Air Emissions Reductions from Energy Efficiency

Abstract

Energy efficiency has become a popular buzz phrase in the 21st century, but in addition to the pure economic cash savings that can be affected from implementing such work there is also the potential for a cleaner environment. Since becoming operational in February 2005, the Kyoto Treaty calls for a reduction in greenhouse gases (GHG) from all developed countries according to a rather strict time schedule. There is much debate as to whether those targets can be met through existing technologies. One of the obvious solutions to part of this problem is to dramatically increase energy efficiency programs because they permanently reduce the use of electricity and fuels. With the advent of the Kyoto Treaty, a trading mechanism for buying and selling CO2 credits also can provide some organizations an additional financial incentive. In addition, there are various other undesirable emissions such as SOx, unburned hydrocarbons, mercury, dioxins, and other undesirable “products of combustion” which are also reduced as a result of energy efficiency.

INTRODUCTION

Energy efficiency refers to the avoidance of waste in the utilization of energy, regardless of its source. Some electricity is not generated from fossil fuels but from hydro, wind, solar, biomass, and geothermal energy. All are considered a precious commodity, so whether fossil fuels or renewable sources are involved, the concept of being as efficient as possible in the use of energy in a facility or industrial process is a reasonable and businesslike goal. In the process of evaluating energy efficiency options, a basic guideline is if electricity and thermal fuel usage is reduced, then, in general, a positive environmental condition will simultaneously occur. The simple mechanism of reducing electricity and fuel also reduces the resulting air pollution from most of these sources.[1-4] There is one exception: electricity from a renewable resource. But in practice, renewables currently supply only a small fraction of energy in most countries (Sweden is a notable exception). Regardless, a reduction in the use of energy will reduce the fossil fuels used somewhere in the system. This reduction in fossil fuels reduces the greenhouse gas (GHG) emissions and other products of combustion such as sulphur, mercury, and dioxins, amongst others.


Under the Kyoto Treaty, there are multiple means established for reducing air emissions in the six regulated gases: CO2, CH4, N2O, hydro oxide, hydro fluorocarbons (HFC) and per fluorocarbons (PFC), and sulphur hexaflouride—SF6. All have been configured in terms of CO2 “equivalents” for purposes of calculating the avoided atmospheric environmental effects. The overall objective is substantial, permanent, worldwide reductions in total air emissions of CO2 and other GHG equivalents. To do so, a series of techniques involving not only reductions within a country but the trading of “credits” from implementation by others in the same or other countries has been set up. Examples of these are Emission Trading (ET), Joint Implementation (JI), and Clean Development Mechanism (CDM), and are all focused on the major industrial countries (referred to as “Annex I” countries, which is similar to “Annex B” in the Kyoto Protocol) to implement reductions elsewhere by claiming credit for the business or government which made that reduction possible (hence the “trading” acronym). Similar in approach to the Kyoto Treaty, the United States set up the 1990 Clean Air Act Amendment set up a “cap and trade” system, similar to GHG, for SO2 emissions.

The ratification of the Kyoto Treaty required that most industrialized countries (the United States not included) reduce their total GHG emissions. The opportunity arose for some organizations to sell these GHG reductions in units of metric tonnes of CO2 to other organizations that, at the same time, feel they need them to “offset” what is otherwise a reduction requirement. In this way, a business can either invest in energy efficiency by purchasing equipment solely designed to sequester carbon and thus create reductions in net CO2, or buy CO2 “offsets” which will be recognized internationally and allow credits against their target reduction requirement. In all cases, capital expenditures of some form are required, but this range of options allows businesses to select the optimum mix. It is noted that although some persons may disagree that global warming exists, the data available suggests otherwise. Fig. 1 illustrates the dramatic rise in temperature as the CO2 concentration increases while Fig. 2 shows the noticeable rise in both CO2 and CO concentrations in the atmosphere.

Global temp and CO2 vs time.

Fig. 1 Global temp and CO2 vs time.

Overall, energy cost reduction is the best solution for reducing GHG air emissions because it provides the only mechanism that allows a user to invest capital and reap a direct economic return on that investment while simultaneously receiving CO2 reductions due to reductions in consumption of electricity and fossil fuels. All other approaches seem to rely on investing in capital, which is a burden cost—it does reduce the total GHG, but with little or no economic return (for example, a baghouse collecting particulate may have some trivial reuse value but it will be nowhere near the amortization investment and annual operating cost). Therefore, one of the best solutions is to invest in energy efficiency and, as a direct result, simultaneously improve the environment through a reduced need for energy.

Emissions measurements in metric tons (“tonnes”) of CO2 equivalents are the internationally accepted norm for reducing the “global warming” problem. Various calculations have been made for GHG reductions, but most depend on such factors as the mix of electric generation from fossil fuels, which varies greatly around the world. For example, until the 21st century in Quebec, Canada, and Brazil, most electricity came from hydroelectric plants, which do not produce GHGs. There is a debate in the science community whether GHGs emitted from decomposing growing plants—which are destroyed when land is dammed up—are, in fact, a GHG “penalty” which should be charged to hydroelectric generation. Therefore, the argument follows that if one saves electricity consumption, one does not “help” the environment by reducing GHG emissions. Thus far, this argument is not widely accepted in the environmental community. However, in practice, all geographic areas have (inefficient, old) fossil fuel plants as “topping” systems at a minimum, to cover the electricity that could not be produced from base-loaded hydro or nuclear energy. In such cases, this energy efficiency would translate to a reduction in operation for these polluting fossil plants as the “last run” unit.

 CO2 concentration vs time.

Fig. 2 CO2 concentration vs time.

In the United States, decisions on energy efficiency tend to be made solely on the basis of pure economics. In some countries, culture, good sense, and government edict (not necessarily related to cost/benefit) have been the deciding criteria for the operational mix of generating plants. For example, the ‘push’ in Sweden in the 1930s for very well-insulated buildings has finally paid off financially. For decades, however, it meant only that people were more comfortable in the cold climate as compared to others in surrounding areas, regardless of the amount of utility bills paid. Despite a similarly cold climate, Norway does not possess the same well-insulated buildings as Sweden, uses about twice the energy per capita as its neighbour, and is only now pushing energy efficiency. This difference alone can be seen as cultural issues affecting energy efficiency in a given country and the use of fossil fuels to run the local economy. Japan imports about 97% of its energy, so it focuses strongly on energy efficiency in every aspect of life because it is economically prudent both for business and government to do so. On the opposite spectrum, the United States wastes the most energy and has historically done so for over 100 years, primarily due to historically low energy prices. Because energy was cheap, methods for energy reduction did not find much of a foothold in the United States until the 1970s. These examples illustrate that there are a variety of reasons for being energy-wasteful or energy-efficient, and cost effectiveness has not always entered that equation.

THE HYDROGEN ECONOMY ALTERNATIVE

The previously mentioned issues of emissions and the GHG problem of excessive CO2 generation are greatly reduced if the input fossil fuel is pure hydrogen, H2. Hydrogen is clean combustion (effectively no CO2 formation) compared to natural gas (let alone other fossil fuels) and the result of combustion is almost pure water vapor. This is because when pure hydrogen is burned in the atmosphere, there is not an accompanying carbon molecule to recombine. Issues of CO2 tend not to be present to the same extent (although there is atmospheric recombination). Therefore, scientists have noted that if automobiles ran on hydrogen, much of the current air pollution generated by transportation would be reduced, as would the GHG emissions of CO2. However, very little hydrogen exists naturally in nature. Most of it is produced through industrial process means such as stripping hydrogen off of methane (CH4) or using electrolysis to separate water (H2O) into pure oxygen and pure hydrogen (which requires substantial energy). As the entire oceans are full of hydrogen (water is H2O), it would be great if cost-effective methods of separation were available for this “infinite” potential energy source other than pure electrolysis, which is simple and very energy-inefficient.

The greatest benefit of hydrogen use could be in transportation, namely cars and trucks. However, there are serious infrastructure problems at the present time that currently limit the practical use of such technology. In conjunction with the cost of the fuel and lack of refueling systems, few vehicles would be capable of combusting hydrogen. Also, there is very little refining capability in producing large amounts of hydrogen and there is a lack of means to safely transport it around the country. One great benefit of hydrogen is its energy storage capacity in a small space, just as with natural gas or oil. In contrast, electricity is normally stored via chemical batteries or esoteric solutions as pumped hydro storage or compressed air caverns, which are large, very localized, expensive, and relatively inefficient. It is interesting to note, however, that small packages of compressed air storage for electricity is now available (2006) in modules that can fit in a closet and produce UPS power for personal computers and other critical power functions.

Above all else, it should be understood that hydrogen is not available in its natural state in meaningful amounts, and therefore, it virtually always requires energy to “produce” it. In practice, hydrogen is merely a method for “storing” energy—possibly convenient and with high energy density—but an entire infrastructure system of storage, distribution, and fueling would certainly have to be developed. Currently there is no structure, to say nothing of the production plant infrastructure worldwide which is very insignificant at this time. So when it is said that hydrogen combustion produces no emissions, it should also be understood that generating hydrogen causes GHG emissions, unless renewable energy sources are involved. So there may be no net effective GHG emissions reductions using hydrogen as a fuel source, despite the rhetoric of some. This total energy accounting is currently controversial because of arguments that only renewables such as solar and wind can be used to generate hydrogen. However, such arguments forget that without generating the hydrogen, those same renewables could have been used to displace existing fossil fuel production in the first place.

EMISSIONS IMPACTS

In most countries, there are now environmental agencies that oversee the regulation of pollution within its borders. In the United States, the Environmental Protection Agency has that charge and allows individual states to administer their own more severe rules (such as California). In most cases, equipment that directly combusts fossil fuels must secure air permits and have “permission to pollute,” which usually involves having limits on the peak rate of generation of certain pollutants as well as total annual pollutants. In cases where the pollution would otherwise be too severe, scrubber systems as “control” devices are mandated to remove sulphur, mercury, or other undesirable products which are deemed unhealthy to the public. However, no country had ever regulated the amount of CO2 emitted until the Kyoto Treaty. Systems have been developed which can either reduce or capture NOx (nitrogen oxides, which cause smog), but none have been tested in commercial use yet for pure capture of NOx or CO2. With the modern understanding that GHGs are promoting global warming, steps are now underway in most countries to change that paradigm and drastically reduce the CO2 emissions into the atmosphere through a combination of public awareness and new laws governing air emissions.

In Table 1 (in which all tonnes are metric), a typical set of emissions factors are shown, representing the weight of pollutants per MMBtu in a given category emitted from combustion of three common fossil fuels used today. These fuels are natural gas, #2 Fuel Oil (a form of light diesel), and coal. These emissions figures by themselves seem fairly tame at per million Btu [Higher Heating Value (HHV)], but when applied to a typical large industrial boiler they can lead to a lot of magnitude pollution per year. The second half of the table shows the impact of fossil fuel combustion[5] on some of the critical GHGs as a function of the fossil fuel source. It can be seen that merely performing a fuel switch from coal to natural gas can have a dramatic impact on the CO2 generated for the same energy output result. This is one of the reasons that natural gas has become so popular as a fuel source.

In Britain and elsewhere in Europe, a new rigid agenda is forthcoming to large industries called the “carbon crunch,” namely butting up against the allowable limits of CO2 emissions for a given nation regardless of its population, economic growth, wealth, or any other parameters. This will soon mean that some corporations will find that if they want to expand production, they will either have to implement major energy efficiency upgrade programs on a scale not seen previously or they will have to pay dearly for CO2 reductions implemented by them and pay someone for credits through a free market where the highest bidder wins. Recent data suggests that in Britain, a tonnes of CO2 credit may go for about 20 €, or about $25 USD, which is about five times the estimated value a few years ago—and the carbon crunch has yet to really begin! Not only are CO2 emissions being capped by country, but they are being lowered—in the next 10 years, the total CO2 emissions for most Kyoto signators will have to be 10% below their 1990 levels of CO2 emissions. A notable exception is Russia, which, due to the collapse of the Soviet Empire and the retraction of industry, already has had a reduction in fossil fuel due to small scale “depression” from business downturn while the country tries to adjust to a free market economy.

Table 1 Air emissions from burning fossil fuels

Pollutant fuel CO2 CO NO* Lead PM10 Voc SO*
Units of pounds/MMBTU fuel combusted
Nat gas 121.22 0.082 0.03        0.0000005           0.0076 0.0055 0.0006
#2 Oil 178.4 0.04 0.169      0.0000005          0.016 0.008896 0.2603
Coal 240.5 0.6 1.75
Using 2,000,000 MMBTU natural gas, or #2 fuel oil, we obtain the following:
Metric tonnes pollutants for 2,000,000 MMBTU combusted
Nat gas 110,000 74 27               0.0              6.9 5.0 0.5
#2 Oil 161,887 36 153            0.0               14.5 8.1 236.2
Coal 218,240 544 1588.0

Another factor in environmental emissions is the effect on marginal GHG emissions from generation due to the implementation of energy efficiency measures. The amount of CO2 saved varies by region, season, and time of day (TOD) simply due to the mix of current electric generation equipment in place. Some states are attempting to receive credit for the energy efficiency impacts in their State Implementation Plans (SIPs) submitted to the EPA concerning electric power generation; this involves developing local-specific factors for the kWh savings and when they occur (day/night/weekend). At an earlier point, the Alberta Interconnected Systems (AIS) in Canada had their marginal generation emission rate at 0.211 T/MWh, but their average was 0.279 T/MWh. This shows the strange effect that the electrical energy efficiency impact has on their more GHG-friendly plants (it is likely that the base-loaded coal plants were unaffected). Some energy efficiency measures will have very different emissions profiles than others even within the same plant or building simply due to the time impacts of those savings. Examples are lighting, which saves more at night than in the day, and a chiller savings measure, which is likely to save more in the daytime than in the nighttime. In fact, normal energy efficiency savings off-peak have a lower economic value to a project than savings during the daytime hours. However, the emissions reductions impact at night, per MWh, may be larger than by day, because many electric utilities are base-loaded with coal and may actually reduce coal consumption at night. Those reductions by day may reduce only gas-fired equipment consumption. This further demonstrates part of the problem with GHG emissions: at present, there is a reverse effect in that the least cash cost savings can occur in such a way that it discourages saving measures that would otherwise provide the maximum GHG emissions reductions.

ENERGY EFFICIENCY AND ENVIRONMENTAL STEWARDSHIP COMPLEMENT EACH OTHER

No matter how you look at it, permanently reducing the volume of fuels and kWh used reduces the total raw fuel inputs as reducing fossil fuel combustion ultimately reduces air pollution. Differing mixes of fuels occur in different regions of a country for electric power generation, but every country uses electric power that has a meaningful fraction generated from fossil fuels— typically natural gas, oil, and coal. These three fossil fuels cause major air pollution, regardless of the country’s current government’s environmental regulations on clean combustion or scrubber technology.

The environmental aspects associated with energy efficiency can certainly assist in the reduction of pollution, but it will not be eliminated solely by aggressive energy efficiency.


Virtually every responsible scientist now concedes that the global warming problem is real, and the arguments now tend to be focused on how much human intervention can impact the reduction in global warming and at what rate. In July 2005, the Wisconsin Public Service Commission of the United States (the state regulating body for electric utilities) redefined and allowed energy efficiency investments by the electric utilities to equal footing with investments in generation, transmission, and distribution. This is apparently the first utility-regulating body to recognize legally that reducing kWh or kW has just as much economic value as investments in generating, transmission, and distribution equipment. This provides some rational economic basis for not only allowing but encouraging real energy efficiency by promoting less energy use during a time in which energy use is otherwise growing. Such encouragement, at the very least, could flatten out electric usage over time and allow the utility to reap a return on their investment at their normal return rates. Instead of rewarding a utility for investments in growth, it is essentially rewarding a utility for slowing or stopping growth in electric energy consumption. Several states require utilities to produce integrated resource plans; for example, PacifCorp has agreed to procure all available cost-effective energy efficiency resources before, and in addition to, conventional generation assets. California has a similar provision so as to promote energy efficiency in the electrical generation area. Many other states have alternate programs, but many are geared at attempting to promote some form of energy-efficient and alternate energy solutions within the bounds of cost effectiveness and still be reasonably acceptable by the public at large. This demonstrates that here in the United States, above all else, the states recognize and are responding to public desires, whereas currently the federal government still seems to be considering whether GHG emissions cause global warming. A coalition of north eastern states has banded together to create legislation referred to as “mini-Kyoto,” which recognizes and accepts that ignoring the problem of global warming is no longer appropriate. Because the United States federal government has not and will not be leading the charge, those selected states will create their own more rigid rules even though it might initially cause some negative economic impact in those isolated states. The feedback, however, is that over time they will gain advantage by being a leader in the world, regardless of federal guidelines, and their individual states will actually benefit from the improved situation vis a vis GHG control.

EU countries have adopted the Kyoto Treaty as well as developed programs and incentives to promote both energy efficiency and emissions limits—it is clear the two are strongly related. Because all EU countries signed the Kyoto Treaty, there is also unanimity of purpose and focus in the EU. Because the United States national government has not ratified the Kyoto Treaty, numerous states are now taking the lead and imposing Kyoto-like rules and regulations out of a common sense of need and purpose. Fig. 3 shows the huge disparity between total CO2 emissions by the United States and other countries. This is further clarified by Fig. 4, showing the per capita emissions of CO2 per country (per country emissions data from UN Millennium Indicators, 2005). In both cases, the United States is the biggest offender of any country by far, and when compared to Europe, is downright profligate (the EU as a whole is less than half the CO2 per person than the United States or Canada and can be easily traced to cheap energy in North America). The development of the Chicago Climate Exchange is another example of a voluntary program in the United States that has begun without government initiative. Although trading is slow, it is increasing. More companies, cities, and states in the United States are joining to demonstrate their commitment to reducing global warming, even if it costs them and their citizens some additional money in the short-term. The nightmare scenario, however, is for fifty U.S. states to adopt fifty sets of laws that all differ substantially. Remember that California alone has the world’s sixth largest economy, so some of these state programs may have tremendous influence in Congress by forcing a rational national plan despite of the United State’s refusal to ratify the Kyoto Treaty.

 Annual metric tonnes CO2 by country-1998.

Fig. 3 Annual metric tonnes CO2 by country-1998.

Per capita CO2 emissions by country-trends of CO2 emissions per country.

Fig. 4 Per capita CO2 emissions by country-trends of CO2 emissions per country.

In the United States, a program with RECs (Renewable Energy Credits) is one way to reap additional financial benefit out of a renewable electrical energy production project—the RECs can be sold as certificates proving that the recipient has obtained renewable (and hence GHG-free) generation. The state of Pennsylvania has gone even further and identified energy efficiency results in terms of an “Alternate Energy Credit” (AEC) source, which can be sold (similar to the idea that elimination of a Watt-hour is a “negawatthour”). These revenues can thus be initially used to help support the energy efficiency investment and reduce environmental pollution and GHGs. These RECs and AECs are all based on 1 MWh electricity “generation” units. Depending on the location of the source of the electrical power generated, 1 MWh could represent 0.30.5 T of CO2 avoided. Prices for these RECs vary by state or region, depending on the base cost of distributed electricity in a given area. The new AECs are predicted to be as low as $25/MWh in Pennsylvania due to lower-cost power, while prices in Massachusetts have been about $55/MWh. This REC credit is in addition to the actual raw KWH sale itself.

CARBON SEQUESTRATION

One area of renewables which has created some controversy is that of biomass—namely the use of grown crops as a fuel source. Such crops absorb CO2, much as humans breathe oxygen for survival. The concept for emissions credit is that if one combusts biomass, then the CO2 returned to the atmosphere will be absorbed by other crops, which will then be harvested and consumed as fuel. Similarly, forests and other greenery are considered “sinks” for CO2, and the focused process of creating such sinks is referred to as “carbon sequestration” (literally grabbing CO2 from the atmosphere). The concept is that by using renewable crops in boilers, one can generate electricity (or thermal heat for steam for processes) and the CO2 emitted is actually the “gas” needed by the next round of crops for their breathing source. This creates a mutually circulating fluid wherein the generated CO2 actually helps support the absorption of CO2, which helps both industry and the environment. As part of any such technology, appropriate equipment must be used to scrub the exhaust for undesirable particulates and sulphur compounds and to control nitrogen compound discharges. The process, demonstrated in Fig. 5, is not perfect, but from a pure CO2 viewpoint it is considered “neutral”.

Carbon sequestration has led to some major research, including technologies and techniques for capturing the carbon before it enters the atmosphere after fossil fuels or other fuels are combusted and methods to sequester the carbon captured in the ocean.

The practical technologies, some of which exist in a fairly efficient (but not cost-effective) way, include solvent absorption/scrubbing; physical adsorption; gas absorption membrane systems (which themselves require a lot of energy to operate effectively); cryogenic fractionation (supercooling and distilling liquid CO2 for separation and then some form of disposal as a concentrate); and chemical looping (in which flue exhaust gases are contacted with special metal oxides, which release oxygen for combustion but capture the carbon). By early 2006, a consortium of BP and Scottish & Southern Energy intend to have on-line a new power plant that strips the hydrogen off natural gas and captures the resulting CO2 at the source before it can be emitted to the atmosphere. This CO2 would be sequestered as a solid material and then injected into the ocean bottom, and the resulting H2 would be using for fuel to generate electricity without generation of CO2 in the exhaust. This would be the first industrial scale demonstration of sequestration. The most common method available presently is to plant more forest area and let the carbon dioxide released from normal combustion be absorbed over time into the growing tree plants, which then produce oxygen from photosynthesis as the trees grow. This “offset mechanism” approach still has the negative effect in that, initially, the CO2 is discharged first into the atmosphere and only over time is a portion of it absorbed. However, this approach is inefficient because it also requires large plots of land—unless the forested land can grow harvestable cash crops that can be reused on a continuing basis. This is the new focus of some biomass power generation products.

Carbon sequestration options.

Fig. 5 Carbon sequestration options.

EXAMPLE OF ENERGY EFFICIENCY YIELDING ENVIRONMENTAL BENEFITS AND COST EFFICIENCY

Consider using sludge in an anaerobic digester at a municipal wastewater treatment plant (WWTP) in India simultaneously to cogenerate electricity and heat, use the heat to produce more biogas, more quickly destroy sludge solids (thereby reducing the sludge dewatering process and ultimately reducing the amount of waste solids to be carried away by trucks), and reduce the environmental pollution (which presently flares 100% of the biogas and produces the most emissions). The baseline production of biogas through anaerobic digesters was originally low only because no digester gas was used for heating the sludge via a hot water boiler, due to the mild weather conditions in-country and the original desire for low first-cost construction of such a plant. Controlling operating costs was not a priority originally, but instead the need was for rapidly installing and operating WWTPs where there had originally been none. However, this means that the unheated sludge circulating in the anaerobic digesters does not decompose very quickly, limiting the destruction of solids in the sludge and the amount of gas generated (which then flares). The unheated sludge’s average temperature was 24°C, whereas it typically heats to 36°C-40°C for optimum decomposition (36°C being considered optimum due to tradeoffs in energy required to heat the material and biological activity). The plant electrical load was approximately 850 KW (peaks about 950 KW), all from the electric grid, with TOD utility rates.

An ESCO project utilizing cogeneration, peak shaving, and ultrasound to improve the economics was planned for this (unheated) anaerobic digestion process. The energy measure consisted of 750 KW (BF?) cogeneration, a 250 KW peak shaving generator (the actual operation of the peak shaver depends on the actual peak demand during the on-peak electric period), heat recovery for heating the digesters, and an ultrasound system for further breaking down the fibrous materials in the sludge, thus generating more biogas due to additional surface area exposed in the sludge. The end result of such an approach was substantially greater biogas generation on-site and a further dewatering of the sludge and destruction of volatiles. Part of the reason for such a project was the desire of the government to promote energy efficiency (thus lowering operating costs) and demonstrating CO2 offset benefits (because the flared gas would be used in offsetting other electrical generation). In addition, the resulting sludge was originally pressed and dewatering was accomplished with a fuel oil-fired dryer on-site to further remove water before the final sludge was hauled by truck to a landfill (and with the gas flared in sight of the fuel oil-fired dryer). This trucking also used fossil fuel, and the landfill consumed fuel oil for equipment to distribute the material around. The project reduced the amount of dewatering required and thus decreased the remaining sludge weight slightly by producing the additional biogas through further decomposition. This resulted in even further (secondary) CO2 reductions through less trucking and landfill activity.

Based on the engineering analysis performed, the total installation cost was determined to be about $2,100,000. Because the existing biogas was naturally generated without heating, the resulting products from the plant was dryer sludge that would have further decomposed at a landfill, letting off additional unconstrained CH4 (with an ozone damage about 21 times that of the CO2 generated from combustion). So, not only was there the CO2 generated from the flare of gas, but also the unburned hydrocarbons given off from decomposition. Being able to generate more gas on-site and using it on-site to offset grid electricity generated by a cogeneration plant does not produce more net CO2 at the plant site. This is because, in this case, the CH4 (and associated unburned methane from material decomposition) not generated from combustion under the project would be naturally generated over time through decomposition, but with no accompanying environmental or financial benefits. For illustrative purposes, only the equivalents for NOX and SOX are ignored herein. Table 2 shows the results of an energy and environmental efficiency project which also generates meaningful GHG reductions as a direct part of the project, and additional economic enhancements possible due to this environmental benefit on what otherwise might be considered only an energy efficiency project. These economic enhancements include CO2 credits that could be sold to the EU or elsewhere to buy down the cost of the project.

This information shows how the upfront purchase of future CO2 credits[6] for avoided CO2 can be beneficial in assisting the economics of a project. The difficulty in such a case as this is that the avoidance of kWh purchases becomes part of the “savings,” but those savings come from elsewhere, even though, with strict measurement and verification protocols, the true benefits can be documented and certified. It also shows how a net sale price of $10/T of CO2 could dramatically affect the payback of an industrial project in India, and yet that price is less than half of the currently expected price in the EU as of fall 2005. This demonstrates that utilizing the digester gas in a responsible manner cannot only reduce operating costs but also reduce what otherwise is pumped into the atmosphere as additional tonnes of CO2. It further shows how an EU business investing in a country like India—where the GHG credit limits do not currently apply yet credit is received for these certified GHG credits in the EU—can be beneficial, especially when they could invest about 40% of the unit price and receive equal (per metric tonne) GHG reduction credits.

To put this in perspective with the 493 Rs/T of CO2 credit and using the annual CO2 savings and the economic impact for the stated kWh avoided/year, we calculate a net added GHG impact savings of 0.2326 Rs/kWh, which compared to 3.962611 Rs/kWh average price is only about 6% improvement in the annual payback calculation. However, by being able to sell upfront many future years of GHG benefits and then using that money to reduce the net capital cost, there is a dramatic impact on the economic viability of the ECM, going from about 4.9 years simple payout to 4.0 years, pulling the project into the minimum range for selection. So, considering that the GHG credit only created about a 6% increase in annual equivalent, the economic benefit is multiplied many times over, if one can plan for 15 years into the future of reliable operation. It is the long-term years of multiplier that create the dramatic impact as well as the fact that there are currently organizations willing to pay upfront for those future GHG credits on the basis that there is a valid M&V methodology in place for verifying the true future efficiency and operational status of the resulting ECM. If one considers a gas-fired plant today, with U.S. prices of about $15/MMBtu (HHV), the fuel value alone of a generated kWh could be as high as 0.15 USD, but the GHG value of avoiding that kWh at the U.K. price of about $30/T CO2 is about 1.63 US cents/kWh, or only about 11% of the fuel price. That benefit is converted to a 15-year upfront stream of money and could dramatically cut the cost of the project by 30%-40% due to the upfront nature of capitalizing the future cash flow stream.

Table 2 Benefits of CO2 credits for environmental projects

Wastewater treatment plant (WWTP) biogas enhancement and recovery in India (MCF = 1000 cubic ft at standard conditions)
Life of project, years 15
Original bio gas generated/year, MCF/year 137,664
Bio gas generated/year after Project MCF/year 137,664
Percent methane in biogas 65.0%
BTU content biogas, BTU/ft3 HHV 650
KWH/year generated on site before retrofit 0
Cogen heat rate (assumes all auxiliaries within), BTU/KWH HHV 15,000
KWH/year generated on Site after retrofit 5,447,894
Current grid elec producer cogen heat rate-nat gas, BTU/KWH HHV 8500
Amount of methane gas for engines, MCF CH4 89,482
Amount of inert CO2 gas, MCF CO2 48,182
Hours per year operation 8000
Amount CO2 generated by grid cogen plant, tonnes/year 2437
Amount CO2 avoided by trucks to landfill, tonnes/yr 128
Amount CO2 avoided by equipment at landfill, tonnes/yr 5
Lifetime CO2 avoided by Project 38,552
Implementation cost, USD $2,106,978 Already has digesters
Implementation cost. Rs 105,348,879
Savings benefits/year, Rs 21,587,885
Raw payback 4.9 Years-not attractive
Average cost/KWH, Rs./KWH 3.96 (U.S. 8 cents/KWH)
Necessary sale price to be financiable, Rs 86,351,540 Management Decision
Minimum buydown required for financing-U.S. company grant 18,997,339 Rs. $379,946.78
Cost/tonnes CO2 avoided, Rs 493 Rs.
Cost/tonne CO2 avoided, USD/tonne $9.86 Minimum acceptable
Payback with 9.86/tonne Buyback of CO2 credits 4.0
Buydown at $30/tonne $1,156,559 E.U. Price in 8/05
Net price after applying carbon credits to sale price $950,419
Net payback with E.U. free market CO2 prices 8/05 2.2 Years Very Attractive Investment

CONCLUSIONS

The quest for reductions in environmental pollution— whether it be different chemical compositions such as SOX, CO2, NOx, etc. or whether it be simply heat dumped to the atmosphere (such as a cooling tower does)—shares a common thread in energy efficiency.[7-9] The simple reduction in energy consumption for doing the same job reduces the requirement for energy to be produced. Because the majority of electrical and thermal energy comes from fossil fuel combustion, it simply reduces the need for these fossil fuels in order to achieve the same result. If such efforts were to be accomplished on a vast international scale, it might be possible for the existing fossil fuel pricing scenarios to be meaningfully altered. Also, the reduction in GHGs only helps reduce the global warming situation while at the same time reducing the other air pollutants such as NOX and SOX. The beauty of the energy efficiency approach to environmental air pollution and GHG reductions is that the cash cost reductions, which can be achieved by selling the environmental credits in the appropriate market, can help pay for the simultaneous environmental improvements in many cases. The ongoing work in carbon sequestration could find itself clashing somewhat with energy efficiency. If simple inexpensive sequestration were possible, the energy efficiency aspect of environmental pollution might not receive the same level of focus as it does currently due to pollution laws that mandate businesses to invest first in carbon sequestration, even to the exclusion of energy efficiency measures. However, this is unlikely to happen. Fortunately, there is mounting evidence that energy efficiency is growing in importance as a key element in the fight to reduce GHGs because in general it relies on proven technologies with long-term value.

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