INDUSTRY SECTOR

Industry Demand

IndustryThe industry sector in India doubled in value during 2000/01 to 2010/11 and grew at an annual growth rate of 7%. In 2010/11 the industry sector consumed ~1656 TWh of energy, which is 45% of the total commercial energy consumed (TEDDY, 2012). Seven sub-sectors - aluminium, cement, chloralkali, fertilizer, iron and steel, pulp and paper, and textiles are the largest energy consumers, accounting for around 60% (TERI calculations) of total energy use in the industry sector. These are analysed at individual sub-sector levels. The remaining sub-sectors are categorized as “Others”. The present analysis offers scenarios of likely reduction in energy demand by effecting efficiency measures in industry. The autonomous Energy Efficiency (EE) improvement that occurs in individual sectors has been considered as a major driver in the analysis (CSTEP). Existing policy mechanisms such as the Perform-Achieve-Trade (PAT) scheme of the Bureau of Energy Efficiency (BEE) wherein the excess energy savings could be traded, and non-compliance penalized, is also factored into the analysis.

Level 1

This scenario assumes no new government policies, other than the one PAT cycle (2012-15). The autonomous EE penetration levels are also low. The norms are applicable to only the subset of the units in the seven industry subsectors. However, the efficiency of the units undergoes a marginal reduction/revision by the end of the terminal year (2047). The remaining units in the sub-sector do not opt for EE. The efficiency of these units improves at 5- 15% of the efficiency improvement for the units that opt for EE. The “Others” undergo reduction in energy intensity by a CAGR of ~4%.

Level 2

This level includes a gradual enhancement of penetration of EE in Industry (Table 1). Industrial units opting for EE would achieve the best efficiency possible in every sub sector. The units not opting for EE also improve their efficiency, but by a much lesser degree. The “Others” undergo a reduction in intensity of about 4-5% CAGR.lights.

Level 3

Building on Level 2, this scenario further increases the EE penetration under the seven sub-sectors. The units not opting for EE increase their efficiency across processes at a rate of 20-30% of the efficiency improvement by units that opt for EE. The “Others” undergo an efficiency improvement of about 4-5% CAGR.

Level 4

Level 4 indicates the maximum possible improvement that can be achieved in the industry sector. This level further increases EE penetration. In addition, this level assumes that the units not taking up EE undergo an efficiency increase of between 20-50% of the units that opt for EE. The “Others” improve their intensity by about 5-6% CAGR.

Technology Options in the Iron & Steel Sector

Five Technology options have been modelled in the Iron & Steel sector of Industry. In general, the default technology option is 1 and other options are denoted by increasing numerals. Increase in the numeral of the technology option is not necessarily an indicator of emissions reduction but in general denotes reduction in energy demand.

Level 1


Default

This option does not invoke specific tech options and the trajectories are based on the levels which have been chosen and the SEC reductions are based on these chosen levels.

Level 2

Switch to Electric Furnace

This tech option studies the impact of a major shift to electric furnace processes instead of the oxygen furnaces which are expected to be dominant in the autonomous/default scenario. Under this tech option a major reduction of the SEC can be expected based on the increased efficiency of the electric processes. A major transfer of efficient electric technologies is estimated giving rise to major improvements in the state of the art of electric processes in the next three decades.

Level 3

Increased Gas based Direct Reduced Iron (DRI)

This option characterizes the impact of a concerted drive to increase the penetration of Gas based technologies in the manufacture of DRI. Plants using gas based DRI are under operation in developed countries and such plants have reported very low SECs and high efficiencies. In addition, the emissions from these plants is also much lower than coal based DRI plants. There are very few gas based DRI plants in India primarily due to the low availability of natural gas in the country and the priority mechanisms which are in place to allot the available gas to fertilizer and power plants. In fact, existing gas based power plants have been facing severe shortages of gas supplies with the hampering of operations. This tech option seeks to provide insights into the scenario in which large supplies of gas could be imported or domestically sourced enabled by strong government policy support and such supplies could be made available to steel plants for increased efficiency of use.

Level 4

Increased Electricity from the Grid

This tech option models a major switch in the sourcing of electric power in the iron and steel sector. Current trends show that plants are preferring to produce most of their electric power through the use of Captive Power Plants which are largely powered by domestic and imported coal. This tech option provides insights into the impact of a switch to procuring most of the electric power from the grid. This assumes that the grid power would be available and would be reliable as well. Such a switch provides a major improvement in the energy efficiency of the specific plant since the inefficient CPP’s energy consumption is now outside the plant boundary. The final energy use could be reduced significantly under this tech option.

Level 5

Increased Scrap

This tech option is a major driver for reduction of thermal energy consumption in iron and steel plants. European and Japanese plants are reportedly running with more that 30-50% iron being substituted by steel scrap. The utilization of scrap in steel plants in India is probably less than 3-5% and thus a large potential seems to exist over the long term, if the enabling infrastructure and incentives can be provided along with policy based support. Increased scrap utilization has the potential to significantly reduce the thermal energy consumption in steel plants since the typically 60% of the total energy is used for producing iron and this can be saved through the increased use of scrap in the downstream steel making process.

Technology Options in the Cement Sector

IndustryFour Technology options have been modelled in the cement sector of Industry. In general, the default technology option is 1 and other options are denoted by increasing numerals. Increase in the numeral of the technology option is not necessarily an indicator of emissions reduction but in general denotes reduction in energy demand.

Level 1

Industry Sector

Default

This option does not invoke specific tech options and the trajectories are based on the levels which have been chosen and the SEC reductions are based on these chosen levels.

Level 2

Industry Sector

Increased Waste Heat Recovery (WHR)

This option characterizes the impact of a concerted drive to increase the penetration of WHR technologies in cement plants. Such technologies are available globally and in India, however the current penetration is low. Under this tech option a large penetration of such technologies is assumed with a corresponding reduction in thermal and electrical energy used in the process.

Level 3

Industry Sector

Increased Electricity from the Grid

This tech option models a major switch in the sourcing of electric power in the cement sector. Current trends show that plants are preferring to produce most of their electric power through the use of Captive Power Plants which are largely powered by domestic and imported coal. This tech option provides insights into the impact of a switch to procuring most of the electric power from the grid. This assumes that the grid power would be available and would be reliable as well. Such a switch provides an improvement in the energy efficiency of the specific plant since the inefficient CPP’s energy consumption is now outside the plant boundary.

Level 4

Industry Sector

Increased Alternate Fuels and Raw Materials (AFRM)

This tech option is a major driver for reduction of thermal energy consumption in cement plants. European and Japanese plants are reportedly running with more that 30-50% coal being substituted by alternate fuels such as domestic, industrial and agricultural waste and used rubber tyres. The penetration of AFRM in India is probably less than 1% and thus a large potential seems to exist if the enabling infrastructure and incentives can be provided along with policy based support.

As the specific energy consumption (SEC) goals are increasingly taken up by industrial units – penetrating into smaller units from existing sectors and units from new sectors - the energy consumption is likely to reduce further. The energy required by industry as feedstock has not been analyzed in this exercise.