new mechanism feasibility study report (executive summary)

New Mechanism Feasibility Study Report (Executive Summary)New Mechanism Feasibility Study for Energy Efficiency Improvement by Introducing High-Performance Industrial Furnaces to Aluminum Industry in India
By Japan Industrial Furnace Manufacturers Association
1. Feasibility Study Implementing Organization Japan Industrial Furnace Manufacturers Association: Feasibility Study Group Mizuho Corporate Bank, Ltd.: Support for creation of scenarios and MRV
methodology Evalueserve U.K. Ltd. (an Indian corporation): Collection of basic information and support for
coordination/arrangements, etc. for interviews with governmental entities and private companies
2. Outline of the Project/Activity (1) Description of the Project/Activity This feasibility study examines the possibility of realizing a reduction in emissions of greenhouse gases (GHG) by implementing the project/activity described below in the host country under a new mechanism, which is being studied for systemization in the next period framework after 2013. The study results are summarized as a case study which can serve as a basis for international negotiations in the future. The co-benefits of global warming measures and environmental pollution measures, etc. in the host country are also evaluated. Specifically, the possibility of realizing the new mechanism in the introduction of high-performance industrial furnaces in the aluminum industry in India is examined with regard to the possibility of the contributing to GHG emission reductions through the project/activity. High-performance industrial furnaces are industrial furnaces which are equipped with regenerative type combustion devices and regenerative burners. By adopting a combustion technology using high temperature combustion air that has been preheated by recovering the heat of the exhaust gas, this technology enables substantial energy savings, low NOx operation, and homogeneous heating. This technology has been highly evaluated in Japan, and a total of 1,300 units were in operation as of the end of 2010. High-performance industrial furnace technology has also been incorporated in Japanese government policy as an energy conservation technology, and is one topic of the taxation system for stimulating investment to promote structural reform in supply and demand of energy and tax reductions for green investment. In this study, the feasibility of introducing this high-performance industrial furnace technology in the aluminum industry in the host country (India) is examined, the amount of GHG reductions in the host country is estimated, and the potential for dissemination of the technology is studied. (2) Conditions in the Host Country 1) Natural gas pipelines
As stated in India’s 11th and 12th Five Year Plans, extension of natural gas pipelines is considered an urgent issue. Whether use of natural gas is possible or not will also have an extremely large impact on the object of this feasibility study (introduction of high-performance industrial furnaces in the aluminum industry).
2) Energy Conservation Act
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India’s Energy Conservation Act specifies 15 sectors as “Energy Intensive Industries” where active energy conservation efforts are to be promoted. The Energy Conservation Act was revised in March 2007, and 9 of these 15 industrial sectors were designated as “Energy Incentive Industries” (8 industrial sectors excluding the Railway sector). In these industrial sectors, legal obligations are placed on “Designated Consumers” (DC) which are defined as industrial units (plants or factories) having energy consumption exceeding a certain threshold.
3) Preferential energy conservation measures Existing policies do not provide preferential tax rates or financial subsidies for energy conservation. The Bureau of Energy Efficiency (BEE) does not provide subsidies, etc. for the reason that businesses must be sustainable. From this viewpoint, expensive energy saving technologies are not considered attractive. On the other hand, the BEE recognized the necessity of energy saving measures for downstream factories and has decided to give attention to introduction as a separate measure in the future.
4) PAT Scheme The Indian government introduced the PAT Scheme (Perform, Achieve and Trade: scheme for certifying achievement of energy conservation targets), under the leadership of BEE. This can be said a “cap & trade” system for energy consumption. In the future, the PAT Scheme will be critical for the introduction of high-performance industrial furnaces (in that it has the potential for energy conservation incentives for object plants and factories) and implementation of CDM projects (in the sense that there is a possibility that additionality cannot be certified because regulations exist).
5) Global warming measures At present, India’s per capita GHG emission is 1-1.2 tons. However, even assuming a high economic growth rate of 8-9% per annum over the next 10-20 years, due to improvement in baseline energy efficiency, energy conservation, and changes in technology, this is estimated to increase to 2-2.5 tons in 2020 and 3-3.5 tons in 2030, and thus is expected not to exceed the average of the industrial countries. Overall Goal and Master Plan As NAMA (Nationally Appropriate Mitigation Actions) for the post-Kyoto Protocol period, the Indian government has reported a goal of “reducing GHG emission intensity of GDP by 20-25% in 2020 in comparison with 2005.” Therefore, this represents the “overall goal” for future global warming measures through the year 2020. National Action Plan on Climate Change (NAPCC) On June 30, 2008, the Indian government established a “National Action Plan on Climate Change” comprising 8 missions, incorporating “Energy savings of 10,000 MW by 2012.”
6) Bilateral Offset Credit Mechanism and post-Kyoto Protocol India ratified the Kyoto Protocol in 2002 and established a DNA (Designated National Authority) in 2003. This means that India implemented a system for promoting CDM at a comparatively earlier timing than other emerging economies and developing countries. Following this, India has steadily continued to increase its number of CDM projects.
(3) Qualification as new mechanism 1) Investment barrier: In comparison with technologies produced by other countries, technologies
produced by Japan are high in cost but offer excellent performance in terms of energy saving, etc. Introduction of regenerative burners manufactured in other countries, which may be more realistic in strictly financial terms, invites a decrease in the GHG reduction rate in comparison with introduction of high-performance industrial furnaces. Therefore, although introduction of low efficiency regenerative
New Mechanism FS 2011 – Report
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burners may appear to be more realistic, introduction of a technology that can achieve a greater reduction should be set as a qualification as a new mechanism. The high-performance industrial furnace is a technology which meets this requirement.
2) Technical barrier: The recuperator is a technology that existed before the high-performance industrial furnace was developed. The conditions for introduction of the recuperator technology are easier than those for the high-performance industrial furnace, and the diffusion rate is also high. On the other hand, operation is an issue. Among other problems, the survey in India found multiple examples in which recuperators had been installed, but the amount of heat recovered was low. Introduction of recuperators, which are inferior to high-performance industrial furnaces in energy saving performance, invites a decrease in the GHG reduction ratio in comparison with introduction of high-performance industrial furnaces. Therefore, introduction of a technology which is capable of achieving a larger reduction than the low efficiency recuperator technology, which may be more realistic in financial terms, should be set as a qualification as a new mechanism. Again, the high-performance industrial furnace is a technology which meets this requirement.
3) General customary barriers: Although the Indian aluminum industry is an object of the PAT Scheme, specifically, application of PAT is limited to 10 plants in the industry. In the local survey, plants which are not included in the PAT Scheme expressed an interest in energy saving technologies, but because there are no incentives for implementing energy saving measures, alternatives with a quick return on investment are given priority, resulting in a tendency to use outmoded technologies with large GHG emissions.
(4) Measures for dissemination of the project/activity: 1) PR for high-performance industrial furnaces at exhibitions, etc.
Recognition (visibility) of high-performance industrial furnaces in the Indian aluminum industry is low. Accordingly, presentations on Japanese high-performance industrial furnace technology are necessary. However, because the Indian aluminum industry is characterized by a large number of small- and medium-sized companies, it is necessary to explain the features of high-performance industrial furnaces at aluminum-related exhibitions in India.
2) Approaches to Indian academic societies An extremely large number of papers on the properties of exhaust gas from engine combustion are presented in academic societies in India, but there is also a certain degree of recognition of flameless combustion and high-performance industrial furnaces. Although it appears that the population of engineers/researchers in this field is not particularly large, a gradual recognition in the industrial world is considered possible.
3) Demonstrations (model plants) In the dissemination of high-performance industrial furnaces in Japan, high-performance industrial furnaces which were delivered to model plants were opened to inspection based on advance agreement, and this served as a useful reference to other companies which were considering introduction. Similar demonstrations should also be planned in India.
4) Approaches to Japanese transplants in India In recent years, an increasing number of Japanese manufacturing industries have established transplant operations in India. Approaches to these companies will be effective for business transactions.
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3. Content of Feasibility Study (1) Issues studied 1) PAT Scheme
At present, the PAT Scheme has been established for 8 industrial sectors (Cement, Fertilizer, Iron and Steel, Paper and Pulp, Thermal Power Plant, Chlor-Alkali, Aluminum, and Textiles sectors). The recent condition of systemization was investigated.
2) Energy saving/emission reduction effects of PAT Scheme The specific scheme for evaluation and certification of energy savings in the aluminum industry during a period of large production increases was studied. The thinking of the Indian government regarding national energy conservation activities and policies for secondary (remelt) aluminum ingot makers which are not currently covered by the PAT Scheme was also studied.
3) Status of energy saving measures at primary (virgin) and secondary (remelt) aluminum ingot makers
A survey of the status of energy saving measures at each company and study of the possibility of introducing high-performance industrial furnaces were conducted.
4) Information on existing industrial furnaces in the Indian aluminum industry In order to identify promising cases, information on existing industrial furnaces in the Indian aluminum industry was summarized and arranged.
5) Operating data on industrial furnaces suitable for conversion to high-performance industrial furnaces
In order to estimate the effects of introduction and construct a MRV methodology, the necessary data for model plants must be collected (fuel type, furnace temperature, exhaust gas temperature, etc.). Therefore, actual data were collected through site surveys.
(2) Content of study: 1) Preliminary study
The following items were investigated. Related legal system, policies, etc. in India Screening of objects of dissemination in the aluminum sector Collection of information related to industrial furnaces in India by Japanese industrial furnace
makers Energy analysis
2) Site surveys At model plants, interviews were conducted, the furnaces which are objects of energy calculations were observed, and the necessary data were collected (Table 1).
Table 1 List of plants visited
Visit of September 2011 Visit of November 2011 Visit of December 2011 Primary ingot (virgin metal)
NALCO HINDALCO
Wire & bar Sheets
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Forgings Vanaz Engineers
Bharat Forge The survey also attempted to gain a feeling regarding the new mechanism while also obtaining
information on recent trends in policy, etc. through interviews with government agencies, etc. and nonprofit groups, as follows.
Visit of September 2011 Visit of November 2011 National
government BEE
Local government
NPO TERI
FICCI PCRA
3) Forecast of scales of energy savings and CO2 emission reductions by dissemination of high-performance industrial furnaces
Energy calculations were made for the industrial furnaces which were observed at model plants. The types of furnaces for which conversion to high-performance industrial furnaces would be possible and the amount of energy savings obtainable by introduction of high-performance industrial furnaces were calculated. Based on the results, forecasts were calculated for the scales of energy savings/CO2 emission reductions by dissemination of this technology. In addition, data on the amounts of production and consumption, etc. in each production process in the aluminum sector were collected in a preliminary study, and the amount of GHG emission reductions was calculated by estimating energy unit consumption from those data.
4) Construction of measurement, reporting, and verification (MRV) methodology for GHG emission reduction effect
Monitoring of industrial furnaces is generally performed by calculating energy efficiency from the heat balance of the furnace. However, in actuality, it is difficult to collect all the desired data in a foreign country. Therefore, a method of estimating energy efficiency using valid data was constructed based on interviews. Referring to the existing CDM methodologies (various methodologies, etc. which attempt to improve energy efficiency on the demand side), the setting levels for baseline monitoring (monitoring items, accuracy, frequency, etc.) required in CDM projects were studied, and based on the results, the MRV methodology required when applying this technology under a CDM regime was assumed. At present, meetings of ISO/TC244 “Industrial furnace and associated processing equipment” are being held, aiming at international standardization of energy efficiency, with the Japan Industrial Furnace Manufacturers Association as coordinator, and monitoring items, etc. are in the process of establishment as ISO standards. Due to the limitations of the data collected in this study, the MRV methodology constructed here does not conform to this international standard. However, it can be shown that the essence of this methodology conforms to the standard.
5) Study of other effects related to the feasibility of the new mechanism In order to judge the possibility of realizing the new mechanism in a multi-faceted manner, items related to securing environmental integrity (environmental impacts), etc. were also summarized.
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4. Results of Feasibility Study of the New Mechanism Project/Activity (1) Emission reduction effect by implementation of the project/activity
High-performance industrial furnace technology has the merit of realizing a large energy saving effect. GHG emissions are reduced by an amount equivalent to the fuel saving. The model plants where site surveys were carried out in this feasibility study have high production shares in each production process, and have typical furnaces which are used in each manufacturing process. It is possible to calculate the emission reduction effect by implementation of the project/activity by calculating the energy saving, etc. in case these furnaces are converted to high-performance industrial furnaces. The energy saving rate and CO2 emission reduction are calculated by the following equations:
Energy saving rate = (QW0 – QW1) / (Calorific value of fuel x Fuel consumption) x 100 CO2 emission reduction = Current fuel consumption x Energy saving rate x CO2 emission factor of fuel
In this equation, QW0 is “heat loss from exhaust gas under the present condition,” and is obtained by specifying the temperature of the exhaust gas when the furnace is converted to a high-performance industrial furnace (installation of regenerative burners) and calculating the heat loss from the exhaust gas at this time. QW1 is “heat loss from exhaust gas after conversion to high-performance industrial furnace.” QW0 and QW1 are obtained by the following equations, respectively.
QW0: Heat loss from exhaust gas under present condition =
Exhaust gas flow rate x Exhaust gas temperature x Specific heat of exhaust gas
QW1: Heat loss from exhaust gas after conversion to high-performance industrial furnace = Exhaust gas flow rate x Exhaust gas temperature x Specific heat of exhaust gas
In addition, the following calculation is also necessary if the energy source is also changed, for example, from electricity to gas, etc.
CO2 emission reduction by fuel conversion =
Power consumption under present condition x CO2 emission factor of electric power – CO2 emission after conversion to high-performance industrial furnace
At the present stage, we still do not know if the model plants where the site surveys were carried out in this feasibility study will implement the project/activity. However, the emission reduction effect was estimated for these plants as representative examples of the Indian aluminum industry. The outlines of the company and plant, outline of the equipment covered by the survey, the survey results, and the evaluation of the feasibility of introducing high-performance industrial furnaces were summarized for each example. The concrete numerical values are shown in Table 2. It should be noted that we were not able to obtain detailed data on operating conditions, the effect of openings, etc. in the site surveys. Therefore, these points were not considered in the estimations. Furthermore, the estimation methods also differed, depending on the condition of the data obtained on the object furnaces.
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Table 2 Representative furnaces and emission reduction effects by manufacturing process Ma
nu fac
tur ing
Virgin metal ingots
Melting & holding furnace
NALCO 45t/ch-unit 750 Heavy oil 54,000 628.0 30.0% 10,174 793 600,000
Soaking pit HINDALCO 48t/ch-unit 510 Electricity → Gas 17,280 1,490.5 57.0% 14,718 875 78,800 5.0
Remelted metal ingot
Melting furnace
Century NF Casting 5t/ch-unit 800 Heavy oil 6,000 5,401.0 35.8% 11,599 834 70,000 4.5
NAMO Alloys 7t/ch-unit 750 Heavy oil 6,552 4,185.0 23.0% 6,307 451 (Unknown) (Average) 6,276 4,793.0 29.4% 8,953 642 70,000 4.5
Wire & bar,
→ Gas 6,120 1,543.0 51.0% 4,798 376 27,600 5.0
Extrusions
10t/ch-unit 1000 LPG 14,400 3,977.5 36.0% 20,619 1,548 100,000 3.6
Reheating furnace 1t/ch-unit 520 LPG
Castings Melting furnace
Endurnce Technologies
4t/ch-unit 1000 Heavy oil 4,800 7,500.0 33.3% 11,880 854 70,000 3.9 4t/ch-unit 900 Heavy oil 3,744 4,604.0 32.0% 5,515 395 (Unknown)
(Average) 4,272 6,052.0 32.7% 8,698 624 70,000 3.9
Forgings
Reheating furnace BANAZ 0.1t/ch-unit 500 Electricity
(2) Setting of reference scenarios and project/activity boundary:
At present, the Energy Conservation Act (which took effect in 2002) and the PAT Scheme (effective in 2011) are the main measures for promoting energy conservation in India. In the aluminum sector, the objects of these two systems are the same, and comprise 10 plants. Mandatory legal energy conservation targets for a 3-year period to 2014 have been set for these object plants. Accordingly, the reference scenarios can be divided into (1) PAT object and (2) Non-PAT object. As post-Kyoto Protocol NAMA (Nationally Appropriate Mitigation Actions), the India Government has reported a target of “reducing GHG emission intensity of GDP by 20-25% in 2020 in comparison with 2005.” India established its 12th Five Year Plan (2012-2016) with this as an overall goal. The country’s National Action Plan on Climate Change (NAPCC) is positioned under this Five-Year Plan. However, mainly with the exception of the PAT Scheme, this does not extend to setting concrete targets for industry, and thus does not constitute an effective policy for promoting energy conservation.
1) PAT objects Under the PAT Scheme, baseline emissions and targets have been set for each Designated Consumer (DC) (Table 3). The following shows whether the energy consumption of each object plant (DC) is a potential target for introduction of high-performance industrial furnaces.
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Table 3 Object plants under PAT Scheme and applicability of high-performance industrial furnaces
Class 1 Class 2 Plant Applicability of
high-performance industrial furnace
None
Partial (melting in ingot production, etc.)
Integrated processes
Sheets, etc. Rolling 1 plant Partial (reheating)
At virgin metal ingot makers, a smelting process (alumina production using bauxite, etc. as raw
material) exists in the stage before the refining process. The smelting process consumes approximately the same amount of energy as the refining process. Electric power accounts for virtually all energy consumption in the refining process (manufacture of aluminum ingots using alumina, etc. as raw material) at the object virgin metal plants. Therefore, it is thought that energy conservation efforts at the PAT object plants will be directed toward reducing consumption of electric power. Accordingly, under the PAT Scheme, it is considered that energy conservation measures for electric energy will be carried out, focusing on equipment that cannot be converted to high-performance industrial furnaces. Thus, in its present phase (up to 2014), the PAT Scheme does not provide incentives for reducing energy consumption by introducing high-performance industrial furnaces. However, in the next phase (from 2014) and thereafter, there is a possibility that the PAT Scheme will be expanded to include equipment for which introduction of high-performance industrial furnaces is possible. Therefore, a reference scenario was established envisioning this possibility. Large differences in consumption of fossil fuels at aluminum refineries are considered to exist, depending on the equipment and process at individual plants, and for this reason, differences in energy consumption per unit of production are also extremely large. Regarding consumption of electric power in the refining process, in addition to the fact that unit consumption differs by plant, there is also extremely large room for reduction in comparison with the “best practice” level worldwide. This is an aspect of the aluminum refining process where the PAT Scheme is expected to demonstrate its effectiveness.
2) Non-PAT objects In India, no incentives for implementing energy conservation currently exist for plants which are not objects of the PAT Scheme (excluding the cost return associated with energy conservation). However, in the next phase of PAT (from 2014) and thereafter, there is a possibility that the energy consumption threshold for object plants will be lowered. In that case, some aluminum plants which are not virgin ingot makers may also be included in the PAT Scheme. Among these, there is a high possibility that remelt ingot makers, rolling mills, etc. will be included. The current objects of the PAT Scheme include the integrated process (one plant) and the rolling process (one plant). The 3-year energy saving targets for these two processes are 5.61% and 5.59%, respectively. Accordingly, energy saving of approximately 5.6% can be assumed as a benchmark for future
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reduction regulations. 3) Reference scenario
At the present point in time, it is not possible to say that substantive incentives for introduction of high-performance industrial furnaces exist at either PAT object plants or non-PAT object plants. However, as the Indian Government has suggested the possibility that the PAT Scheme may be expanded in the future, it is also possible to regard the level of future reduction regulations (benchmark) as a reference scenario. Therefore, in this study, an emission reduction of 5.6% was set as the reference scenario. In this case, the portion of the reduction achieved by introduction of the high-performance industrial furnace that exceeds 5.6% will be recognized as a credit.
Figure 1 Energy saving incentives in Indian aluminum industry
4) Setting of project/activity boundary
Based on the basic study and site surveys of the Indian aluminum industry, the boundary of the project/activity was set as follows. Virgin metal ingot makers: Melting and holding furnace, soaking pit Secondary (remelt) ingot makers: Melting furnace Wire rod and bar, sheet, foil products: Annealing furnace Extrusions: Melting furnace, reheating furnace Castings: Melting furnace Forgings: reheating furnace.
Virgin ingot maker Integrated Rolling
Secondary (remelt) ingot maker
Approx.
5.6%
None (however, may be included in objects of PAT in
future)
Aluminum production process
Energy saving target
None Partial None Incentive for energy saving by high-performance industrial furnace
Exist partially Partial Some Technical possibility of energy saving by high-performance industrial furnace
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(3) Monitoring methods and plan:
The amount of energy saving which is possible by furnace improvement is obtained by subtracting the fuel consumption after improvement from that before improvement. However, various problems arise because measurement for a certain period (e.g., 1 year) is necessary, but the amount of material treated during that period is generally not constant, and various uncertainties in connection with the operating environment should be considered, for example, changes in operation due to economic (business) fluctuations. On the other hand, from the viewpoint of furnace efficiency, the amount of energy saving (amount of fuel) can be calculated from the energy U necessary to treat a unit amount of material and the efficiency of the furnace. In other words, if pre-improvement furnace efficiency is Epre and post–improvement furnace efficiency is Epost, the energy saving Usave per unit of material (product) by furnace improvement is expressed by the following equation.
Usave = U (1 / Epre – 1 / Epost)
Here, Epre, Epost, and U are determined using the terms provided in ISO/WD 13579-3 (FDIS). The monitoring items are listed in 4.8(1). However, all of these items are set assuming detailed
calculations of a level exceeding that in ordinary business transactions. In this study, the essential items in MRV were set so as to enable construction of an implementation system, while also securing transparency and traceability. Namely, the essential items are 5.1.1 Measurement of fuel consumption (Volume), 5.3.1, Measurement of combustion air volume (Combustion air volume), 5.5.1 Combustion exhaust gas temperature, 5.5.2 Combustion exhaust gas volume, and 5.6.1 Mass of fixture products and jigs/fixtures for product handling (Fixture / Mass).
Virgin metal ingots
Secondary (remelt) ingots
Others
Melting furnace
Annealing furnace
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(4) GHG emissions and reductions: 1) GHG emission reduction under scenarios of project/activity
Based on the information ascertained to date, the annual production of each aluminum manufacturing process was estimated, and the total GHG emission reduction in the Indian aluminum industry was calculated using the representative furnaces of each manufacturing process in section 4.3 and their emission reduction effects. The annual CO2 emission reductions in each manufacturing process are obtained using the following equation, and the sum total is the total GHG emission reduction in the Indian aluminum industry.
Annual CO2 emission reduction in manufacturing process = Annual CO2 reduction/unit x Efficiency of high-performance industrial furnace x (Annual production of manufacturing process / Annual production per unit)
As a result of this calculation, it was found that a total reduction of 214,500 tons/year is possible in
the Indian aluminum industry. As a breakdown, the soaking pit in the virgin metal ingot process and the annealing furnaces in the wire & bar, sheet, and foil processes accounted for large percentages. When the emission reduction of 5.6% in accordance with the reference scenario is subtracted from this result, the credit framework of this project/activity is 187,200 tons/year (Table 4).
Table 4 GHG emission reduction under scenario of implementation of project/activity
Manufacturing process
after deduction of
5.6% (10,000 t/y)
Virgin metal ingot
155 Melting and holding furnace 100% Application possible. 2.28 0.43 1.85
155 Soaking pit 100% Conversion of electric heating
to RT high-performance industrial furnace.
7.85 0.77 7.08
Secondary (remelt) ingot 33 Melting furnace 50% Dust treatment is necessary
for scrap raw material. 1.69 0.32 1.37
Wire & bar Sheet Foil
112 Annealing furnace 100%
6.88 0.76 6.12
Extrusions 12 Melting furnace 100% Application possible. 1.29 0.20 1.09
25 Reheating furnace X 0% Heating temperature is low.
Furnace structure is too small.
Castings 20 Melting furnace 50% In many cases, scale is 1.0 t/charge or smaller. 1.46 0.25 1.21
Forgings 8
Reheating furnace X 0% Little merit, as temperature is

Reheating furnace X 0%
Total 21.45 2.73 18.72 2) GHG emission reductions under future scenario
In addition to the rapid expansion of production seen in manufacturing industries in India in recent
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years, large growth is also predicted in the future. Because the GHG emission reductions realized by introduction of high-performance industrial furnaces is proportional to production, the GHG emission reduction by introduction of high-performance industrial furnaces in the future was forecast based on predicted production in 2020. It should be noted that predicted production in 2020 may also change, depending on economic changes, etc. Therefore, this forecast of GHG emission reductions should be considered a reference value.
Table 5 Forecast of GHG emission reduction in 2020
Production process Annual production (10,000 t/y) CO2 emission reduction
(credit framework after deduction of 5.6%) (10,000 t/y)
Present 2020 (max) Present 2020 (max) Virgin metal ingot 155 1,000 8.93 57.6
Secondary (remelt) ingot 33 180 1.37 7.5 Wire & bar
Sheets Foil
112 618 6.12 33.8
Extrusions 25 48 1.09 2.1 Castings 20 72 1.21 4.4 Forgings 8 30
Total 18.72 105.4 (5) Measurement, reporting and verification (MRV) system for GHG reductions:
An international standard for energy efficiency of industrial furnaces is now under review in ISO/TC244 (Industrial furnaces and associated processing equipment), as proposed by Japan (Japan Industrial Furnace Manufacturers Association). As an MRV system which can be adopted as an international MRV guideline, it is desirable to follow the thinking of this international standard. Due to the timing of the present study, it is not possible to include an international standard which has been finalized as an ISO standard for the energy efficiency of industrial furnaces. The MRV system is presented here using the Working Draft at the present FDIS stage. As attachments, two ISO/WDs are included separately: ISO/WD 13579-3: Industrial furnaces and associated processing equipment – Method of energy balance and efficiency – Part 3: Batch type aluminum melting furnace, and ISO/WD 13579-1: Industrial furnaces and associated processing equipment – Method of energy balance and efficiency – Part 1 General methodology, which contains many points mentioned as references in the text of ISO/WD 13579-3. In the following, the MRV system is described using the items in ISO/WD 13579-3. This MRV system is also applied to equipment other than batch-type nonferrous melting furnaces in the Indian aluminum industry. Furthermore, because ISO/WD 13579-1 and ISO/WD 13579-3 have not been finalized as ISO standards yet, changes in some details are possible in the future. However, as these drafts are now in the voting phase based on discussion thereof, it is thought that a consensus has been reached on the main points. In Japan, methods of calculating energy savings, etc. for industrial furnaces have generally been established and have an extensive record of actual use. Because the above-mentioned international standards were proposed based on those methods, it is considered possible to apply this methodology to industrial furnace users in India without problems.
1) Measurement Measurements shall be performed in accordance with ISO/WD 13579-3, Chapter 5: Measurement
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method. However, the techniques of those methods are the ideal form. In actuality, there are many cases where it is difficult to satisfy all conditions. Therefore, a method by which MRV is possible without satisfying all conditions is presented. In cases where it is not possible to measure all items, the “essential items” for measurements are 5.1.1 Volume, 5.3.1 Combustion air volume, 5.5.1 Combustion exhaust gas temperature, 5.5.2 Combustion exhaust gas volume, and 5.6.1 Fixture / Mass. These are monitoring items that are measured in site observation for establishment of the specifications of high-performance industrial furnaces by Japanese industrial furnace makers. Energy saving and other effects which are calculated using these items are also used in judgments related to business transactions. Accordingly, MRV based on these simplified essential items forms the basis for implementation of the project/activity. Measurement of these essential items by local industrial furnace users is also possible (Table 6).
Table 6 Measurement related items in ISO/WD 13579-3 – Symbols and content of items
No. Contents
5.1 5.1.1 5.1.2 5.1.3 5.2 5.2.1 5.2.2 5.3 5.3.1 5.3.2 5.3.3 5.4 5.4.1 5.4.2 5.5 5.5.1 5.5.2 5.5.3 5.6 5.6.1 5.6.2 5.6.3 5.7 5.7.1 5.7.2 5.8 5.9 5.10 5.10.1 5.10.2 5.10.3 5.11
Fuel Volume Sampling, test, analysis and heat value Pressure and temperature Atomization agent Volume Pressure and temperature Combustion air and leak-in air Combustion air volume Combustion air pressure and temperature Leak-in air volume Controlled atmosphere gas Volume Temperature Combustion exhaust gas Temperature Volume Method of combustion exhaust gas analysis Fixture Products and jigs/fixtures for product handling Mass Temperature Scale loss Temperature of furnace surface Furnace wall Section area of parts through furnace wall Furnace inner wall temperature Furnace inner pressure Cooling water Temperature Volume Cooling water pressure Pneumatic utilities
Essential item Essential item Essential item Essential item Essential item
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No. Contents
5.11.1 5.11.2 5.12 5.12.1 5.12.2 5.13 5.13.1 5.13.2 5.13.3 5.13.4 5.13.5 5.13.6 5.13.7 5.13.8 5.13.9
Pressure Volume Hydraulic utilities Pressure Volume Electrical energy Electrical heat sources Fans/blowers RC fans Product handling equipment and motors Cooling water pumps Air compressors Hydraulic pumps Auxiliary equipment Control units
2) Reporting
Reporting shall be performed in accordance with ISO/WD 13579-3, Chapter 6: Calculation. As the thinking on reporting based on the essential items in the above-mentioned Measurement, the energy saving rate after conversion to a high-performance industrial furnace is calculated based on measurements of the combustion exhaust gas. The reduction of fuel consumption is then obtained by multiplying the result by the fuel volume, and the GHG emissions reduction is also obtained (Table 7).
Table 7 Reporting related items in ISO/WD 13579-3 – Symbols and content of items No. Contents
6.1 6.1.1 6.1.2 6.1.3 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.3 6.3.1 6.3.2
Energy input Heating and combustion energy Sensible heat of supplied cooling water Energy supplied for machinery and electrical equipment Consumed energy Consumed heat energy concerning heating and combustion Heat energy losses emitted from furnace Sensible heat of discharged cooling water Energy consumed by machinery and electrical equipment Energy loss by fluid Circulated energy Sensible heat of combustion air Sensible heat of fuel
3) Verification
Verification is performed in accordance with the table in ISO/WD 13579-3, Chapter 7: Energy supplied for machineries and electrical equipment” (Table 8).
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Table 8 Verification related items in ISO/WD 13579-3 – Symbols and content of items No. Contents
7.1 7.2 7.2.1 7.2.2
(6) Securing environmental integrity:
This technology realizes high performance in existing industrial furnaces or furnaces scheduled for installation. Environmental loads (CO2, energy consumption, NOx, etc.) are reduced, and no new environmental loads are imposed. Accordingly, environmental integrity is secured. In India, businesses are legally required to make environmental impact assessments, which have different levels of requirements depending on the investment cost of the project. After confirmation of the environmental impact assessment, state governments issue operating permits. Some plants in India have already applied regenerative burners to actual operating furnaces. However, older-generation technologies did not consider NOx emissions. Although India does not currently regulate NOx, the impact on air pollution is a concern, for example, as a cause of photochemical smog and acid, etc. Japanese high-performance industrial furnaces developed by NEDO can be expected to reduce NOx compare to conventional furnaces with low NOx combustion, and thus will guarantee a positive effect on the environment.
(7) Other indirect impacts:
No other social, cultural, and economic impacts, including environmental impacts, associated with the energy savings achieved by introduction of industrial furnaces or equipment (regenerative burners, etc.) were foreseen from the beginning of the study, and no such effects are considered likely at the present stage, when 3 local surveys have been completed.
(8) Comments by stakeholders:
Comments on the new mechanism for introduction of high-performance industrial furnaces were obtained from government agencies involved in energy-related policy and groups which may possibly participate in new schemes such as the new mechanism (Table 9). As no concrete progress on the scheme of the new mechanism was apparent when the local surveys were carried out or at the end of COP17, many comments mentioned effective introduction of energy saving technologies.
Table 9 Comments by stakeholders
Type Organization Comment
No subsidy scheme for energy efficiency exists. For this reason, energy efficiency measures must be economically sustainable. From this viewpoint, expensive energy saving technologies are not attractive.
However, because the necessity of energy conservation policies for downstream plants is understood, attention will be given to introduction as a separate program in the future.
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TERI For high-performance industrial furnaces, a method of introduction with financial assistance from the Japanese government and building trust by demonstrations in the industry is desirable. Aluminum manufacturers may invest in this technology after confirming its performance and energy saving effects. In any case, dissemination within a short period of time is considered difficult.
FICCI In introduction of high-performance industrial furnaces in India, FICCI proposes to be in charge as an Indian consultant; FICCI is positive toward introduction of high-performance industrial furnaces and believes it is possible to have a cooperative relationship in the future.
Regarding bilateral credits, this is still in the conceptual stage and cannot be compared with CDM, which is an established scheme. It should also be noted that FICCI performed consulting for CDM development in 4 projects (biomass, hydro, solar).
PCRA The objects are limited when revamping cost for energy saving becomes too expensive. Therefore, PCRA feels that promotion of high-performance industrial furnaces under ESCO schemes may be more realistic, since many companies in India carry out ESCO projects. In this scheme, a mutual division not only of profits, but also of the bilateral offset credit mechanism is desirable.
(9) Project/activity implementation system: 1) Large-scale plants (Fig. 3)
Large-scale plants have large furnaces as the object of installation, and a direct response by the industrial furnace maker is appropriate for contact on the Japanese side. On the other hand, in India, “virtually all large companies implement energy conservation measures by working with some type of consultant; therefore, it is desirable to approach a consulting company when targeting a major company.” Based on this situation, aluminum companies should be approached through a local consulting company when considering industrial furnace projects. Regarding monitoring, measurements of the essential items mentioned in 4.8(1) can be performed by the local industrial furnace user. However, these measurements can also be performed by the Japanese industrial furnace maker during site observation to decide the specifications of high-performance industrial furnaces.
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2) Small- and medium-sized plants (Fig. 4)
Due to the large number and comparatively small scale of small- and medium-sized plants, it is more efficient to establish collective contacts for industrial furnace makers and industrial furnace users, respectively. As the Japanese contact, a nonprofit organization (NPO) is perhaps appropriate. As the Indian contact, we obtained a feeling that “when adopting high-performance industrial furnaces in India, there is an idea that Indian contacts will take charge of consultancy in the future; there is positive feeling toward the introduction of high-performance industrial furnaces and a possibility of a cooperative relationship in the future” and “active exchanges are being conducted with Japanese energy conservation-related organizations, beginning with the Energy Conservation Center Japan (ECCJ).” Based on these comments, we think that placing an Indian NPO such as PCRA in charge of a consultant is promising. In monitoring, measurements of the essential items in 4.8(1) can be performed by the local industrial furnace user, and can also be performed by the Japanese industrial furnace maker during site observation to decide the specifications of high-performance industrial furnaces.
India Japan
Audit
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Figure 4 Project/activity implementation system (case of small- and medium-scale plants)
(10) Financial planning:
The following cases are assumed in this project/activity (Table 10).
Table 10 Financial planning
Equipment introduced Capacity Fuel
48 t/ch-unit Gas 57.0% 78,800 875 5.0 6,608
2 Melting furnace (secondary metal)
5 t/ch-unit
28 t/ch-unit Gas 51.0% 27,600 376 5.0 3,008
*As the unit price of emission permits, 8 euros/ton is used.
According to interviews with local companies and the Indian Government, the payback period is as follows (Table 11).
India Japan
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Table 11 Payback period according to interviews with local companies and
Indian Government Class Company Payback period Remarks
Virgin metal NALCO
No particular benchmarks, etc. for equipment investment.
HINDALCO 5 years or less Do not particularly set the payback period as a benchmark.
Secondary metal
NAMO Alloys Most important consideration in capital investments is cost.
Castings RICO AUTO <2 years 3-5 years is excessively long. Endurance Technologies
Within 3 years For new melting furnace: Within 3 years. For simple exchange of burners: Within 1 year.
Forgings Vanaz Engineers 2-3 years
Intend to implement an equipment expansion plan in 2-3 years.
Bharat Forge Extrusions Superfine Metals 2-3 years Planning to expand business 2-3 years from now.
NPOs FICCI Within 3 years As a general business case. PCRA Within 3 years General standard for capital investment in India.
The actual amount of investment and financial plan are still undecided. However, there are methods that combine self-financing and bank loans. For loans, borrowing from a Japanese bank is also assumed, depending on the case.
(11) Measures to promote introduction of Japanese technology: 1) Efforts to improve recognition (visibility) of Japanese technology
Because recognition of the high-performance industrial furnace, which is a Japanese-manufactured technology, is low in India, efforts to increase the visibility of this technology are necessary. Increasing the familiarity of the Indian aluminum industry with the high-performance industrial furnace technology to a certain level will form the basis for introduction/dissemination of this technology in the host country. Specific measures include PR on high-performance industrial furnaces at exhibitions, trade fairs, etc., approaches to academic societies in India, and similar efforts.
2) Model projects Model projects are an effective means of accelerating the introduction/dissemination of a technology with little or no actual record of deliveries. Considering the timing of implementation of the new mechanism, early implementation of model projects is desirable. Support by the government, etc. is required. Model projects should be carried out at both PAT object plants and non-PAT object plants. In combination with this, demonstrations with the cooperation of the plants carrying out the model projects are effective.
3) Cost reduction/shortening of delivery period by standardization An international standard for industrial furnaces is currently under examination by ISO/TC244. However, separately from this, accumulation of knowledge regarding the common specifications in each manufacturing process in the Indian aluminum industry and standardization of high-performance industrial furnaces for the Indian aluminum industry will contribute to reducing costs and shortening the delivery period for this technology.
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Although standardization requires more time than other measures, it will contribute to the competitiveness of all Japanese industrial furnace makers in the host country market.
4) Domestic PR in Japan In parallel with promotion measures in the host country, development of domestic PR in Japan to Japanese manufacturers with operations in India will accelerate decision-making by industrial furnace users. However, there is a view in Japan that agreement on the new mechanism is not firm, and differences in the introduction promotion effect are foreseen, depending on the status of agreement on the system.
(12) Future outlook and issues: 1) Outlook for timing of start of project/activity operation
When we explained the high-performance industrial furnace technology and the new mechanism during the local study and asked about impressions of the project, etc., we received good feelings from many companies and groups. On the other hand, when we requested detailed data on the object furnaces for energy calculations at model plants, many plants did not provide adequate data for detailed heat calculations. Although we recognized a certain degree of interest in high-performance industrial furnaces, it will be necessary to pass through several stages before the start of actual project/activity operation. Accordingly, the outlook for the timing of starting project/activity operation is unclear.
2) Issue: Shortening period until start of project operation Several barriers must be cleared before delivery, including the desire on the Indian side for a shorter payback period than in Japan, among others. However, as a total judgment of the study results up to now, if seen from the long-term perspective, it is possible to introduce Japanese-made high-performance industrial furnaces in the Indian aluminum industry. However, as mentioned previously, no outlook for the timing of the start of project/activity operation has been established, and this is an impediment to the new mechanism, which assumes that a target deadline will be set. Precisely because there is no actual record of deliveries to the Indian aluminum industry, shortening the period until the start of project operation, including the time required to eliminate uncertainties, is demanded.
3) Measure: Support by government, etc. If efforts to solve the above-mentioned problem are limited to the private-sector level, the results are also expected to be limited. Furthermore, at the conclusion of COP17 in December 2011, the new mechanism was still in the study stage, and it is considered that the debate on the division of roles of government and the private sector will develop in the future. Based on these points, the importance of government support is recognized anew, and implementation of that support by diverse methods is expected.
4) Precondition: Promotion of agreement on new mechanism The present study is preconditioned on agreement regarding the new mechanism. However, it is also necessary to consider the risk that the scheme itself will not be materialized, or its implementation will be delayed. Initially, when carrying out this study, progress toward agreement on the new mechanism was expected at COP17. However, the status of the agreement became more uncertain than was originally anticipated; for example, no significant progress on the new mechanism was achieved at COP17, and there were also objections regarding compliance with the Kyoto Mechanism. Thus, progress toward agreement on the new mechanism is a key element for realizing the new mechanism for introduction of high-performance industrial furnaces in the Indian aluminum industry.
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5. Results of Study on Co-Benefits 1) Cost of environmental externalities
Attempts to assess environmental externalities were made in Japan against the backdrop of frequent pollution suits in the 1970s and the establishment of environmental policy and environmental laws in response to those problems. More recently, in 2003, a Japanese version of LIME (Life-cycle Impact assessment Method based on Endpoint modeling) was published in collaboration by the National Institute of Advanced Industrial Science and Technology (AIST) and the national government’s LCA project. For the monetary value used in calculations of an integrated index (Eco-Index), the monetary value of damage is calculated by WTP (Willingness to Pay) in order to avoid damage of environmental impacts (Table 12).
Table 12 Integrated index by monetary conversion used in LIME
Emissions substance Conversion factor (¥/kg) CO2 1.74 NOx 141.22
From the above, it is possible to evaluate the cost of environmental externalities by reduction of CO2 and NOx as co-benefit effects in case of dissemination of high-performance industrial furnaces in the Indian aluminum industry.
2) Calculation of NOx generation In addition to NOx originating from the nitrogen component in fuels, NOx is also formed by nitrogen in the air. Therefore, calculations of the amount of NOx generation are complicated. Calculations also give various values, depending on the type of fuel, combustion method, and treatment temperature. Although it is difficult to quantify the NOx reduction by introduction of high-performance industrial furnaces, an emission reduction of 30% or more has been confirmed in cases where high-performance industrial furnaces were introduced in Japan.
6. Results of Study on Contribution to Sustainable Development in the Host Country

new mechanism feasibility study report (executive summary)

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