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Cogeneration and Emissions Trading Tom Markowitz Enerhope

Cogeneration Seminar Calgary, Alberta. Cogeneration and Emissions Trading Tom Markowitz www.Enerhope.com. September 1 st , 2011 1:30 p.m. Alberta’s Climate Change Strategy (2008).

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Cogeneration and Emissions Trading Tom Markowitz Enerhope

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  1. Cogeneration Seminar Calgary, Alberta Cogeneration and Emissions Trading Tom Markowitz www.Enerhope.com September 1st, 2011 1:30 p.m.

  2. Alberta’s Climate Change Strategy (2008) “Alberta has both a responsibility and an opportunity to take decisive action to reduce greenhouse gas emissions.” http://environment.gov.ab.ca/info/library/7894.pdf Alberta and Climate Change: Meeting the Challenge – Regulatory Framework Update (June 22, 2009) http://carbonoffsetsolutions.climatechangecentral.com/files/microsites/Policy_Regulation/Workshop_-_Reg_Framework_Update_-_June_22_09.pdf

  3. Alberta’s Targets http://environment.gov.ab.ca/info/library/7894.pdf

  4. “Specified Gas Emitters” (“SGEs”) • of Greenhouse Gases: • ~90 Large, Direct Emittersin Alberta • Coal-Fired Electricity, Petroleum Refineries, Oil Sands, Upgraders, Petrochemicals…… • Each Specified Emitter: > 100 kt CO2e/y • ~50% of Alberta’s Greenhouse Gas Emissions • Emissions growing http://www.ec.gc.ca/ges-ghg/Default.asp?lang=En&n=040E378D-1

  5. How to Persuade Specified Emitters to Reduce Emissions: “Command and Control” “Market Forces” e.g. Emissions Trading

  6. ALBERTA REGULATION 139/2007 Climate Change and Emissions Management Act SPECIFIED GAS EMITTERS REGULATION http://www.qp.alberta.ca/574.cfm?page=2007_139.cfm&leg_type=Regs&isbncln=9780779738151&display=html

  7. Synthetic Crude Oil “SCO” CO2 in Exhaust “The Upgrader” Delayed Coking Unit Heater Bitumen Coke

  8. Synthetic Crude Oil 250,000 tonnes/y CO2 “SCO” Total Annual Greenhouse Gas Emissions (“TAE”) Averages, 2003-2005 Production (“P”): 3.125 million Bbl/y Delayed Coking Unit Heater Bitumen Coke

  9. TECHNICAL GUIDANCE DOCUMENT FOR BASELINE EMISSIONS INTENSITY APPLICATIONS JULY 18, 2007 ALBERTA ENVIRONMENT http://www.environment.gov.ab.ca/info/library/7811.pdf “BEI” FREQUENTLY ASKED QUESTIONS FOR BASELINE EMISSIONS INTENSITY APPLICATIONS AND COMPLIANCE REPORTING FEBRUARY 2008 http://environment.alberta.ca/documents/Baseline_FAQ.pdf

  10. TAE BEI = P Average, 2003-2005 Baseline Emissions Intensity Total Annual Emissions = Production Average, 2003-2005 Calculate the Baseline Emissions Intensity “BEI”

  11. TAE BEI = P Average, 2003-2005 BEI for The Upgrader “SCO” Synthetic Crude Oil TAE 250,000 tonnes/y CO2 3.125 million Bbl/y P Delayed Coking Unit Heater Bitumen Coke 250,000 x 1000 BEI = = 80 kg CO2/Bbl SCO 3.125 x 1,000,000

  12. 70.4 2007 and Future: “SCO” Synthetic Crude Oil Net Emissions Intensity Limit: 88% of BEI CO2 Delayed Coking Unit Heater Bitumen Coke The Upgrader’s Net Emissions Intensity Limit 88 x 80 = kg CO2/Bbl SCO 100

  13. In 2008….. How many tonnes of CO2 was the Upgrader allowed to emit? 70.4 70.4 The Upgrader produced….. 3.3 M Bbl/y Synthetic Crude Oil “SCO” CO2 Delayed Coking Unit Heater Bitumen Coke Net Emission Intensity Limit: ______ kg CO2e/Bbl SCO Allowed Total Emissions :____ kg CO2e/Bbl SCO x_____ Bbl SCO = _________t CO2/y 3.3 M 232.3 k

  14. Verified! During the Year: Measurement and Monitoring of GHG Emissions End of Year: Report Annual Total GHG Emissions to AB Environment “True-Up” of Reported Emissions with Allowed Total

  15. In 2008, The Upgrader is allowed to emit 232.3 kt of CO2 Allowed to Emit 232.3 kt/y Net Emission Intensity Limit: ______ kg CO2e/Bbl SCO 70.4 In 2008, the Upgrader produces 3.3 million Bbl of SCO.

  16. 2008: If the Upgrader emits exactly 232.3 kt of CO2……… Allowed to Emit 232.3 kt/y The Upgrader is in compliance with Regulation 139/2007 Net Emission Intensity Limit: _70.4_ kg CO2e/Bbl SCO In 2008, the Upgrader produces 3.3 million Bbl of SCO.

  17. “True-Up” at the end of the year Alberta Environment gives this many Emission Performance Credits to The Upgrader If, in 2008, The Upgrader emits less than 232.3 kt of CO2 Allowed to Emit 232.3 kt/y Net Emission Intensity Limit: _70.4_ kg CO2e/Bbl SCO In 2008, the Upgrader produces 3.3 million Bbl of SCO.

  18. The Upgrader must give to Environment Alberta (Emission Performance Credits + Fund Credits + Offsets) to equal the extra tonnes. “True-Up” at the end of the year If, in 2008, The Upgrader emits more than 232.3 kt of CO2 Allowed to Emit 232.3 kt/y Net Emission Intensity Limit: _70.4_ kg CO2e/Bbl SCO In 2008, the Upgrader produces 3.3 million Bbl of SCO.

  19. Emission Performance Credits: Awarded to Specified Gas Emitters (“SGEs”) that have emitted less than their Allowed Total Emissions. Fund Credits: Contributions to the Alberta Climate Change and Emissions Management (“CCEM”) Fund. Used to fund emission reduction projects. One tonne of CO2e Credit for each $15 contributed to Fund Offsets: Rewards for verified emission reductions by non-Specified Gas Emitters. e.g. hospitals, transportation, land use, buildings All of these “tradeable units” can be bought and sold in Alberta’s emissions trading market. Units: tonnes of CO2e

  20. What if 2009 Emissions Exceed Allowed Total Emissions! Synthetic Crude Oil “SCO” 280 kt/y CO2 3.6 million Bbl/y CO2 in Exhaust Delayed Coking Unit Heater Bitumen Coke The Upgrader’s total emissions are 26.6 kt/y higher than the allowed total. How to reduce the emissions intensity?

  21. Synthetic Crude Oil “SCO” Heat Recovery Boiler Steam Turbo-Generator ~ Delayed Coking Unit Bitumen Pre-Heater Heater Coke Cogeneration Retrofit of the Upgrader

  22. Alberta will award 418 kg of Emission Performance Credits for each MWh of cogenerated electricity. Synthetic Crude Oil “SCO” Pre-heating the bitumen with exhaust steam from the turbine increases the efficiency of heating, reduces fuel consumption and air emissions. Heat Recovery Boiler Steam Turbo-Generator ~ Delayed Coking Unit Bitumen Pre-Heater Heater Coke Cogeneration Retrofit of the Upgrader

  23. Upgrader: Many opportunities for cogeneration

  24. SPECIFIED GAS EMITTERS REGULATION : ADDITIONAL GUIDANCE ON COGENERATION FACILITIES OCTOBER 1, 2007 http://www.assembly.ab.ca/lao/library/egovdocs/2007/alen/165318.pdf

  25. Natural Gas Buses: Low-GHG Diesel Buses: High-GHG Offsets Rewards for verified emission reductions by non-Specified Gas Emitters. e.g. hospitals, transportation, land use, buildings Typical Offset Project

  26. Offsets – Information Technical Guidance for Offset Project Developers, January, 2011 http://environment.gov.ab.ca/info/library/7915.pdf Carbon Offset Solutions (Climate Change Central) http://carbonoffsetsolutions.climatechangecentral.com/ Offsets in Cap-and-Trade (www.Enerhope.com) http://www.enerhope.com/_blog/Offsets_in_Cap-and-Trade_-_July,_2011

  27. 100 kt of Credits $ “I will have 100 kt of extra Credits after True-Up at the end of the year.” “I will need 100 kt more Credits at True-Up at the end of the year.” Trading of Credits

  28. Results Alberta: 2010 greenhouse gas emission reduction results http://alberta.ca/acn/201105/30322B6FFB035-F686-76DE-835193EEE98AC9B2.html

  29. Alberta’s Emissions Trading System: A Success? Yes!.... First Greenhouse Gas Emissions Trading System in North America Demonstrates the Mechanics of Emissions Trading Has Reduced Emissions below Forecasts No Scandals: No speculative investors However…..

  30. Need for Improvement No declaration of the emission reduction Target for SGEs. Impossible to define Production "P", year-after-year No public record of Credits and their history Baseline formula rewards polluters, punishes efficiency Alberta Environment does not verify offsets CCEM Fund has not reduced emissions significantly Overall sector emissions continue to rise In a recession, emissions intensity goes up, is penalized. 2014: SGE Regulation ends.

  31. Cogeneration in Alberta Life Cycle Assessment Comparison of North American and Imported Crudes Jacobs – Life Cycle Associates Report to AERI (July, 2009) http://www.albertainnovates.ca/media/15753/life%20cycle%20analysis%20jacobs%20final%20report.pdf • Cogeneration in the North • Replacing Coal-Fired Generation in the South • Massive GHG Reductions Emissions trading?

  32. Emissions Trading Baseline and Credit Cap and Trade (Alberta) Specifies allowed total emissions from each “SGE” regulated facility. Each SGE must monitor and report its emissions. Government awards Credits to under-emitters. Demands Credits from over-emitters. SGEs can trade Credits with each other.

  33. Emissions Trading Baseline and Credit Cap and Trade (e.g. European Union) Specifies the Cap, the group total tonnes of pollution allowed for all regulated (“capped”) facilities together. Creates Allowances (Permits), one Allowance for each tonne in the Cap. Distributes the Allowances to capped facilities according to some fair scheme. Each capped facility must monitor and report its emissions. Each capped facility must return to government one Allowance for each tonne it emitted. Capped facilities may trade allowances with each other.

  34. Some Cap and Trade Systems Active: European Union, New Zealand http://ec.europa.eu/clima/policies/ets/index_en.htm Regional Greenhouse Gas Incentive (NE US States) http://www.rggi.org/ NOx and SO2 Cap and Trade Systems http://www.epa.gov/airmarkets/progsregs/nox/sip.html http://www.epa.gov/airmarkets/progsregs/arp/index.html Future: (?) Western Climate Initiative (10 States and Provinces) http://www.westernclimateinitiative.org/ Japan, China, India, Korea, Australia, California

  35. Further Information • EMISSIONS TRADING PRIMER: Pollution Probe, Toronto, 2003, ISBN 0-919764-54-1: http://www.pollutionprobe.org/Publications/emissionstradingdwnldpage.htm • TOOLS OF THE TRADE,USEPA, 2003: http://www.epa.gov/airmarkt/resource/docs/tools.pdf • EU emissions trading: an open system promoting global innovation: European Communities, 2007, ISBN 978-92-79-06862-1: http://ec.europa.eu/environment/climat/pdf/emission_trading2_en.pdf • CLIMATE CHANGE 101- Cap and Trade: Pew Center on Global Climate Change, Arlington, VA, 2009: http://www.pewclimate.org/docUploads/Climate101-CapTrade-Jan09.pdf

  36. www.Enerhope.com • Emissions Trading Course: Video and .pdf • Monthly Emissions Trading News Update • Monthly In-Depth Articles and Commentary • e.g. “Cogeneration and Emissions Trading”(January, 2011) • http://enerhope.advancedwebsites.ca/_blog/January_2011_-_Cogeneration_and_Emissions_Trading • Consulting Services: • Energy, Environment, Engineering • and Emissions Trading

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