Feasibility study of JCM project for energy saving … Ministry of Economy, Trade and Industry,...

To Ministry of Economy, Trade and Industry, Japan

Feasibility study of JCM project for energy saving

technologies for iron and steel industry in

Thailand

Abstract

March 2015

Deloitte Tohmatsu Consulting Co., Ltd.

Nippon Steel & Sumikin Research Institute Corporation

Table of contents

1 Overview of F/S ................................................................................................................................... 1

2 Overview results of the study ............................................................................................................ 3

2.1 Selection of candidate technologies ......................................................................................... 3

2.2 EAF Shell Revamping for Energy Saving Type ........................................................................ 4

2.3 Regenerative Burner for Ladle Preheater ................................................................................. 6

2.4 Upgraded Recuperator for Reheating Furnace ........................................................................ 8

2.5 Absorption Type Chiller Using Waste Heat ............................................................................ 10

2.6 MRV methodologies for each technology ............................................................................... 12

2.7 Estimation of CO2 emission reductions using MRV methodology ...................................... 24

2.8 Feasibility of technologies introduction ................................................................................. 24

2.9 Issues for establishment of JCM ............................................................................................. 25

2.10 Step forward ............................................................................................................................... 25

3 F/S result report to stakeholders in Thailand ................................................................................ 27

1

1 Overview of F/S

(Objective of the study)

In order to effectively address the issue of climate change, Government of Japan

intends to achieve low-carbon growth all around the world by fully mobilizing

technology, markets and finance which leads to mitigation of Greenhouse Gas (GHG)

emission. Government of Japan addresses the utility of advanced low-carbon

technologies and products in various fields as well as a scheme of Joint Crediting

Mechanism (JCM) to candidate countries to build partnership under the scheme and

promotes to increase the number of partner counties.

On the other hand, Thailand, which is a target country of this feasibility study

(F/S), has been participating actively to worldwide activities to mitigate GHG

emissions since it signed to United Nations Framework Convention on Climate

Change (UNFCCC) in June 1992. Government of Thailand has not yet signed on

bilateral agreement for JCM, but they recently have shown proactive attitude for the

cooperation, and further progress is expected. It is also assumed that steel

consumption would be increasing in a mid to long term in Thailand, and mitigation

actions toward iron and steel industry, which is generally recognized as energy

consuming industry, would play a major role for the country to achieve their target

on GHG emission reductions.

Considering current status and future prospect of these governments, the plan for

actual introduction of specific energy saving technologies has been developed in the

field of iron and steel industry whose energy saving potential is said to be high. The

study was conducted in order to assess feasibility of introduction of the technologies

under the JCM scheme and to come up with recommendations for the future JCM

projects between Thailand and Japan.

2

(Overview of the study)

The focus has been given to iron and steel industry in this F/S, where it is said

that energy saving potential is particularly high. Detailed contents of this F/S are

shown below;

Table 1: Overview of the study

1. Project Title Feasibility study of JCM project for energy saving technologies for iron and

steel industry in Thailand

2. Country Thailand

3. Field Energy Saving Technology for Iron and Steel Industry

4. Project

member

Deloitte Tohmatsu Consulting Co., Ltd. (DTC)

Nippon Steel & Sumikin Research Institute Corporation (NSRI)

5.Project period This F/S was conducted from September 2014 to March 2015.

6. Contents of

the study

a. Proposal of energy saving technology introduction plan

Business plan under the JCM was proposed to the target steel plant as the

result of F/S;

- Selection of energy saving technologies by conducting steel plant

diagnosis

- Examination of detailed technologies’ specs

- Estimation of energy saving effects and CO2 reduction effects

- Rough estimation of initial and maintenance cost and payback period

- Drafting of JCM Monitoring, Report and Verification (MRV)

methodology

b. Recommendations for the future JCM scheme for government of Thailand

Issues were identified, and recommendations for the solution were reported

to public stakeholders of Thailand;

- Estimated effects of energy saving and CO2 reductions at national level

- Drafting of MRV methodology which is adoptable after signing of

bilateral agreement

- Examination of regulatory issues when executing business plan under

the JCM framework

- Design of business execution plan for energy saving technology

introductions into a target steel plant under the JCM framework

7. Technology Feasibility study was conducted for four candidate technologies as below;

1. EAF Shell Revamping for Energy Saving Type

2. Regenerative Burner for Ladle Preheater

3. Upgraded Recuperator for Reheating Furnace

4. Absorption Type Chiller Using Waste Heat

3

2 Overview results of the study

2.1 Selection of candidate technologies

Issues below were recognized at a target steel plant with results of the diagnosis

in this F/S.

(Electric Arc Furnace)

High electricity intensity comparing to similar type in the industry (600 kWh)

Gap between rid and EAF

Inefficient tapping

Inefficient scrap charging

Too high tapping temperature (approx. 1,700 deg C)

Inefficient use of logged data

High electrode consumption intensity (4.5 kg/ton-steel)

(Reheating Furnace)

Low temperature of preheated air (approx. 300 deg C)

Inefficient coordination of air ratio

High temperature of flue gas from exit side of recuperator (approx. 560 deg C)

Discussing possible energy saving technologies to be introduced with the plant,

following four technologies were selected as candidate technologies.

1. EAF Shell Revamping for Energy Saving Type

2. Regenerative Burner for Ladle Preheater

3. Upgraded Recuperator for Reheating Furnace

4. Absorption Type Chiller Using Waste Heat

4

2.2 EAF Shell Revamping for Energy Saving Type

2.2.1 Overview of technology

Revamping electric arc furnace to have a tapping hole at the bottom of the furnace,

it enables to tap molten steel from a bottom of the furnace, called eccentric bottom

tapping (EBT). EBT leads to slag-free tapping as well as shorter tap-to-tap times. It

also reduces refractory and electrode consumption, and improves efficiency to melt

scrap with hot heel, which is a remained molten steel inside the furnace. In addition

to EBT, sealing rid of the furnace prevents infiltration and brings about efficiency of

scrap heating. Moreover, deepening the furnace captures the amount of hot heel, and

it leads to efficiency of scrap melting.

2.2.2 Effects of technology introduction

Generally, energy saving effects by EAF revamping are complex so that it is

impossible to calculate its effect separately for each modification. Therefore, its

integral effect was estimated as 16 % reduction of electricity (100 kWh/t reduction

from current status of electricity intensity of 600 kWh/t) based on comments and

experiences of experts who conducted the diagnosis and equipment manufacturer.

Annual energy saving effect and economic effect were also calculated as follows.

Annual energy saving effect = Reduced electricity intensity by revamping *

Annual crude steel production

⇒ 100 kWh/t * 200,000 t/y = 20,000,000 kWh/y

Annual economic effect = Annual energy saving effect * Price of electricity from

grid * Exchange rate

⇒20,000,000 kWh/y * 3.42 THB/kWh

= 68,400,000 THB/y * 3.62 JPY/THB

= 248,000,000 JPY/y

2.2.3 Proposed introduction plan and profitability

EAF revamping would take 10 months for engineering, procurement and

transportation and 4 months for construction after making a contract with

equipment manufacturer. Operation of each furnace might be shut down for 4

months of construction period. However, it is difficult to conclude since engineering

scope is not sure. Assumed initial cost to revamp is 545,000,000 (JPY) based on

estimation by the manufacturer and adjusted construction costs in Thailand.

5

Simple payback period of the initial cost was calculated as follows. See Annex.1

Calculation of payback period for formula.

Simple payback period = Total initial cost / Annual economic effect

⇒ = 545,000,000 JPY / 247,608,000 JPY = 2.2 years

Table 2: Analysis on payback period for EAF Revamping for Energy Saving Type

EAF Revamping for Energy Saving Type

Equipment Manufacturer Nikko Industry

Item Unit Value

Initial cost JPY 545,000,000

Annual electricity saving kWh 20,000,000

Annual economic effect JPY 247,608,000

Annual GHG emission reductions tCO2 10,226

Annual economic effect from

credits (assumed)

JPY 10,226,000

Simple payback period Year 2.2

Discounted payback period

(@7.5%)

Year 2.5


(@8.75%)

Year 2.6

Discounted payback period (@10%) Year 2.6

6

2.3 Regenerative Burner for Ladle Preheater

2.3.1 Overview of the technology

Regenerative burner is a burner system which has two individual burners absorb

exhaust gas heat to reservoir and preheat combustion air by regenerator to improve

energy efficiency. Two burners switch roles as absorber and preheater mutually.

Preheated air is designated to be heated up through reservoir, and it leads to

efficient air preheating. The burner is introduced to ladle preheater in order to save

fuel consumption with efficient air preheating in this F/S.

2.3.2 Effects of technology introduction

Energy saving effects of regenerative burner for ladle preheater varies along with

a number of charging melted steel to ladle. In concrete, energy saving effect of the

burner slightly drops from the second time of charging to ladle comparing to the first

time. It is presumed that ladle is replaced after 20th charge in this study, and

assumed a ratio of energy saving effect between the first charge (a new ladle) and

charges from the second to 20th (circulated ladle) is 1 : 19, and calculated weighted

energy saving effect as follows.

Energy saving effect of regenerative burner for ladle preheater

：0.44 * (1/20) + 0.42 * (19/20) = 0.421 = 42.1 %


Annual energy saving effect = Fuel intensity of existing ladle preheater * Energy

saving effect * Annual crude steel production

⇒ 5.93 L/t * 42.1 % * 200,000 t/y = 499,306 L/y

Annual economic effect = Annual energy saving effect * Price of diesel * Exchange

rate

⇒ 499,306 L/y * 15.45 THB/L

＝ 7,714,278 THB/y * 3.62 JPY/THB

＝ 27,925,685 JPY/y


Introduction of regenerative burner to ladle preheater would take 7 months for

engineering, procurement and transportation and 1.5 months for construction and

testing after making a contract with equipment manufacturer. It is possible to keep

7

50 % of production capacity if the construction is conducted to ladle preheater one by

one. Assumed initial cost of the introduction is 127,320,000 (JPY) based on

estimation by the manufacturer and adjusted construction costs in Thailand.




⇒ = 127,320,000 JPY / 27,925,685 JPY = 4.6 years

Table 3: Analysis on payback period for Regenerative burner for ladle preheater

Regenerative burner for ladle preheater

Equipment Manufacturer Chugai Ro

Item Unit Value


Annual fuel saving L 499,306


Annual GHG emission reductions tCO2 1,320


credits (assumed)

JPY 1,320,000



(@7.5%)

Year 5.8


(@8.75%)

Year 6.1


8

2.4 Upgraded Recuperator for Reheating Furnace


A recuperator is a heat exchanger which absorbs heat from waste gas from

reheating furnace to reservoir and preheats combustion air to improve heating

efficiency of the furnace. It is possible to save fuel consumption at reheating furnace

with a rise of temperature of combustion air from current 400 deg C to 500 deg C

using upgraded recuperator. In concrete, energy efficiency is realized with broadened

heating area with size enlargement and changes horizontal type 2 passes from

concurrent to countercurrent.

2.4.2 Effect of technology introduction

With upgraded recuperator, temperature at exit side of recuperator would be

increased from 380 deg C to 480, which leads to efficient heating of reheating furnace

and fuel saving of 4.6 % reduction.


Annual energy saving effect = Fuel intensity of existing reheating furnace *

Energy saving effect * Annual steel production

⇒ 35 L/t * 4.6 % * 104,167 t/y = 167,709 L/y

Annual economic effect = Annual energy saving effect * Price of banker oil *

Exchange rate

⇒ 167,709 L/y * 17.15 THB/L

＝ 2,876,209 THB/y * 3.62 JPY/THB

＝ 10,411,878 JPY/y


Shut down period with previous construction of recuperator to reheating furnace

at the plant was 7 days (7 am to 12 am) in 2011 so that construction period of 10 days

is presumed for proposed introduction plan. Assumed initial cost of the introduction

is 60,000,000 (JPY) based on estimation by the manufacturer and adjusted

construction costs in Thailand.




⇒ = 60,000,000 JPY / 10,411,878 JPY = 5.8 years

9

Table 4: Analysis on payback period for Upgraded recuperator for reheating furnace

Upgraded recuperator for reheating furnace

Equipment Manufacturer Chugai Ro

Item Unit Value


Annual fuel saving L 167,709


Annual GHG emission reductions tCO2 656


credits (assumed)

JPY 656,000



(@7.5%)

Year 8.0


(@8.75%)

Year 8.6


10

2.5 Absorption Type Chiller Using Waste Heat


Absorption type chiller has a 2-stage evaporation and absorption cycle with agent

in order to attain chilled air. The chiller proposed in this F/S utilized waste heat

recovered from a furnace and replace recovered energy with necessary energy at air

conditioning system which leads to high efficiency. Flue gas temperature at exit side

of existing recuperator remains high as 530 deg C unless being updated so that the

chiller could recover energy from the gas. However, there is no enough space and flue

gas temperature to introduce upgraded recuperator and the chiller at once, so it is

necessary to select either technology between two.

2.5.2 Effect of technology introduction

It is necessary to subtract electricity consumption of heat recovery blower from

energy recovered from waste heat in order to calculate annual energy saving effect at

air conditioning system. Electricity consumption of heat recovery blower is assumed

as 66kW, and annual energy saving effect at air conditioning system (per hour) is

calculated as follows.

Annual energy saving effect at air conditioning system

：300 kWh – 66 kWh = 234 kWh


Annual energy saving effect = (Energy recovered from waste heat – Electricity

consumption of heat recovery blower) * Annual operating hour of air conditioning

system

⇒ (300 kWh - 66 kWh) * 6,300 h = 1,474,200 kWh/y

Annual economic effect = Annual energy saving effect * Price of grid electricity *

Exchange rate

⇒ 1,474,200 kWh/y * 3.42 THB/kWh

＝ 5,041,764 THB/y * 3.62 JPY/THB

＝ 18,251,186 JPY/y


Operation shut down is not necessary for the introduction since construction of

chiller does not influence steel making process. Construction period of 10 days is

11

presumed for introduction of waste heat recovery blower based on previous

construction of recuperator in the plant. Assumed initial cost of the introduction is

98,125,000 (JPY) based on estimation by the manufacturer and adjusted

construction costs in Thailand.




⇒ ＝ 98,125,000 JPY / 18,251,186 JPY = 5.4 years

Table 5: Analysis on payback period for Absorption type chiller using waste heat

Absorption type chiller using waste heat

Equipment Manufacturer

Item Unit Value


Annual electricity saving kWh 1,474,200


Annual GHG emission reductions tCO2 754


credits (assumed)

JPY 754,000



(@7.5%)

Year 7.1


(@8.75%)

Year 7.6


12

2.6 MRV methodologies for each technology

2.6.1 EAF Shell Revamping for Energy Saving Type

A. Title of the methodology

「Introduction of EAF Shell Revamping for Energy Saving Type to steel plant with

scrap melting」

B. Terms and definitions

Terms Definitions

Eccentric Bottom

Tapping: EBT

Eccentric bottom tapping leads to slag-free tapping,

shorter tap-to-tap times. It also reduces refractory and

electrode consumption, and improves ladle life

C. Summary of the methodology

Items Summary

GHG emission

reduction measures

Revamping electric arc furnace for energy efficiency type,

electricity consumption to melt scrap is reduced, which

leads to the reduction of GHG emissions.

Calculation of reference

emissions

Reference emissions are calculated based on the estimated

electricity consumption of current EAF without the

proposed project.

Calculation of project

emissions

Project emissions are calculated based on the electricity

consumption of revamped EAF with the proposed project.

Monitoring parameters ・Electricity consumption of electric arc furnace (Project)

[MWh]

・Crude steel production (Project) [t]

D. Eligibility Criteria

This methodology is applicable to projects that satisfy all of the following criteria.

Criterion 1 Electric arc furnace is utilized for steel production with scrap

Criterion 2 Conducting rid sealing, and/or installing EBT and/or deepening to

utilize hot heal into existing electric arc furnace

Criterion 3 Purchase electricity from grid for both reference and project scenario

13

E. Emission Source and GHG types

Items Emission sources GHG types

Reference emissions Consumption of grid electricity CO2

Project emissions Consumption of grid electricity CO2

F. Establishment and calculation of reference emissions

F1. Establishment of reference emissions

Establish reference emissions when the furnace is not revamped, and continues

utilizing existing electric arc furnace

F2. Calculation of reference emissions

RE = RECI * EFe * PM ・・・ (1)

Where,

RE Reference CO2 emissions [tCO2]

RECI Electricity consumption intensity of electric arc furnace

(Reference) [MWh / t]

EFe CO2 emission factor of grid electricity [tCO2 / MWh]

PM Crude steel production (Project) [t]

G. Calculation of project emissions

PE = (PEC/PM) * EFe * PM ・・・ (2)

Where,

PE Project CO2 emissions [tCO2]

PEC Electricity consumption of electric arc furnace (Project) [MWh]

EFe CO2 emission factor of grid electricity [tCO2 / MWh]

PM Crude steel production [t]

H. Calculation of emission reductions

Emission reductions are calculated as the difference between the reference

emissions and project emissions, as follows:

ER = RE – PE ・・・ (3)

14

Where,

ER CO2 Emission reductions [tCO2]



I. Data and parameters fixed ex ante

Parameter Description of data Source

RECI Electricity consumption intensity of

electric arc furnace (Reference) [MWh / t]

Measurement at site

EFe CO2 emission factor of grid electricity

[tCO2 / MWh]

Default value from

IPCC

2.6.2 Regenerative Burner to Ladle Preheater


「Introduction of Regenerative Burner to Ladle Preheater」


Terms Definitions

Regenerative burner Burner system which has two individual burners which

absorb exhaust gas heat to reservoir and preheat

combustion air by regenerator to improve energy efficiency.

Two burners switch roles as absorber and preheater

mutually


Items Summary

GHG emission

reduction measures

Introducing a regenerative burner instead of conventional

burner to ladle preheater, fossil fuel consumption is

reduced, which leads to the reduction of GHG emissions.


emissions


consumption of fossil fuel in the facility without the

proposed project.


emissions

Project emissions are calculated based on the consumption

of fossil fuel in the facility after implementing the proposed

project.

Monitoring parameters ・Fossil fuel consumption of ladle preheater (Project) [liter]

・Crude steel production (Project) [t]

15



Criterion 1 Regenerative burner is introduced to ladle preheater

Criterion 2 Project type is either greenfield, or expansion or replacement of

regenerative burner into existing ladle preheater



Reference emissions Combustion of fossil fuel in ladle

preheating

CO2

Project emissions Combustion of fossil fuel in ladle

preheating

CO2



Establish reference emissions when regenerative burner is not introduced to ladle

preheater, and continues utilizing existing ladle preheater


Calculation methodology on reference emissions is developed for each project type.

<Greenfield project>

RE = RFCIg * EF * PM ・・・ (1)

Where,


RFCIg (Greenfield) Fossil Fuel consumption intensity of ladle

preheater (Reference) [GJ / t]

EF CO2 emission factor of fossil fuel [tCO2 / GJ]


<Expansion or replacement project>

RE = RFCIex,re * EF * PM ・・・ (2)

16

Where,


RFCIex,re (Expansion or replacement) Fossil Fuel consumption

intensity of ladle preheater (Reference) [GJ / t]




PE = (PFC/PM) * NCV * EF * PM ・・・ (3)

Where,


PFC Fossil Fuel consumption of ladle preheater (Project) [liter]

NCV Net heating value of fossil fuel [GJ / liter]






ER = RE – PE ・・・ (4)

Where,




17



NCV Net heating value of fossil fuel [GJ / liter] Default value from IPCC

EF CO2 emission factor of fossil fuel [tCO2 /

GJ]

Default value from IPCC

RFCIg (Greenfield) Fossil Fuel consumption

intensity of ladle preheater (Reference) [GJ

/ t]

Measurement at site

RFCIex,re (Expansion or replacement) Fossil Fuel

consumption intensity of ladle preheater

(Reference) [GJ / t]

Measurement at site

2.6.3 High Temperature Recuperator to Reheating Furnace


「Introduction of High Temperature Recuperator to Reheating Furnace」


Terms Definitions

Recuperator A heat exchanger which absorbs heat from waste gas to

reservoir and preheats combustion air to improve energy

efficiency of the furnace.


Items Summary

GHG emission

reduction measures

Introducing the recuperator to reheating furnace, fossil

fuel consumption is reduced, which leads to the reduction

of GHG emissions.


emissions


consumption of fossil fuel in the facility without the

proposed project.


emissions

Project emissions are calculated based on the consumption

of fossil fuel in the facility after implementing the proposed

project.

Monitoring parameters ・Fossil fuel consumption of reheating furnace (Project)

[liter]

・Steel production (Project) [t]

18



Criterion 1 Recuperator is introduced to existing reheating furnace

Criterion 2 Project type is either green field, or expansion or replacement of

recuperator



Reference emissions Combustion of fossil fuel at

reheating furnace

CO2

Project emissions Combustion of fossil fuel at

reheating furnace

CO2



Establish reference emissions when the recuperator is not introduced to reheating

furnace, and continues utilizing existing furnace


Calculation methodology on reference emissions is developed for each project type

of introduction of recuperator.

<Greenfield project>

RE = RFCIg * EF * PM ・・・ (1)

Where,


RFCIg (Greenfield) Fossil fuel consumption intensity of reheating

furnace (Reference) [GJ / t]


PM Steel production (Project) [t]

<Expansion or replacement project>

RE = RFCIex,re * EF * PM ・・・ (2)

19

Where,


RFCIex,re (Expansion or replacement) Fossil fuel consumption intensity

of reheating furnace (Reference) [GJ / t]




PE = (PFC/PM) * NCV * EF * PM ・・・ (3)

Where,


PFC Fossil Fuel consumption of reheating furnace (Project) [liter]

NCV Net heating value of fossil fuel [GJ / liter]






ER = RE – PE ・・・ (4)

Where,




20



NCV Net heating value of fossil fuel [GJ / liter] Default value from

IPCC

EF CO2 emission factor of fossil fuel [tCO2 / GJ] Default value from

IPCC

RFCIg (Greenfield) Fossil fuel consumption

intensity of reheating furnace (Reference)

[GJ / t]

Measurement at site

RFCIex,re (Expansion or replacement) Fossil fuel

consumption intensity of reheating furnace

(Reference) [GJ / t]

Measurement at site

2.6.4 Absorption Type Chiller Using Waste Heat


「Introduction of Absorption Type Chiller Using Waste Heat to Reheating Furnace」


Terms Definitions

Absorption type chiller A chiller which has a 2-stage evaporation and absorption

cycle with agent, which leads to high efficiency

21


Items Summary

GHG emission

reduction measures

Introducing the absorption type chiller using waste heat to

reheating furnace, electricity consumption of existing air

conditioning system is reduced, which leads to the

reduction of GHG emissions.


emissions

Reference emissions are calculated based on electricity

consumption from grid which would be consumed at

existing air conditioning system unless the proposed

project is implemented


emissions

CO2 emissions are to be calculated based on electricity

consumption in the facility after implementing the

proposed project.

Monitoring parameters ・Energy recovered from waste heat collected by absorption

type chiller [kWh]

･Operating hours of heat recovery blower [hour]



Criterion 1 Absorption type chiller uses waste heat from furnace

Criterion 2 Absorption type chiller collects energy from waste heat of furnace and

utilizes all of its energy but for heat recovery blower for chilling

Criterion 3 Purchase electricity from grid for both reference and project scenario



Reference

emissions

Consumption of grid electricity CO2

Project emissions N/A N/A



The chiller is not introduced, and continues utilizing existing air conditioning

system (existing system)

22


RE = EG * EFe ・・・ (1)

Where,


EG Replacement of energy for chilling at existing air

conditioning system with energy recovered from waste

heat collected by the chiller [kWh]

EFe CO2 emission factor of grid electricity [kgCO2 / kWh]

< Determination of EG>

EG = EGsup – ECaux

Where,

EG Replacement of energy for chilling at existing air

conditioning system with energy recovered from waste

heat collected by the chiller [kWh]

EGsup Energy recovered from waste heat collected by absorption

type chiller [kWh]

ECaux Electricity consumption of heat recovery blower [kWh]

< Determination of EGaux>

ECaux = ECcap * OH

Where,

ECaux Electricity consumption of heat recovery blower [kWh]

ECcap Rated power of heat recovery blower [kW]

OH Operating hours of heat recovery blower [hours]


Project emissions are not assumed in the methodology as the waste heat recovery

system utilizes only waste heat and does not utilize fossil fuels as heat source to

generate cool water, which is prescribed in the eligibility criterion 2.

23

PE = 0 ・・・ (2)




ER = RE – PE ・・・ (3)

Where,

ER CO2 emission reductions [tCO2]





EFe CO2 emission factor of grid electricity

[kgCO2 / kWh]

Default value from

IPCC

ECcap Rated power of heat recovery blower [kW] Measurement at site

24

2.7 Estimation of CO2 emission reductions using MRV methodology

CO2 emission reductions were calculated using MRV methodology as follows.

Table 6： Estimation of CO2 emission reductions using MRV methodology

EAF Revamping for Energy Saving Type

Regenerative Burner for Ladle Preheater

Upgraded Recuperator for

Reheating Furnace

Absorption Type Chiller Using Waste

Heat

Production Crude steel 200,000t Crude steel 200,000t Steel 104,167t (Steel 104,167t)

Reference Emissions (RE)

61,356 [tCO2] = 0.6 * 0.5113 * 200,000

3,136 [tCO2] = 0.216 * 0.0726 * 200,000

10,932 [tCO2] = 1.39 * 0.0755 * 104,167

754 [tCO2] = (1,890,000 – 415,800) * 0.5113

Project Emissions (PE)

51,130[tCO2] = 100,000 / 200,000 * 0.5113 * 200,000

1,816 [tCO2] = 686,694 / 200,000 * 0.03642 * 0.0726 * 200,000

10,444 [tCO2] = 3,478,136 / 104,167 * 0.03977 * 0.0755 * 104,167

0 [tCO2]

Emission Reductions (RE-PE)

10,226 [tCO2] (RE - PE) = 61,356 – 51,130

1,320 [tCO2] (RE - PE) = 3,136 – 1,816

488 [tCO2] (RE - PE) = 14,692 – 14,036

754 [tCO2] (RE - PE) = 754 - 0

Values for Estimation (Ref) Bold：Monitoring parameter *Estimated

Electricity intensity of EAF (Site)*1: 0.6 [MWh/t] CO2 emission factor of grid (TGO)*2: 0.5113 [tCO2/MWh] Electricity consumption of EAF: 100,000 [MWh] Crude steel production: 200,000 [t]

Net heating value of fuel (DEDE): 0.03642 [GJ/liter] CO2 emission factor of fuel (IPCC): 0.0726 [tCO2/GJ] Fuel intensity of LF preheater (Site) *1: 0.216 [GJ/t] Fuel consumption: 686,694 [liter] Crude steel production: 200,000 [t]

Net heating value of fuel (DEDE): 0.03977 [GJ/liter] CO2 of emission factor of fuel (IPCC): 0.0755 [tCO2/GJ] Fuel intensity of RHF (Site) *1: 1.39 [GJ/t] Fuel consumption: 3,478,136 [liter] Steel production: 104,167 [t]

Electricity consumption of heat recovery blower (Manuf.): 415,800 [kWh] CO2 emission factor of grid (TGO)*2: 0. 5113 [kgCO2/kWh] Energy recovered from waste heat: 1,890,000 [kWh]

*1 Actual value measured at a target plant was utilized as reference value for estimation in order to make sure the

methodology is applicable to the plant

*2 Average value of build margin factor (0.4231) and operating factor (0.5996) is adopted as CO2 emission factor of

grid in Thailand

2.8 Feasibility of technologies introduction

At the end of this F/S, it was concluded that, based on discussion with the steel

plant, introduction of absorption type chiller using waste heat into the steel plant

was difficult to realize due to operating situation of the steel plant and lack of

necessary space for placement. While it was concluded that EAF shell revamping for

energy saving type is highly feasible to be introduced into the steel plant considering

its high energy saving performance and high economic value brought by the

introduction, and payback period with two years. The other two technologies namely

regenerative burner for ladle preheating and upgraded recuperator are difficult to be

introduced because of their expensive initial cost and small economic value, and so as

to its payback period within two years although there are no technical issues for

introduction of both technologies.

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2.9 Issues for establishment of JCM

As a result of interviews with the steel plant, ISIT and government agencies in

Thailand, it has been found that (1) Expansion of public finance support/incentives

by the government and (2) Storage and management of information required for

operation of JCM are especially important issues in order to promote JCM projects in

Thailand.

2.9.1 Financial supporting mechanism for initial investment

Regarding the issue of (1), it is identified that economic value brought by

technology introduction cannot pay back its initial cost within two years without use

of subsidy. In Thailand, funding schemes have been stopped due to regime change,

namely Energy Efficiency Revolving Fund, ESCO Revolving Fund and 20% subsidy

program provided by DEDE. In addition, budget proposal for those funding scheme is

being prepared at this moment. Considering acceleration of introduction of energy

saving technologies for various fields in the future, study for expansion of funding

scheme in Thailand would be necessary. At the same time, participants of the F/S

from Thailand expect Japanese financing support for introduction of energy saving

technologies. As mentioned earlier, it is concluded that only financial support from

Thailand cannot cover expensive initial cost of energy saving technologies

introduction, and therefore it is crucial to consider possibilities to apply existing

Japanese financial supporting scheme such as NEDO’s JCM demonstration project,

MoE’s JCM model project, financial support of JBIC and so on, toward energy saving

technologies introduction projects in Thailand.

2.9.2 Financial supporting mechanism for initial investment

Regarding issue of (2), it is found to be difficult to validate reference value which

is necessary to calculate reference emission objectively. Therefore, it is important to

prepare system and scheme to store and manage reference value for possible JCM

subject technologies and to make it available to possible participants in JCM in order

to establish MRV methodology for iron and steel technologies in the future. For

example, ISIT could be an administrator of such information and lead preparation.

2.10 Step forward

In case bilateral document would be signed in the future, the first tasks will be

launch of Joint Committee (JC) and creation of rules and guidelines spearheaded by

JC. Detailed roadmap will be clearly defined after signage to the bilateral document

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by both governments. More detailed examination would be necessary for the project

scheme and MRV methodology to operate JCM correctly, and therefore it is expected

to make the most of opportunities of F/S, JCM demonstration project and JCM model

project provided by government.

Further, it is required to accelerate concrete and detailed planning and

demonstration of JCM scheme paying due regard to progress of governments

consultation considering provided information that Government of Thailand agreed

to cooperate with Government of Japan to realize JCM in January 2015.

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3 F/S result report to stakeholders in Thailand

At the end of this F/S, results of F/S have been shared with the steel plants, iron

and steel industry sector and government agencies in Thailand in “JCM F/S

Workshop” held in Bangkok. In this workshop, F/S project team member participated

from Japan and the target steel plant, DEDE, TGO, ISIT and other steel plants

member participated from Thailand. In the workshop, overview of the F/S project,

result of the feasibility study of technologies introduction, technologies introduction

plan, designed MRV methodologies and issues and policy proposal for realization of

JCM were introduced by the project team. Also, GHG reduction measures and

activities in Thailand and current status of consideration of JCM within Government

of Thailand were presented by an officer of TGO which is a responsible agency for

JCM in Thailand. Questions regarding existing Japanese financial supporting

scheme for energy saving technologies, scheme of Joint Committee, policy of credit

distribution mechanism and factors used in MRV methodologies were made in the

workshop, and opinions were lively exchanged among the participants.

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Annex.1 Concept of payback period

Simple Payback Period (SPP) = Initial investment cost / Annual economic effects

brought by technologies introduction

Discount Payback Period (DPP) =

CF : Annual economic value brought by technologies introduction

I : Initial investment cost

c : Discount rate

In this F/S, following three patterns of discount rate are considered in calculation

for DPP：

Discount rate (c) 7.5 % : Loan interest in Thailand

Discount rate (c) 8.75 % : Weighted average of loan interest and market risk

premium in Thailand

Discount rate (c) 10.0 % : Market risk premium in Thailand

DPP =

log

CFI

CFI − c

log 1 + c

Feasibility study of JCM project for energy saving … Ministry of Economy, Trade and Industry,...

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