SEDS – Industrial Sector

1. SEDS – Industrial Sector • Joseph M. Roop • Brian K. Boyd • Olga V. Livingston

2. Industrial Sector Data Flow Output Variables Input Variables Interest Rate Expenditures on new equipment Macroeconomics Macroeconomics Manufacturing Growth Rate Electricity Electricity Demand Oil Oil Price Coal Coal Coal Price Coal Demand Natural Gas Natural Gas Natural Gas Price Industry Natural Gas Demand Heavy Fuel Oil Demand Heavy Fuel Oil Price Liquid Fuels Liquid Fuels Light Fuel Oil Demand Light Fuel Oil Price Electricity Electricity Price Byproduct Gas Demand Emission Tax Byproduct Gas Price CO2 content of fuels CO2 Produced

3. Major Components of Industrial Sector

4. Structural Overview • 4 major end uses defined: Process heat, Electro-Chemical Processes, Refrigeration, Other process • Variety of technologies serve end uses, multiple fuel options for each. • Three categories of technologies for each end use: • Conventional technology • State-of-the-art • Advanced • The state-of-the-art is competitive with the current average stock immediately; the advanced technology becomes available to compete with these two in 2025. • End-uses dictate a set of auxiliary requirements – pumps, fans, compressors, conveyance, steam, etc. , all of which have drive requirements that are satisfied by motors of different size classes and efficiencies

5. Service Flow Models

6. Major Assumptions • Capital costs, operating and maintenance costs, and performance characteristics for all the auxiliary equipment are drawn from the CIMS-US data base. • The major end-use categories that were defined are gross representations of averages of equipment contained in the CIMS data base, but themselves have no real-world technology equivalent. • The default alpha value for Logit is based on rule-of-thumb that a 15% cost differential captures 80% of the market share for new equipment. Currently set to the same value for all sectors. • This module is a representation of the U. S. Manufacturing sector, thus it is both national in scope and lacks both regional and industry detail. Manufacturing growth rate drives the sector. • The model is currently incapable of describing the introduction of a major new industry-specific technology, such as an innovative substitute for the electric-arc furnace used in steelmaking, or a energy-saving option for the firing of black liquor in the pulp industry. • Byproduct gas price is a linear function of coal, oil and NG prices 0.72*coal_price + 0.1*oil_price + 0.18*gas_price

7. Decision Flow in Industrial Sector Main End-Use Process Requirements Installed Capacity Auxiliary Process Requirements Projection of Next Year’s Demand Industrial Output Demand Motor Drive Requirements New Capacity Additions Retirements FUEL Requirements Market Share Energy Demand Levelized Cost of Technology

8. Current Settings Total Fuel Demand, inputs set to global Fuel prices

9. Energy demand by submodule EC OP PH PR

10. Energy demand by submodule (cont.) IND SH SC BL

11. Energy demand by submodule (cont.) Cogen Motors

12. Share in total fuel demand

13. Parametric Sensitivity Analysis Outputs • CO2 Produced • Intensity Metric • Energy Expenditures • Coal Demand • LFO Demand • Electricity demand • Natural gas demand • Byproduct gas demand Parameters • Inputs • Energy Prices • Manufacturing growth rate • Interest rate • Alpha parameter in Logit • Fuel Intensities • Process Heating • Boilers • Cogeneration

14. Sensitivity (Inputs): CO2 Produced

15. Sensitivity (Inputs): Intensity Metric

16. Sensitivity (Inputs): Energy Expenditures

17. Sensitivity (Inputs): Total Fuel Demand

18. Sensitivity (Inputs): Coal Demand

19. Sensitivity (Inputs): LFO Demand

20. Sensitivity (Inputs): NG Demand

21. Sensitivity (Inputs): Electricity Demand

22. Sensitivity (Inputs): Byproduct Gas Demand

23. Sensitivity (Intensities): CO2 Produced

24. Sensitivity (Intensities): Efficiency Metric

25. Sensitivity (Intensities): Energy Expenditures

26. Sensitivity (Intensities): Total Demand

27. Sensitivity (Intensities): Coal Demand

28. Sensitivity (Intensities): LFO Demand

29. Sensitivity (Intensities): NG Demand

30. Sensitivity (Intensities): Electricity Demand

31. Sensitivity (Intensities): Byproduct Gas Demand

32. Price scenarios Scenarios • Current settings • Low oil price • High oil price • Low NG price • High NG price • Low coal price • High coal price Results • Fuel demand • Byproduct gas price • Industry capital expenditures • Industry energy expenditures • Industry CO2 from on-site combustion • Industry CO2 from all consumed energy • Industrial intensity (1/efficiency)

33. Price scenarios Coal industrial demand

34. Price scenarios LFO demand

35. Price scenarios NG Industrial demand

36. Price scenarios Byproduct gas demand

37. Price scenarios Electricity demand

38. Price scenarios Byproduct gas price

39. Price scenarios Industry energy expenditures

40. Price scenarios Industry capital expenditures

41. Price scenarios Industry CO2 from on-site combustion

42. Price scenarios Industry CO2 from all consumed energy

43. Price scenarios Industrial intensity (1/efficiency)

44. Carbon cap scenarios Scenarios • Current Settings • Carbon Cap - 5 GtCO2 • Carbon Cap - 4 GtCO2 • Carbon Cap - 3 GtCO2 • Carbon Cap - 2 GtCO2 Results • Fuel demand • Byproduct gas price • Industry capital expenditures • Industry energy expenditures • Industry CO2 from on-site combustion • Industry CO2 from all consumed energy • Industrial intensity (1/efficiency)

45. Carbon cap scenarios Byproduct gas price

46. Carbon cap scenarios Coal demand

47. Carbon cap scenarios Byproduct gas demand

48. Carbon cap scenarios LFO demand

49. Carbon cap scenarios NG demand

50. Carbon cap scenarios Electricity demand