calculate baseline emissions

“Existing actual emissions” are used as baseline

• Estimate CO2 emission reductions of

model units by applying state-of-the-artJapanese technologies (with someexception)

• Apply model units’ reduction to all others

units




Summary of CO2 emission

reduction potential (Power Plants)

73,42945,5509,0047,18011,695

Total300MWFuel switchingfrom coal to

natural gas

200MWRetrofit

100MWRetrofit

50 MWScrap &Build(50MW

to 200MW)

Unit 1000 t/y




Other energy intensive industries

(Iron & steel)

Blast furnaces exceeding 1000M3, but excludes plants

already installed them

Top PressureRecovery Turbine

(TRT)

Plant capacity bigger than 1 Mtof Pig Iron, but excludes plantsalready installed them

Coke Dryquenching

(CDQ)

Targeted plantsTechnologiesJapanese state-of-the-arttechnology






Comparison of CDM reduction

potential by industry

Paper industry ：Reduction potential is 394∼ 1172 thousand ton-CO2. 783 thousand ton-CO2 showedabove is average.

27879

5744

783

13275

8625

45550

0 10000 20000 30000 40000 50000 60000 70000 80000

Pow er Plant

Steel Industry

Paper Industry

C em ent Industry

O il Refinery andC hem ical Industry

Reduction P otential (thousand ton-C O 2 /year)

total73429

300M W

C i f CDM d ti




11695

7180

9004

45550

4764

980

783

4807

357

1892

4260

1959

6707

938

729

251

0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000

50M W Scrap & Build

100M W M odification


300M W Fuel switching

C DQ

TRT

Paper Industry

Replace of sm all vertical kiln

Replace of wet-process kiln with SP

W aste heat pow er generation

Utilize of com bustible waste as fuel

Utilize of steel slag for cem ent m aterial

Residue gasification at oil refineries

Utilize of exhaust gas at ethylene plants

IG C C at chem ical fertilizer plants

Ion-exchange m em brane process at soda plants

Comparison of CDM reduction

potential by technologyReduction Potential (thousand ton-C O 2 /year)

PowerPlant

Steel Industry

C em ent

Industry

O il Refineryand

C hem ical

Industrｙ




Cost estimation methodology

( )∑= +

−−n

i

i

iii

r

MB EBSB

1 1

)(−

( )0

1 1

)( I

r

MC EC SC n

i

i

iii −+

−−∑=

(Baseline emission) (Emission after CDM project)

0

1 )1(

)( I

r

EB EC n

i

i

ii ++

−∑=

--- (Numerator means saved fuel)

∑

∑

=

=

++

−

n

i

i

n

i

i

ii

Y

I r

EB EC

1

1

0)1(

)(

(Denominator means CO2 reduction in year i)

=

SB i : revenue, EB

i : fuel cost, MB

i : maintenance cost of Baseline case

SC i : revenue, EC i : fuel cost , MC i : maintenance cost of CDM caseI 0 : initial investment cost of the project

(Carbon reduction cost per ton)




Reduction potential and cost (1)

73,429Total

41.461.445,550300 MWFuel switching

12.728.39,004200 MW

Modification

8.019.47,180100 MWRetrofit

2.58.311,69550 MWScrap & Build

Cost, $/t - CO2

14 year crediting period

Cost,$/t - CO2

7 year

crediting period

ReductionPotential1,000t- CO2/y

Power Plant





5,744Total

-15.60.5980TRT

-15.31.64,764CDQ

Cost, $/t - CO2

14 year

crediting period

Cost,$/t - CO2

7 year

crediting period


Iron & Steel





0.9121.1394 - 1,172Replacementof main

motors etc.

Cost, $/t - CO2


Cost,$/t - CO2

7 year

crediting period


Paper &Pulp





-3.1-2.91,959Utilize of steel slag

for cement material

10.225.04,260Utilize of combustible waste

as fuel

-5.28.91,892Waste heat power generation

26.255.9357Replace of wet-process kiln with

Suspension Pre-heater

21.445.04,807Replace of small

vertical kiln withfluidized bed kiln

Cost,$/t - CO

2


Cost,$/t - CO2

7 year

crediting period


Cement






7.524.7251Clor-alkali Replacementof diaphragm process

with ion-exchangemembrane process

-5.8-4.7729Chemical fertilizer

(Coal gasificationcombined power generation)

-33.5-19.8938Ethylene (Gas turbineinstallation and

utilization of exhaustgas for crackingfurnace)

-23.3-20.46,707Oil refinery(Gasification of oil

residue and power generation)

Cost, $/t

14 year creditingperiod

Cost, $/t

7 year creditingperiod

Reduction

Potential1,000 CO2 t/y

Oil refinery,

Chemicals

Marginal Cost Curve of




Marginal Cost Curve of

CDM in China

-40-30

-20

-10

010

20

30

4050

60

70

0 20 40 60 80 100 120

C O 2 Em ission Reduction Potential (m illion ton-C O 2 /year）

R

e d u c t i o n

C

o s t

( U S

$ / t o n -

C

O

2 )

crediting period: 7years crediting period: 14years

Reduction Potential




1959

6707

938

729

4764

980

11695

1892

7180

9004

45550

7834807

357

4260

251

0 5000 10000 15000 20000 25000 30000 35000 40000 45000 5000

50M W Scrap & Build100M W M odification


300M W Fuel switching

C DQ

TRT

Paper IndustryReplace of sm all vertical kiln

Replace of wet-process kiln with SP

W aste heat power generation

Utilize of com bustible waste as fuel

Utilize of steel slag for cem ent m aterial

Residue gasification at oil refineries

Utilize of exhaust gas at ethylene plants

IG C C at chem ical fertilizer plants

Ion-exchange m em brane process at soda plants

$0 $4.5 $9 $18 All Potential

Reduction Potential

corresponding to credit prices

PowerPlant

Steel Industry

C em entIndustry

O il Refineryand

C hem icalIndustrｙ

（19.4）（8.3）

（28.3）

（1.6）

（55.9）

（0.5）

（45.0）

（8.9）

（25.0）

（-20.4）

（-19.8）

（-4.7）

（24.7）

（61.4）

（-2.9）

C O 2 Reduction Potential (thousand ton-C O 2 /year)

（21.1）

T t ti C l i




Tentative Conclusion

• Potential CO2 emission reduction in five major sectors isaround 100 Mt (Physical potential)

• Among them, power generation sector is the largest

(especially at 300 MW units)• When considering cost, picture changes drastically

• Very few commercially viable projects exist (at zero cost,

total reduction will be only 10 Mt, at $4.5, still 16 Mt evenunder our baseline emission figures)

• Fuel switching projects in power sector will not be

feasible due to high cost of natural gas• Public funding is essential for promotion of CDM projects

in China




Further works

• Elaborate baseline emissions in view of

discussions at the Executive Board• Revisiting selection of model plants

• Improve data quality (other than power plants)

• Compare with other top down models

• Take into consideration of transaction

costs• Explore applicability of our methodology to

other developing countries

Documents

CDM Potential of Electric Power Sector and Energy Intensive Industry in China