SEDS - Industrial Sector Joseph M. Roop Olga V. Livingston Pacific Northwest National Laboratory

Industrial Sector in Context of SEDS Macroeconomics Biomass Coal Natural Gas Oil Biofuels Electricity Hydrogen Liquid Fuels Buildings Heavy Transportation Industry Light Vehicles Macroeconomics Converted Energy Primary Energy End-Use

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

Major Components of Industrial Sector

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 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

Service Flow Models

Major Assumptions Capital costs, operating and maintenance costs, and performance characteristics for all the auxiliary equipment are drawn from the CIMS-US data base, and are currently being updated. 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. Where special studies have been conducted, the estimated parameter for the logit function is used. Otherwise, the default value is based on rule-of-thumb that a 15% cost differential captures 80% of the market share for new equipment. 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. 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.

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

Sources of Data Output, energy use, and technology stocks calibrated to Manufacturing Energy Consumption Survey (MECS) data for 2002, then simulated and benchmarked to 2005 Annual Energy Outlook. This version of the industrial sector of SEDS was constructed from an aggregate model of the U. S. Manufacturing sector developed as part of the CIMS-US model. –Integrated economic model of the energy produced and used in the United States. –Developed in conjunction with the Energy and Materials Research Group at Simon Fraser University, British Columbia, Canada. R&D impact on fuel intensity –Intensity improvements computed from ITP energy savings estimates. –Detailed spreadsheets with savings estimates for each fuel type –Developed as part of annual benefits estimation for ITP by Energetics, Inc.

Energy Demand, Baseline case

Energy Demand, High NG Price

Energy Demand, Carbon Cap

Energy Demand, Target R&D (stochastic run)

Issues and Future Work Break out industrial sector into manufacturing and non-manufacturing industry Incorporate additional detail for energy-intensive industries –Pulp and Paper –Primary Iron and Steel Remove the industries analyzed as part of the liquid fuels model