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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Back-up info, some views and experiences (not necessarily shared by all sectors)
Applicability and practical aspects of Performance-based allocation
Vianney Schyns, IFIEC Europe [email protected]
ECCP Meeting, EU ETS Review, 22 nd May 2007 1
IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Contents
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Number of benchmarks Transaction costs & complexity Setting the benchmark below average performance Technical definition
all energy carriers Benchmarks in a direct emissions scheme
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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Pareto: few activities have major coverage
Netherlands: almost 100 benchmarks already defined 3
IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Transaction costs and complexity
High transaction costs often mentioned in literature
Transaction costs lower in practice
• • • • • Typical consultancy costs: € 25-40,000 per benchmark Higher cost first time complex benchmark So 100 benchmarks cost say € 3-4 mln “Verification Bureau”, NL say < € 1 mln for 100 benchmarks (each 4 years?) Excl. verifier, for NL only: say € 5 mln for 4 x 75 Mton = < € 0.02/ton CO 2 Determination of benchmarks cheaper on EU scale Additional: annual costs of monitoring & verification Complexity often mentioned as problem Defining new benchmarks needs great care – technology expertise Practical principle: keep it simple – ignore secondary effects Once defined rather straightforward
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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Possible feasible benchmark formula
Benchmark data of plants under the scheme (now EU) Benchmark between average & best performance, e.g.
Benchmark = WAE – CF x (WAE – BP)
• • • WAE = Weighted Average Efficiency CF = Compliance Factor, to comply with total cap BP = proven Best Practice, proven means actual measured operational data (or rather BP Group, for extra stimulation of innovation) Formula coincides with EU ETS Directive Annex III (3), average emissions and achievable progress for each activity Industry most likely opposes following alternatives Dutch/Flemish worldtop 10% – too short allocation, unstable outcome shape benchmark curve
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incomplete participation Related only to BP (BP + X%) – too short allocation, contra incentive to improve BP, effectiveness & innovation
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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Benchmark = WAE – CF x (WAE – BP)
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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Benchmark takes account of all energy carriers (1)
Feeds Steam CO 2 ?
Production plant Natural gas ?
Other fuel ?
Product(s) Many energy functions can • • • be done either with: Steam, or Electricity, or Natural gas or other fuel Electricity Benchmark takes this into account:
Normalised calculation to (total) primary energy – or total CO 2
Benchmark for only fuel is meaningless Benchmarks for manufacturing and (related) utility plants Examples: chemical plants, refineries, paper plants, etc.
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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Benchmark takes account of all energy carriers (2)
Feeds (ethane, LPG, naphta, gas oil, etc.) Simplified scheme steamcracker CO 2 Furnaces with heat recovery to steam 2/3 of the investment Steam recovery Separations with high power compressors Electricity Methane from feedstock Steam • • • Separation train can be: Efficient, with net-export of steam of whole cracker Inefficient, steam import Both can be with the same direct emission of the cracker itself Products (ethylene, propylene, etc.) • • • Power train can be: Steam turbine driven Electric motor driven Combinations High influence on electricity & steam balance, direct emissions elsewhere
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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Benchmarks in a direct emissions scheme (1)
Allocation
= direct emission – emission {total plant – total BM} CO 2 Feeds Production plant Product(s) •
Example:
Net-import of secondary energy carriers:
70 – {120 – 100} = 50 Plant worse than benchmark
Steam Electricity Natural gas Other fuels Site utilities have also benchmarks
Further examples:
• • Zero net-import:
120 – {120 -100} = 100 Plant worse than benchmark
Net-import:
70 – {90 – 100} = 80 Plant better than benchmark 9
IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Benchmarks in a direct emissions scheme (2)
Easy inclusion in an ETS No conceptual problem in a direct scheme and no legal problem with Directive, on the contrary
Allowances according to deviation with benchmark
In formula:
A = RDE + RSE – Σ production x (REE/RCE – benchmark) x CCF
• • • • • RDE = Realised Direct Emission (ton CO 2 ) RSE = Realised Sequestered Emissions (ton CO 2 ) REE/RCE = Realised Energy (or CO 2 ) Efficiency (GJ/ton product or ton CO 2 /ton product) Benchmark = benchmark energy (or CO 2 ) efficiency CCF = CO 2 Conversion Factor (= 1.0 in case of CO 2 -benchmark) Note: Process emission is in this view included in the Best Practice
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IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Benchmarking in the product chain
Benchmarking provides incentives in the whole product chain …
Fuel Electricity and heat generation Electricity Fuel Feed Heat, from CHP or from boilers Industrial manufacturing plant with use of electricity and heat Product … the efficiency of the production of electricity & heat … the efficiency of the use of (fuel), electricity & heat 11
IFIEC EUROPE – International Federation of Industrial Energy Consumers
IFIEC Back-up material (not necessarily shared by all sectors)
Benchmarks need great care
Feeds Hardly or zero CO 2 Production plant Product(s) Steam Electricity Hardly or zero fuel
Other effectiveness’ shortcomings
Maximisation E (110%) Minimisation E (85%)
Present Dutch formula is incorrect
Allowances = HE x G x E x C HE = historic emissions G = Growth Factor
E = Energy Efficiency
(benchmark/actual energy use) C = Compliance factor to remain within total cap Formula becomes meaningless – even introduces gaming – in case of significant import of secondary energy carriers (utility boilers & CHP are rightfully separate), for example: HE (= ~ zero) x E = ~ zero
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