The use of conservation supply curves in energy policy and economic analysis: The case study of Thai cement industry

The cement industry is one of the largest energy-consuming industries in Thailand with high carbon dioxide (CO₂) emissions. Using a bottom-up electricity Conservation Supply Curve (CSC) model, the cost effective and the total technical electricity-efficiency potential for the Thai cement industry in 2008 is estimated to be about 265 and 1697 gigawatt-hours (GWh) which account for 8% and 51% of the total electricity used in the cement industry in 2005, respectively. The fuel CSC model shows the cost-effective fuel-efficiency potential to be 17,214 terajoules (TJ) and the total technical fuel-efficiency potential equal to 21,202 TJ, accounting for 16% and 19% of the total fuel used in cement industry in 2005, respectively. The economic analysis in this paper shows how the information from the CSCs can be used to calculate the present value (PV) of net cost savings over a period of time taking into account the energy price escalation rate. The results from the policy scenario analysis show that the most effective and efficient policy scenario is the introduction of an energy-related CO₂ tax for the cement industry under a voluntary agreement program. This scenario results in 16.9% primary energy-efficiency improvement over a 5-year implementation period.