Cost‐effectiveness analysis of energy efficiency measures in the Swiss chemical and pharmaceutical industry

Energy efficiency improvement is an effective way of reducing energy demand and CO₂ emissions. Although the overall final energy savings potential in chemical industry has been estimated in a few countries, energy efficiency potentials by concrete measures applicable in the sector have been scarcely explored and their associated costs are hardly analyzed. In Switzerland, the production of chemicals and pharmaceuticals exceeds all other industrial sectors in terms of energy use and CO₂ emissions, and it accounted for 22% of the total industry's overall final energy demand and 25% of the CO₂ emissions related to non‐renewable energy sources in 2016. In this study, the economic potentials for energy efficiency improvement and CO₂ emissions reduction in the Swiss chemical and pharmaceutical industry are investigated in the form of energy efficiency cost curves. The economic potential for final energy savings and CO₂ abatement based on energy‐relevant investments is estimated at 15% and 22% of the sector's final energy use and fossil fuel‐related CO₂ emissions in 2016, respectively. Measures related to process heat integration are expected to play a key role for final energy savings. The economic electricity savings potential by improving motor systems is estimated at 15% of the electricity demand by these systems in 2016. The size of economic potential of energy efficiency improvement across the sector decreases from 15% to 11% for 0.5 times lower final energy prices while the size increases insignificantly for 1.5 times higher final energy prices. The additional power generation potential based on Combined Heat and Power plants is estimated at 14 MW for 2016. This study is a contribution to the so far limited international literature on economic energy efficiency measures applicable in this heterogeneous sector and can support policy development. The results for specific costs of energy efficiency measures can also be adapted to other parts of the world by making suitable adjustments which in return may provide useful insights for decision makers to invest in economically viable clean energy solutions.     

The effect of energy end-use efficiency improvement on China’s energy use and CO2 emissions: a CGE model-based analysis

With its rapid economic growth, China is now confronted with soaring pressure from both its energy supply and the environment. To deal with this conflict, energy end-use efficiency improvement is now promoted by the government as an emphasis for future energy saving. This study explores the general equilibrium effect of energy end-use efficiency improvement on China’s economy, energy use, and CO₂ emissions. This paper develops a static, multisector computable general equilibrium model (CGE) for China, with specific detail in energy use and with the embodiment of energy efficiency. In order to explore the ability of subsidizing non-fossil-generated electricity on moderating potential rebound effects, in this model, the electricity sector was deconstructed into five specific generation activities using bottom–up data from the Chinese electricity industry. The model is calibrated into a 16-sector Chinese Social Accounting Matrix for the year 2002. In the analysis, seven scenarios were established: business as usual, solely efficiency improvement, and five policy scenarios (taxing carbon, subsidized hydropower, subsidized nuclear power, combination of taxing carbon and subsidized hydropower, combination of taxing carbon and subsidized nuclear power). Results show that a sectoral-uniform improvement of energy end-use efficiency will increase rather than decrease the total energy consumption and CO₂ emissions. The sensitivity analysis of sectoral efficiency improvement shows that efficiency improvements happened in different sectors may have obvious different extents of rebound. The three sectors, whose efficient improvements do not drive-up total national energy use and CO₂ emissions, include Iron and Steel, Building Materials, and Construction. Thus, the improvement of energy end-use efficiency should be sectoral specific. When differentiating the sectoral energy-saving goal, not only the saving potential of each sector but also its potential to ease the total rebound should be taken into account. Moreover, since the potential efficiency improvement for a sector over a certain period will be limited, technology measures should work along with a specific policy to neutralize the rebound effect. Results of policy analysis show that one relatively enhanced way is to combine carbon taxing with subsidized hydropower.     

Hybrid modelling of long-term carbon reduction scenarios for the UK

This paper summarizes the development of a new hybrid MARKAL–Macro (M–M) energy system model for the UK. This hybrid model maintains the technological and sectoral detail of a bottom-up optimisation approach with aggregated energy demand endogeneity and GDP impacts from a single sector neoclassical growth model. The UK M–M model was developed for underpinning analysis of the UK's groundbreaking mandatory long-term − 60% carbon dioxide (CO₂) emissions reduction target. Hybrid modelling illustrates that long-term UK CO₂ emission reductions are feasible. However, there are endemic uncertainties, notably a trade-off between behavioural and technological decarbonisation options with resultant energy system impacts in the requirements for zero-carbon electricity. UK M–M model sensitivity runs further illustrate the range of energy system interactions including the deployment of the UK's limited CO₂ storage capacity, alternate timing of power vs. transport sectoral reductions, the relative ease of switching between electricity generation portfolios, and substitution opportunities between natural gas and coal. The macro-economic cost impacts range from 0.3% to 1.5% reduction in UK GDP by 2050, with higher cost estimates strongly influenced by pessimistic assessments of future low-carbon technologies. However cost impacts from the UK M–M model are likely to be in the lower range for stringent CO₂ reduction pathways as the simplicity of the reduced form macro-linkage omits competitiveness and transitional impacts on the UK economy.     

Modeling of current and future energyintensity and greenhouse gas emissions ofthe Lebanese industrial sector: assessmentof mitigation options

Greenhouse gas emissions in Lebanon mainly come from energy activities, which are responsible for 85% of all CO₂ emissions. The CO₂ emissions from energy use in manufacturing industries and construction represent 24% of the total emissions of the energy sector. Lebanese manufacturers' accounted for 39.15 million gigajoules of fuel consumption for heat and power generation in 1994, including both fuel used directly and fuel burned remotely to generate electricity used in the sector. In addition to being processed by combustion, CO₂ is generated in calcining of carbonates in the manufacture of cement, iron and glass. Electricity, the most expensive form of energy, represented 25.87% of all fuel used for heat and power. Residual fuel oil and diesel, which are used mainly in direct combustion processes, represent 26.85 and 26.55% of all energy use by industry, respectively. Scenarios for future energy use and CO₂ emissions are developed for the industrial sector in Lebanon. The development of the baseline scenario relied on available data on major plants' outputs, and on reported amounts of fuels used by the industrial sector as a whole. Energy use in industry and the corresponding greenhouse gas (GHG) emissions for Lebanon are projected in baseline scenarios that reflect technologies, activities and practices that are likely to evolve from the base year 1994 to year 2040. Mitigation work targets a 15% of CO₂ emissions from the baseline scenario by year 2005 and a 20–30% reduction of CO₂ emissions by year 2040. The mitigation options selected for analysis are screened on the basis of GHG emissions and expert judgement on the viability of their wide-scale implementation and economic benefits. Using macroeconomic assessment and energy price assumptions, the final estimates of potential GHG emissions and reduction costs of various mitigation scenarios are calculated. The results show that the use of efficient electric motors, efficient boilers and furnaces with fuel switching from fuel oil to natural gas has the largest impact on GHG emissions at a levelized annual cost that ranges from −20 to −5 US$/tonne of CO₂ reduced. The negative costs are indicative of direct savings obtained in energy cost for those mitigation options.     

Internalisation of external cost in the power generation sector: Analysis with Global Multi-regional MARKAL model

The Global MARKAL-Model (GMM), a multi-regional “bottom-up” partial equilibrium model of the global energy system with endogenous technological learning, is used to address impacts of internalisation of external costs from power production. This modelling approach imposes additional charges on electricity generation, which reflect the costs of environmental and health damages from local pollutants (SO₂, NO_x) and climate change, wastes, occupational health, risk of accidents, noise and other burdens. Technologies allowing abatement of pollutants emitted from power plants are rapidly introduced into the energy system, for example, desulphurisation, NO_x removal, and CO₂ scrubbers. The modelling results indicate substantial changes in the electricity production system in favour of natural gas combined cycle, nuclear power and renewables induced by internalisation of external costs and also efficiency loss due to the use of scrubbers. Structural changes and fuel switching in the electricity sector result in significant reduction of emissions of both local pollution and CO₂ over the modelled time period. Strong decarbonisation impact of internalising local externalities suggests that ancillary benefits can be expected from policies directly addressing other issues then CO₂ mitigation. Finally, the detailed analysis of the total generation cost of different technologies points out that inclusion of external cost in the price of electricity increases competitiveness of non-fossil generation sources and fossil power plants with emission control.     

The savings of energy saving: interactions between energy supply and demand-side options—quantification for Portugal

Reducing demand by increasing end-use energy efficiency on the demand side of energy systems may also have advantages in reducing fossil dependency and greenhouse gas (GHG) emissions on the supply side. This paper addresses interactions between energy supply- and demand-side policies, by estimating the impact of measures addressing end-use energy efficiency and small-scale renewables uses in terms of (1) avoided large-scale electricity generation capacity, (2) final energy consumption, (3) share of renewables in final energy and (4) reduction of GHG emissions. The Portuguese energy system is used as a case study. The TIMES_PT bottom-up model was used to generate four scenarios covering the period up to 2020, corresponding to different levels of efficiency of equipment in buildings, transport and industry. In the current policy scenario, the deployment of end-use equipment follows the 2000–2005 trends and the National Energy Efficiency Action Plan targets. In the efficient scenarios, all types of equipment can be replaced by more efficient ones. Results show that aggressive demand-side options for the industry and buildings sector and the small-scale use of renewables can remove the need for the increase in large-scale renewable electricity capacity by 4.7 GW currently discussed by policy makers. Although these measures reduce total final energy by only 0–2 %, this represents reductions of 11–14 % in the commercial sector, with savings in total energy system costs of approximately 3,000 million euros₂₀₀₀—roughly equivalent to 2 % of the 2010 Portuguese GDP. The cost-effectiveness of policy measures should guide choices between supply shifts and demand reduction. Such balanced policy development can lead to substantial cost reductions in climate and energy policy.     

Effects on global CO<Subscript>2</Subscript> emissions when substituting LPG with bio-SNG as fuel in steel industry reheating furnaces—the impact of different perspectives on CO<Subscript>2</Subscript> assessment

The iron and steel industry is the second largest user of energy in the world industrial sector and is currently highly dependent on fossil fuels and electricity. Substituting fossil fuels with renewable energy in the iron and steel industry would make an important contribution to the efforts to reduce emissions of CO₂. However, different approaches to assessing CO₂ emissions from biomass and electricity use generate different results when evaluating how fuel substitution would affect global CO₂ emissions. This study analyses the effects on global CO₂ emissions when substituting liquefied petroleum gas with synthetic natural gas, produced through gasification of wood fuel, as a fuel in reheating furnaces at a scrap-based steel plant. The study shows that the choice of system perspective has a large impact on the results. When wood fuel is considered available for all potential users, a fuel switch would result in reduced global CO₂ emissions. However, applying a perspective where wood fuel is seen as a limited resource and alternative use of wood fuel is considered, a fuel switch could in some cases result in increased global CO₂ emissions. As an example, in one of the scenarios studied, a fuel switch would reduce global CO₂ emissions by 52 ktonnes/year if wood fuel is considered available for all potential users, while seeing wood fuel as a limited resource implies, in the same scenario, increased CO₂ emissions by 70 ktonnes/year. The choice of method for assessing electricity use also affects the results.     

Metal requirements of low-carbon power generation

Today, almost 70% of the electricity is produced from fossil fuels and power generation accounts for over 40% of global CO₂ emissions. If the targets to reduce climate change are to be met, substantial reductions in emissions are necessary. Compared to other sectors emission reductions in the power sector are relatively easy to achieve because it consists mainly of point-sources. Carbon Capture and Storage (CCS) and the use of low-carbon alternative energy sources are the two categories of options to reduce CO₂ emissions. However, for both options additional infrastructure and equipment is needed. This article compares CO₂ emissions and metal requirements of different low-carbon power generation technologies on the basis of Life Cycle Assessment. We analyze the most critical output (CO₂) and the most critical input (metals) in the same methodological framework. CO₂ emissions and metal requirements are compared with annual global emissions and annual production for different metals. It was found that all technologies are very effective in reducing CO₂ emissions. However, CCS and especially non-fossil technologies are substantially more metal intensive than existing power generation. A transition to a low-carbon based power generation would require a substantial upscaling of current mining of several metals.     

Technical and cost assessment of energy efficiency improvement and greenhouse gas emission reduction potentials in Thai cement industry

The cement industry is one of the most energy-consuming industries in Thailand, with high associated carbon dioxide (CO₂) emissions. The cement sector accounted for about 20.6 million tonnes of CO₂ emissions in 2005. The fuel intensity of the Thai cement industry was about 3.11 gigajoules (GJ)/tonne cement; the electricity intensity was about 94.3 kWh/tonne cement, and the total primary energy intensity was about 4.09 GJ/tonne cement in 2005 with the clinker to cement ratio of around 82%. In this study, the potential application of 47 energy-efficiency measures is assessed for the Thai cement industry. Using a bottom-up electricity conservation supply curve model, the cost-effective electricity efficiency improvement potential for the Thai cement industry is estimated to be about 265 gigawatt hours (GWh), which accounts for 8% of total electricity use in the cement industry in 2005. Total technical electricity-saving potential is 1,697 GWh, which accounts for 51% of total electricity use in the cement industry in 2005. The CO₂ emission reduction potential associated with the cost-effective electricity savings is 159 kilotonne (kt) CO₂, while the total technical potential for CO₂ emission reductions is 902 ktonne CO₂. The fuel conservation supply curve model shows a cost-effective fuel-efficiency improvement potential of 17,214 terajoules (TJ) and a total technical fuel efficiency improvement potential equal to 21,202 TJ, accounting for 16% and 19% of the total fuel use in the cement industry in 2005, respectively. CO₂ emission reduction potentials associated with cost-effective and technical fuel-saving measures are 2,229 ktonne and 2,603 ktonne, respectively. Sensitivity analyses were conducted for discount rate, electricity and fuel prices, and exchange rate that showed the significant influence of these parameters on the results. Hence, the results of the study should be interpreted with caution.     

Energy efficiency and CO2 emissions in Swedish manufacturing industries

This paper analyses the trends in energy consumption and CO₂ emissions as a result of energy efficiency improvements in Swedish manufacturing industries between 1993 and 2008. Using data at the two-digit level, the performance of this sector is studied in terms of CO₂ emissions, energy consumption, energy efficiency measured as energy intensity, value of production, fuel sources, energy prices and energy taxes. It was found that energy consumption, energy intensity and CO₂ emission intensity, measured as production values, have decreased significantly in the Swedish manufacturing industries during the period studied. The results of the decomposition analysis show that output growth has not required higher energy consumption, leading to a reduction in both energy and CO₂ emission intensities. The role of structural changes has been minor, and the trends of energy efficiency and CO₂ emissions have been similar during the sample period. A stochastic frontier model was used to determine possible factors that may have influenced these trends. The results demonstrate that high energy prices, energy taxes, investments and electricity consumption have influenced the reduction of energy and CO₂ emission intensities, indicating that Sweden has applied an adequate and effective energy policy. The study confirms that it is possible to achieve economic growth and sustainable development whilst also reducing the pressure on resources and energy consumption and promoting the shift towards a low-carbon economy.     

On the potential trade-offs between energy supply and end-use technologies for residential heating

In Sweden, where district heating accounts for a significant share of residential heating, it has been argued that improvements in end-use energy efficiency may be counter-productive since such measures reduce the potential of energy efficient combined heat and power production. In this paper we model how the potential trade-offs between energy supply and end-use technologies depend on climate policy and energy prices. The model optimizes a combination of energy efficiency measures, technologies and fuels for heat supply and district heating extensions over a 50 year period. We ask under what circumstances improved end-use efficiency may be cost-effective in buildings connected to district heating? The answer hinges on the available technologies for electricity production. In a scenario with no alternatives to basic condensing electricity production, high CO₂ prices result in very high electricity prices, high profitability of combined heat and power production, and little incentive to reduce heat demand in buildings with district heating. In contrast, in a scenario where electricity production alternatives with low CO₂ emissions are available, the electricity price will level out at high CO₂ prices. This gives heat prices that increase with the CO₂ price and make end-use efficiency cost-effective also in buildings with district heating.     

Estimating the potential for electricity savings in households

Improving efficiency in the use of energy is an important goal for many nations since end-use energy efficiency can help to reduce CO₂ emissions. Furthermore, since the residential sector in industrialised countries requires around one third of the end-use electricity, it is important for policy makers to estimate the scope for electricity saving in households to reduce electricity consumption by using appropriate steering mechanisms. We estimate the level of technical efficiency in the use of electricity using data from a Swiss household survey. We find an average inefficiency in electricity use by Swiss households of around 20 to 25%. Bottom-up economic-engineering models estimate the potential in Switzerland to be around 15%. In this paper we use a sub-vector input distance frontier function based on economic foundations. Our estimates lie at the upper end of the electricity saving potential estimated by the afore-mentioned economic-engineering approach.     

Coal-based synthetic natural gas (SNG): A solution to China’s energy security and CO2 reduction?

Considering natural gas (NG) to be the most promising low-carbon option for the energy industry, large state owned companies in China have established numerous coal-based synthetic natural gas (SNG) projects. The objective of this paper is to use a system approach to evaluate coal-derived SNG in terms of life-cycle energy efficiency and CO₂ emissions. This project examined main applications of the SNG and developed a model that can be used for evaluating energy efficiency and CO₂ emissions of various fuel pathway systems. The model development started with the GREET model, and added the SNG module and an end-use equipment module. The database was constructed with Chinese data. The analyses show when the SNG are used for cooking, power generation, steam production for heating and industry, life-cycle energies are 20–108% higher than all competitive pathways, with a similar rate of increase in life-cycle CO₂ emissions. When a compressed natural gas (CNG) car uses the SNG, life-cycle CO₂ emission will increase by 150–190% compared to the baseline gasoline car and by 140–210% compared to an electric car powered by electricity from coal-fired power plants. The life-cycle CO₂ emission of SNG-powered city bus will be 220–270% higher than that of traditional diesel city bus. The gap between SNG-powered buses and new hybrid diesel buses will be even larger—life-cycle CO₂ emission of the former being around 4 times of that of the latter. It is concluded that the SNG will not accomplish the tasks of both energy conservation and CO₂ reduction.     

High-efficiency power production from natural gas with carbon capture

A unique electricity generation process uses natural gas and solid oxide fuel cells at high electrical efficiency (74%HHV) and zero atmospheric emissions. The process contains a steam reformer heat-integrated with the fuel cells to provide the heat necessary for reforming. The fuel cells are powered with H₂ and avoid carbon deposition issues. 100% CO₂ capture is achieved downstream of the fuel cells with very little energy penalty using a multi-stage flash cascade process, where high-purity water is produced as a side product. Alternative reforming techniques such as CO₂ reforming, autothermal reforming, and partial oxidation are considered. The capital and energy costs of the proposed process are considered to determine the levelized cost of electricity, which is low when compared to other similar carbon capture-enabled processes.     

Profitability and off‐site CO2‐emission reduction from energy savings in the pulp and paper industry in different future energy markets

Previous studies by the authors have shown that energy savings in pulp and paper mills offer opportunities for increased electricity production on‐site or wood fuel export. The energy export implies reductions in CO₂ emissions off‐site, where fossil fuel or fossil‐fuel‐based electricity is replaced. To assess this potential and the related profitability for a future situation, four energy market scenarios were used. For a typical Scandinavian mill, the potential for CO₂‐emission reductions was 15–140 kton year^?1 depending on the scenario and the form of energy export. Extrapolated to all relevant mills in Sweden, the potential was 0.4–3.1 Mton year^?1, which is in the order of percent of the Swedish CO₂ emissions. Wood fuel export implies larger reduction in CO₂ emissions in most scenarios. In contrast, electricity export showed better economy in most of the cases studied; with annual earnings of 5–6 M€, this is an economically robust option. In the market pulp mill investigated, the wood fuel export was in the form of lignin. Lignin could possibly be valued as oil, regarding both price and potential for CO₂‐emission reduction, making lignin separation an option with good profitability and large reductions of CO₂ emissions. Copyright © 2011 John Wiley & Sons, Ltd.     

Role of energy efficiency standards in reducing CO2 emissions in Germany: An assessment with TIMES

Energy efficiency is widely viewed as an important element of energy and environmental policy. Applying the TIMES model, this paper examines the impacts of additional efficiency improvement measures (as prescribed by the ACROPOLIS project) over the baseline, at the level of individual sectors level as well as in a combined implementation, on the German energy system in terms of energy savings, technological development, emissions and costs. Implementing efficiency measures in all sectors together, CO₂ reduction is possible through substitution of conventional gas or oil boilers by condensing gas boilers especially in single family houses, shifting from petrol to diesel vehicles in private transport, increased use of electric vehicles, gas combined cycle power plants and CHP (combined heat and power production) etc. At a sectoral level, the residential sector offers double benefits of CO₂ reduction and cost savings. In the transport sector, on the other hand, CO₂ reduction is the most expensive, using bio-fuels and methanol to achieve the efficiency targets.     

Will a radical transport pricing reform jeopardize the ambitious EU climate change objectives?

This paper examines the effects of replacing current fuel taxes by a system of taxes that account better for all the different external costs of the different transport modes. One of the important implications of this reform is that current fuel taxes are decreased to a level of 80 euro/ton of CO₂ but that the mileage related taxes on car and truck use increase. Using the TREMOVE model for the transport sector of 31 European countries, one finds that the volume of transport will decrease because current taxes on transport are too low compared to overall external costs. Overall CO₂ emissions will decrease slightly. Using the MARKAL–TIMES model for the Belgian energy sector, putting all sectors and technologies on equal footing shows that a fuel tax reform makes that it is not cost efficient to require large CO₂ emission reductions in the transport sector and that traditional car technologies will continue to dominate the car market in 2020–2030.     

Implications of a US electricity standard for final energy demand

This paper analyzes the emissions impact of an emissions intensity standard (metric tons of CO₂ per MWh of electricity) for the US power sector on US final energy demand — i.e. the manufacturing, residential, commercial, and transportation sectors. An emissions intensity standard, although geared towards the power sector, will have implications for these other sectors of the economy through its effect on economy-wide energy prices. Using a hybrid energy-economy simulation model (CIMS), we find the effect on aggregate emissions from final demand to mostly be small. However, after disaggregating final demand, we find significant changes in CO₂e emissions for several of sub-sectors. Given that emissions reductions in final energy demand are needed alongside power sector reductions for the US to achieve deep emissions cuts, our findings provide needed insight as to whether these eventual reductions will be helped or hindered by a US electricity standard.     

Factors affecting transport sector CO2 emissions growth in Latin American and Caribbean countries: An LMDI decomposition analysis

This study determines the factors responsible for the growth of transport sector CO₂ emissions in 20 Latin American and Caribbean (LAC) countries during the 1980–2005 period by decomposing the emissions growth into components associated with changes in fuel mix (FM), modal shift and economic growth, as well as changes in emission coefficients (EC) and transportation energy intensity (EI). The key finding of the study is that economic growth and the changes in transportation EI are the principal factors driving transport sector CO₂ emission growth in the countries considered. While economic growth is responsible for the increasing trend of transport sector CO₂ emissions in Argentina, Brazil, Costa Rica, Peru and Uruguay, the transportation EI effect is driving CO₂ emissions in Bolivia, the Caribbean, Cuba, Ecuador, Guatemala, Honduras, Other Latin America, Panama and Paraguay. Both economic activity (EA) and EI effects are found responsible for transport sector CO₂ emissions growth in the rest of the Latin American countries. In order to limit CO₂ emissions from the transportation sector in LAC countries, decoupling of the growth of CO₂ emissions from economic growth is necessary; this can be done through policy instruments to promote fuel switching, modal shifting and reductions in transport sector EI. Copyright © 2008 John Wiley & Sons, Ltd.