Authors: M. Freislich, S. Kumar, S. Gale and P. Duncan
International Convention on Clean, Green and Sustainable Technologies in Iron and Steelmaking, Bhubaneshwar, India, July 15, 2009
Abstract
The iron and steel industry uses vast quantities of resources including iron ore, coal, water, energy in the form of electrical power and fuels, as well as chemical additives such as fluxes, alloys etc. Efforts are being made by the steel companies to reduce the resource consumptions, minimize emissions and thus, make their operations eco-friendly, sustainable and more cost effective. Amongst the numerous options being considered by the steel industry, a major thrust area is the reduction of Green-House Gas (GHG) emissions as well as energy consumption.
Legislators around the world are also responding to climate change by limiting the energy consumption and placing a price on the CO2 emissions. In India, the government has developed a framework for improving the GHG emissions and energy consumption in the steel industry through its national mission for enhanced energy efficiency, as stipulated in the National Action Plan for Climate Change (NAPCC). An increase in energy cost will not only negatively impact steel sector profitability, but could also limit the planned growth in the industry in India. The Indian government therefore has to enact a regulatory framework that simultaneously meets the Indian economy’s high growth demand and GHG targets. Indian legislators recognise this and are in the process of developing a framework to benchmark the steel industry, and to reduce its energy consumption through trading program in Energy Efficiency Certificates.
Top-down economic modelling has been adopted as a primary tool to assess and establish the expected economic impacts of enacting energy reduction legislation or pricing CO2. This methodology is appropriate for sectors such as electrical power, where international trade is limited, the supply chain is simple and production processes are largely standard. On the other hand, in the case of Energy Intense Trade Exposed Industry (EITEI) sectors, this economic modelling methodology does not adequately defining the impacts of CO2 pricing.
To overcome this impasse, Hatch designed a novel Greenhouse Gas Carbon Abatement Process (G-CAP) that incorporates a sound technical element to the modelling. In contrast to the previous models, the methodology is bottom-up, and is applied in much more detail to the specific operations of the iron and steel industry. The core of the G-CAP methodology relies heavily on the skilled technical specialists to benchmark the different operational units (for example, Coke Ovens, Sinter Plant, and Blast Furnace etc.) within a steel business. The gaps between the current operations, best-in-class practice and the theoretical limits, are carefully assessed, and the Abatement Activities (AA) that can bridge the gaps are then established on the basis of the identified gaps. The activities can range from behavioural changes right through to operational improvements as well as strategic changes, and capital projects.
The next stage involves application of risk-filtering to eliminate those activities that are unacceptable on legislative, occupational health and safety (OH&S) as well as technical grounds. The resulting AA list is then processed to develop order of magnitude operating and capital costs as well as the likely CO2 abatement. Finally, the NPV of each AA is determined and reported in dollars per tonne of CO2 abated. By ranking the activities from the highest return (most significant negative dollar cost) to the most costly, a Marginal Abatement Cost Curve (MACC) is formulated. The MACC is essentially a summary picture of how
much abatement is economically achievable for any particular energy saving (or CO2 price). With the help of the MACC, it is possible to identify the “transfer point”; the point at which it becomes cheaper to purchase the abatement permits rather than implement the abatement activities.
In addition to the assessment of the cost impacts, each AA is also programmed into a “project” schedule that identifies how long it would take to implement the activity. The schedule is then employed to create a “target pathway”, over a time period, for emissions reduction that is based on real projects within the business. Policy makers want to ensure that industry continues to support the national economies whilst reducing emissions in a sustainable manner. Doing this requires that the policies do not erode the competitive advantage of the industry in a nation, which in the case of India may constrain growth. The Hatch G-CAP offers the EITEI’s a robust techno-economical platform that helps demonstrate that.
The G-CAP has been successfully applied to generate the Marginal Abatement Cost Curves (MACC) at three steel plants namely, New Zealand Steel, BlueScope Steel and OneSteel. Currently, the G-CAP is being employed to develop the MACC for the Australian Steel Sector, as a whole. The paper describes the novel Hatch G-CAP that has been developed with the main objective of quantifying and qualifying the potential energy savings and CO2 abatement within the iron and steel industry.
