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Cogeneration and Emissions Trading
Tom Markowitz
www.Enerhope.com
Cogeneration Seminar
Calgary, Alberta
September 1st, 2011 1:30 p.m.
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“Alberta has both a responsibility and an opportunity to take decisive action to reduce greenhouse gas emissions.”
http://environment.gov.ab.ca/info/library/7894.pdf
Alberta’s Climate Change Strategy (2008)
Alberta and Climate Change: Meeting the Challenge – Regulatory Framework Update (June 22, 2009)
http://carbonoffsetsolutions.climatechangecentral.com/files/microsites/Policy_Regulation/Workshop_-_Reg_Framework_Update_-_June_22_09.pdf
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Alberta’s Targets
http://environment.gov.ab.ca/info/library/7894.pdf
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“Specified Gas Emitters” (“SGEs”)
of Greenhouse Gases:
•~90 Large, Direct Emitters in Alberta
•Coal-Fired Electricity, Petroleum Refineries, Oil Sands, Upgraders, Petrochemicals……
•Each Specified Emitter: > 100 kt CO2e/y
•~50% of Alberta’s Greenhouse Gas Emissions
•Emissions growing
http://www.ec.gc.ca/ges-ghg/Default.asp?lang=En&n=040E378D-1
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How to Persuade
Specified Emitters
to Reduce Emissions:
“Command and Control” “Market Forces”
e.g. Emissions Trading
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ALBERTA REGULATION 139/2007Climate Change and Emissions Management Act
SPECIFIED GAS EMITTERS REGULATION
http://www.qp.alberta.ca/574.cfm?page=2007_139.cfm&leg_type=Regs&isbncln=9780779738151&display=html
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BitumenHeater
Delayed
Coking
Unit
Coke
“The Upgrader”Synthetic Crude Oil
“SCO”CO2 in Exhaust
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BitumenHeater
Delayed
Coking
Unit
Coke
Averages, 2003-2005
Production (“P”): 3.125 million Bbl/y
Synthetic Crude Oil“SCO”
250,000 tonnes/y CO2
Total Annual Greenhouse Gas Emissions (“TAE”)
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TECHNICAL GUIDANCE DOCUMENT FOR BASELINE EMISSIONS INTENSITY APPLICATIONS JULY 18, 2007 ALBERTA ENVIRONMENThttp://www.environment.gov.ab.ca/info/library/7811.pdf
“BEI”
FREQUENTLY ASKED QUESTIONSFOR BASELINE EMISSIONS INTENSITY APPLICATIONS ANDCOMPLIANCE REPORTINGFEBRUARY 2008http://environment.alberta.ca/documents/Baseline_FAQ.pdf
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BEI = TAE
P Average, 2003-2005
Calculate the Baseline Emissions Intensity
“BEI”
Baseline Emissions Intensity
= Total Annual Emissions
ProductionAverage, 2003-2005
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BitumenHeater
Delayed
Coking
Unit
Synthetic Crude Oil
Coke
BEI for The Upgrader
250,000 tonnes/y CO2 3.125 million Bbl/y
250,000 x 1000
3.125 x 1,000,000= 80 kg CO2/Bbl SCO
“SCO”
BEI =
TAE
P
BEI = TAE
P Average, 2003-2005
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BitumenHeater
Delayed
Coking
Unit
Synthetic Crude Oil
Coke
2007 and Future:
Net Emissions Intensity Limit: 88% of BEI
The Upgrader’s Net Emissions Intensity Limit
88100
x 80 = 70.4 kg CO2/Bbl SCO
“SCO”
CO2
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BitumenHeater
Delayed
Coking
Unit
Synthetic Crude Oil
Coke
“SCO”
3.3 M Bbl/yIn 2008…..
The Upgrader produced…..
Net Emission Intensity Limit: ______ kg CO2e/Bbl SCO
:____ kg CO2e/Bbl SCO x _____ Bbl SCO = _________t CO2/y
70.4
70.4 3.3 M 232.3 k
How many tonnes of CO2 was the Upgrader allowed to emit?
CO2
Allowed Total Emissions
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During the Year:
Measurement and Monitoring of GHG Emissions
End of Year:
Report Annual Total GHG Emissions to AB Environment
“True-Up” of Reported Emissions with Allowed Total
Verified!
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0
50
100
150
200
250
CO
2 E
mis
sio
ns,
kt/
y
Allowed to Emit 232.3 kt/y
In 2008, The Upgrader is allowed to emit 232.3 kt of CO2
In 2008, the Upgrader produces 3.3 million Bbl of SCO.
Net Emission Intensity Limit: ______ kg CO2e/Bbl SCO70.4
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0
50
100
150
200
250
CO
2 E
mis
sio
ns,
kt/
y
Allowed to Emit 232.3 kt/y
2008: If the Upgrader emits exactly 232.3 kt of CO2………
The Upgrader is in compliance with Regulation 139/2007
In 2008, the Upgrader produces 3.3 million Bbl of SCO.
Net Emission Intensity Limit: _70.4_ kg CO2e/Bbl SCO
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0
50
100
150
200
250
CO
2 E
mis
sio
ns,
kt/
y
Allowed to Emit 232.3 kt/y
If, in 2008, The Upgrader emits less than 232.3 kt of CO2
Alberta Environment gives this many Emission Performance Credits to The Upgrader
In 2008, the Upgrader produces 3.3 million Bbl of SCO.
Net Emission Intensity Limit: _70.4_ kg CO2e/Bbl SCO
“True-Up” at the end of the year
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0
50
100
150
200
250
CO
2 E
mis
sio
ns,
kt/
y
Allowed to Emit 232.3 kt/y
If, in 2008, The Upgrader emits more than 232.3 kt of CO2
In 2008, the Upgrader produces 3.3 million Bbl of SCO.
Net Emission Intensity Limit: _70.4_ kg CO2e/Bbl SCO
The Upgrader must give to Environment Alberta (Emission Performance Credits + Fund Credits + Offsets) to equal the extra tonnes.
“True-Up” at the end of the year
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Emission Performance Credits:Awarded to Specified Gas Emitters (“SGEs”) that have emitted less than their Allowed Total Emissions.
Fund Credits:Contributions to the Alberta Climate Change and
Emissions Management (“CCEM”) Fund.
Used to fund emission reduction projects.
One tonne of CO2e Credit for each $15 contributed to Fund
Offsets:Rewards for verified emission reductions by non-Specified Gas Emitters.
e.g. hospitals, transportation, land use, buildings
Units: tonnes of CO2e
All of these “tradeable units” can be bought and sold in Alberta’s emissions trading market.
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BitumenHeater
Delayed
Coking
Unit
Coke
Synthetic Crude Oil
“SCO”
CO2 in Exhaust
What if 2009 Emissions Exceed Allowed Total Emissions!
3.6 million Bbl/y280 kt/y CO2
How to reduce the emissions intensity?
The Upgrader’s total emissions are 26.6 kt/y higher than the allowed total.
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Heater
Delayed
Coking
Unit
Coke
Synthetic Crude Oil
“SCO”Heat
Recovery
Boiler
~
Bitumen Pre-Heater
Steam Turbo-Generator
Cogeneration Retrofit of the Upgrader
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Heater
Delayed
Coking
Unit
Coke
Synthetic Crude Oil
“SCO”Heat
Recovery
Boiler
~
Bitumen Pre-Heater
Steam Turbo-Generator
Cogeneration Retrofit of the Upgrader
Alberta will award 418 kg of Emission Performance Credits for each MWh of cogenerated electricity.
Pre-heating the bitumen with exhaust steam from the turbine increases the efficiency of heating, reduces fuel consumption and air emissions.
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Upgrader: Many opportunities for cogeneration
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SPECIFIED GAS EMITTERS REGULATION : ADDITIONAL GUIDANCE ON COGENERATION FACILITIESOCTOBER 1, 2007
http://www.assembly.ab.ca/lao/library/egovdocs/2007/alen/165318.pdf
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Offsets
Rewards for verified emission reductions by non-Specified Gas Emitters.
e.g. hospitals, transportation, land use, buildings
Diesel Buses: High-GHG
Natural Gas Buses: Low-GHG
Typical Offset Project
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Offsets – Information
Technical Guidance for Offset Project Developers, January, 2011
http://environment.gov.ab.ca/info/library/7915.pdf
Carbon Offset Solutions (Climate Change Central)
http://carbonoffsetsolutions.climatechangecentral.com/
Offsets in Cap-and-Trade (www.Enerhope.com)
http://www.enerhope.com/_blog/Offsets_in_Cap-and-Trade_-_July,_2011
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“I will have 100 kt of extra Credits after True-Up at the end of the year.”
“I will need 100 kt more Credits at True-Up at the end of the year.”
Trading of Credits
100 kt of Credits
$
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Alberta: 2010 greenhouse gas emission reduction results
Results 2010 Cumulative totals (since July 1, 2007)
Facility improvements to target 0.68 Mt 5.60 Mt
Carbon offsets 3.86 Mt 11.70 Mt
Emission performance credits generated 1.96 Mt 6.48 Mt
Emission reductions (from business as usual) 6.50 Mt 23.78 Mt
Climate Change and Emissions Management Fund payments
$70.0 million
$256.9 million
http://alberta.ca/acn/201105/30322B6FFB035-F686-76DE-835193EEE98AC9B2.html
Results
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Alberta’s Emissions Trading System:
A Success?
Yes!....
First Greenhouse Gas Emissions Trading System in North America
Demonstrates the Mechanics of Emissions Trading
Has Reduced Emissions below Forecasts
No Scandals: No speculative investors
However…..
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Need for ImprovementNo declaration of the emission reduction Target for SGEs.
Impossible to define Production "P", year-after-year
No public record of Credits and their history
Baseline formula rewards polluters, punishes efficiency
Alberta Environment does not verify offsets
CCEM Fund has not reduced emissions significantly
Overall sector emissions continue to rise
In a recession, emissions intensity goes up, is penalized.
2014: SGE Regulation ends.
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Cogeneration in AlbertaLife Cycle Assessment Comparison of North American and Imported Crudes
Jacobs – Life Cycle Associates Report to AERI (July, 2009)
http://www.albertainnovates.ca/media/15753/life%20cycle%20analysis%20jacobs%20final%20report.pdf
•Cogeneration in the North
•Replacing Coal-Fired Generation in the South
•Massive GHG ReductionsEmissions trading?
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Emissions Trading
Baseline and Credit Cap and Trade
(Alberta)
Specifies allowed total emissions from each “SGE” regulated facility.
Each SGE must monitor and report its emissions.
Government awards Credits to under-emitters.
Demands Credits from over-emitters.
SGEs can trade Credits with each other.
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Emissions Trading
Baseline and Credit Cap and Trade
(e.g. European Union)
Specifies the Cap, the group total tonnes of pollution allowed for all regulated (“capped”) facilities together.
Creates Allowances (Permits), one Allowance for each tonne in the Cap.
Distributes the Allowances to capped facilities according to some fair scheme.
Each capped facility must monitor and report its emissions.
Each capped facility must return to government one Allowance for each tonne it emitted.
Capped facilities may trade allowances with each other.
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Some Cap and Trade SystemsActive:
European Union, New Zealand
http://ec.europa.eu/clima/policies/ets/index_en.htm
Regional Greenhouse Gas Incentive (NE US States)
http://www.rggi.org/
NOx and SO2 Cap and Trade Systems
http://www.epa.gov/airmarkets/progsregs/nox/sip.html
http://www.epa.gov/airmarkets/progsregs/arp/index.html
Future: (?)
Western Climate Initiative (10 States and Provinces)
http://www.westernclimateinitiative.org/
Japan, China, India, Korea, Australia, California
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Further Information• EMISSIONS TRADING PRIMER: Pollution Probe, Toronto, 2003,
ISBN 0-919764-54-1: http://www.pollutionprobe.org/Publications/emissionstradingdwnldpage.htm
• TOOLS OF THE TRADE,USEPA, 2003: http://www.epa.gov/airmarkt/resource/docs/tools.pdf
• EU emissions trading: an open system promoting global innovation: European Communities, 2007, ISBN 978-92-79-06862-1: http://ec.europa.eu/environment/climat/pdf/emission_trading2_en.pdf
• CLIMATE CHANGE 101- Cap and Trade: Pew Center on Global Climate Change, Arlington, VA, 2009: http://www.pewclimate.org/docUploads/Climate101-CapTrade-Jan09.pdf
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www.Enerhope.com
Emissions Trading Course: Video and .pdf
Monthly Emissions Trading News Update
Monthly In-Depth Articles and Commentarye.g. “Cogeneration and Emissions Trading”(January, 2011)
http://enerhope.advancedwebsites.ca/_blog/January_2011_-_Cogeneration_and_Emissions_Trading
Consulting Services:
Energy, Environment, Engineering
and Emissions Trading
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