THE KYOTO PROTOCOL: A PROFITABLE OPPORTUNITY FOR THE INDUSTRY ?

This is a complex issue that concerns not only the industrial sector (industry is the largest producer and transportation comes in second place). But, among the possible solutions available to the industry, energy efficiency comes in first place.

In energy efficiency, the last 15 years have seen the emergence and extensive application of a process integration approach named Pinch Analysis. Its application in all industrial sectors (many thousand applications) has demonstrated its capacity to maximize energy savings at minimum capital expenditure. Pinch Analysis rests on rigorous thermodynamic principles that determine the minimum energy requirement of a process (heating and cooling utilities). Furthermore, the Pinch Analysis design rules allow the engineer to find the minimum capital cost solutions that meets this minimum energy target. Process integration with Pinch Analysis is the perfect tool to maximize GHG emission reduction by energy efficiency the most profitable way possible (more details on Pinch Analysis).

In 1999, Pragmathic conducted for a NGO a study on the economic GHG reduction potential with Pinch Analysis in the Pulp and Paper sector in Quebec (Canada). This work was based on the detailed results of many process integration studies completed in the past 10 years by Pragmathic's personnel for several types of mill (Kraft, TMP, SGW, VHYS, ...). Energy saving measures in these studies included energy recovery with heat exchangers, fresh water usage reduction, and process modifications. To evaluate sustainable reduction potentials, capitalized investment costs were used for the economic calculations. The results obtained are presented in the table below in terms of profitability vs GHG reduction. The profitability is expressed in % internal rate of return before income taxes (The IRR is equivalent to the interest rate obtained for your invesment). The net value after income taxes, taking into consideration the accelerated depreciation class 34 available in Canada for energy efficiency projects, is also given in the second column. These figures are overall values for all mills, some locations showing very small potentials and others showing much larger ones.

These results clearly show that, on average, very significant reductions could be achieved with process integration with a 25% IRR. Since this value is an average, it means that some mills could do much more (like the QRP awarded project with 35% savings for an IRR above 100% !!) while others could show minimal potentials. We could then imagine that a carbon credit exchange mecanism between mills could greatly help them reaching the Kyoto target of 30% reduction within a good economic framework. Thus, Pinch Analysis can help Pulp and Paper industry decreasing its GHG emission by a big step in a profitable context.

Based on our experience and on the information available in the literature, we estimate that closely similar results would be obtained for the chemical and petrochemical industry in plants where, of course, no process integration has never been applied before. For Food and Beverages, we estimate that the IRR would be smaller by a factor of about 1/3 (multiply tabulated IRR values by 2/3). Thus, it appears that process integration offers great possibilities. Process integration with Pinch Analysis is vigorously promoted by Natural Ressources Canada (NRCan) for this reason.