Department Editor: Scott Jenkins

Conservation economics: Carbon pricing impacts

Energy efficiency projects economics
Crude heater revamp Hot feed for steam generation 100
Internal rate of return, 150,000 bbl/d*

eduction of greenhouse gas (GHG) emissions continues to be a major issue in national and international public policy, as well as a major focus for companies in the chemical process industries (CPI). Many countries are considering systems that place a price on GHG emissions through a carbon cap-andtrade system, for example. In an environment where GHG emissions have a given price, certain energy conservation measures that may have provided a small or negligible internal rate of return (IRR) based on fuel savings alone will be much more attractive economically as GHG emissions prices increase.

Vacuum tower steam ejectors Power recovery

80 60 40 20 0 0 20 40 60 80 Greenhouse gases price, $/metric ton 100

Returns from efficiency projects Example calculations that illustrate the impact of GHG emissions prices on the economics of energy efficiency projects are those for calculating the IRRs of several energy-efficiency projects at a hypothetical 150,000-bbl/d petroleum refinery with a range of GHG prices ($0 to $100/metric ton (m.t.) CO2 equivalent). In general, results demonstrate that incorporating the cost of GHG emissions into project economics can improve the attractiveness of previously marginal energy projects. IRRs for the following projects are shown at GHG price levels from $0 to 100/m.t. in Figure 1: Revamp crude-preheat exchanger train to increase the crude-heater inlet temperature Replace the vacuum tower steam ejectors with a liquid ring compressor (LRVP) Utilize diesel hydrodesulfurization (HDS) unit hot feed for additional steam generation Recover power from fluid catalytic cracking (FCC)regenerator hot fluegas. If these four projects were combined, they would result in a 9.5% reduction in GHG emissions for the hypothetical refinery. Example: Air pre-heat An example of an energy efficiency improvement project to consider is using combustion air preheat for fired heaters. For this study, it was assumed that a heater without this feature would have an overall thermal efficiency of 82%. The addition of air preheat will increase the heater efficiency to approximately 92%. IRRs for the project at various GHG emissions prices are shown in Figure 2. Heaters with an absorbed duty of just over 150 million Btu/h would achieve a 20% IRR with GHG emissions valued at $15/m.t. and natural gas priced at $5.50/million Btu. If natural gas is priced at $6.50/million Btu, the 20% IRR can be achieved with an absorbed duty of 100 million Btu/h.

*bbl/d = Barrels-per-stream-day

Figure 1. Various energy efficiency projects with costs of GHG emissions included are illustrated here

Air preheat economics revamp

45 40 35
Internal rate of return (IRR)

30 25 20 15 10 5 0 50.0 100.0 150.0 200.0 250.0 Process absorbed duty, million Btu/h
$100 $90 $80 $70 $60 $50 $40 $30 $25 $20 $15 $0

Considerations Figure 2. Revamp heater air-preheat economics are shown with GHG emis Care must be taken to evaluate all energy usage; not sions costs included only in the process unit of interest, but also changes in net energy usage in the entire facility A thorough review is needed to ensure that all approReference priate costs are included 1. U.S. Energy Information Administration (EIA). Emissions of Greenhouse A facility-wide audit is recommended to identify all potential Gases in the United States 2008, U.S. Department of Energy, December energy conservation opportunities 2009. An energy-saving project not evaluated here, but worth further Note: Material for this Facts at Your Fingertips was supplied by I.M. Glasstudy is improved heat exchanger duties with welded plate gow, S. Polcar, E. Davis, T. Nguyen, J. Price, C. Stuecheli and R.E. Palmer at Mustang Engineering LP, Houston. exchangers, twisted tubes, tube inserts and/or helical baffles