ENERGY AND CO 2 CHALLENGE FOR SWEDEN The Swedish Association for - - PowerPoint PPT Presentation

THE BASIC INDUSTRY – AN ENERGY AND CO2 CHALLENGE FOR SWEDEN

The Swedish Association for Energy Economics (SAEE) Conference 2016 August 23-24, 2016, Luleå Johan Rootzén Energiteknik Chalmers

10 20 30 40 50 60 70 80 90 100 1850 1900 1950 2000 2050 MtCO2/ year Historical 2050 Targets 2010

BACKGROUND

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SWEDISH CO2 EMISSIONS

HISTORICAL TRENDS AND FUTURE TARGETS

Data sources: [Boden et al., 2010; EC-JRC/PBL, 2009; European Commission 2011; EEA, 2015]

Power and heat Industry Transport Other

THE CARBON-INTENSIVE INDUSTRY IRON AND STEEL MANUFACTURING ~5 MtCO2/year from 2 plants CEMENT PRODUCTION ~2.2 MtCO2/year from 3 plants

>15%

OF SWEDISH

CO2

EMISSIONS

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PETROLEUM REFINING ~3 MtCO2/year from 5 plants

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How far can existing abatement measures take us? What is the potential role for CCS and other emerging low-CO2 processes? How can we finance the development and implementation new alternative production processes?

QUESTIONS ADRESSED

How far can existing abatement measures take us? What is the potential role for CCS and other emerging low-CO2 processes? How to finance the development and implementation new alternative production processes?

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5 10 15 20 25 30 2010 2020 2030 2040 2050 PREVIOUS RESULTS

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Reduced activity level refineries Biomass in iron and steel and cement industries Reduced fraction

• f clinker in cement

BAT replacing existing process technology Carbon-intensive industry in the Nordic countries (without CCS)

MtCO2/year

Existing measures NOT sufficient if to meet 2050 GHG emission targets

5 10 15 20 25 30 2010 2020 2030 2040 2050 PREVIOUS RESULTS

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Large-scale introduction could come at a high price in terms of energy use Large volumes of CO2 to handle MtCO2/year Carbon-intensive industry in the Nordic countries (with CCS) With CCS total potential: 85% reduction in Year 2050 relative to 2010

How far can existing abatement measures take us? What is the potential role for CCS and other emerging low-CO2 processes? How to finance the development and implementation new alternative production processes?

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PERSPECTIVES ON ABATEMENT COSTS

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MACC Sweden - Industry

• 250
• 200
• 150
• 100
• 50

50 100 150 200 2 4 6 8 Reduction cost (€/tCO2) Reduction potential (MtCO2-eq)

Efficient motors Efficient buildnings CCS – Iron and steel CCS – Refineries CCS – Cement

100 200 300 400 500 600 Ref S0 S1 S2 Production costs (€/t HRC) Added costs with a carbon price of 100 €/tCO2 Added production costs CO2 transport and storage costs Purchased allowances

X €/t steel Y €/tCO2

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MATERIAL AND VALUE FLOW ANALYSIS

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Selling price of steel/concrete containing product Steel/concrete Other materials All other costs

ANALYSIS APPROACH

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COMPONENTS MANUFACTURING CAR MANUFACTURING CAR SALES STEEL PRODUCTION Profit Overhead costs Direct manufacturing costs (excl. purchased components) Vehicle tax Dealer profit Sales, transport and marketing R E T A I L P R I C E Profit Overhead costs Direct manufacturing costs (excl. steel) The sales price depends on the:

production process

Amount and mix of steels required depends on the:

compositions of the passenger cars considered

RESULTS: STEEL TO PASSENGER CAR

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5 10 15 20 25 30 35 1 6 Relative cost increase (%)

Selling price of steel Car retail price

+0.5% +25%

With investments in BAT/CCS at the steel plant and with the price of CO2 at 100 €/t ~100–125 €/car

RESULTS: CEMENT/CONCRETE TO RESIDENTIAL BUILDING

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20 40 60 80 100 1 7 Relative cost increase (%)

Selling price of cement Building production costs

+0.5% +70%

With investments in BAT/CCS at the cement plant and with the price of CO2 at 100 €/t ~5 €/m2

CONCLUSIONS

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• While covering the costs of investing in new low-CO2 steel- and

cement-making processes would require substantial increases in the selling prices of steel and cement

• Our results suggest that such price increases would neither

significantly alter the cost structure nor dramatically increase the price to be paid by a car buyer or a procurer of a building or an infrastructure project.

THE WAY FORWARD

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New perspectives on how to support innovation in the basic materials industries. Examples of such policies innovation support mechanisms includes:  to include the consumption of cement and other CO2-intensive commodities in the EU ETS  the use of sustainable procurement as a tool to create niche markets and to guarantee an outlet for low-carbon cement and steel; and,  innovative business models that create and capture value for the actors involved in the production, refinement and use of materials like steel and cement.

THANK YOU!

johan.rootzen@chalmers.se

INTEGRATED IRON AND STEEL

BASICS

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Fe2O3 Fe

Reducing agent & Heat

Specific thermal energy use Integrated steel GJ/t crude steel Existing capacity 17 – 23 BAT 16.5

Calcium oxide (CaO) reacts and agglomerates with additives, forming cement clinker

CEMENT MANUFACTURING CaCO3 + Heat → CaO + CO2 BASICS CALCINATION CLINKERISATION FUEL COMBUSTION 900°C 1450°C

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40% 60%

Specific thermal energy use Cement manufacturing GJ/t cement clinker Existing capacity 3.6 – 5.7 BAT 3

PETROLEUM REFINING BASICS

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DISTILLATION CONVERSION AND CRACKING TREATMENT

Heat, steam and electricity

CO2

Specific thermal energy use Petroleum refining GJ/t throughput Simple 1.7 – 2.8 Complex 2.8 – 3.7

SCENARIO ANALYSIS

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100 200 300 400 500 600 2010 2020 2030 2040 2050 MtCO2/year

Baseline ”Buiness-as-usual” ”Cap” Targeted emission reductions