Energy Policy 30 (2002) 865–883 A Chinese cokemaking process-flow model for energy and environmental analyses Karen R. Polenskea,*, Francis C. McMichaelb b a Massachusetts Institute of Technology, 77 Massachusetts Avenue, Room 9-535, Cambridge, MA 02139, USA Blenko Professor of Environmental Engineering, Department of Civil and Environmental Engineering, Porter Hall 123G, Carnegie Mellon University, Pittsburgh, PA 15213, USA Abstract The purpose of this paper is to describe the design of a process-flow model that will improve our understanding of the industrial energy use, efficiency, and pollution in the cokemaking sector in the People’s Republic of China (China). We use a modified version of the input–output process model (IOPM), developed by Lin and Polenske. By modifying the design of the IOPM model for use in the cokemaking sector, we have made three key contributions. First, the end result of our design is a generic energy process-flow model that can be easily adapted for use in conducting energy and environmental analyses of cokemaking in China and other countries as well as examining other industrial processes in other sectors. Second, as we constructed our design framework, we have identified the key differences in energy use and pollution generation among three generic cokemaking technologies in China. Third, we have determined the crucial issues, such as changes in iron and steel making technologies, plant location, and world coal and coke trade, that may affect the cokemaking sector in China in the next decade. Our research is a micro-level examination of the production processes and input–output structure of three alternative types of cokemaking technologies (modified indigenous, small machinery, and nonrecovery) in use in Shanxi Province, China, in the year 2000. r 2002 Elsevier Science Ltd. All rights reserved. Keywords: Environment; Process-flow; Energy-efficient technologies 1. Introduction Policy makers can use a number of tools to improve their understanding of the industrial energy use, efficiency, and pollution in the cokemaking sector in the People’s Republic of China (China). The cokemaking input–output process-flow model (hereafter IOPM) we design here should help serve that purpose. To design the model and to illustrate its use, we focus especially on the cokemaking plants in Shanxi Province, which is the region where the greatest amount of coke is produced in China. We use a modified version of the IOPM that was developed by Lin and Polenske (1998), to examine these types of plants. By adapting the IOPM for examination of the cokemaking sector in the Province, we make three key contributions. First, the end result of our design is a generic energy and environmental process-flow model *Corresponding author. Tel.: +1-617-253-6881; fax: +1-617-2532654. E-mail address: [email protected] (K.R. Polenske). that can be easily adapted for studying other heavy energy-using and polluting sectors, such as cement making, brick making, and ironmaking. Second, as we construct our design framework, we identify the key differences in energy use and pollution generation among the following three generic cokemaking technologies that were in use in the Province in the late 1990s: (1) advanced modified indigenous, (2) small machinery, and (3) nonrecovery. Third, we determine the crucial issues that may affect the cokemaking sector in China in the next decade. These include changes in ironmaking technologies, plant location, and world coal and coke trade. Our research is a micro-level examination of the production processes and input–output structure of these three alternative types of cokemaking plants in existence in Shanxi Province, China, in the late 1990s. We will refer to these as three generic cokemaking plants, although some of the data upon which they are based are from over 20 different types of cokemaking ovens. First, we provide some general background information for the coke sector; second, we describe 0301-4215/02/$ - see front matter r 2002 Elsevier Science Ltd. All rights reserved. PII: S 0 3 0 1 - 4 2 1 5 ( 0 1 ) 0 0 1 4 7 - 1 866 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 the basic IOPM model for the coke sector and how it compares with previous process models; third, we extend the IOPM for use by cokemaking plant managers and policy makers in China for structural analyses, energy process-flow analyses, and environmental management. We focus on cokemaking because it is one of the two largest coal-using sectors in China, which together with the United States, produces about 50% of the total coal mined in the world (US Bureau of the Census, 1997). We focus on Shanxi Province, which produces more than 25% of total coal production in China, and coke plants use a major portion of the total coal produced in the Province. In addition, seven of the eight top polluting cities in China are in Shanxi Province and many of these, such as Linfen, are major coke-producing areas in the Province. We analyze coke-production technologies used by the township and village enterprises (TVEs), which are currently the major producers of coke in Shanxi Province. Because of the systematic way we designed the cokemaking IOPM, it can be used for coke plants both in the TVE and state-owned enterprise (SOE) sectors. SOEs are more energy efficient, but less economically efficient, than TVEs (Polenske and McMichael, 2000). By making relatively straightforward adaptations of the model, policymakers also can use it for cokemaking or other sectors elsewhere in China or other countries. During 1998–1999, Chinese colleagues working with us on an Alliance for Global Sustainability (AGS) project collected (directly from cokemaking plants in Shanxi Province) some of the detailed data we present later in the paper. We combined those data with published data from Chinese statistical yearbooks, interviews with plant officials at selected plants during three field missions to the Province, and other relevant sources to construct and test the IOPM presented later. 2. Background to the study Coke is a critical intermediate product in the foundry and metallurgical coke supply (production) chains that extend from the coal mines to the cokemaking plants to the durable-goods manufacturers, such as automobiles and other goods made of steel (Polenske, 2001). In many cases, the coke supply chain extends to the port of export, as both foundry and metallurgical coke are traded throughout the world. Because over 80% of China’s coke and a majority of the world coke produced are metallurgical coke, we focus on the production of metallurgical coke for iron making, which is made from the blending of various kinds of bituminous coal to make strong cokes for use in large-size (in height) blast furnaces (Paxton, 1982). Of the coke produced in China, almost 75% is used in making iron and steel. Given this supply chain, at least four major (sometimes interconnected) factors could influence the future of cokemaking in China: (1) world coal, coke, iron, and steel production, (2) new ironmaking, steelmaking, and automobile-production technologies, (3) imposition and enforcement of environmental regulations, and (4) new cokemaking technologies. After discussing these factors briefly, we present the IOPM that should help policy makers determine the appropriate cokemaking technology to use, given their goals and priorities. 2.1. World coal, coke, iron, and steel production Since the early 1970s, the location of world coal, coke, and iron and steel production has shifted dramatically. The world production of coal has remained remarkably stable at approximately 5 billion (short tons) from 1986 through 1998, after steadily rising from 3.4 million tons in 1973 (US Bureau of the Census, 1987, 1990, 1997), despite a significant shift in the spatial distribution of the production. By 1995, only 20 countries produced 96% of the coal, whereas in 1986, those countries produced 64% of the world total (US Bureau of the Census, 1986–1997). Both the United States and China have increased their share, representing 23.3% and 23.6%, respectively, of the world total in 1999 versus 17.7% and 19.6% in 1986 (www.eia.doe.gov/emeu/ international/coal.html; www.iea.org/statist/index.htm) (International Energy Association)). Together, they now represent almost 50% of the total production. The second major spatial shift is in the production of coke, with China now being a major producer. Coke production in China increased from 23 million tons in 1970 to 73 million tons in 1990, representing 3% and 11%, respectively, of total world production to almost 140 million tons by 1997 (Ministry of Coal Industry, 1998).1 The other principal world coke producer is the former Union of Soviet Socialist Republics (USSR), which produced 75 million tons in 1970 (12% of world production) and 80 million tons in 1990 (14%). In the United States, coke production decreased from 65 million tons in 1970 (11%) to 23.8 million tons in 1995 (5%) and to 20.8 million tons in 2000 (www.eia.doe.gov/cneaf/coal/quarterly/html/t2p01p1.html; Ministry of Coal Industry, 1998; Agarawal et al., 1996a, b), and US coke consumption decreased from 66 million tons in 1973 to 24.5 million tons in 1995 (www.eia.doe.gov (Energy Information Administration); US Bureau of the Census, 1997, p. 708). The gap between production and consumption caused a large net import of coke into the United States in 1995 of 1.1 million short tons, with 40% of the imports coming from 1 This is probably an underestimate of the total production, because the production of most so-called ‘‘indigenous’’ coke in China may not be included in the number. K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 China and 53% from Japan (US Bureau of the Census, 1997). The third major spatial shift is in the production of iron and steel. Currently, the Pacific Basin accounts for 30% of the world steel production, and by 2005, the Asia/Pacific area is projected to have up to 45% of the world steel production (www.iea.org/statist/index.htm Brichaut, 1996). As one of the largest consumers of coke, the iron and steel sector can change the international trade flows of coal and coke through the major plant relocations currently taking place. Thus, spatial shifts in production and consumption of coal, coke, and iron and steel are important to understanding what future there is for coke production in China. 2.2. New ironmaking and/or steelmaking and automobile production technologies The development of new ironmaking and steelmaking technologies that either do not require the use of coke or that require use of far less coke than at present are affecting the demand for coke. Wakelin (1999), Considine et al. (1993), and Rosenberg (1982) discuss three options that iron and steel producers in a given country, especially in Europe and in the United States, may employ to reduce or eliminate the use of domestic coke: (1) Adopt processes that require no coke, (2) adopt processes that require less coke than before, and/or (3) import coke from other countries. In some direct steelmaking processes, no coke is required (Normille, 1991). The introduction of electricarc furnaces (EAFs), for example, has caused a major reduction in coke demand. EAFs use scrap iron and steel and do not use any coke directly. Today, they produce over 40% of the US raw steel (www.steel.org/ mt/roadmap/roadmap.htm). In other processes, pulverized coal injection (PCI) allows the coal-to-coke ratio to be dramatically decreased, because every pound of pulverized coal used replaces about one pound of coke. Since the mid 1970s, innovations in ironmaking have allowed the average US coke rate (tons (t) of coke consumed per ton of blastfurnace iron produced) to decrease from 0.61 t coke/1 t iron to 0.43 t coke/1 t iron (www.steel.org/mt/roadmap/ roadmap.htm). In addition, automobile producers are replacing steel with other materials, such as plastics, which reduces the demand for coke. 2.3. Imposition and enforcement of environmental regulations Environmental abatement measures and the use or discharge of the by-products, such as coal-gas, tar, and chemical products also affect the overall production and consumption of the coke. The United States and 867 China are imposing new and more stringent environmental regulations than 20 years ago. As of November 15, 1993, US coke producers, for example, had to choose one of two tracks, with the end goal being that all batteries at a facility must meet a residual-risk standard (RRS) based on minimizing the risk to public health in the surrounding community. On January 1, 1998, each facility had to reach the lowest achievable emissions rate (LAER), and on January 1, 2010, even more severe restrictions will be imposed until 2020 when the facility must be in full compliance with the RRS. The purpose of the RRS is to control risks to public health from exposure to hazardous or toxic substances. Under the 1990 amendments to the Clean Air Act, the US Environmental Protection Agency (EPA) was required by December 31, 1995, to issue standards for a Maximum Achievable Control Technology (MACT) for all US coke batteries (www.epa.gov/epahome/ laws.htm). A MACT has the lowest achievable pollution emissions.2 For the last half century in the United States, byproduct cokemaking has been the normal practice. The US by-product plants collect or process the chemicals usually to control environmental emissions rather than to provide a source of revenue. The most recently constructed US coke plants, however, convert coal into coke and fuels with no recovery of the chemical byproducts. This is called ‘‘nonrecovery’’ cokemaking, even though heat is usually recovered for use in electricity generation. Nonrecovery plants currently have fewer environmental problems than byproduct plants and, as noted above, are now designated by the EPA as MACT. By-products (volatiles, tars, chemicals, etc.) are burned in the nonrecovery oven, rather than being recovered, and the flue gas is cleaned of sulfur dioxide and particulate matter prior to being vented. ‘‘Meeting a standard’’ means that the coke-oven battery must be below the standard number of allowable occurrences of pollution (e.g., percentage of leaking doors, lids, and off-takes during a given time period and restrictions on charging times), as set by the relevant MACT and/or LAER standard (Environmental Quality Management, Inc., 1991). According to Considine et al., 1993, p. 16), ‘‘ydoors are the single largest source of leaks.’’ At Clairton Works, for example, each year 70% of the doors are sent to an on-site door-repair shop, with each repair taking about 32.5 h (Bagsarian, 1998, p. 4). The need for these repairs increases as the coke batteries 2 ‘‘The 1990 Amendments to the Clean Air Act name the Sun Coke non-recovery [cokemaking] technology as a Maximum Achievable Control Technology (MACT), the standard that any new coke plants built in the US must meet’’ (www.33metalproducing.com). The new Indiana Harbor nonrecovery coke plant meets the MACT (Polenske, 1999a; Westbrook, 1999). 868 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 age. In the United States, the average battery life is considered to be 35 years, but recent advances in repair and maintenance have made it possible that 40% of the batteries are over 30 years old and 25% are over 40 years old (Bagsarian, 1998). When the LAER standard is not met, the facility must be rebuilt, either by retrofitting existing ovens or rebuilding the coke ovens, or the plant must be shutdown by 2003. Several facilities have been closed, such as the LTV one in Pittsburgh, which closed in 1998, because rebuilding the plant would have cost $400-$500 million (Hogan and Koelble, 1997; www.newsteel.com). China is also imposing environmental regulations on cokemaking (SEPA, 1999), although the enforcement of the regulations is not as strict as in the United States. In 1996, the State government in China issued a directive that all indigenous cokemaking ovens had to be closed by 1998. By 1999, a new set of regulations had been imposed in which most modified indigenous plants also had to be closed, with a dispensation being given until 2003–2004 for those that produce town gas (Polenske, 1999b). Enforcement of regulations is a problem, however, partly because peasants from towns and villages produce coke throughout the countryside; many of these local facilities may be far off a main highway along roads that most enforcement officials may not bother to travel. In August 1998, our research team conducted a survey of TVE cokemaking plants and found that 7% of the plants surveyed in Shanxi Province were indigenous despite the 1996 regulation to close all indigenous plants (Chen et al., 1999). This is probably because cokemaking pays well in China and is an important source of income for many peasants. The Chinese have emission regulations for air pollutants for ‘‘‘nonmechanized’’ and ‘‘mechanized ovens.’’ The regulations vary for coke ovens of different vintages and for three types of ambient air-quality areas. New coke ovens (whether nonmechanized or mechanized) are not permitted to be built at all in the most strict (Class One) areas, so that the standards apply only to Class Two and Class Three areas. Emission standards are given for particulate matter, sulfur dioxide, benzo(a)pyrene, while a Ringleman blackness standard of less than 1 applies to all areas. (SEPA, 1999). There are also national water-discharge standards for cokemaking, which limit the volume of wastewater per ton of coke produced to 3 m3 in water-short regions and to 4 m3 in regions with adequate water resources. The wastewater regulations set limits for pH, suspended solids, cyanide, chemical oxygen demand, oils, hexavalent chromium, ammonia-nitrogen, and zinc.3 (SEPA, 1999). 3 pH, or hydrogen potential, a shorthand term used when specifying the hydrogen-ion (acid) concentration in a solution. Cokemaking plants in China and the United States face three options as environmental regulations become stricter and are enforced. First, a coke plant manager can rebuild or retrofit the ovens, but this is a costly proposition in either country. Second, the firm can build a new plant with some of the latest technologies, but this is even costlier, as noted above. Third, the plant can close. As we describe our process-flow model later in this paper, we will show how such a model can aid analysts in China in determining the trade-offs in the different options by examining the environmental-employmentinvestment-energy use for the byproduct, nonrecovery, and other ovens. 2.4. New cokemaking technologies In the United States, as noted above, the primary new technology competing with the byproduct oven is the socalled nonrecovery coke oven. We say ‘‘so-called’’ because heat is recovered at some of the facilities. As of the spring of 2002, there are however only two nonrecovery facilities in the United States, both of which are run by Sun Coke and have a total capacity of about 2.0 million tons. These are the only new US coke plants built since the mid 1980s (Westbrook, 1999, p. 25). Other technologies that are being tested in Europe and Japan include (1) a two-stage process of gasification and then formation of briquettes, developed by Coal Technologies Corporation, (2) a combo reactor that has enlarged coking chambers, and (3) a low-temperature continuous cokemaking facility being developed in Japan. As far as we know, none of these last three technologies are used in China as of 2002. The nonrecovery technology is being used in at least two coke plants in Shanxi Province, China. 3. The input–output process model To help users understand the various components of the input–output process model, we first quickly review predecessors to our model. Then, we specify the main features of cokemaking in China, such as location and sizes of the plant and the organizational structure of the plants. Finally, we describe the model and review the inputs and outputs that are associated with alternative technologies. 3.1. Predecessors to the cokemaking IOPM model An input–output model is a systematic economic analytical tool that analysts can use to compare alternative cokemaking technologies. In designing the cokemaking IOPM, we determine the inputs of materials, energy, capital, and labor that are purchased to K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 operate a coke plant. The principal material input is coal. Coke is the main output of cokemaking, but, depending upon the technology used, byproducts, such as tars, ammonia, light oils, aromatic chemicals (like benzene, toulene, xylene, and naphthalene), phenolics, and coke-oven gas also result. For example, in byproduct cokemaking in China, about 60–75% of the coal mass becomes coke, and the remaining 25–40% becomes volatile chemicals and tars and coke-oven gas (Chen, 2000). Lin and Polenske (1998) developed the original IOPM model to investigate the energy-intensity of steel making. One key reason to use the IOPM is to help policymakers know how alternative technologies will affect the energy intensity (energy consumption per unit of output) of a sector. Some analysts have investigated the energy-intensity issues in China and other countries (e.g., Garbaccio et al., 1999; Levine et al., 1991; Lin and Polenske, 1995; Polenske and Lin, 1993; and Sinton and Levine, 1993; Sinton et al., 1996). Even so, few analysts have investigated the factors in China causing the dramatic decline in energy intensity (about 50% between 1978 and 1998), its differences across regions, and the implications on technological change. We developed the cokemaking IOPM to help understand the energy-intensity implications of alternative cokemaking technologies. Previously, Russell and Vaughan (1976) conducted a pioneering study of the US steel industry in which they introduced a linear-programming approach to trace the economic and environmental consequences of alternative steelmaking technologies. They examined details for the US by-product cokemaking technologies as part of their overall assessment of steelmaking. Early processflow models were based upon principles outlined in Dorfman et al. (1958) and developed for ironmaking and steelmaking and for energy flows (Sakamoto et al., 1999; Marakovits, 1994; and Considine et al., 1993).4 Lupis and McMichael (1999) extended the Lin-Polenske IOPM (1998) to assess the costs of a simple threeprocess system of cokemaking, ironmaking, and steelmaking. They included three main products (coke, pig iron, and steel), seven purchased inputs (iron ore, coal, scrap steel, fluxes (materials that change the fluidity or viscosity of the liquid), air, oxygen, and make-up water (water added to make up for that evaporated in the quenching), ten by-products and wastes (coke-oven gas, blast-furnace gas, basic oxygen-furnace gas, slag, tar, ammonia liquor, dust and fumes, evaporated water, purged wastewater (water released from the system) to stream or sewer, purged solids (in wastewater), and five primary inputs (process capital, environmental capital, 4 Marakovits and Considine (1996) provide a summary of the ironmaking and steelmaking process-flow models that preceded theirs, which we do not repeat here. 869 process labor, environmental labor, and other charges). Their process-flow model uses a mass balance with some use of environmental-emission factors. The authors included a vector of prices for inputs and outputs to calculate the net costs or revenues of selected production schemes as well and the total costs of the entire system and individual process units. In this paper, we modify the Lin-Polenske IOPM to examine the various processes of cokemaking and the alternative technologies in use in Shanxi Province, China. Next, we discuss differences in the rationale for and organization of cokemaking in China and the West. We then explain three different aspects of the model: (1) inputs (mainly coal) into cokemaking, (2) technologies available, and (3) coke and by-product outputs of the cokemaking process. 3.2. Rationale for and organizational structure of cokemaking in China China plans to grow a cokemaking industry that will not only support a domestic iron and steelmaking industry and an automobile and other consumerdurable industry, but will also export coke to other countries. To accomplish these goals, four factors are important in determining the inputs to cokemaking: (1) location of the plant, (2) size of the plant, (3) organizational structure of the plant, (4) alternative cokemaking technologies available. In the West, most metallurgical coke plants are located contiguous to the ironmaking facility, and some, such as the nonrecovery cokemaking plant in Vansant, Virginia, are close to the coal mines. In Shanxi Province, China, with the rapid growth of township and village enterprise cokemaking since the early 1980s, most of the cokemaking plants are neither near the mine nor the ironmaking plants. Rather, the plant is usually established in the town or village where the peasant who sets up the plant lives. Coal frequently is transported 50– 100 km to the cokemaking plant; then, the coke sometimes is transported even longer distances to the ironmaking plant or to ports for export (Polenske, 1999b). The size of the plants also differs in the West versus in China. In the United States, the largest cokemaking facility (Clairton Works in Pittsburgh, Pennsylvania) produces up to five million short tons of coke annually and accounts for approximately 20% of the total metallurgical coke produced in the country. Twelve of twenty-three cokemaking facilities in the United States have an annual capacity greater than 1 million short tons. These facilities are able to reap economies of scale in terms of using less coal, electricity, water, and other inputs per unit of output than smaller-size plants. In Shanxi Province, most facilities are very small and are scattered throughout the countryside. Although their 870 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 dispersed location enhances the employment opportunities for the peasants, it creates a need for an extensive transportation infrastructure. In the late 1990s, the largest TVE plants produce about 300,000–600,000 t (metric) of coke annually, although at least one TVE produces about 1 million tons. Of the 37 SOEs, the eight largest together account for less than 40% of the total coke produced in the Province (Chen et al., 1999). Chinese cokemaking is organized in two ways. The first way, which is increasing in importance, is comprised of many local, generally small, facilities operated as township and village enterprises (TVEs). Although classified in the statistics as TVEs, they may be jointly owned by the peasant with a town or village, privately owned, or have other diverse ownership structures other than state ownership (Chen et al., 1999). The second way is comprised of usually large facilities run under state ownership, identified as state-owned enterprises (SOEs). TVEs tend to select technologies that permit smaller-scale operation and are less capital intensive than the SOEs. Until the late 1990s, most TVEs in China operated the so-called ‘‘indigenous’’ or ‘‘modified indigenous’’ ovens (Li et al., 1995). Indigenous cokemaking is similar to beehive cokemaking in the United States, which has been abandoned since the 1950s partially due to strict US environmental emission standards. Compared to the TVEs, the SOEs in China use more capital-intensive cokemaking technologies, commonly called ‘‘machinery ovens,’’ which have basic vertical slot-oven geometries of chemical byproduct ovens.5 Both in China and the United States, cokemaking is done in batches. Continuous production of coke is achieved with many ovens staged to operate in sequence. To maintain the physical integrity of oven materials and brickwork, it is customary to keep the ovens always warm; otherwise, the extreme variations of oven temperatures lead to failure of the oven materials. Building a larger oven or adding more ovens may achieve increased capacity. A group of ovens that are operated concurrently is called a coke battery. A facility (plant) is described by counting the number of ovens and the number of batteries. For the smallest facility, a battery may consist of three ovens, while large facilities may have as many as 100 ovens in a single battery. Analysts can use the IOPM to help with a technical issue concerning the selection of an economically viable size of a coke oven, or to design the size of a coke oven that is the most energy efficient or one that has the least environmental impact. 5 Cokemaking analysts describe the different ovens as indigenous and machinery ovens, or small, medium, and large, or simple and modified, or byproduct and nonrecovery. We will use these terms, when necessary, to identify specific facilities. Mostly, however, we classify the Chinese technology options in terms of their specific inputs and outputs. 3.3. Alternative cokemaking technologies Technology choices in cokemaking involve finding ways to change or control the yield of coke, chemicals, energy, and wastes. Removing tars, ammonia, light oils, aromatic chemicals (like benzene, toulene, xylene, and naphthalene), and phenolics makes the coke-oven gas easier to burn and transport. If these materials are not removed from the raw coke gas, they create maintenance problems by condensing in pipelines and burner nozzles. In the best of circumstances, these recovered chemicals may generate revenue. In the worst of circumstances, the recovered materials form liquid and solid-waste materials that require special handling and containment. Coal for making coke ideally has different properties than coal burned for making steam and electricity and is referred to as ‘‘coking coal,’’ which is lower in ash and sulfur content than noncoking (thermal) coal. Both in China and the United States, most of the coal used in cokemaking is washed. Cleaning and preparing coal for cokemaking includes some changes in both the physical form and the chemical composition of the coal. By reducing the size of the raw coal, the producer can separate ash and inorganic sulfur from the coal. The cokemaking technology used to convert coal into coke, gas, and other coal-chemical products determines the final size distribution of the coke. The physical size of coke is related to its role in deep-bed blast furnaces. For use in the blast furnace, the operator requires fistsized pieces of coke in order to provide the permeability and porosity that permit the mass flow of air and other blast-furnace gases to pass through the burden of blastfurnace materials. Large pieces of coke also must support the physical weight of several meters of depth of other furnace materials above them. The size of the coke is not a measure of its strength. Foundry coke, for example, is typically larger in size than metallurgical coke, but foundry coke does not have to be as strong, because it is used in foundry cupola furnaces, which are less tall than blast furnaces and therefore have to support less burden. Coal can be converted into coke by several technologies. Analysts can use the cokemaking IOPM to evaluate each technology in terms of mass, energy, and economic efficiency. Nominally, about 75% of the mass of the coal is converted into coke; and, about 85% of the energy of the input coal is contained in the coke. It goes without saying that coke has a higher unit price than coal. The details of the mass and energy balances for each cokemaking technology determine the energy and the pollution obtained from the coal. For example, if 25% of the mass of coal is not converted into coke, it is found in the by-products of cokemakingFthe cokeoven gas, the coke chemicals, and the wastes. In early cokemaking, these materials were discharged into the K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 environment (air, water, and land). This is the kind of environmental impact that any country wants to avoid today. When plant managers collect and utilize these materials, they improve the mass and energy efficiencies. They may also collect revenue from the sale of the byproducts and reduce harmful environmental emissions. In China, a few managers have made an important improvement over the earliest cokemaking technologies by designing ovens that capture some of the coke oven gas and recycle it back to the oven for combustion heating, i.e., they use nonrecovery coke ovens. Sanjia Cokemaking Corporation, for example, runs one major nonrecovery coke plant in Jiexiu, Shanxi Province; however, this facility does not capture the energy for making electricity.6 Coke has desirable physical and chemical properties. It is both a fuel and a chemical-reducing agent. Both roles are important in the blast furnace for converting iron oxides to iron metal. Although fine coke, called coke breeze, is not suitable for direct use in a blast furnace, it can be agglomerated or bound in some fashion to make larger particles for use in the furnaces. Fine coke may be a suitable feed material for burning directly, or it may be further processed to make an activated carbon. For our study, we distinguish between technologies that recover coke and fuel gas and chemicals (used for byproduct ovens) and technologies that recover coke and fuel gas only (used for nonrecovery ovens). The most primitive technology (in China, these are the socalled ‘‘indigenous coke ovens’’) that recovers only coke is unacceptable today, because of its enormous negative environmental effects (Li et al., 1995). Regardless of the technology used, incandescent coke from the ovens must be cooled to ambient temperatures for storage or transport. Cooling is normally done with direct contact with water, which evaporates in the cooling process. This is called a consumptive use of water and means that a continuous source of new water is required. About 1000 liters of water are used to cool a ton of hot coke if quenching is done externally to the coke ovens, as is the practice for by-product or machinery ovens. Less water is used for quenching in indigenous and nonrecovery ovens in China because the water is applied directly to the coke in the oven. During quenching, some water is evaporated, and the excess water is collected and recycled. The recycled water has coal fines, which must be separated and handled or disposed. If the waste water is blended with natural waters for quenching, the volatile organic materials are transferred from the wastewater to the atmosphere surrounding the quench tower. In some advanced 6 As noted earlier, the United States has two nonrecovery coke ovens built by Sun Coke, both of which have heat recovery. 871 modified indigenous coke processes, a worker adds the quench water to the oven, and the evaporated water is exhausted near the ground. In the byproduct plants, coke is ‘‘pushed’’ from the slot ovens into a quenching (railroad) car and transported to the quenching tower, which is designed to exhaust the steam (evaporated water) through a stack elevated above ground level. The managers’ choice of an appropriate cokemaking technology depends upon a number of additional factors. One factor is the availability or nonavailability of markets for byproducts and fuel gas from the cokemaking. Another key policy issue they confront is the choice between generating revenue from byproducts or incurring additional waste-disposal problems. Additional variations occur among the key cokemaking technologies in terms of the capital costs and labor requirements, including the skills of workers, which differ among those workers whose jobs are to tend the different types of ovens and those workers who have the administrative jobs needed to run the plant. Occupational health and safety exposures also differ from plant to plant. 4. Modeling issues concerning cokemaking We designed the cokemaking IOPM to use in comparing the economic, energy-use, and environmental performance of alternative cokemaking technologies in China. Many data issues arose as we collected the information. For the technology comparisons, for example, we are especially concerned with the environmental costs, which we could only approximate. Given the lack of detailed information about specific environmental control technologies in China, we use US environmentalcost ratios (10–20%) for the process-technology environmental costs. We would require more detailed information if we were to define the costs accurately. Additional difficult issues arise from the relative importance of capital and operational expenditures in controlling emissions. Environmental costs are generally higher when plant personnel are retrofitting controls, than when they are making choices early in the design of a process technology. Some design choices can change environmental impacts and costs in major ways. For example, quenching coke with water, which then evaporates, has very different environmental and economic effects than dry quenching (with nitrogen), which is often used to capture the heat for other purposes. In indigenous and nonrecovery coke ovens, the workers apply the quench water in the kiln reactor in which the coal is coked. For machinery coke ovens, workers quench coke with water in a facility, called a quenching tower, external to the ovens, producing evaporated water and volatiles with vapor pressures 872 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 close to that of water and releasing fine coke particles, called ‘‘breeze’’.7 Dry quenching uses no water and has minimal air emissions, but it is a more complicated and capital-expensive process than wet quenching. All those working with cokemaking must give critical attention to air emissions from cokemaking ovens and by-product chemical plants, because coke-plant air emissions have been identified and classified by the International Agency for Research on Cancer (IARC) as a human carcinogen. Studies in Allegheny County in the United States by the University of Pittsburgh School of Public Health found that top-side coke-oven workers have a risk of lung, trachea, and bronchus cancer seven times larger than the risk for non-oven production workers (Wu et al., 1998; Constantino et al., 1995; Redmond, 1983; Redmond and Mazumbar, 1993). The risk to highly exposed workers on and around the ovens varies with their location on the site. In the United States in the 1970s, Graham and Holtgrave (1989) found that two-thirds of the primary sources of emissions from coke batteries were from charging (putting coal into the ovens) and one-third from pushing the finished coke from the ovens into the quenching car. We are interested in the changes in Chinese cokemaking technologies and how they affect the releases of volatile products to the atmosphere. The United States Environmental Protection Agency (USEPA) prefers not to measure (thus regulate) concentrations of particulate matter directly from coke-oven charging lids, coke-oven doors, or by-product coke-oven gas offtakes. Proposed regulatory schemes set limits on the fraction of these locations that are observed to have visible leaks; for example, a USEPA standard requires the following: less than 10% PLD (percent leaking doors), less than 3 PLL (percent leaking lids), less than 6% PLO (percent leaking offtakes), and less than 16 seconds of visible emissions per charge. Plants can achieve these limits in several ways, such as technology requiring capital investment in hoods and ventilation control or operation and maintenance schemes using various kinds of sealants applied as needed. Costs vary considerably as does the effectiveness of these measures. Coke-oven workers wearing personal respirators cut down on their own exposure, but not on the exposure to the community at large. If regulatory officials are not to squander money, time, and effort, they should regulate coke-oven emissions with occupational and non-occupational exposures in mind. (Graham and Holtgrave, 1989). An additional issue is that to determine the amount of cleaning of the raw coke-oven gas required, the plant manager must determine how the gas will be burned and how far the gas must be transported through pipes before it is burned. The length of transport affects the 7 The incandescent coke is pushed from the oven into a quenching car, which is then moved to the quenching tower. degree of gas cooling and the concomitant formation of condensation products that may result in plugging of the pipes and nozzles, creating major maintenance problems. Also, contrary to what happens in the United States, where coke is typically made to be used onsite or close by the cokemaking facility, in Shanxi Province, the cokemaking plants are frequently neither close to the coal mine, nor close to the iron and steel mills or other end users. A producer who transports coke to external (outside the region or even country) users may find that the user imposes special coke-strength requirements on the sale. Finally, regardless of the technology, converting coal to coke releases water of composition. Cokemaking analysts study two kinds of water problems. First, cokemaking generates wastewater that is salty like seawater and contains a large quantity of organic chemicals and dissolved inorganic salts. Each ton of coal converted to coke produces about 100 liters of wastewater. If this water condenses from the raw gas, plants must control the resulting major wastewater stream; later, we refer to this condensate as ammonia liquor. This process water, separated from coke-oven gas to improve its combustion properties, is a difficult wastewater to treat to meet environmental standards for discharging to natural waters (rivers and lakes). Second, water is consumed in the quenching of hot coke, with the heat being removed as the water evaporates into the atmosphere. In the United States, some plants use process water for quenching in order to eliminate its discharge to surface waters. This practice transfers pollutants from being a threat to the water to being a concern for the atmosphere. Each manager must choose which media (water or air) to pollute, depending upon the effects on the cost of environmental control for a facility as well as its impact on the nearby community. 5. Spreadsheet model for cokemaking Spreadsheets offer flexibility and simplicity in modeling costs, mass flows, and environmental emissions for cokemaking. By using this form of technical-cost modeling, we can link processes and separate parameters that are common to processes by a process-flow diagram. Our spreadsheet model guides us in collecting information about alternative technologies. It helps us to build a process-flow diagram (e.g., Fig. 1) for linking the cokemaking unit operations and identifying key points to support alternative decisions to deal with byproduct recovery or energy recovery. We can easily see when choices are made to shift pollutant emissions from water to air, etc. This systematic approach to understanding the topology of cokemaking technologies K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 873 RAW COAL WASH REFUSE COAL WASHING CLEAN COAL BYPRODUCT COKE OVEN EXTERNAL QUENCH OF HOT COKE QUENCH WATER EVAPORATED QUENCH WATER COKE COMBUSTION GAS RAW COG TAR AND BYPRODUCT CHEMICAL RECOVERY TAR, ETC. COKE-OVEN GAS (COG) COKE BREEZE Fig. 1. Process flows for a byproduct coke enterprise. provides a basis for communicating among industry personnel, environmental regulators, planning officials, and the public. Our approach gives us qualitative and quantitative results. The accuracy of the quantitative results is affected by how well we have modeled the system as well as the accuracy of our numerical data. To show the process flow for each cokemaking technology, we describe a mass balance that equates the output of coke, coke chemicals, and coke-oven gas to the input of coal and other feedstocks. We account for some important, yet very small (less than a percent of the total process flows), environmental emissions in terms of empirical emission coefficients. Our cokemaking IOPM represents a Chinese (TVE) coal-based cokemaking enterprise that has facilities for coal washing (one for steam coal and one for metallurgical coal), producer-gas generation, electricity production, and three types of coke ovens: small machinery, modified indigenous, and nonrecovery.8 These seven facilities are listed in Table 1 with the assumptions about the technology, economics, and environment for the seven facilities that we model in our cokemaking enterprise. The important processes in cokemaking are the ovens, the quenching of the hot coke, and the processing of the hot, raw coke-oven gas. By developing the model hierarchically, we can isolate the major differences among the technologies. We first identify the key capital facilities: coal cleaning, coke ovens, coke quenching, coke-oven gas processing for chemical or heat recovery, combustion-gas processing, etc. We also include facilities for generating electricity and producer gasFa low-heat content fuel gas substitutable (for economic reasons) for coke-oven gas for heating ovens, as part of our coal enterprise.9 Using information from Chen’s empirical case studies (Chen, 2000), we describe the capital (investment) costs of each technology in terms of capital cost per unit of annual production.10 For illustration, we summarize the 8 Differences exist between Chinese and Western names given to alternative cokemaking technologies. In the West, managers commonly use ‘‘byproduct recovery’’ to mean collection and separation of chemicals (gases, liquids, and solids) from raw (unprocessed) cokeoven gas, and they use ‘‘nonrecovery’’ to mean a technology that does not recover a mass of chemicals, but does recover energy by combusting the chemicals in the raw coke-oven gas. 9 Producer gas is cheaper if it is made from coal-washing plant refuse, but because of its carbon-monoxide content, its use in a town rather than an industrial plant is less desirable. 10 In July of 2000, the two authors revisited the coke plants and verified the numbers Chen recorded and made a few modifications in his numbers. 874 Table 1 Assumptions for process-flow cokemaking model Process characteristics (assumptions) Clean coal requirement Ash content of raw coal Ash content of clean coal Ash content of washer refuse Sulfur content of raw coal Sulfur content of clean coal Sulfur content of washer refuse Fraction of sulfur in clean coal to coke Fraction of sulfur in clean coal to COG Fraction of sulfur in clean coal to byproducts Heat content of clean coal Thermal efficiency of power plant S to flue gas/S in clean coal Electricity consumption Coke oven gas production Tar recovery Ammonia liquor production Ammonium sulfate production Bottom ash from clean coal input ash Fly ash from clean coal input ash Process wastewater generation Quench water consumption Coke breeze production from external quench Capital investment Unit for capital investment Labor Labor rate Environmental capital/process capital Environmental labor/process labor SO2 scrubber removal efficiency t coal/t coke Percent Percent Percent Percent Percent Percent Percent Percent Percent MJ/kg J electricity/J input tS/tS kWh/t input m3/t coal l/t coal l/t coal kg/t coal Percent Percent l/t coal l/t coke t breeze/t coke RMB/annual unit Annual unit Person years RMB/person year Fraction Fraction Percent Steam coal washer Metallurgical coal washer Producer gas generator Steam coal power plant Small machinery coke ovens (1) (2) (3) (4) (5) 1.32 25 10 65 2 2 2 (7) 1.32 60 30 10 60 30 10 30 300 10 120 10 15 300 5 60 10 300 1000 0.1 800 t/year 400 12,000 0.05 0.05 600 600 90 t/year 300 12,000 0.05 0.05 45 t/year 300 12,000 0.05 0.05 24 0.33 1 50 10 100 60 t/year 200 12,000 0.05 0.05 1.35 Nonrecovery coke ovens 15 7 65 1 1 1 24 50 Advanced modified indigenous coke ovens (6) 60 t/year 200 12,000 0.05 0.05 0.3 m3/year 300 12,000 0.05 0.05 70 30 913,242 MkWh/year 400 12,000 0.05 0.05 65 COG=coke-oven gas; j=joule; kg=kilogram; kWh=kilowatt hour; m3=cubic meters; RMB=renminbi; S=sulfur; SO2=sulfur dioxide; t=ton. Sources: Chen Hao. 2000. ‘‘Technological Evaluation and Policy Analysis for cokemaking’’, Cambridge, MA, Technology and Policy Program. Master’s thesis. Field missions to Shanxi Province by the Multiregional Planning Staff, MIT, July 1999 and 2000, December 1999. K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. Units K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 economic model assumptions by comparing three alternative Chinese cokemaking technologies for (1) small machinery, (2) advanced-modified indigenous, and (3) non-recovery (Table 1, columns 5–7). As Chen (2000) collected these data during case studies of Chinese cokemaking technologies, he obtained annual costs and revenues, but he did not explicitly separate environmental control costs from cokemaking costs. In Table 1, we list the production factors and other assumptions used in making the model calculations. For example, the capital cost of cokemaking technologies in China ranges from 45 to 800 renminbi (RMB) per annual ton of coke produced, depending on the level of chemicals or heat recovered. We assign a 5% environmental capital and labor cost for all facilities for illustrative purposes only. Our hypothetical facility is profitable including this level of additional control costs. We also identify variable costs for each of the major purchased inputs, such as coal, electricity, and labor. For the technologies we investigated in Shanxi Province, the cost of the coal may range from 20% to 80% of the total annualized cost of production. We include other 875 variable costs, like water consumed in quenching and electricity to run pumps, or if we believe that they represent a small fraction of the total cost, we neglect them. Although we include labor requirements as an important variable cost, we are also interested in measuring the employment opportunities or lack of opportunities for each technology. Before introducing the process-flow materials balance, we provide prices for the inputs (outputs) to (from) the enterprise (Table 2). We illustrate how the model can be used by introducing the process-flow materials balance for a fictitious enterprise with seven facilities that produces 789 million kWh of electricity, 580,000 t of coke per year (180 small machinery ovens, 200 modified indigenous ovens, and 200 nonrecovery ovens), 180 million cubic meters of coke-oven gas, and a number of byproducts and pollutants (Table 3, last column). Each row describes the production (positive number) and the consumption (negative number) of a commodity (main product, byproduct, or waste). The process-flow balance contains three key production sections: main products, purchased inputs, and Table 2 Prices for cokemaking enterprise inputs and outputs Inputs and outputs Units 1. Clean steam coal 2. Clean metallurgical coal 3. Producer gas 4. Electricity 5. Coke from small machinery plant 6. Coke from advanced modified indigenous plant 7. Coke from nonrecovery ovens 8. Raw steam coal 9. Raw metallurgical coal 10. Water 11. Steam coal washer refuse 12. Metallurgical coal washer refuse 13. Bottom ash 14. Power plant fly ash 15. Coke breeze from quench 16. SO2 to atmosphere [social cost] 17. S to coke oven gas to atm [social cost] 18. COG 19. COG to underfire ovens 20. Tar and pitch 21. Ammonium sulfate 22. Ammonia liquor 23. Process capital investment-capital recovery factor (CRF) 24. Process labor 25. Environmental capital investment-CRF 26. Environmental control labor RMB/t RMB/t RMB/m3 RMB/kWh RMB/t RMB/t RMB/t RMB/t RMB/t RMB/m3 RMB/t RMB/t RMB/t RMB/t RMB/t RMB/t RMB/t RMB/m3 RMB/m3 RMB/l RMB/kg RMB/l Per year a RMB/person year Per year RMB/person year Value 150.00 180.00 0.08 0.20 360.00 360.00 360.00 100.00 120.00 0.40 10.00 12.00 (8.00) (8.00) 25.00 (1.00) (1.00) 0.30 0.30 40.00 0.50 (0.01) 0.20 12,000.00 0.20 12,000.00 a Value in US$ $18.75 $22.50 $0.01 $0.03 $45.00 $45.00 $45.00 $12.50 $15.00 $0.05 $1.25 $1.50 ($1.00) ($1.00) $3.13 ($0.13) ($0.13) $0.04 $0.04 $5.00 $0.06 ($0.00) Assumptions Assume 1.5 times raw coal price Assume 1.5 times raw coal price Assume 25% of COG price Assume 2 times clean coal price Assume 2 times clean coal price Assume 2 times clean coal price Assume 10% of raw coal price Assume 10% of raw coal price $1500.00 $1500.00 8 renminbi (RMB)=B$1 US. atm=atmosphere; COG=coke-oven gas; CRF=capital recovery factors; kg=kilogram; kWh=kilowatt hours; S=sulfur; SO2=sulfur dioxide. Parentheses equal negative values. Sources: Chen Hao. 2000. ‘‘Technological Evaluation and Policy Analysis for Cokemaking’’, Cambridge, MA, Technology and Policy Program, Master’s thesis. Field missions to Shanxi Province by the Multiregional Planning Staff, MIT, July 1999 and 2000, December 1999. 876 Table 3 Cokemaking enterprise process-flow model Product/input Main products [A matrix] 1. 2. 6. 7. Purchased products [B matrix] 8. 9. 10. Byproducts and wastes [C matrix] 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. Clean steam coal Clean metallurgical coal Producer gas Electricity CokeFsmall machinery plant CokeFadvanced modified indigenous plant CokeFnonrecovery ovens Units kt/year kt/year Mm3/year MkWh/year kt/year Steam coal washer Metallurgical coal washer Producer gas generator Steam coal power plant [100 MWe] Small machinery coke ovens (1) (2) (3) (4) (5) 394 (46) 56 (3) 876 kt/year kt/year m3/year Steam coal washer refuse Metallurgical coal washer refuse Bottom ash Power plant fly ash Coke breeze from quench SO2 to atmosphere S to coke oven gas COG production COG to underfire ovens SO2 to atm from combusted COG Tar and pitch Ammonium sulfate Ammonia liquor kt/year (264) (56) (6) 180 (3) (2) 200 kt/year kt/year kt/year kt/year kt/year kt/year Mm3/year Mm3/year 200 (540) 0 0 Y3 Y4 Y5 0 789 180 Y6 200 Y7 200 (540) (926) (346,800) (146) Zc1 0 (128) Zc2 0 Zc3 Zc4 Zc5 206 12 20 Zc6 Zc7 Zc8 Zc9 6 6 180 (117) (26,400) 128 Y1 Y2 Zb1 Zb2 Zb3 (926) 146 Final output [Z] (270) kt/year Symbol (7) (264) kt/year Raw steam coal Raw metallurgical coal Water Nonrecovery coke ovens (394) 798 (27) Advanced modified indigenous coke ovens (6) 178 (162,000) (158,400) 28 12 20 6 4 1 60 (18) 1 60 (57) 1 60 (42) kt/year 0 1 1 l/year kg/year l/year 2640 2640 31,680 1350 16,200 Zc10 1 Zc11 Zc12 Zc13 3990 2640 47,880 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 3. 4. 5. Detailed Product/input (105) Main products [Xa vector] 27. Abbreviations: k=thousand; M=million; for other abbreviations, see Table 2. Sources: Chen Hao. 2000. ‘‘Technological Evaluation and Policy Analysis for Cokemaking’’, Cambridge, MA, Technology and Policy Program, Master’s Thesis. Field missions to Shanxi Province by the Multiregional Planning Staff, MIT, July 1999 and 2000, December 1999. 394 798 56 876 180 200 200 Zd4 (15) (15) (20) (20) (15) (10) Person years (10) (2100) (52,966) Zd2 Zd3 (300) (450) (300) (900) (400) (7200) (400) (40,000) (300) (840) (200) (2394) (200) (1182) Person years kRMB 25. 26. Primary inputs [D matrix] 24. Process capital investment Process labor Environmental capital investment Environmental control labor kRMB (23,640) (47,880) (16,800) (800,000) (144,000) (18,000) (9000) Zd1 (105,9320) K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 877 byproducts and wastes. The fourth section, primary inputs, represents financial costs, such as investment capital costs and labor. The last line shows the total output for each of the seven facilities. Thus, this balance sheet provides information on the investment, labor, and maintenance costs plus costs of purchased coal and utility costs. It also provides estimates of revenues from coke, chemical by-products, and generated steam and electricity. Both costs and revenues are expressed in yuan per annual ton of coke.11 The columns pertain to the seven main facilities at the plant: (1) steam coal washer, (2) metallurgical coal washer, (3) producer-gas generator, (4) steam coal-fired electric power plant, and (5–7) three types of ovens used at the hypothetical plant. In any column, the positive entries represent outputs of a facility, and the negative entries are the inputs. We identify all entries in terms of appropriate physical units. Although sometimes (to clarify the mass balance), analysts use this kind of table to present all entries in common units, we did not do that here. We can also view Table 3 as a statistical account of the flows in the enterprise and of the inputs used and the outputs generated in each facility. For example, the first line in the main products section shows that the washer produced 394,000 t of clean steam coal, which were consumed by the electric power plant. The first column shows that 27 million kWh of electricity and 540,000 t of raw steam coal were consumed by the washer to produce 394,000 t of clean steam coal and 146,000 t of coal washer refuse. The steam coal washer required a capital investment of 23,640,000 RMB and used 200 person-years of labor. In matrix form, Table 3 provides the information for the 10 components required for a cokemaking version of the Lin-Polenske IOPM: A=matrix summarizing the production and consumption of the main products, B=matrix describing the consumption of purchased products, C=matrix describing the generation of byproducts and wastes. D=matrix describing the consumption of primary inputs, X a =line matrix or vector giving for each main process the corresponding main productoutput, Y =vector giving the final output of main products, Z a =vector giving the total demand for purchased products, Z b =vector giving the total demand for purchased products, Z c =vector giving the total discharge of by-products and wastes. Z d =vector giving the total consumption of primary inputs. 11 In 2001, 1 yuan=8.2 US dollars; renminbi (RMB) is another term used for yuan. 878 Product/input 1. Main products 2. [a matrix] 3. 4. 5. 6. 7. Detailed product/input Steam coal washer Metallurgical coal washer Producer gas generator Steam coal power plant [100 MWe] Small machinery coke ovens (1) (2) (3) (4) (5) Clean steam coal Clean metallurgical coal Producer gas Electricity Coke from small machinery plant Coke from advanced modified indigenous plant Coke from nonrecovery ovens 1.000 0.000 0.000 (0.069) 0.000 0.000 0.000 0.000 1.000 0.000 (0.058) 0.000 0.000 0.000 0.000 0.000 1.000 (0.054) 0.000 0.000 0.000 (0.450) 0.000 0.000 1.000 0.000 0.000 0.000 8. Purchased products 9. [b matrix] 10. Raw steam coal Raw metallurgical coal Water (1.371) 0.000 0.000 0.000 (1.160) 0.000 0.000 0.000 0.000 11. Byproducts and wastes 12 [c matrix] 13. 14 15. 16. 17. 18. 19. 20. 21. 22. 23. Steam coal washer refuse Metallurgical coal washer refuse Bottom ash Power plant fly ash Coke breeze from quench SO2 to atmosphere S to coke oven gas COG production COG to underfire ovens SO2 to atm from combusted COG Tar and pitch Ammonium sulfate Ammonia liquor 0.371 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.160 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 (2.607) (2.286) 3.179 0.000 0.000 0.000 0.075 0.000 0.000 0.000 0.000 0.000 0.000 Advanced modified indigenous coke ovens (6) Nonrecovery c oke ovens (7) 0.000 (1.467) (0.311) (0.033) 1.000 0.000 0.000 0.000 (1.350) 0.000 (0.015) 0.000 1.000 0.000 0.000 (1.320) 0.000 (0.010) 0.000 0.000 1.000 0.000 0.000 0.000 0.000 0.000 (146.667) 0.000 0.000 (810.000) 0.000 0.000 (792.000) 0.000 0.000 0.032 0.014 0.000 0.006 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.111 0.000 0.004 0.333 (0.100) 0.001 14.667 14.667 176.000 0.000 0.000 0.000 0.000 0.000 0.000 0.004 0.300 (0.285) 0.004 6.750 0.000 81.000 0.000 0.000 0.000 0.000 0.000 0.000 0.004 0.300 (0.210) 0.003 0.000 0.000 0.000 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 Table 4 Cokemaking process-flow direct inputs 24. Primary inputs 25. [d matrix] 26. 27. Process capital investment Process labor Environmental capital investment Environmental control labor [P transpose]* [a]=profit per gross main product [b] [c] [d] [P transpose]* [a]*[a inverse]=profit per final main product [b] [c] [d] (60.000) (0.508) (3.000) (0.025) (60.000) (0.251) (3.000) (0.013) (300.000) (5.357) (15.000) (0.268) (913.242) (0.457) (45.662) (0.023) (82,281) 126,217 111,131 99,518 128,168 5350 35,392 (75,390) 128,624 143,871 149,227 176,171 394 798 56 876 180 200 Clean steam coal Clean metallurgical coal Producer gas Electricity Coke from small machinery plant Coke from advanced modified indigenous plant 200 Coke from nonrecovery ovens Profit in million RMB 192.46 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 Clean steam coal Clean metallurgical coal Producer gas Electricity Coke from small machinery plant Coke from advanced modified indigenous plant 200 Coke from nonrecovery ovens Profit in million RMB 192.46 (45.000) (1.500) (2.250) (0.075) 27,977 Total output [X ] 0 0 0 789 180 200 (90.000) (1.500) (4.500) (0.075) (3464) Source: Calculated from Table 3 by dividing each element in a given column by the total output of the plant. Abbreviations refer to Table 3. Final demand [Y ] (800.000) (2.222) (40.000) (0.111) 879 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 880 When we divide each element in a column in Table 3 by the output of the main product of the process corresponding to that column, we obtain the ‘‘directinput-coefficients’’ matrices (Table 4). The elements of the new matrices [a], [b], [c], and [d] are related to the elements of the matrices [A], [B], [C], and [D] by the relations: facility within a plant and the interrelationships among the facilities that comprise this type of coal-using enterprise. We can readily modify the relationships and modules for the individual facilities to represent other types of coal-using enterprises. aij ¼ Aij =Xj ; bij ¼ Bij =Xj ; dij ¼ Dij =Xj ; 6. Discussion of model results and limitations cij ¼ Cij =Xj ; ð1Þ where the subscripts i and j of an element identify, respectively, the row and column of its matrix. Each coefficient shows the amount of input required or output produced per unit of a production process, and thus each column shows the input–output structure of a facility. For example, the producer-gas generator column in Table 3 indicates that 1 million cubic meters of producer gas consumes 0.054 million kWh of electricity, 2.607 103 t of steam coal washer refuse and 2.286 103 t of metallurgical coal refuse, and discharges 3.179 103 t of bottom ash, while consuming 300,000 RMB of investment capital and 5.357 personyears of labor (excluding estimates for environmental control). The final demands and outputs are related to the matrices [a], [b], [c] and [d] by the following relations: ½a½X ¼ ½Y ; ¼ ½Zc ; ½b½X ¼ ½Z b ; ½c½X ½d½X ¼ ½Z d ; ð2Þ where [X ] is the transposed column matrix [vector] of the line vector [X a ] whose elements are the main products for each facility. Eq. (2) may be transformed by using the inverse matrix [a1 ] into the following relations: ½X ¼ ½a1 ½Y ; ½Zb ¼ ½b½a1 ½Y ; ½Z c ¼ ½c½a1 ½Y ; ½Zd ¼ ½d½a1 ½Y ; ð3Þ where, per unit of main product final output: * * * * [a1 ] is the total main product output, [b][a1 ] is the total purchased input requirement, [c] [a1 ] is the total byproduct and waste discharge, and [d][a1 ] is the total primary input requirement. The matrices are shown in Table 5. Each coefficient in the table describes the total input required, both directly and indirectly, to generate one unit of main product. For example, each coefficient in the raw steam coal row in Table 5 is larger than the corresponding number in the same row in Table 4 of direct input coefficients. The difference between the two numbers indicates the amount of raw steam coal required indirectly for each of the seven processes. As is shown by Tables 1–5, the cokemaking processflow model provides a great deal of information for each To each unit of output (elements of the vectors [Y ], [Zb ], [Zc ], and [Z d ]) can be associated a revenue (positive number) or a cost (negative number), thus revenue and price vectors [Py ], [Pb ], [Pc ], and [Pd ]. An analyst calculates the profit of the enterprise by taking the inner product of the two vectors: Profit ¼ ½P transpose½Z ð4Þ As shown in Lupis and McMichael (1999), we can also calculate the profit per unit of gross output of main product, which readily provides the change in profit associated with a change in the total production of one of the main products. Profit ¼ ½P transpose a½X b c d ð5Þ By transforming ½X ¼ ½a1 ½Y ; we can calculate the profit per unit of final main product output, or determine the change in the profit associated with a variation in the amount of main product sold to the final customers. Returning to the fictitious TVE coal-based enterprise, we can examine the results in terms of the assumed production factors in Table 1. In our highly simplified model, we have not analyzed any environmental control technologies directly. Cokemaking technologies might be compared environmentally and economically on the yield of coke from a unit of coal input. Using less coal for a unit of coke output is viewed as good from both viewpoints. Cokemaking with the byproduct ovens where workers externally quench the hot coke consumes more water for quenching than the other coke processes where workers quench the hot coke inside the ovens. Quenching in the oven obviates the need for capital investment in quench towers, but may have other undesirable features like increased oven maintenance. Purchased water is used to makeup for the losses of evaporated water in quenching. Process wastewater, called ammonia liquor, is generated in the small machinery and the advanced modified indigenous coke plants. Any water generated in the nonrecovery coke ovens is unaccounted for in the model. Ammonia liquor is assigned a negative price, reflecting that it is a cost Table 5 Total input coefficient cokemaking process-flow model Input/product Metallurgical coal washer Producer gas generator Steam coal power plant [100 MWe] (1) (2) (3) (4) 1.032 0.000 0.000 0.071 0.000 0.000 0.000 (1.414) 0.000 0.000 0.382 0.000 0.002 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 (126.481) (0.556) (6.324) (0.028) 0.027 1.000 0.000 0.059 0.000 0.000 0.000 (0.037) (1.160) 0.000 0.010 0.160 0.002 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 (115.922) (0.291) (5.796) (0.015) 0.025 0.000 1.000 0.055 0.000 0.000 0.000 (0.034) 0.000 0.000 (2.598) (2.286) 3.180 0.001 0.000 0.000 0.075 0.000 0.000 0.000 0.000 0.000 0.000 (351.971) (5.395) (17.599) (0.270) 0.464 0.000 0.000 1.032 0.000 0.000 0.000 (0.636) 0.000 0.000 0.172 0.000 0.033 0.014 0.000 0.006 0.000 0.000 0.000 0.000 0.000 0.000 0.000 (970.130) (0.707) (48.506) (0.035) Small machinery coke ovens (5) Advanced modified indigenous coke ovens (6) Nonrecovery coke ovens 0.062 1.467 0.311 0.139 1.000 0.000 0.000 (0.086) (1.702) (146.667) (0.788) (0.476) 0.993 0.002 0.111 0.001 0.027 0.333 (0.100) 0.001 14.667 14.667 176.000 (1111.859) (4.352) (55.593) (0.218) 0.043 1.350 0.000 0.096 0.000 1.000 0.000 (0.059) (1.567) (810.000) 0.016 0.217 0.003 0.001 0.000 0.001 0.004 0.300 (0.285) 0.004 6.750 0.000 81.000 (261.047) (1.904) (13.052) (0.095) 0.040 1.320 0.000 0.089 0.000 0.000 1.000 (0.055) (1.532) (792.000) 0.015 0.212 0.003 0.001 0.000 0.001 0.004 0.300 (0.210) 0.003 0.000 0.000 0.000 (207.719) (1.892) (10.386) (0.095) (7) K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 1. Clean steam coal [a inverse] 2. Clean metallurgical coal 3. Producer gas 4. Electricity 5. Coke from small machinery plant 6. Coke from advanced modified indigenous plant 7. Coke from nonrecovery ovens 8. Raw steam coal [b]*[a inverse] 9. Raw metallurgical coal 10. Water 11. Steam coal washer refuse [c]*[a inverse] 12. Metallurgical coal washer refuse 13. Bottom ash 14. Power plant fly ash 15. Coke breeze from quench 16. SO2 to atmosphere 17. S to coke oven gas 18. COG production 19. COG to underfire ovens 20. SO2 to atm from combusted COG 21. Tar and pitch 22. Ammonium sulfate 23. Ammonia liquor 24 Process capital investment [d]*[a inverse] 25. Process labor 26. Environmental capital investment 27. Environmental control labor Steam coal washer Source: Calculated from Table 4 by inverting the matrices. 881 882 K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 that would change depending on the level of treatment provided. We list coke-oven gas as a byproduct, but this gas presents several concerns. On the one hand, it is a valuable fuel gas, having a heat value about one-half of natural gas. On the other hand, coke ovens generate more gas than they consume for heating coke. In China, the excess gas may be used as an industrial fuel gas or as town gas, and the level of gas cleaning and purification (i.e., the level of sulfur) varies with the intended use of the gas. We have assumed that 30% of the sulfur in the coal fed to the coke ovens ends up in the coke-oven gas. The technology chosen to remove sulfur depends on the form of the sulfur in the gas. Unburned coke-oven gas has sulfur in a reduced form like H2S; after combustion the sulfur is oxidized to the form of SO2. The decision to remove the sulfur or not to remove it involves technical and regulatory issues. This model draws attention to the different forms of sulfur and the path that sulfur traces through the enterprise. With the assumed values for processes and costs, our model for the base case shows that, overall, the enterprise is profitable, despite different profits for each of the seven facilities. Expressing the profit vector using Eq. (5), we find that the overall system makes an annual profit of about 192 million RMB (Table 4). Separating this profit for each of the seven facilities, we get the following results for a final demand vector, Y ¼ 0 clean steam coal, 0 clean metallurgical coal, 0 producer gas, 789 MkWh, 180 kt small-machinery coke, 200 kt of advanced-modified-indigenous coke, and 200 kt of nonrecovery coke: * * * * * * * Steam coal washerFloss of 19.6 103 RMB per kiloton of clean steam coal. Metallurgical coal washerFloss of 20.2 103 RMB per kiloton of clean metallurgical coal. Producer gas generatorFloss of 28.1 103 RMB per M cubic meters of producer gas. Power plantFa gain of 146,000 RMB per M kWh. Small-machinery coke ovensFa gain of 104,000 RMB per kiloton of coke. Advanced-modified-indigenous coke ovensFa gain of 127,000 RMB per kiloton of coke. Nonrecovery coke ovensFa gain of 127,000 RMB per kiloton of coke. The negatives represent losses and imply that at the prices assumed for washed coal and producer gas, marginal increases in production of these commodities would lose money. On the other hand, marginal increases in the production of electricity and coke proved to be beneficial. More experimentation with the assumptions will provide insight about the strengths and weaknesses of the model. 7. Conclusion We have illustrated how the cokemaking IOPM can be used to determine the economic (investment cost, labor cost, material input costs, and revenues) and specific energy (coal and electricity) requirements, as well as the environmental tradeoffs of using alternative cokemaking technologies. Plant managers, government officials, and/or academic researchers can use the IOPM to determine the effect that a particular technology, environmental, energy, labor, and investment policies may have on the individual plants and regional and national economy. As an example, policy discussions are now occurring in Shanxi Province concerning the use of new by-product ovens versus new nonrecovery ovens. By using the cokemaking process-flow model the environmental policy analysts will know the amount of pollution to be expected if a given amount of coke is produced by each proposed facility. The economic planning commission analysts could use the same model to determine the amount of coal, electricity, water, and other inputs the alternative technologies would require. Thus, for China, it is a useful tool to study the economic and environmental impacts of the closing of indigenous and most modified indigenous plants and to help policymakers determine which cokemaking technologies to support with investment funds and other incentives. Our cokemaking IOPM is sufficiently generic to be used not only for cokemaking in Shanxi Province, China, but also for other regions in China. In addition, coke managers and economic and environmental analysts in India, the United States, or any other cokemaking country can assemble the relevant data for their own countries and use the model. In addition, with only minor adjustments, we can adapt our process-flow model for use in other sectors of any economy. We believe this model will prove to be a very valuable addition to the toolbox of models already available. Acknowledgements The authors appreciate the many plant managers and local officials in Shanxi Province who provided and helped us verify the numbers presented here. The numbers were originally collected during field missions to the Province in 1998–2000 by Chen Hao (2000) for his master’s thesis at MIT and were verified by Professors Polenske and McMichael during their July 2000 field trip. We also thank an external reviewer and Monica Pinhanez who provided useful editorial comments. Funding for this research is from the Alliance for Global Sustainability grant number 198.11m-f and NSF grant number INT 9970425. K.R. Polenske, F.C. McMichael / Energy Policy 30 (2002) 865–883 References Agarawal, J., Brown, F., Chin, D., Stevens, G., Smith, D., 1996a. The future supply of coke. Iron Age New Steel 12 (30), 88. Agarawal, J., Brown, F., Chin, D., Stevens, G., Smith, D., 1996b. Injecting coal and natural gas: which one? how much?. Iron Age New Steel 12 (12), 70–82. Bagsarian, T., 1998. 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