1

Preliminary Analysis of Sector-Based Proposal: Case Study for India

Atul KumarTERI, India

Dialogue on Future International Actions to Address Global Climate Change

Lima, Peru13th October, 2005

Presentation outline

Energy and GHG Emissions Overview of IndiaOverview of the Indian Cement, Iron and Steel Industry, and Power SectorFramework of AnalysisAnalysis and Preliminary Model Results

2

India’s energy overview

0

50

100

150

200

250

300

350

1970/71 1980/81 1990/91 2001/02

Mto

e

Coal Lignite Crude Oil Natural GasHydro Nuclear Wind Net Imports

•TPES (2002) 538 mtoe (India) World (10376); China (1245), USA (2290)

•TPES/cap: India 0.51 (toe), World (1.67), China (0.97), USA (7.97)

•Primary commercial energy supply - increase ~ 5 times

• Coal ~60% of commercial energy

•Natural gas use increasing

•Energy imports increasing rapidly

Sectoral Energy Consumption

42%

20%

13%

9%

6%

10%

Industries Transport ResidentioalAgriculture Commercial Non-energy uses

• Industry largest consumer followed by transport

Source: TEDDY, 2003-04

51%

22%

10%

4%

3%

10%

Industries Transport ResidentioalAgriculture Commercial Non-energy uses

2001-021990-91

3

Relative CO2 emissions from Energy Sector Activities

Source: NATCOM India, 2004

CO2 emission (2002)India 1017 (million tonnes), World (24102), China (3307)USA (5652)

CO2 emissions/capita (2002):India 0.97 (tonnes), World (3.89), China (2.57), USA (19.65)Source: (IEA, Statistics, CO2emissions from Fuel Combustion 197-2002, 2004)

Share of CO2 emissions from LPS (1995)Fossil power (94): 47%Steel (11): 6 (%)Cement (85): 9%(Source: Garg and Shukla, 2004)

52%

22%

12%6% 3% 5%

Energy and transformation industries IndustryTransport ResidentialCommercial Others

1994

GHG mitigation potential in key sector till 2012

Source: CDM Implementation in India, The National Strategy Study, 2005

4

Cement Sector Overview

World cement production (2000)

India is the world second largest cement producing country after ChinaPer capita cement consumption

India 110 kg, World average 273 kg, Japan 540 kg, south Korea 1090 kg, Taiwan 745 kg, Thailand 300 kg

Cement production Country Amount (million tonnes) Percentage

China 586.20 36% India 104.31 6% USA 87.85 5% Japan 85.95 5% Korea 52.20 3% Other countries 728.54 45% Total 1645.05 100%

Source: Basic Data – 2003, India Cement Industry

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Indian cement industry

29 32 36 39 4249

54 55 56 58 61 62 6773

8290

100106109

117

134138

21 23 25 29 31 34 37 41 42 45 49 51 53 58 6269

75 7992 96 98

110

0

20

40

60

80

100

120

140

1980 1985 1990 1995 2000 2005

Year

mill

ion

tonn

es

Capacity Production

•Installed capacity is 149 million tonnes (138 mt large plants)

•95% production from large plants (0.2 MTPA and above)

Energy consumption

•Heat – 665-800 kcal/kg clinker (1300-1600 in 1950-60’s)

•Power – 68-95 kWh/t cement (115-130 in 1950-60’s)

•World best: 640kcal/kg clinker, 66kwh/tonne cement

Source: Basic Data – 2003, India Cement Industry

Trend in Variety Wise Cement Production

•Share of blended cements increasing ~57%

•Policy for utilization of flyash

•Blending reduces clinker requirement (OPC: 95%, PPC: 80%, PSC: 65%)

69% 71%63%

52%

37%

25%19%19%

11%12%10%12%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1996 1998 2000 2002

Year

Perc

enta

ge

Ordinary Portland Cement Portland Pozzolana Cement Portland Slag Cement

Source:Basic Data – 2003, India Cement Industry

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Process profile of Indian cement industry

Process Year Number of kilns

Capacity (000’ tonnes per day)

% of total

Wet process 95 40 41.1 Semi-dry process 9 6 5.7 Dry process

1983

50 51 53.2 Wet process 32 13 3.7 Semi-dry process 9 6 1.6 Dry process

2003

125 349 94.7

Source: Cement Manufacturers’ Association, India

Cement Manufacturing Process

CLINKER

Kiln

Jaw

Double Rotor

Mining

Crusher

Ball-Mill

VRM

Raw Mill

4 stage + PC

5 stage + PC / PH

6 stage + PH + TSP + Pyro C

Coal Mill BM/VRM

BM

VRMCement

Mill

Ball-Mill

VRM

CEMENT

PC : Precalcinator, PH : Preheater, TSP : Twin stream Precalcinator,Pyro C : Pyrtostep cooler, VRM : Vertical Roller Mill, BM : Ball Mill

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Specific energy consumption in different types of cement plant

PC : Precalcinator, PH : Preheater, TSP : Twin stream Precalcinator, Pyro C : Pyrtostep cooler

Process/Plant Heat consumption (kcal/kg clinker)

Power consumption (kWh/kg cement)

Investment cost (US$/tonne)

Wet 1450 123 - Semi-dry 950 117 - Dry – 4 stage PH/PC 850 110 78 Dry – 5 stage PH/PC 720 80 83 Dry – 6 stage PH,TPS, Pyro C 665 68 84

Iron and Steel Sector Overview

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Iron Steel Production RouteDirect Reduction Route

Iron ore Fuel

Direct reduction shaft

Sponge iron

Secondary Steel Route

Scrap

Electric arc furnace

Steel

C-electrode

Cold rolling

Finishing

Various steel products

Crude-steel

Casting (ingot/ continuous)

Hot rolling (profile, strip, wire)

Blast furnace

Primary Steel Route

Iron ore

Coal Limestone

Preparation Coke oven

Pig iron

Basic oxygen furnace

Open hearth furnace

Oxygen

Overview of Indian Iron & steel Industry

• Production of finished steel 36.91 million tonnes (2003-04) increased from 15.2 in 1993-94 (growth rate 9%)

• 41% of finished steel production in integrated plants (7 major plants)

• 59% of production is secondary steel

• 55% of crude steel production in BOF, 37% in EAF and 6.9% in OHF

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G Cal / tcs9.29

8.99 8.98.8 8.7 8.68

8.398.28

8.097.96 7.9

7.747.59 7.54

7.28

7

7.5

8

8.5

9

9.5

10

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

Specific Energy Consumption in Integrated Steel Plants

Source: Steel Authority of India Ltd.

Iron & Steel – GHG Mitigation Options

Use of:• Coal moisture control process (CMCP) in coke ovens

• Heat recovery from sintering and sinter cooling

• Pulverised coal injection (PCI) in blast furnace

• Coke dry quenching technology

• Oxy-fuel burners in Electric Arc Furnace (EAF)

• Scrap pre-heating (Consteel and FUCHS processes) for EAF

• Corex process for Iron smelting

• Direct Reduction (do not require coking coal)

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Power Sector Overview

Electricity Sector 2003-04

183Nuclear

75 30 Hydro

2011Diesel & Wind

73 15 Gas

447 74Coal

Generation (TWh) Installed Capacity (GW)

Source: General Review, Central Electricity Authority, India

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Growth of Installed Capacity & Gross Power Generation

0

20

40

60

80

100

120

1945 1955 1965 1975 1985 1995 2005

Year

Capa

city

(GW

)

0

100

200

300

400

500

600

Gen

erat

ion

(TW

h)

Capacity Generation

Source: General Review, Central Electricity Authority, India

•Installed capacity 1950: 1.7GW 2004: 112.7 GW

•Generation 1950: 5.1 TWh2004: 565 TWh

Technology Characterization of Thermal Power PlantsDescription

Start year

Investment cost

(million US$/GW)Efficiency

(%) Coal-based plants

Existing coal fired plant 2000 - 29 New sub critical coal plant 2005 877 32 CFBC 2005 1013 39 IGCC 2015 1170 46 Super critical coal plant 2005 945 38 Ultra Super critical coal plant 2015 1134 44 Lignite power plant 2000 887 29 Gas-based plants

Existing open cycle 2000 - 28 Existing combined cycle 2000 - 44 New open cycle 2005 354 39 New combined cycle 2005 399 54

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Investment cost of Hydro, Nuclear, Solar and Wind Power Plants

Description

Start year

Investment cost (million US$/GW)

Large hydro power plant 2000 887

Small hydro power plant 2000 1996

Nuclear power plant 2000 1331

Solar Photovoltaic power 2000 4437

Wind turbines 2000 843

Framework of Analysis

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Broad Assumptions

Time-Frame of Analysis: 2000-2030

Assumptions on growth rates of Population & Gross Domestic Product(“Case A” & “Case B”)

Discount Rate :10%

Model Structure

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Model Assumptions

High GDPLow GDP GDP

Medium Variant (UNPP)High Variant (UNPP)Population

Case - B Case - A

Population projection• Population increases from 1017 million (2000) to 1642 million (case A) & 1416 million (Case B) (2030)

1000

1100

1200

1300

1400

1500

1600

1700

2000 2005 2010 2015 2020 2025 2030 2035

Year

mill

lion

Case A Case B

Source: UNPP

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Gross Domestic Product (GDP)

0

500

1000

1500

2000

2500

3000

1995

2000

2005

2010

2015

2020

2025

2030

2035

Year

billi

on U

S$

CASE-A CASE-B

• GDP for India in 2000 was US$ 266 billion

• Expected growth 8% in case B and 6.7% in case A

Domestic availability coal

Fuels 2000 2035

Coking coal (million tonnes) 27 50

Non-coking coal (million tonnes) 299 550

Lignite (million tonnes) 25 50

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Natural gas availability (MMSCMD)

2005 2010 2015 2020 2025 Domestic availability 84 123 125 125 125 LNG import 25 65 95 125 135 Transnational Pipelines Iran-Pakistan-India 0 30 90 90 90 Myanmar-India 0 0 30 30 30 Total imports 25 95 215 245 255 Total 109 218 340 370 380 Source: TERI estimates

Installed capacity of nuclear and hydro power plants under reference and new policy scenarios

Installed capacity (GW) Scenario 2000 2010 2020 2030

Reference 2.80 6.78 6.78 6.78 Nuclear New Policy 2.80 12.80 32.40 69.80

Reference 24.9 35.0 35.0 35.0 Hydro New Policy 24.9 60.0 108.0 150.0

Source: Planning commissions, Government of India

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Fuel price scenarios

Constant prices

Price trajectory

Fuel prices (Constant price)PriceFuel

Unit Value

Import US $/tonne 60

Non –coking coal Domestic US $/tonne 35

Import US $/tonne 85 Coking coal

Domestic US $/tonne 59

Lignite Domestic US $/tonne 25

Import US $/bbl 62 Crude oil

Domestic US $/bbl 60

Domestic natural gas U S$/mmbtu 3.21

Import of natural gas by pipelines US$/mmbtu 3.515

LNG import at terminals US$/mmbtu 4.10

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Fuel prices (Price trajectory)

Year OilUS $ per barrel

Natural Gas (wellhead price)(US $ per thousand cubic feet)

Coal US$ per tonne

2000 29.20 3.89 17.79 2005 33.99 5.30 18.61 2010 25.00 3.64 17.30 2015 26.75 4.16 16.89 2020 28.50 4.53 17.25 2025 30.31 4.79 18.26

Source: CCAP

Demand projections under case A & B

31 31 63 76 128 175248

360

107 107204 245

405551

833

1211

0

200

400

600

800

1000

1200

1400

Case A Case B Case A Case B Case A Case B Case A Case B

2000 2010 2020 2030

Year

mill

ion

tonn

es

Steel Cement

Growth rate are 7.1% and 8.5%

Per capita consumption in 2030

Cement: 588 kg and 737 kgWorld average (2003) 273 kg, Japan 540 kg, Taiwan 745 kg

Steel: 175kg and 219 kgWorld average (2003) 149 kg, China 178 kg, Malaysia 251 kg, South Korea 955 kg

Source: Steel Statistical year Book 2004

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Analysis and Preliminary Model Results

Energy requirement for steel & cement industry under various cases

18 1828 33

5472

100

143

8 8 13 15 25 3349

71

020406080

100120140160

Case A Case B Case A Case B Case A Case B Case A Case B

2000 2010 2020 2030

Year

mto

e

Steel Cement

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CO2 emissions from steel and cement industry under case A & B

0

100

200

300

400500

600

700

800

900

Year

mill

ion

tonn

es

Iron and Steel 68 68 130 158 262 362 508 744

Cement 82 82 141 168 275 372 553 801

Case A Case B Case A Case B Case A Case B Case A Case B

2000 2010 2020 2030

Steel: Growth rate 8.3% (11 times)

Cement : Growth rate 7.9% (10 times)

CO2 emissions intensity of cement production

0.76

0.690.67

0.66

0.64

0.66

0.68

0.70

0.72

0.74

0.76

0.78

2000 2005 2010 2015 2020 2025 2030 2035

Year

kg/k

g of

cem

ent

13% reduction in emissions intensity

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CO2 emissions intensity of steel production

2.16

2.08

2.06 2.06

2.04

2.06

2.08

2.10

2.12

2.14

2.16

2000 2005 2010 2015 2020 2025 2030 2035

Year

kg/k

g of

tcs

5% reduction in emissions intensity

CO2 emissions from power utility case B

0

1000

2000

3000

year

mill

ion

tonn

es

New Policy 384 435 568 1268

Reference 384 521 890 2027

Price trajectory (ref) 384 650 1371 2527

2000 2010 2020 2030

22

CO2 emissions intensity of power sector (case B)

0.76

0.630.56

0.73

0.76

0.52

0.36

0.45

0.76 0.78

0.870.90

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1995 2000 2005 2010 2015 2020 2025 2030 2035

Year

kg/k

Wh

Reference New Policy Price trajectory (ref)