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Perform Achieve & Trade

Inclusion of Petroleum Refineries into PAT Cycle - II

byMilind Deore, Energy Economist, BEE

Delhi

5th July 2016

Perform, Achieve and Trade (PAT)

National Action Plan on Climate Change (NAPCC)– Nation Mission for Enhanced Energy Efficiency

(NMEEE) Perform, Achieve and Trade (PAT)Market Transformation for Energy Efficiency (MTEE) Energy Efficiency Financing Platform (EEFP) Framework for Energy Efficient Economic Development

(FEEED)

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Perform Achieve and Trade (PAT): A regulatory instrument to reduce specific energyconsumption in energy intensive industries, with an associated market based mechanism toenhance the cost effectiveness through certification of excess energy saving which can betraded.

Genesis of PAT

20012014-15

Energy Conservation Act enacted

National Action Plan on Climate Change released

Sector studies Commenced toidentify DCs

Baseline datacollection begins

Financial outlay ofover Rs. 235 croresapproved

National Mission for Enhanced Energy Efficiency (NMEEE) Approved by Ministry of Power

Nation wide Consultation Workshops organised;consultation continues through 2012

NMEEE approved by Prime Minister's Councilon Climate Change

Energy Conservation Actamended to make provisions for issue of energy saving certificates, imposition of penaltyfor non compliance and tradingof ESCerts

Perform, Achieve and Trade(PAT) scheme came into effect;first compliance period begins (2012-2015)

2008 2009 2010 2011 2012

Target Year PAT Cycle I

Consultations on Target setting methodology and targets

2015-16

Performance Verification

PAT Cycle II2016-17To 2018-

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PAT Cycle I- Notified Sectors

S.NO. Sectors

Annual Energy Consumption

Norm to be DC (mtoe)

No. of Identified DCs

Annual Energy Consumption (Million toe)

Share Consumption (%)

Apportioned Energy

Reduction For PAT Cycle-1

(Million toe)

1 Power (Thermal) 30000 144 104.56 63.38% 3.211

2 Iron & Steel 30000 67 25.32 15.35% 1.486

3 Cement 30000 85 15.01 9.10% 0.815

4 Aluminium 7500 10 7.71 4.67% 0.456

5 Fertilizer 30000 29 8.20 4.97% 0.478

6 Paper & Pulp 30000 31 2.09 1.27% 0.119

7 Textile 3000 90 1.20 0.73% 0.0668 Chlor- Alkali 12000 22 0.88 0.53% 0.054

Total 478 164.97 100% 6.686

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PAT Cycle I- Achievements

S. NO. Sectors No. of Identified DCs Savings(Million toe)

1 Aluminium 10 0.73

2 Cement 75 1.44

3 Chlor- Alkali 22 0.13

4 Fertilizer 29 0.83

5 Iron & Steel 60 2.10

6 Paper & Pulp 26 0.26

7 Textile 82 0.12

8 Thermal Power Plant 123 3.06

Total 427 8.67

Saving of about 8.67 MTOE from the assessed 427 DCs

CO2 mitigation - 31 million tonne

PAT Cycle II- Notified sectors Sr. No

Sector No. of DCs in PAT I

Additional DC in PAT Cycle-II

Total no. of DCs PAT -2

1 Aluminum 10 2 122 Chlor-Alkali 22 3 243 Textile 90 14 994 Pulp & Paper 31 4 295 Iron & Steel 67 9 716 Fertilizer 29 8 377 Cement 85 27 1118 Thermal Power

Plants144 22 154

9 Refinery NA 18 1810 DISCOMS NA 44 4411 Railway NA 22 22Total 621

PAT Cycle IIBaseline Year: 2014-15PAT Cycle 2016-2019Assessment Year: 2018-19

Total Energy Consumption from 11 sectors 227 mtoe

National Target = 8.869 mtoe at the end of 2nd PAT Cycle (by 2018-19)

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• Deepening of PAT (existing sectors): Inclusion of more units from existing sectors – 89 DCs from (I&S, P&P, Cement, TPP, Chlor-Alkali, Fertilizer and Aluminum and

Textiles)• Widening of PAT: Inclusion of more units from new sectors

– New sectors: Refinery, Railways and Electricity DISCOMS– 84 new DCs

PAT- Way forward (PAT Cycle II)

PAT Cycles No. of Units Share of total energy consumption (2009-10 Level)

Sectors covered

Cycle I (2012-13 to 2014-15) 478 DCs 36% 8

Cycle II (2016-17 to 2018-19) 621 DCs 50% 11

PAT- Salient features

• Regulatory instrument linked with market mechanism- Certification of energy saving

• Consultative approach- Ministries/DCs/Associations/FIs/Research Organizations

• Outreach/ Capacity Development- Workshops/Seminars/ Visits

• “Self – competing” - Unit specific targets

• Relative responsibility - Less target for more efficient and more for less efficient

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Institutional Structure

SERCs

Process Flow for Issuance of ESCerts

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PAT Cycle I Experience

• Amendments in the EC Act• Requires changes in the timelines

– Notified timeline for comprehensive monitoring, reporting and verification was extended

• Deadline for submission of Performance Assessment Document extended by 45 days

• Need to link Inspection Rules, 2010 with Check verification under PAT to increase the domain of SDAs in the process of check verification

• Capacity of stakeholders– Need for building of Capacity of AEAs/SDAs/BEE desired

PAT Cycle I Experience

• Removal of rules related to early issuance of ESCerts– No DCs applied for early issuance– Proposal for rolling cycle

• Changes in the target setting methodology– To factorize the historical trend of sectoral efficiency improvement– National Policy objectives– Recognition of Global best sector/DCs

• Changes in the baseline setting methodology– To accommodate the variations in capacity utilization – Single year based baseline fixation

• Normalization factors – Need to provide legal sanctity to normalization factors

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13

31st Dec

M&V Phase

Scrutiny Phase

1st April 31st July

45 Days 2 months 45 Days

M&V-Submission of FORM I, Form A,B, SectoralProform and M&V report

SDA’s Scrutiny BEE’s

Scrutiny BEE’s recommendation to Central Government

Issue of ESCerts andTrading

Compliance Phase

28th Feb

2 months/ Period specified by CERC

1 month

31st March

FORM DSubmission

Key Timelines: Revised

Normalization

“Normalisation” means a process of rationalization of energy and production data of Designated Consumer to take into account changes in quantifiable terms that impact of energy performance under equivalent conditions’.

• It is a streamlining process by which any DC is not subjected to undue advantage or disadvantage due to factors beyond the control of the DC

Process– Formation of sectoral/sub-sectoral technical committee– Consultation with stakeholders– Identification of factors– Integration with reporting format - proforma– Validation with real data

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PAT- Way forward (PAT Cycle II +)

478

BY:2007-10AY:2014-15

621

BY:2014-15AY:2018-19

PI PII

230+2

Sectors (1500-2000)

BY:2015-16AY:2019-20

PIII

2012 2016 2017

Left Over in existing sector

+New

Sectors

BY:2016-17AY:2020-21

PIV

2018

Left Over in existing sector

+New

Sectors

BY:2017-18AY:2021-22

PV

2019

621+Left Over in existing sector

+New

Sectors

BY:2018-19AY:2022-23

PVI

2020

230+Left Over in existing sector

+New

Sectors

BY:2019-20AY:2023-24

PVII

2021

Inclusion of Petroleum Refineries into PAT Cycle - II

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Indian Refineries• India has 23 refineries:

– Public Sector: 18 – Private Sector: 3– Joint ventures: 2

• Indian refining industry is the 4th largest in the world• Main outputs of refinery: LPG, Petrol, Naphtha, Aviation fuel, Kerosene, Diesel oil,

Furnace oil• Focus shifted from maximization of middle distillates to market driven economics –

more secondary units• Stringent Envn. Norms, fuel quality compliance & improved performance – ‘key’ for

survival• Evolving Refinery Configurations – highly complex & integrated with Petrochemicals /

Power plants to up-grade bottom of the barrel for maximize profitability

Rationale for selecting Refinery sector

• The Energy Conservation (EC) Act, 2001 empowers the CentralGovernment to establish and prescribe energy consumptionnorms for Designated Consumers (DCs)

• Energy Intensive Industries listed into the schedule of the ECAct, 2001.

• High Energy Saving Potential• Prime Minister’s Council on Climate Change directed to

include Petroleum Refineries, DISCOMs and Railways into PATscheme

• Energy cost is major head and directly impacts on margins• Established institutional structure for energy efficiency

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1. Aluminium;

2. Fertilizers;

3. Iron and Steel;

4. Cement;

5. Pulp and paper;

6. Chlor Akali;

7. Sugar;

8. Textile;

9. Chemicals;

10. Railways;

11. Port Trust;

12. Transport Sector (industries and services);

13. Petrochemicals, Gas Crackers, Naphtha Crackers and Petroleum Refineries;

14. Thermal Power Stations, hydel power stations, electricity transmission companies

and distribution companies;

15. Commercial buildings or establishments;

Schedule of the EC Act, 2001

Energy consumed in refining processes :1. Direct Fuel : fired in process heaters, for high temp. heat requirement

in the process. 2. Indirect Fuel: utilities, consumed in the process, are produced thru’ on-

site captive generation, which in turn requires fuel (known as ‘indirect fuel’ for the process)

Steam : - process heating (within steam temp), tracing etc. - steam jet ejectors for maintaining vacuum- as inert for stripping (partial pressure reduction) - turbine drives

Power: - motor drives for pumps / compressors , conveyors etc.- for illumination

Cooling Water: - for condensing vapors- for cooling products before storage

Hydrogen: - as reactant, for hydro-processing reactions -- to get clean fuel products, meeting stipulated quality.

Energy Performance Indicator

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– Specific Energy Consumption written shortly as SEC or MBN (MBTU/Bbl/NRGF)

– It is measure of Energy Efficiency of a Refinery.

– MBN is calculated by Refineries in India as per the methodology advised by CHT using the energy factors developed by CHT for individual units.

– MBN calculation takes care of the complexity of a Refinery. Hence, it can be used for comparing different Refineries having different complexities.

– MBN helps in monitoring the Energy Performance of any Refinery over a period of time.

– MOP&NG awards Refineries having lowest MBN every year.

Energy Performance Indicator

Specific Energy Consumption – Trend Since 1984-85

182179

166166 165158

154 150144147 146

138134133128 130

127124

8982 81

76 74 71 69 6963 61 59

50

70

90

110

130

150

170

190

84-8

585

-86

86-8

787

-88

88-8

989

-90

90-9

191

-92

92-9

393

-94

94-9

595

-96

96-9

797

-98

98-9

999

-00

00-0

101

-02

02-0

303

-04

04-0

505

-06

06-0

707

-08

08-0

909

-10

10-1

111

-12

12-1

3

(MBT

U/B

bl/N

RGF)

Financial Year

Specific Energy Consumption(Industry average)

SEC

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MBN Trend For PSU and Industry Since 2004-05

04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14MBN-INDUSTRY 66.2 68.7 63.2 61.1 58.5 58.6MBN-PSU 81.1 76.4 73.6 70.7 69.0 67.8 65.7 63.2 62.4 61.5NRGF-INDUSTRY 5.7 5.7 6.8 7.2 7.6 7.6NRGF-PSU 5.0 5.2 5.4 5.4 5.5 6.0 6.4 6.4 6.3

30

40

50

60

70

80

90

3

3.5

4

4.5

5

5.5

6

6.5

7

7.5

8

NRG

F /M

BN

INDUSTRY AND PSU AVERAGE

24

MBN trend in Indian Refineries

• The percentage reduction in MBN values is in the range of 4%-12%

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

110.00

120.00

RIL-

DTA

RIL-

SEZ

EOL

HM

EL

NRL

PAN

IPAT

BARA

UN

I

MAT

HU

RA

GU

JARA

T

BPCL

-MR

HAL

DIA

BPCL

-K

MRP

L

HPC

L-VI

SAKH

BORL

HPC

L-M

UM

BAI

CPCL

BON

GAI

GAO

N

MBN

Refinery Name

Refineries MBN Trend

2012-13 2013-14 2014-15

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Target Setting

Policy objectives • INDC

– Intended Nationally determined Contribution (INDC): reduction of emission intensity by 33-35% of GDP by 2030 from the base year of 2005

• GOALS– Reduction in energy intensity between 2016 and 2019 by 7 %

Sectoral Targets - PAT Cycle – II

S. No Sector No of DCsEnergy

Consumption (million toe)

Energy Savings

(million toe)1 Thermal Power Plant 154 120.16 3.132 Cement 111 21.43 1.123 Aluminium 12 10.66 0.574 Chlor Alkali 24 1.77 0.1015 Pulp & Paper 29 2.68 0.156 Iron & Steel 71 40.44 2.147 Textile 99 1.48 0.0878 Fertilizer 37 8.25 0.4469 Refinery 18 18.5 1.1010 Railways 22 1.39 0.033

Total 577 226.76 8.877

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Sectoral Targets - PAT Cycle – II

35%

13%

7%1%2%

24%

1% 5%

12%

0%

Energy Savings (million toe)

Thermal Power Plant

Cement

Aluminium

Chlor Alkali

Pulp & Paper

Iron & Steel

Textile

Fertilizer

Refinery

Railways

S.No. REFINERY 2014-15 (Submitted by Refineries) 5.97% Reduction

MBN Crude T'put Th.Bbls

NRGF Target MBN MBN Reduction

% Reduction

1 RIL-DTA 50.9986 217778 9.3592 48.7585 2.24 4.392 RIL-SEZ 51.9504 260659 10.2586 49.6259 2.32 4.473 EOL 64.0900 142936 6.7898 60.5522 3.54 5.524 HMEL 71.5700 51829 9.1914 67.1582 4.41 6.165 NRL 74.0800 19659 6.8615 69.3533 4.73 6.386 PANIPAT 73.1075 103709 5.6067 68.5041 4.60 6.307 BARAUNI 81.5084 43727 5.4943 75.7862 5.72 7.028 MATHURA 77.6819 62237 5.0721 72.4844 5.20 6.699 GUJARAT 76.6785 96614 6.1183 71.6144 5.06 6.60

10 BPCL-MR 78.2458 95818 4.4566 72.9725 5.27 6.7411 HALDIA 71.7170 55695 5.3785 67.2870 4.43 6.1812 BPCL-Kochi 78.3944 78496 4.2178 73.1011 5.29 6.7513 MRPL 83.5806 108063 5.6517 77.5638 6.02 7.2014 HPCL-VISAKH 81.6838 65350.4 4.4128 75.9370 5.75 7.0415 BORL 85.3144 44618 8.3414 79.0453 6.27 7.3516 HPCL-MUMBAI 87.8100 53971 5.3405 81.1688 6.64 7.5617 CPCL 92.5762 76025 4.4791 85.1945 7.38 7.9718 BONGAIGAON 99.8950 17729 4.8351 91.3000 8.59 8.60

Refinery wise Targets

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Refinery Wise MBN Targets

0.00

20.00

40.00

60.00

80.00

100.00

120.00

BON

GAIG

AON

HPCL

-MU

MBA

I

CPCL

MRP

L

BORL

BARA

UN

I

HPCL

-VIS

AKH

HALD

IA

BPCL

-K

MAT

HURA

BPCL

-MR

GUJA

RAT

PAN

IPAT NRL

HMEL

EOL

RIL-

DTA

RIL-

SEZ

MBN

Target For Petroleum Refineries under PAT Scheme

Baseline MBN

Target MBN

4.20 %

8.68 %

Relative Responsibility: Less target for more efficient & higher target for in-effficient unit.

Strategies for Energy Conservation in refineries

• Three broad categories • Process specific • Equipment oriented • General

• Monitoring & audit of operations

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Strategic Planning

Process Specific Equipment Related General Preheat

Improvement Power Recovery Flare Gas Recovery Anti-surge

control, etc

Efficiency improvement of Fired Heaters

Heat exchanger performance improvement

Distillation column performance improvement

Air Fan coolers performance efficiency improvement

Optimization of Steam System Proper insulation of Steam Network &

Minimizing Steam venting Efficient use of Steam-traps &

Condensate Recovery System Regular Steam trap audit Optimizing hydrogen management

through pinch approach Fugitive emissions survey for passing of

PSVs and control valves Provision of flare meters in major units

for better management of flare loss Provision of double seal in floating roof

tanks for reducing fugitive emissions

Monitoring & audit of operations

Established robust energy measuring and monitoring system Energy Audit / Energy Performance Survey Performance Bench-marking

Major Obligations for DCs

• DCs to appoint or designate energy managers who shall be incharge of activities for efficient use of energy and itsconservation (clause 14(l)).

• The information with regard to energy consumed (clause14(a)) in Form 1

• Get energy audits conducted by accredited energy auditors• Implement techno-economic viable recommendations• Comply with norms of specific energy consumption• Submit report on steps taken

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Thank you