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Position:

Past Award

EE Project Group2:  Industrial Boiler Energy EfficiencyProjects

Measure Name

Scope and Category

Pollutant Reduction

Carbon Reduction Benefits

Main Implementing Agencies

Simple Description

Industrial boiler EE projects

Fixed source—industry

SO2, NOx, PM

CO2

Industrial enterprises; Government  energy conservation units

Coal-fired boiler system  consolidation, renovation, and technology upgrading



1.     Objective

      Asof the end of 2012, China’s over 460,000 coal-fired industrial boilers have atotal steam production capacity of 1.78 million t/hr, consume about 700 milliontons of coal per year, and account for about 33% of the country’s total PMemissions, 27% of its SO2 emissions and 9% of its NOx emissions.[1]  Industrial boiler energyefficiency projects reduce PM, SO2, NOx and CO2 emissions by improving theefficiency of coal use and therefore combusting less coal for the same level ofindustrial output.


2.     Measure Description

      a.  Relevant laws and regulations.  Rationalization of current coal-fired boileruse ranks high in the list of 10 key air pollution control measures promotedunder the State Council’s Air Pollution Control Action Plan of September 2013.  In April 2014 The Ministry of EnvironmentalProtection revised the previous Boiler Air Pollution Emissions Standard to makeit the most stringent boiler air pollution emission standard to date.    In November 2014 seven ministerial-levelagencies issued a national Implementation Plan for Comprehensive Upgrading ofCoal Fired Boilers for Energy Savings and Environmental Protection (“2014Integrated Boiler Upgrading Plan”).

     

      b.   Scope for adoption of the measure.  Coal-fired industrial boilers are used inevery part of the country.  Includingboilers used in residential and commercial applications, the seven-ministry2014 Integrated Boiler Upgrading Plan calls for achievement of the followingtargets by 2018:  (1) Put into use500,000 t/hr of steam capacity in high-efficiency boilers, increasing theirmarket penetration from less than 5% to 40%; (2) eliminated backward coal-firedboilers adding up to 400,000 t/hr of coal-fired boiler steam capacity; (3)complete energy efficiency renovations in 400,000 t/hr of coal-fired boilersteam capacity; (4) develop a variety of high-efficiency boiler manufacturingbases and nurture a group of large-scale high-efficiency boiler coremanufacturing enterprises; (5) Increase the average operating efficiency ofcoal-fired industrial boilers by 6%, compared with 2013 levels, realizingannual coal-saving capacity of 40 million tons per year; and (6) reduction of10 million tons of particulate emissions, 1.28 million tons of SO2 emissions,and 240,000 tons of NOx emissions per year[CJ1] .


      c.  Description of the measure.  Typical industrial boiler energy efficiencyprojects include: (1) consolidation of steam or hot water production inexisting small boilers into one or several larger, more efficient boilers, (2)upgrading of backward boilers to more newer, more efficient boiler technology,(3) renovation or replacement of boiler systems to use different fuels,including currently wasted fuel sources, (4) modification to ancillary systems(heat recovery, cooling water, fans, etc.), (5) improvement of fuel inputtechnology and boiler controls, and others.   The main objective is to reduce energy use and costs per unit steam orhot water output.  However, renovationprojects also provide an opportunity for improving emissions controltechnology, in addition to reducing emissions due to reduced fuel combustion.


          Conversion of coal-fired industrial boilersto use natural gas fuel was not covered in the project sample.  Although these projects yield substantialenergy efficiency and air pollution control benefits, and are important for thefuture, the increased fuel cost results in heavy additional financial costs toconsumers, unlike the projects described here.


      d.  Implementation framework.  Projects are implemented by enterprisesthemselves with technical expertise and equipment available in the market.  A primary incentive is to reduce energycosts.  Additional incentives includeneeds to comply with energy conservation agreements with local government,needs to conform with energy-use and emissions standards, and/or needs tocomply with instructions from local environmental authorities concerning coaluse limitations in urban areas.


      e.  Benefits and costs:

   Overall potential energy savings and/or pollution reductionimpact.  The remaining potential forenergy savings in industrial coal-fired boilers is huge.  Aside from elimination of the most backwardboilers and conversion of some boilers to natural gas, cost-effective gains inimproved energy efficiency in industrial coal-fired boilers through adopting ofnew, high-efficiency models, consolidation of on-site boiler systems to gainscale economies, implementing energy efficiency renovation projects andimproving operational efficiency can yield annual coal combustion savingsextend into the tens of millions of tons.


   Total Investment costs vary substantially according to project scopeand scale.  In a sample of four completedenergy efficiency renovation projects, project costs ranged from RMB 8 millionto RMB 54 million.  Investment costs pertce of annual energy savings capacity in the sample ranged from RMB 820 per tceto RMB 3500 per tce, with the lowest cost project involving modifications to anexisting boiler and the highest cost project involving complete renovation ofthe factory’s boiler systems and, most likely, additional benefits besidesenergy savings.  Life-cycle energy costsavings benefits far exceed project costs in all cases, so that the net costper tce saved after accounting for energy cost benefits are negative.  Accordingly, the net cost to the country ofreducing air pollution from these projects also is negative. The life-cyclefinancial benefit achieved by enterprises over and above energy cost savingsamounts to RMB 12 to RMB 25 for each ton of SO2 and NOx emissions reduced.


      f.  Key issues for implementation. Whilethe main types of energy efficiency projects save enterprises money,encouragement and support for implementation by local energy conservation supervisionagencies and environmental protection authorities can help raise projectpriority and overcome operational inertia within enterprises.  Assistance from energy conservation units orthird-party service entities may be needed in identifying the best specifictechnical options and solutions.


      g.  Other. Emissions impacts of industrial boiler upgrade projects can varysubstantially when boiler technology or input fuel quality is changed as aresult.  While technology and fuel qualitychange can in some cases bring above-average emissions reduction benefits, someprojects may require addition or modification of emissions control technologyto achieve best environmental results.


3.     Method for Calculating Project EnergySavings and Emissions Reduction

      Airpollution reductions from industrial energy efficiency projects can becalculated from available data on the reduced energy use resulting the projectswhich then leads to reduced fuel combustion emissions.  For most projects, it is best to divideproject energy savings into two categories: (1) on-site coal combustionsavings, which directly benefits the local air-shed; and (2) on-siteelectricity savings, from which a reduction in needs to combust coal in thermalpower plants and associated emissions reductions at thermal power plants can becalculated, wherever they are located.


      Projectinvestment and energy savings data used for this note are from the Institutefor Industrial Productivity’s (IIP) database of 84 Chinese industrial energyefficiency projects completed during 2008-2014. Both on-site and power plant emissions reductions were then derived fromaverage national coefficients for SO2 and NOx emissions reduction per ton ofindustrial on-site coal saved and for SO2 and NOx emissions reduction per tonof coal saved in thermal power production.


      Localenvironmental protection authorities can prepare improved, location-specificair pollution benefit calculations.  Theycan obtain recent local energy efficiency project investment and energy savingsdata and information on future project potential from local energy conservationsupervision agencies (节能监察队或中心).  Coal savings-emission reduction coefficientscan be fine-tuned to account for local coal characteristics, electric powergenerating plant location and type, and prevalent emissions controlinstallations at various sites. Reductions in local air-shed ambient PM 2.5 levels that can be achievedby portfolios of energy efficiency projects can be calculated by adding coalsavings-PM emissions reduction coefficients (as well as SO2 and NOxcoefficients), and calculating synergistic effects using local air qualitymodels.


4.     Project Examples

      Theinvestment costs, net lifecycle financial benefits arising from energy costsavings, pollution reduction per year and net financial benefits of SO2 and NOxreduction of three example projects are provided in the table below.  All projects have been completed, withverified energy savings levels.



Project Type

Province

Total Invest-ment Cost (mln RMB)

Net Lifecycle Financial Benefit (mln RMB)*

Local SO2 reduc-tion per year

Local NOx reduc-tion per year

Total SO2 reduc-tion per year

Total NOx reduc-tion year

Net financial benefit per ton of life-cycle SO2 and NOx   reduction (1000 RMB)

1. Replacing small boilers with large, modern boiler

Jilin

30

41

207

83

207

83

12

2. Upgrade old boiler system to new large boiler

Jiangxi

54

234

790

316

796

321

17

3.  Modification to  existing boiler and its ancillaries

Jiangxi

8

77

175

70

183

78

25

* Lifecycle energy costsavings minus total investment costs.


      Project1, involving replacement of over 20 small boilers with a large boiler at achicken farm, provides estimated financial benefits of RMB 41 million to thefactory, in addition to air pollution reduction.  Project 2, where the enterprise also replacedits old boiler system with a new, larger boiler, yields somewhat bettereconomics, as the project also saves a little relatively expensive electricityas well as coal.  Although it’sinvestment cost also is greatest, this project yield the greatest air pollutionreduction benefits of the three.  Project3 involves modifications to one existing boiler, costing just RMB 8 million.  This project yields excellent net financialbenefits of some RMB 77 million to the factory over the project’s lifetime,despite its low cost.  Projects thatmainly involve operational improvements, especially through improved boileroperator training, also can yield large financial and air pollution benefitswith even less investment.





[1] NDRC, MEP, MOF, State Inspection Bureau, MIIT, State AssetManagement Bureau, National Energy Administration, “Implementation Plan forComprehensive Upgrading of Coal Fired Boilers for Energy Savings andEnvironmental Protection”  (November 6,2014)


[CJ1]Wonder if these might be clearer if they were in bullet form? Dittofor the first paragraph under c below.