Mitigation Analysis

Mitigation Options Assessment - Industrial Sector

Given the importance of steam generation and direct heat in the energy consumption and greenhouse gas (GHG) emissions from industrial sector, an analysis of several mitigation options for these energy uses was conducted.

Steam Generation

Mitigation options are aimed at increasing the average efficiency of boiler and the use of fuel with lower carbon contents. This study considers two mitigation options for boilers which are operating in branches (UIIC): 31- foods, beverages and tobacco 35- Chemicals and Coal and 37- Metallic Basic, which all together consume 82,4% of the energy used in steam generation. These options are: Boilers conversion from liquids fuels to natural gas and efficiency improvement of existing natural gas boilers through annual maintenance programs.

In the baseline scenario, only the incorporation of new natural gas burning boilers is considered due to the steam increase requirements in this sector for the 1990-2025 study period, which slightly increases the average efficiency of these equipments. Yearly energy growth rates of 3.1% for the steam generation useful energy in the Foods branch and 3.8% for the Chemical and Metallic Basic branches were assumed. The characteristics of the boilers were monitored in order to determine a representative equipment for each industrial branch per type of fuel, as specified in Table III.5.

OPCION 1: Boilers Conversion from Liquid Fuels to Natural Gas

This option basically deals with the substitution of the burner and the installation of pressure regulators and automatic valves, allowing the natural gas to reach the burner under the necessary technical conditions. Efficiency of the converted natural gas boiler reaches 85%. Implementation of this option is assumed to begin on year 2000 and finish by 2005, when all liquid fuel boilers would have been replaced. Table III.6 shows the investment and operation costs involved in the application of this mitigation option. Table III.7 summarizes energy savings, CO2 emissions reduction and the cost for the final user obtained with boilers conversion. Although the option involves costs through the modification of boilers, the final result provides economical benefits.

OPTION 2: Natural Gas Boilers Maintenance Program

Combustion adjustment is one of the measures that allows boiler efficiency to increase. This adjustment consists in obtaining a correct oxygen-fuel mixture in order to have a complete combustion, according to the type of burner used. In addition, maintenance program includes: elimination of steam leaks and sealing chamber oxygen,cleaning fireside boiler tube , proper refractors repairs, adjustment and proper burners cleaning , proper inspection of regulation, control and safety devices.

Implementation of this option is assumed to begin in 2000, initially on 20% of existing boilers, and will be progressively extended up to year 2004, when all the boilers would have been covered. This option will only be adopted in branches 31 and 35 where the gas natural boilers efficiency is low.

The operating and maintenance costs for each year as well as the new efficiencies of boilers as result of the mitigation measure are shown in Table III.8. Table III.9 shows results related to energy savings, C02 emissions reduction and the final user costs.

Direct heat

In base year, 1990, metallic basic industries (branch 37) registered a consumption of 41% of the total energy in the manufacture industry and 50% of direct heat consumption for these industries. The steel and aluminum industries consume almost the total energy for direct heat in branch 37, thus two mitigation options were formulated for these industries: Changes in iron mineral reduction and combustion efficiencies improvement in natural gas furnaces for foundry and lamination.

The baseline scenario considers a tendency behavior in the development of the steel and aluminum industries under the following assumptions: Energy demand for using direct heat will increase at an interannual rate of 4.2%, there will be no actions concerning relevant changes in processes , there will be some improvement in energy efficiencies due to the renewal and introduction of new equipment. Table III.10 shows the general characteristics of direct heat equipment, under assessment.

OPTION 3: Changes in Direct Reduction of Iron Ore

Table III.11 shows the characteristics of technology available in the Venezuelan steel industry. The "H&L" and "Midrex" technologies, are the most important regarding capacity and production; however when analyzing their natural gas specific consumptions per Ton of production a significant difference could be observed (4.86 BOE/Ton and 2.04 BOE/Ton); This difference is due to: first, the actual value of the "H&L" technology is more than double the theoretical value (2,1 /T BOE/Ton) and second, the "H&L" is the oldest reduction technology and did not achieve the full design production levels. Thus, CO2 emissions reduction could be obtained through energy efficiency improvement of the "H&L" technology or a conversion or substitution process to more efficient technologies. Furthermore, the Midrex technology could also be improved.

The basic assumptions for this mitigation options are:

.Efficiency improvement 2000- 2025 "H&L" from 43% to 73% "Midrex " maintained in 80% .Technology change 2005 First stage of the "H&L" to the"Midrex" 2010 Second stage of the "H&L" to the"Midrex" 2015 Improvement of the "Midrex" Technology .Investments required Year 1990 2000 2005 2010 2015 2025 M$ 130 30 200 255 280 0

Investment values are based on company estimates and initial investments in order to star-up technologies in this process; however, they are subject to review due to uncertainties. Table III.12 shows energy savings, C02 emissions reduction and the final user costs obtained for this option.

It is important to bear in mind that this analysis has been done considering saving of only natural gas used as fuel, which represents part of the potential of energy savings and reduction of emissions.If saving of process gas were included, the emissions reduction potential would be higher, and thus mitigation costs per tons of C02 might be considerably reduced.

OPTION 4: Efficiency Improvement in Natural Gas Furnaces

In this mitigation option, a typical furnace with its own characteristics was considered taking as a basis, reheating lamination furnaces of steel products and furnaces for aluminum alloys. The designed thermal efficiency of furnaces was found to be low.

Basic assumptions are:

. Energy efficiency increases from 42% to 70% (2000-2025) . Increase of yearly operation and maintenance costs of 20$/BOE in year 2000. . Investments of 400 thousand $ in year 2010.

Table III.13 shows energy savings, C02 emissions reduction and the final user costs.

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