ISISCement and Related Data

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ISIS is currently populated with data and information on the U.S. cement industry. This cement industry component of ISIS is hereafter referred to as ISIS-cement. The data used in ISIS-cement are described below.

8.5.2.1 Existing and Projected Units and Costs

Currently, the ISIS-cement model contains information on 189 cement kilns that were in existence in 2009 and PCA's projected capacity expansions from 2009 to 2012, as shown in Table 8.7 below [11].

Each kiln in ISIS-cement is characterized by its location, design (i.e., wet, dry, preheater, or precalciner), clinker capacity (short tons per year), vintage, and retirement information when available [15]. In addition, each kiln is characterized by its variable cost (VC) components.

In general, five inputs are required in cement production including raw materials, repair and maintenance, labor, electricity, and fuel. For use in ISIS-cement, kiln-specific VC functions for each of these inputs were developed [41]. The formulation of fuel-specific VC permits each kiln to select a fuel based on the relative costs of available fuels. Under policy, this choice is also influenced by fuel-specific emission factors. In addition to the above VC components, additional cost components included in ISIS-cement are: capital costs associated with use of new and replacement units, indirect labor costs, and applicable overhead costs.

8.5.2.2 Model Markets

As stated previously, the U.S. cement markets are organized in state-specific demand centers. In ISIS-cement, each modeled kiln is located in one of the states as shown in Fig. 8.6. Each state containing at least one kiln is shaded in this figure.

Table 8.7 Summary of kilns modeled in ISIS-cement

Kiln population

Number of kilns

Existing kilns (2009)

189

PCA's projected new kilns

17

(2009-2012)

Portland Cement Kilns Locations

Portland Cement Kilns Locations

Source: EPA 2009 Data

Fig. 8.6 Demand centers for Portland cement in the U.S.

Source: EPA 2009 Data

Fig. 8.6 Demand centers for Portland cement in the U.S.

8.5.2.3 Portland Cement Demand

One of the key data inputs for ISIS-cement is the projection of demand for each demand center. In general, the demand is a function of gross domestic product (GDP) growth, interest rates, special construction projects (e.g., highways), and public sector construction spending. Portland cement demand was 128 million metric tons in 2005. PCA expects that the cement demand will reach 192 million metric tons by 2035, which reflects an increase of nearly 64 million metric tons with a compound annual growth rate of 1.4%. Cement demand through the year 2035 is reported in the PCA Long-Term Cement Consumption Outlook [11] and is used in ISIS cement.

8.5.2.4 Transportation-Interregional Trade

In ISIS-cement, a transportation matrix is used to describe the costs for transporting cement from kiln and import district locations to demand centers. To develop these costs, information on distances between supply and demand points and costs of transportation modes (truck, rail, or water transport) was obtained. In particular, the TRAGIS model [42] was used to estimate the origin-destination distances. Also, in the transportation-matrix, the applicable lowest cost transportation mode is used to connect a supply point with a destination. While the cement demand centers are interlinked through a transportation matrix, the competition is generally maintained on a regional level because the cost of transporting cement is relatively high.

8.5.2.5 Imports

U.S. cement markets receive imported quantities of cement and clinker from a number of countries, and these imports arrive at more than 30 import districts [43]. In ISIS-cement, international supplies from exporting countries, excluding Canada and Mexico, to U.S. import districts are modeled using a supply elasticity and then these imports are transported to the demand centers. Supplies from Canada and Mexico are modeled similarly to supplies from domestic kilns.

Excluding Canada and Mexico, the five largest international suppliers of cement and clinker to the U.S. are China, Thailand, Venezuela, South Korea, and Greece. An econometric study was conducted to determine an estimate of international supply elasticity for supplies from these countries and the rest of the world. The results of this study [44] reflected that the best estimate of the international supply elasticity of cement and clinker from China, Thailand, Venezuela, South Korea, Greece, and the rest of the world into the U.S. is 3.94. This indicates that if the price of cement was to increase by 1% within any import district in the U.S., then, ceteris paribus, the quantity of cement imported from each of these five supply countries into that district would increase by 3.94%.

8.5.2.6 Capacity Retirement and Growth

Cement plants have relatively long lifetimes of up to 50 years [45]. Various factors including, but not limited to, raw material availability in quarry, technology changes, productivity, efficiency, longevity, reliability, maintenance, and long-term costs can affect the lifetime of a cement kiln. In ISIS-cement, projected kiln retirements of certain existing kilns are based on information from PCA, supplemented with information from individual cement companies on their plans for shutdowns, new construction, and kiln consolidation. Further, as mentioned earlier, ISIS-cement includes algorithms for endogenous capacity growth and retirement of kilns. To determine capital recovery factor for capital costs associated with kiln capacity changes, an economic life of 25 years and an interest rate of 15% are used. Capital costs in 2005 $ per short ton of clinker for new, replacement of wet, and replacement of dry capacity are 208, 296, and 238, respectively [46].

Natural Gas Fuel Oil

■ Petroleum Coke

■ Other Solid Wastes 76% a Liquid Wastes

Fig. 8.7 Fuel use profile for the U.S. cement industry in 2005. (Source: EIA 2008 [47])

Natural Gas Fuel Oil

■ Petroleum Coke

■ Other Solid Wastes 76% a Liquid Wastes

Fig. 8.7 Fuel use profile for the U.S. cement industry in 2005. (Source: EIA 2008 [47])

The Annual Energy Outlook 2008 [47] energy use profile for the U.S. cement sector in 2005 is shown in Fig. 8.7. As shown in this figure, the primary fuel being used in cement kilns is coal. However, there has been an increasing trend towards using other fuels, particularly alternative fuels, such waste tires and oily wastes [48].

In ISIS-cement, information on coal, coke, natural gas, fuel oil, and tire fuels is included. This information includes state-specific fuel prices for the years 2005-2030 (EIA 2008) and fuel-specific CO2 emission intensity (see next section). Fuel-specific escalation factors from ElA (2008) are used to obtain projected fuel prices for future years. Additionally, based on data from PCA, information on kiln-specific availability of each fuel is also included in ISIS.

8.5.2.8 Emission Intensities

In ISIS-cement, each kiln is characterized by its NOX, SO2, PM, hydrochloric acid (HCl), mercury, total hydrocarbon (THC), and CO2 emission intensities. These emission intensities were developed using available data (Andover Technology Partners [9, 40]).

Tables 8.8 and 8.9 show the NOX and CO2 emission intensities for the cement kilns in ISIS.

Kiln specific emission intensities for SO2 vary by geographic location (states) and kiln type. These intensities (lb/short ton clinker) range from 0.02 to 24.85 [9].

Table 8.8 Estimated NOX emission intensity (lb/106 Btu) for cement kilns

Kiln Type

Wet Dry

Preheater Precalciner

NOX Emission Intensity (lb/106 Btu)

Table 8.9 CO2 emission intensity (lb/t clinker) for cement kilns

Fuel

Coal Coke

Natural gas

Tires

CO2 emission intensity (lb/short ton clinker)

199.52 199.52 105.02 169.32 187.44

8.5.2.9 Emissions Abatement Approaches

ISIS-cement contains information on abatement approaches for NOx, SO2, PM, HCl, mercury, THC, and CO2 emissions described above. The three categories of abatement approaches included are: process modifications and upgrades, raw material and/or fuel substitution, and mitigation technologies. For each emission abatement approach, where possible, information on the following parameters was developed [29] and included in the model: capital cost, fixed operating cost, variable operating cost, emission reduction performance for all of the pollutants, impacts on fuel and/ or raw material use, impact on electricity consumption, byproduct generation and cost, and impact on water use.

To estimate capital recovery factors for capital costs associated with control technologies, economic life of 15 years and an interest rate of 7% are used. Payback periods and technical life for the energy efficiency measures shown in Tables 8.38.6 are given in Worrell and Galitsky [23]. Economic life for each of these measures was taken to be the average of the technical life and the payback period. Again, an interest rate of 7% was used for capital recovery.

8.5.2.10 Policy Parameters

The ISIS model framework allows the user to select a variety of potential policy options for evaluation. The user can select from cap-and-trade policy (with or without deminimus requirements), emissions charge policy, or rate-based policies. In a cap-and-trade policy scenario, separate caps on pollutants of interest can be specified. The user has the option to run a cap-and-trade policy scenario with or without banking of emissions. Further, a cap-and-trade policy scenario can include deminimus requirements, where the user defines a minimum level of emission reduction required for each emission unit. As mentioned before, it is also possible for the user to input an emission charge for pollutants of interest. Furthermore, traditional policy scenarios (rate-based policies) with unit specific emission reduction requirements specified by the user can be modeled in ISIS.

The user can specify the policy horizon (time period) to be used for the model runs. Since climate-related simulation horizons can be long (e.g., 40 years), the user may choose to run ISIS with blocks of years (e.g., 5-year blocks). The simulation horizon and blocks of years can be chosen by the user subject to availability of data.

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