sergio valdir bajay

Workshop USA – Brazil on energy efficiency in industry

- What should be done to upgrade energy efficiency in the Brazilian industry?- Some good practices

Sergio Valdir BajayInterdisciplinary Center for Energy Planning (NIPE) and Department of

Energy (DE), Faculty of Mechanical Engineering (FEM)State University of Campinas (Unicamp)

Campinas, SP, Brazil

Brazil Units 1980 1990 2000 2008

Energy intensity of industry (at purchasing power parities (ppp)) koe/$05p 0.140 0.178 0.182 0.188 Energy intensity of manufacturing (at ppp) koe/$05p 0.211 0.269 0.283 0.291 Energy intensity of chemicals industry (at ppp) koe/$05p n.d. n.d. 0.247 0.253 Unit consumption of steel toe/t 0.59 0.63 0.55 0.53 Share of electric process in steel production % 25.9 23.8 20.6 23.5 Share of industrial cogeneration in power generation % n.a. n.a. n.a. n.a. CO2 intensity of industry from fuel combustion (to value added) (at ppp) kCO2/$05p n.a. 0.223 0.278 0.243 Per capita CO2 emissions of industry from fuel combustion tCO2/cap n.a. 0.36 0.52 0.52

United States Energy intensity of industry (at purchasing power parities (ppp)) koe/$05p 0.271 0.163 0.163 0.122 Energy intensity of manufacturing (at ppp) koe/$05p 0.418 0.252 0.197 0.180 Energy intensity of chemicals industry (at ppp) koe/$05p 0.506 0.421 0.535 0.503 Unit consumption of steel toe/t 0.52 0.43 0.35 0.31 Share of electric process in steel production % 27.9 37.3 47.0 58.1 Share of industrial cogeneration in power generation % 0 5.9 4.3 3.4 CO2 intensity of industry from fuel combustion (to value added) (at ppp) kCO2/$05p n.a. 0.394 0.294 0.253 Per capita CO2 emissions of industry from fuel combustion tCO2/cap n.a. 2.90 2.58 1.95

France Energy intensity of industry (at purchasing power parities (ppp)) koe/$05p 0.168 0.113 0.105 0.079 Energy intensity of manufacturing (at ppp) koe/$05p 0.226 0.155 0.145 0.114 Energy intensity of chemicals industry (at ppp) koe/$05p 0.731 0.361 0.238 0.151 Unit consumption of steel toe/t 0.50 0.43 0.32 0.36 Share of electric process in steel production % 15.9 28.4 40.3 40.3 Share of industrial cogeneration in power generation % 0 0.3 1.9 2.2 CO2 intensity of industry from fuel combustion (to value added) (at ppp) kCO2/$05p n.a. 0.296 0.242 0.199 Per capita CO2 emissions of industry from fuel combustion tCO2/cap n.a. 1.63 1.45 1.26

Data source: Enerdata (www.enerdata.net, retrieved on November 28, 2010)

Evolution of some energy efficiency and CO2 emissions indicators for industry in Brazil, United States and France

from 1980 to 2008

http://www.enerdata.net/

Absolute and relative energy conservation technical potentials for energy-intensive industrial branches in Brazil

Industrial branches Year Heat Electricity Total

Abs. pot.(toe) Rel. pot. (%) Abs. pot.(toe) Rel. pot.(%) Abs. pot.(toe) Rel. pot.(%)

Iron and steel 2007 5,774,921 34.7 1,048,073 66.4 6,822,994 37.4

Ceramics 2007 1,464,345 41.0 28,427 10.0 1,492,772 38.9

Chemicals 2006 1,284,667 23.4 188,973 10.0 1,473,640 20.0

Pulp and paper 2006 1,273,035 19.0 160,259 12.0 1,433,294 17.9

Cement 2007 912,958 30.4 144,147 38.8 1,057,105 31.3

Non-ferrous metals 2006 415,132 16.5 398,981 12.6 814,113 14.3

Food and drink 2004 260,404 1.6 257,113 15.1 517,517 2.9

Glass 2007 222,831 46.3 0 0 222,831 44.5

Lime 2007 172,191 23.0 50,105 64.6 222,296 27.0

Mining 2007 0 0 212,921 22.9 212,921 6.4

Textiles 2005 129,990 24.0 62,219 9.4 192,209 16.0

Foundries 2007 57,328 22.2 65,881 24.1 123,208 23.1

Iron alloys 2007 0 0 87,725 11.8 87,725 4.9

Source: NIPE/Unicamp for the Brazilian Confederation of Industry (CNI) and Procel

Comparisons between the Brazilian experience with energy efficiency programs in industry and the experiences

of 13 other countries with such programs

• Environmental concerns, particularly with the emission of gases responsible for the greenhouse effect, are among the main motivations for most of the recent energy efficiency programmes adopted in developed countries, particularly in those which signed Annex I of the Kyoto protocol

• In most of the developing countries, e.g. in Brazil, however, there are other motivations for these programmes, such as: a better use of the available energy supply capacities, particularly for electricity, in order to decrease the risks of energy shortages and large price increases; reducing the investments required to expand the energy supply facilities; reducing the expenses with energy imports, etc.



• Most of the examined industrial energy efficiency programs were conceived by government bodies and they often include partnerships with industry associations (US, Sweden, Canada, Finland, Denmark and Australia)

• In Brazil, agreements started to be signed some years ago between the National Program for Electricity Conservation (Procel) and industry federations in the Brazilian states, within the scope of Procel´s industrial program

• These agreements aim at minimizing losses at the existing systems driven by electric motors in industrial facilities and speeding up the adoption of high performance tri phase induction motors in industry

• In 2006 a partnership was established between Procel and the National Confederation of Industry (CNI)



• Within the countries evaluated, there are either departments of ministries in charge of the planning and management of energy efficiency programs for the industry (US, Canada, Finland, Denmark, Mexico and Australia), or agencies created for this purpose (New Zealand, Japan, Germany, Québec/Canada and China)

• The Swedish agency responsibilities extend to the whole energy sector, while the French agency also deals with environmental questions

• UK is an exception to these two main trends, since a private company was created to search for reductions in the emission of green house gases in the country, using, among other strategies, energy efficiency programs to achieve this goal

• In Brazil, there are no ministry’s department or agency in charge of planning and managing industrial energy efficiency programs. The Brazilian Ministry of Mines and Energy, through the Department of Energy Development, coordinates the Procel and Conpet programs, which are run by Eletrobras and Petrobras, respectively, with very limited results in what concerns energy efficiency gains in industry



• Most of the countries analysed have national energy efficiency programmes, backed up by legislation. They also have, in general, quantitative goals for future energy efficiency gains. These goals can be expressed in different ways. The most usual is to express these goals in terms of per cent energy efficiency gains, as it happens in the European Union, New Zeeland and Japan. In France and UK there are energy consumption reduction goals in GWh, or toe. France, Russia and China have energy intensity reduction goals

• As the energy efficiency and CO2 emissions indicators shown in the beginning of this presentation have illustrated, the Brazilian government programs (Procel, Conpet and PEE) and the Brazilian Energy Efficiency Law have impacted very little such indicators so far. The National Plan of Energy for 2030 (PNE 2030), produced by the Energy Research Company (EPE) for the Ministry of Mines and Energy (MME), set an electricity saving target of 106 TWh/year, but the Energy Efficiency Strategic Plan, which should guide the energy conservation actions and programs to meet this target, is not implemented yet



• Voluntary agreements between government and industry have been common to implement energy efficiency programs in this sector of the economy, particularly in the energy-intensive branches, as can be observed in the USA, Sweden, Canada, Finland, Denmark and Australia

• As mentioned before, Procel has signed in recent years agreements with industry federations, in the Brazilian states, and with the National Confederation of Industry, but these agreements do not specify regular energy savings targets and the monitoring of the achievements, as practiced in some of the countries referred to above



• In the other hand, several countries have adopted legislation and mandatory regulation concerning energy efficiency programs in industry. Such obligations may include: regular energy consumption reporting, to the government or in the annual reports, of energy-intensive companies (e.g. Australia); the requirement of an energy manager for large companies (e.g. Japan); the obligation of energy savings plans (e.g. Russia and Japan); mandatory regular maintenance of certain industrial equipments, such as boilers, following pre-determined procedures (e.g. France); and the setting up of energy conservation targets for energy suppliers, or utilities in their clients’ facilities, which include industrial consumers (e.g. France)

• From the mandatory measures referred to above, there are in Brazil just the Energy Efficiency Programs (PEEs), carried out by the electricity distribution utilities and regulated by ANEEL, which can include projects in industry. ANEEL has been setting limits and constraints concerning the types of projects and where they can be applied. As mentioned before, the utilities should apply, every year, 0.5% of their net operating revenue on these programs, but there are not lower limits to the energy savings provided by them, different thus from what is required in the French white certificates, for instance



• Incentives to carry out energy audits in industrial facilities exist since the first energy efficiency programs were set up, during the seventies. These incentives include the full costing, or, more often, the partial costing of the audits

• Since it was created, in 1985, Procel promoted, in one way or another, energy audits in industrial facilities. Until the nineties, the focus of Procel was on subsidized audits for small, or medium size plants. More recently, within the scope of the ”Procel Industry” programe, the focus changed to energy audits carried out by “multiplying agents” in the companies involved in the agreements between Procel and the industry federations in the states

• Both the Brazilian experience and that of other countries have shown that the return of these audits is uncertain and difficult to estimate whenever they are not associated to other measures, such as tax relief or credit facilities, or, still, mandatory energy savings plans



• Tax relief and credit facilities also exist since the very first energy efficiency programs for industry. They are currently adopted in most of the countries that were evaluated

• In Brazil, tax relief for efficient industrial equipments has been used only occasionally and for short periods of time, such as, for instance, during the electricity shortage period, in 2001

• A credit line specific for energy efficiency has been available during the last few years in the National Bank for Economic and Social Development (BNDES); the use of this line, however, has been very limited so far, due to the high interest rates practiced in the country (despite the fact that BNDES’ interest rates are lower than those practiced in the market place) and the low priority given to energy efficiency programs by most of the Brazilian managers in industry

Recommendations to upgrade energy efficiency in the Brazilian industry

• Brazil never had a broad and long-term public policy for energy efficiency, with agreed on energy savings targets with key stakeholders. The targets should be based on the results of cost-benefit analysis of efficient technologies and good practices. Deadlines to reach the targets and the responsibilities of each stakeholder should be outlined in the plan detailing the policy

• The development of such a policy, with a chapter devoted to energy efficiency gains in the Brazilian industry, is a task for the National Council for Energy Policy (CNPE), the government multi-ministry body responsible for elaborating the main energy policies in Brazil

• The Council could follow the same procedure of the European Commission, launching initially a policy proposal to be discussed by the stakeholders. After the appraisal of their critics and proposals, CNPE would publish an enhanced and final version


• It is important to keep in mind that advances in energy efficiency in the Brazilian industry will bring not only energy savings, but also environmental benefits and better competitiveness, affecting, therefore, not only the Ministry of Mines and Energy (MME), but also the Ministry of Environment and the Ministry of Development, Industry and Commerce. All these ministries are members of CNPE

• An executive agency, subordinated to MME and with strong ties to Eletrobras and Petrobras, could effectively manage the large resources basis needed to turn energy efficiency programs into meaningful alternatives for additional expansion of energy supply in the country

• This upgrade in energy efficiency programs in Brazil is only possible if effective mechanisms for measurement and verification (M&V) are deployed in all programs, and if there is a reasonable degree of decentralization of these programs in terms of the states of the federation, as it occurs, for example, in the USA. These two goals could be more easily achieved with the existence of an executive agency, rather than with the current institutional arrangement


• Industrial Assessment Centers could be created within the states of the federation, like in the United States, funded by this agency. This would make possible a closer relationship with industry, providing technical guidance on energy efficiency measures, setting up specific M&V procedures for some industrial branches, certifying reliable energy service companies (ESCOs) and carrying out energy audits in some cases. An important role of these centers would be to survey and register the impacts, on energy demand and emissions, of local industries’ energy efficiency actions and programs

• These Assessment Centers would also be responsible for training technical personnel through partnerships with local universities, non-government organizations and R&D centers

• Voluntary programs between the government and energy-intensive industries should be created in Brazil, following the successful experiences of Japan and the United States. These programs should include best practice guides, benchmarking, technical training, M&V guidelines, jointly funded R&D projects, tax reductions for energy efficient equipments and credit facilities, in exchange for energy saving targets and verifiable results


• Best practice guides and funding facilities should also be available for non-energy-intensive industries, together with tax incentives for the adoption of efficient crosscutting technologies, such as electric motors and boilers

• Energy management standards have been adopted in recent years by many industrial companies in both developed countries such as USA and Sweden, and in developing ones like China. The ISO 50001 standard, compatible with the family of standards ISO 9000, for quality, and the ISO 14000 family of standards for environment, was launched recently. The National Confederation of Industry (CNI) and the energy-intensive industries’ associations should encourage their members to adopt the new standard and help them in the implementation process, regardless of new government incentives for energy efficiency, since substantial benefits for the companies can accrue from doing that in any case

Some good practices today

• Four among the largest industrial groups in the country, controlled by Brazilians, have energy efficiency programs:– Petrobras– Votorantim– Braskem– Vale

• R$ 300 millions were invested in the last four years in Petrobras’ refineries, oil and gas productions fields and transport facilities in projects proposed by 48 Internal Energy Conservation Commissions (CICEs). Petrobras set the following voluntary targets for 2015: reductions of 10% and 5% in the energy intensity of the company’s refineries and thermal power stations, respectively; reduction of 65% of natural gas burning in flares in the production fields; and reductions of 15%, 8% and 5% in the emissions of greenhouse gases in the production facilities, refineries and thermal power stations, respectively. To meet these targets, R$ 1.2 billion should be invested in energy efficiency projects, including R&D ones

Some good practices today

• Forty industrial facilities are monitored for energy consumption in Votorantim’s energy efficiency program and eight more will be added during the next years. Since the beginning of the program, 70 energy efficiency projects have been filed and 29 of them were approved, requiring the investment of R$ 24.7 millions. From 2007 to 2010 the program saved the Votorantim Group an energy consumption of 5.9 GJ, which meant an economy of R$ 48.2 millions

• Braskem’s energy efficiency program managed to decrease the company’s specific energy consumption from 12.4 GJ/t in 2003 to 11.3 GJ/t in 2007. One of the targets in the company’s “Vision for 2020” is a 12% reduction in its energy intensity. The program sets annual specific energy consumption targets for each plant

• The company Vale is responsible for 4.5% of the total electricity and 2% of the diesel oil consumed in the country. To increase the internal generation of electricity, including the use of cogeneration plants, has a high priority among the current company goals. Vale’s energy efficiency program is relatively recent, with limited results so far

Energy efficiency in the Brazilian industry: survey and forecasts

• The Federal University of Amazonas (Northern Region), the Federal University of Pernambuco (Northeastern Region), the University of Brasília (Center-Western Region), the Federal University of Itajubá (Southeastern Region) and the Catholic University of Rio Grande do Sul (Southern Region), financed by FINEP and under the coordination of NIPE/Unicamp, will be carrying out a survey on energy efficiency in industry and in some branches of the service sector all over Brazil

• The main technical, economic, environmental, energy consumption and cogeneration features of the energy-intensive industrial branches will be addressed in the project

• Forecasts of energy demand and energy saving potentials will be made for each of these branches for the five regions and the country as a whole

• Duration of the project: from August 2011 to December 2012

Thank you for your attention

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sergio valdir bajay

Documents

department of energy

energy imports

brazilian industry

energy supply facilities

energy planning nipe

risks of energy shortages

industry federations

brazilian experience