Workshop 3

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• 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

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Content
Fichtner steel sector references
1
Overview of steel sector in China international
context
2
Potential CDM projects carbon benefits
3
Regulations in the steel sector in China
4
3
Fichtner steel sector references
1
4
Fichtner worldwide
Founded in 1922 and family owned since then
Germanys largest independent engineering and
consultancy company
Figures 2005 Head office (Stuttgart) Worldwide
Sales EUR 60 Mio. EUR 95 Mio.
Employees ca. 330 ca. 1000

• Subsidiaries and affiliates, branches and project
  offices in more than 50 countries
• Project experience in some 160 countries

Russia
Georgia
Ukraine
Moldova
Mongolia
Azerbaijan
Armenia
China
Bulgaria
Indonesia
India
Bolivia
Brazil
Pakistan
Paraguay
branches / project offices
CDM and JI project experience
5
Fichtners strengths
CDM JI services
Engineering and consulting services

• 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

Fichtner's areas of activity

• Energy
• Environment
• Water Infrastructure
• Consulting IT

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Our role in the CDM / JI Market
Carbon Market - supply side
Carbon Market - demand side
Industry, utilities
CDM and JI projects

• 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
CO2
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

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Steel references - in context with climate change

Client/project
Project description Fichtner services
Country
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 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
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
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Other steel references
Client
Project description / Fichtner services
Country
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 made available upon request.
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Overview of steel sector in China international
context
2
10
Steel production
in 1000t

• 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)

Source IISI 2004 / 2006
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Energy consumption

• 98 of all steel works with annual production of
  crude steel lt500 000 t
• Specific energy consumption for plants gt1 Mio.
  tcs production/a lower than countrys 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)

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Resource and energy consumption
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)
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Potential CDM projects carbon benefits
3
14
CDM projects related to casting

• Displacement of slab casters by CSP (Compact
  Strip Production)

• 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

Source Fichtner 2006
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identify heat losses in steel making furnace
CDM projects related to waste heat recovery
air leakage losses
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Identify options for using waste heat
pre-heating furnace stock prior to charging
(stock recuperation)
scrap pre-heating
pre-heating combustion air, within burner or
remotely by using external recuperator/regenerato
r
pre-heating furnace by waste heat from other
furnace (furnace regeneration)
use in drying processese.g. brick manufacture
fuel preheating, e.g. HFO
hot water generation
generation of low pressure steam for process
applications
raise steam for power generation
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Other CDM energy efficiency / CO2 reduction
measures
Component
Potential regions
C/CO2 Reduction
Sources
Replacement of Open Hearth Furnace by oxygen
converter
30-100 Mt C till 2010
States of former Soviet Union, Russia, China
IPCC, 2001
Replacement of Open Hearth Furnace by oxygen
converter
lt 5 Mt
States 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
worldwide
IEA/EET working paper, see above Jiang et al,
1998
Direct coke blasting into blast furnace
350 Mt CO2/a
worldwide
IEA/EET working paper, see above, Chiang et al,
1998
Increasing energy recovery from blast furnace
gases
10 Mt CO2/a
worldwide
IEA/EET working paper, see above
Replacement of coke ovens with wet coke cooling
with coke ovens with dry coke cooling
65 Mt CO2/a
worldwide
IEA/EET working paper, see above
Replacement of inefficient mini blast furnace
50 - 100 Mt CO2/a
worldwide
IEA/EET working paper, see above
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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
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Regulations in the steel sector in China
4
20
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 gt 5 Mt of annual
  steel production shall make efforts to covering
  their own power demand and to sell surplus power
  to the net.

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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.

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So what ???
CDM / JI project phases
Think about energy efficiency improve-ment
options in your steel plant asap. Make use of
the CDM !

• Investigation of energy efficiency and emissions
  reduction
• Conceptual studies
• Economic and technical analysis
• Feasibility study

Conceptual study and decision-making phase

• Plant engineering
• Bid evaluation
• Contract award negotiations
• Contracts

Engineering and contract award

• Project steering (costs, timing)
• Site management and supervision
• Commissioning

Construction

• Process optimisation
• Maintenance planning
• Deployment optimisation

Operation
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Thank you for your attention !
FICHTNER Fichtner GmbH Co. KG Sarweystr.
3 70191 Stuttgart / Germany www.fichtner.de
Simone Ullrich CDM JI Expert Phone 49 (0) 711
8995-327 Fax [phone] E-mail
ullrichs_at_fichtner.de
Nino Turek Business Development CDM / JI Phone
49 (0) 711 8995-746 Fax 49 (0)711
8995-459 E-mail turekn_at_fichtner.de
Martin Hollnaicher Director Business Development
East Asia Phone [phone] Fax49
(0)711 8995-459 E-mail hollnaicherm_at_fichtner.de
www.co2-info.com
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Annex
A
25
Classification of EE measures according to
Capital Expenditure
Emphasis
Examples
Measures
Suitability for CDM

• 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

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

• maintenance
• meters
• MT
• simple controls
• insulation
• training end users

a combination of investment in low cost
technology and people involvement
Low cost

• Small project size
• Difficult baseline
• Difficult monitoring
• low suitability

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

investment in high cost technology with some
people involvement
High cost

• Medium project size
• Baseline monitor. manageable
• Additionality ?
• can be suitable