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15 August 2014

NAMA PROPOSAL FOR THE STEEL


SECTOR IN BANGLADESH.
PROJECT NAMA proposal for the steel sector in Bangladesh

Picture 1: Front page. Melting process at Vikrampur, Bangladesh

NIRAS A/S Reg. No. 37295728 Denmark P: +45 4810 4200 D: +45 48104200
Sortemosevej 19 FRI, FIDIC F: +45 4810 4300
3450 Alleroed, Denmark www.niras.com E: niras@niras.dk
1 ACROCYM, PARAMETERS AND VALUES .............................................. 5

2 EXECUTIVE SUMMARY ............................................................................. 9

3 INTRODUCTION ....................................................................................... 12
3.1 Background ............................................................................................... 12
3.2 The project organisation and set-up. ..................................................... 12
3.3 The project objective and structure ....................................................... 14
3.4 Stakeholder mapping ................................................................................ 15
3.5 Stakeholder consultations......................................................................... 19

4 NAMA ........................................................................................................ 23
4.1 What are NAMAs ? ................................................................................... 23
4.2 NAMA models ........................................................................................... 24
4.3 Advantages and disadvantages of sector NAMA ..................................... 25
4.4 Bangladesh climate mitigation actions and efforts relevant for steel sector
.................................................................................................................. 26
4.5 NAMAs in the steel sector from other countries ....................................... 27

5 STEEL IN A GLOBAL PERSPECTIVE .................................................... 28

6 BANGLADESH ......................................................................................... 30
6.1 Overview and Strategy ............................................................................. 30
6.2 Overview of the CDM procedure and specific CDM projects ................... 30
6.3 Overview of the Gold standard procedure and specific Gold Standard
projects ..................................................................................................... 33
6.4 Baselines, Standardised Baselines and grid emission factors ................. 33
6.5 Overview of the key characteristics of the industrial sector ...................... 33
6.6 Overview of the key characteristics of the steel sector ............................ 34
6.7 Energy production, consumption and supply in Bangladesh.................... 36
6.8 Electricity produced on Gas engine VS electricity from grid ..................... 38
6.8.1 Description of the connection between gas engine, factory and
electricity grid ............................................................................ 38
6.9 Electricity prices ........................................................................................ 39

7 LESSONS LEARNED FROM CDM, VOLUNTARY MARKET AND


EMISSION TRADING SCHEMES ....................................................................... 41
7.1 Experience and lessons learned from CDM ............................................. 41
7.2 Experience and lessons learned from the voluntary carbon market ........ 44
7.3 Experience and lessons learned from Emission Trading Schemes ......... 45

8 POTENTIAL ENERGY AND ENVIRONMENTAL PROJECTS ................ 49


8.1 Introduction ............................................................................................... 49
8.2 Reference mill ........................................................................................... 50

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NAMA proposal for the steel sector in Bangladesh
8.3 Optimisation of the melting process Waste heat recovery from the
induction furnace ...................................................................................... 51
8.3.1 Introduction ............................................................................... 51
8.3.2 Project description .................................................................... 52
8.3.3 Example of savings ................................................................... 52
8.3.4 Co-benefits................................................................................ 53
8.3.5 Measurements and monitoring ................................................. 53
8.3.5.1 Electricity.................................................................................... 54
8.3.5.2 Batch Time ................................................................................. 54
8.3.5.3 Scrap .......................................................................................... 54
8.3.5.4 Additives .................................................................................... 55
8.3.5.5 Slag ............................................................................................ 55
8.3.5.6 Product losses ........................................................................... 55
8.3.5.7 Product ....................................................................................... 55
8.3.5.8 Visual monitoring of quality: ....................................................... 55
8.3.5.9 Measuring program and activities .............................................. 56
8.3.6 Investment and maintenance costs .......................................... 58
8.3.7 Barriers ..................................................................................... 59
8.3.8 Toolbox ..................................................................................... 59
8.4 Optimisation of the reheating process Waste heat recovery from the
reheating furnace ...................................................................................... 60
8.4.1 Introduction ............................................................................... 60
8.4.2 Project description .................................................................... 60
8.4.3 Example of savings ................................................................... 61
8.4.4 Co-benefits................................................................................ 62
8.4.5 Measurements and monitoring ................................................. 62
8.4.6 Investment and maintenance costs .......................................... 62
8.4.7 Barriers ..................................................................................... 63
8.4.8 Toolbox ..................................................................................... 63
8.5 Combustion and feed control system ....................................................... 64
8.5.1 Introduction ............................................................................... 64
8.5.2 Project description .................................................................... 64
8.5.3 Example of savings ................................................................... 64
8.5.4 Co-benefits................................................................................ 65
8.5.5 Measurements and monitoring ................................................. 65
8.5.6 Investment and maintenance costs .......................................... 65
8.5.7 Barriers ..................................................................................... 66
8.5.8 Toolbox ..................................................................................... 66
8.5.9 Other ways of optimising the reheating furnace. ...................... 66
8.5.9.1 Optimising existing air preheating systems ............................... 66
8.5.9.2 Regenerative burner .................................................................. 66
8.5.9.3 Oxyfuel burners.......................................................................... 67
8.5.9.4 Product preheat ......................................................................... 67
8.5.9.5 Minimising heat losses from the reheating furnace ................... 67
8.6 Training program ...................................................................................... 68

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NAMA proposal for the steel sector in Bangladesh
8.6.1 Introduction ............................................................................... 68
8.6.2 Project description .................................................................... 68
8.6.3 Example of a training program.................................................. 69
8.6.4 Co-benefits................................................................................ 71
8.6.5 Measurements and monitoring ................................................. 71
8.6.6 Investment and maintenance costs .......................................... 71
8.6.7 Barriers ..................................................................................... 72
8.6.8 Toolbox ..................................................................................... 72

9 BASELINE ................................................................................................. 73

10 COST ESTIMATES AND ECONOMIC ANALYSES IN THE STEEL


SECTOR .............................................................................................................. 75
10.1 Introduction ............................................................................................... 75
10.2 Economic analyses ................................................................................... 76
10.2.1 Data assumptions ................................................................... 77
10.2.2 Budget and financing ................................................................ 78
10.2.3 Results ...................................................................................... 79

11 OVERVIEW MITIGATION POTENTIAL AND COST ESTIMATES


BASED ON THIS SURVEY ................................................................................. 81

12 INCENTIVE STRUCTURE ........................................................................ 82


12.1 Introduction ............................................................................................... 82
12.2 Discussion................................................................................................. 82
12.3 Recommendation ...................................................................................... 83

13 MRV SYSTEM ........................................................................................... 84


13.1 Introduction ............................................................................................... 84
13.2 Discussion................................................................................................. 84
13.3 Recommendation ...................................................................................... 86

14 FINANCIAL SUPPORT AND MECHANISMS .......................................... 87


Financing for implementation of NAMA .............................................................. 88

15 DISCUSSIONS AND ANALYSES ............................................................ 89


15.1 Organisation of NAMA work in Bangladesh ............................................. 89
15.2 NAMA Steel building blocks...................................................................... 89
15.3 NAMA models in the steel sector ............................................................. 92
15.4 Can the NAMA steel in Bangladesh be developed as a stand-alone
system ?.................................................................................................... 94
15.5 NAMA seeking support for implementation .............................................. 95

16 CONCLUSIONS ........................................................................................ 96
16.1 Summary of conclusions ........................................................................... 96
16.2 Recommendation of next actions ............................................................. 97

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NAMA proposal for the steel sector in Bangladesh
18 ANNEX A QUESTIONNAIRE STEEL MILLS ...................................... 100

19 ANNEX B SUPPLEMENTARY PROPOSAL OF POTENTIAL


INITIATIVES IN THE STEEL SECTOR ............................................................. 104

20 ANNEX C ECONOMIC MODELLING .................................................... 107


20.1 Optimisation of the reheating process Waste heat recovery ............... 107
20.2 Optimisation of the reheating process Waste heat recovery from the
reheating process ................................................................................... 108
20.3 Combustion and feed control system ..................................................... 109
20.4 Training program .................................................................................... 110

21 Annex D. Support letter from Bangladesh Auto Re-Rolling &


Steel Mills Association .................................................................................... 111

22 Annex E. Support letter from Bangladesh Steel Mill


OwnersAssociation ........................................................................................ 112

23 Annex F. Support letter from Bangladesh Re-Rolling Mills


Association ....................................................................................................... 113

24 REFERENCES ........................................................................................ 114

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NAMA proposal for the steel sector in Bangladesh
1 ACROCYM, PARAMETERS AND VALUES

ACRONYMS

AAU Assigned Amount Unit

BARSMA The Bangladesh Auto Re-Rolling & Steel Mills Associa-


tion

BAU business-as-usual

BCF Billion Cubic Feet

BOI Board of Investment

BRMA Bangladesh Re-Rolling Mills Association

BSEC Bangladesh Steel and Engineering Corporation

BSMOA Bangladesh Steel Mill OwnersAssociation

BTA Bangladesh Taka

BUR Biennial Update Report

CAPEX Capital Expenditure

CCTF Climate Change Trust Fund

CDM Clean Development Mechanism

COP Conference of Parties

DNA Designated National Authority

DOE Department of Environment

EAF Electric Arc Furnace

EMS Environmental Management Systems

ERD Economic Relations Division

EU European Union

EU-ETS European Union Emission Trading Scheme

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NAMA proposal for the steel sector in Bangladesh
FVA Framework for Various Approaches

GDP Gross domestic product

GHG Greenhouse gases

HAL Historical Activity Level

ICA international consultation and analysis system.

IF Induction Furnace

LGED Local Government Engineering Department

MoEF Ministry of Environment and Forests

MoI Ministry of Industries

MPEMR Ministry of Power, Energy and Mineral Resources

MRV Measurable, Reportable, Verifiable

NAMA National Appropriate Mitigation Action

NCF Nordic Climate Facility

NDF Nordic Development Fund

NEFCO Nordic Environment Finance Corporation

OPEX Operational Expenditure

PLC Programmable Logic Controller

QA Quality Assurance

SEC Specific Energy Consumption

SNC Second National communication

SREDA Sustainable & Renewable Energy Development Authority

TCF Trillion Cubic Feet

UNFCCC United Nation Framework Convention on Climate Change

USD US Dollar

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NAMA proposal for the steel sector in Bangladesh
WHR Waste Heat Recovery

Table 1. Acronyms

PARAMETERS

mair Mass of air, [kg]

mng Mass of natural gas, [kg]

cpair Specific heat capacity of air, [kJ/(kgK)]

3
ng Density of natural gas, [kg/m ]

T Temperature difference of two mediums

3
LHV Lower heating value of natural gas, [MJ/Nm ]

Qyear Yearly quantity

Table 2. Parameters

Exchange rates

The currency used in this study is euro and taka. The exchange rates are from
October 2013:

I USD (US dollar) 0.74 Euro

1000 BDT (Bangladesh Taka) 9.48 Euro

1000 BDT (Bangladesh Taka) 12.86 USD

Table 3. Exchange rates.

Values

Grid factor Natural gas Bangladesh 0.2 kg CO2e/kWh


xxii
(base on LHV)

xv
Grid factor electricity Bangladesh: 0.67 kg CO2e/kWh

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NAMA proposal for the steel sector in Bangladesh
3 1 3
Natural gas price (BDT/Nm ) : 4.2 BDT/Nm

3 3
Natural gas price (Euro/Nm ): 0.05 Euro/Nm

Electricity price (BDT/kWh)1 : 6.71 BDT/kWh

Electricity price (Euro/kWh) 0.06 Euro/kWh

xxii 3
LHV : 9,72 kWh/Nm

Scrap price 317 Euro/ton

Table 4. Values

1
The prices of natural gas and electricity are based on actual invoices from Vikrampur
Steel ltd

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NAMA proposal for the steel sector in Bangladesh
2 EXECUTIVE SUMMARY

In a global context the steel sector is one of the sectors with greatest potential for
CO2 emission reductions whilst offering development co-benefits at the same
time. Therefore, the steel sector is being looked at as a candidate for the devel-
opment of Nationally Appropriate Mitigation Activities (NAMA) in many countries
including Bangladesh.

The development of a NAMA in the steel sector is a priority for the Bangladesh
Government and this NAMA is coordinated by the Department of Environment
(DOE). The NAMA development is strongly supported by the three steel associa-
tions 1) Bangladesh Auto Re-Rolling & Steel Mills Association, 2) Bangladesh
Steel Mill OwnersAssociation and 3) the Bangladesh Re-Rolling Mills Associa-
tion.

This study has contributed to that Bangladesh is at the forefront with the devel-
opment of a NAMA in the steel sector and is in the position to set an example
and pilot a NAMA in such an important sector with regard to reducing global
greenhouse gas (GHG) emissions. Further support from the international com-
munity is needed to secure implementation.

The following key findings should be including in the NAMA development and
implementation.

A supported NAMA is a priority and a detailed MRV system should be


developed. The MRV system should include both CO2 emissions and co-
benefits.

The supported NAMA should include an option for crediting or trading of


CO2 emission reductions.

The development of the baseline should be the required/recommended


electricity or natural gas /tons steel produced.

In the climate space the CDM and voluntary market have developed
methodologies, initiated standardised approach and suppressed demand
approach. These should be integrated to highest possible degree to se-
cure the NAMA is in line with international standard.

The monitoring should be done by the company and verified by the De-
partment of Environment or another appointed authority, for instance
SREDA. It is crucial to have a national validation and verification system
to avoid costly international system, like CDM. In case it will be decided
to involve an international institution/association in the verification pro-

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NAMA proposal for the steel sector in Bangladesh
cess, it could be considered to involve for instance the World Steel As-
sociation.

The steel sector in Bangladesh consists of very different levels of steel


mills, from basically just a steel mill with one furnace to fully large au-
tomatized steel mills. This will be a challenge when developing a NAMA
covering the entire sector

The actual knowledge and overview of the steel sector is limited and an
effort should be done to prepare an inventory for this sector. Only based
on the full-scale inventory covering the steel sector a final decision of
how to develop a NAMA can be decided.

The focus in the NAMA development should be an incentive structure ra-


ther than a penalty system.

This study has also focused on potential investments which can contribute to the
sustainable development of a NAMA A significant number of investments can be
done in the steel sector and four illustrative examples have been selected in
close cooperation with the stakeholders The four potential projects 1) Optimisa-
tion of the melting process Waste heat recovery from the induction furnace, 2)
Optimisation of the reheating process Waste heat recovery from the reheating
furnace, 3) Combustion and feed control system and 4) Training programme.

If the above mentioned 4 projects only are implemented on 200 out of the 300
steel mills the yearly reduction in CO2 will be 120,860 tonnes and the total in-
vestment cost Euro 25 mio.

Different financial packages have been analysed for the different projects. In the
case of a 100 % self-finance scenario. The Net Present Value are positive for all
projects except for combustion and feed control system project. The project has
an IRR on 8 % which is just below the discount rate. It is worth noticing, that with
a 20 % in-crease in the gas price or a 20 % decrease in the CAPEX and OPEX
the NPV for the Combustion and feed control system turns positive.

Having above mentioned specific project ideas in mind an effort in the steel sec-
tor should include investments for tens of millions Euro. It should be noted that at
this stage it is based on simplified calculations and a survey including all steel
mills need to be performed to have a more accurate picture of the needed in-
vestment costs. The proposed investments illustrate and indicate the direction for
important initiatives which shall be developed further.

Finally it should be noted that there is a strong commitment to do an effort in the


steel sector. It should be pointed out that this NAMA report is based on four mis-
sion of less than 1 week each and having mind that it is a complex sector with
limited available data and most steel mills have limited experience in working

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NAMA proposal for the steel sector in Bangladesh
international, several of the discussion and conclusions should be considered
preliminary and as an input to further clarification and input to the full scale im-
plementation of the NAMA. This report can be considered as a draft pre-
feasibility study for a NAMA project in the steel sector in Bangladesh.

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NAMA proposal for the steel sector in Bangladesh
3 INTRODUCTION

3.1 Background
Growth, sustainability and energy security are the three main dimensions in
Governments development plans nowadays, in light of growing threats such as
climate change, rising fuel prices and environmental degradation.

One of the measures to tackling these concerns is through energy efficiency


measures in energy intensive sectors, to limit energy consumption per unit pro-
duced product, thus guaranteeing a good balance between all three dimensions.

The industrial sector in Bangladesh contributes roughly to 1/4 of the GDP in the
country, in 2013, and is expected to have a growth trajectory in the upcoming
years, therefore, raising the alert for the progressive implementation of energy
efficiency measures in the sector, to curb major problems with energy security,
already affecting the energy panorama in the country, and to boost a greener
economic growth.

Amongst the several sub-sectors within the industrial sector, the steel industry
has been identified by the Government of the Peoples Republic of Bangladesh
(Government of Bangladesh) as a potential target to reducing energy intensity
(and GHG emissions), even though it only represents a small share of the overall
economic output of the industry in Bangladesh. It is recognised that an effort in
the steel sector will have a lot of other benefits, for instance the handling of
waste products and the improved workers environment

The National Appropriate Mitigation Action (NAMA) concept is a high priority in


the international climate negotiation and by the Government of Bangladesh. The
NAMA concept will be described and discussed in later sections of the NAMA
proposal in this report.

It has been decided by the Government of Bangladesh in close cooperation with


the Nordic Climate Facility (NCF) and the Danish Embassy in Dhaka to initiate a
project which can support the development of the steel sector in Bangladesh.
The project mentioned below has been initiated.

3.2 The project organisation and set-up.


The NAMA and Innovative Optimisation in the Steel Sector in Bangladesh Pro-
ject (hereafter, the Project), originated from the need to identify technology,
capacity, policy and financial needs to enhance energy efficiency actions and
development in the steel sector. The output from this NAMA project phase
should contribute to clarify whether the NAMA concept is realistic and operation-
al in a Bangladesh context. The point of departure is to establish a NAMA cover-
ing the steel industry in Bangladesh.

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NAMA proposal for the steel sector in Bangladesh
The Project is developed under the scope of the Nordic Climate Facility (NCF),
which is a Nordic climate initiative financed by the Nordic Development Fund
(NDF) and implemented jointly with the Nordic Environment Finance Corporation
(NEFCO).

The Royal Danish Embassy in Dhaka secured supplementary financing to guar-


antee a consistent financial package for the project, which counts as well with
co-financing from other sources.

The Project is expected to be finalized in 2014, and is jointly implemented by


Danish and Bangladeshi companies, and with the in-kind support of the Gov-
ernment of Bangladesh.

The main actors of the Project are listed in Figure 1.

Project actors

Bangladesh Denmark

Department of
Viegand &
Modern Erection Environment of
Maage A/S
the Ministry of
Vikrampur Steel (MEL) ---------------- NIRAS A/S
Environment and
Ltd. ----------------
---------------- Forests of Engineering
---------------- Bangladesh consultancy Engineering
Engineering
Owners of the company ---------------- company consultancy
steel facility responsible for responsible for company leading
In-kind support to
where the pilot constructing the the design of the the development
the
project will be new heat new heat of the NAMA for
implementation
developed recoveery system recovery system the steel sector
of the Project and
components and capacity
coordinating
building activities
NAMA actions

Figure 1 Main actors during the implementation of the Project.

Morten Pedersen, Mads Glent Abildgaard and Rune Jrgensen from NIRAS A/S
and Fridolin Mller Holm and Christian Risborg from Viegand Maage A/S have
been the main contributors of the NAMA steel report. All work has been done
with significant support and in close cooperation with Department of Environment
(DOE) of the Ministry of Environment and Forests of the Government of Bangla-
desh, Mr. Monsulrul Alam and Mr. Md. Ziaul Haque.

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NAMA proposal for the steel sector in Bangladesh
MEL has also contributed with technical input to this report and facilitated meet-
ings, on site visit etc. Representatives from the steel sector have contributed with
knowledge of the steel sector and potential investments and future initiatives.

3.3 The project objective and structure


The Project was formulated along three streams which complement each other,
and intend to promote the investment in innovative technical solutions for energy
efficiency in the steel industry, as well as, improving technical competences
among steel workers and, and also contribute to the whole development and
attracting new investments in the steel sector. Furthermore at a higher level it is
the ambition to identifying feasible mitigation measures under the framework of
Nationally Appropriate Mitigation Actions (NAMAs), being discussed at the Unit-
ed Nations Framework Convention on Climate Change (UNFCCC).

The three streams are defined in figure 2.

NAMA and Innovative Optimisation in the Steel Sector in


Bangladesh

Technology Capacity Building NAMA


Implementation of heat Conduction of training Preparation of a sector
recovery system in workshops for the staff in specific NAMA, with
identified pilot sites the steel production elements from the two
facilities other streams

Figure 2 NAMA and Innovative Optimisation in the Steel Sector in Bangladesh: Project
streams.

The present report focus on the NAMA Stream of the Project, which particularly
involves:
Data collection from mainly Vikrampur Steel Ltd;
Create an overview of existing national policies and regulations;
Overview and discussion of other CO2 reducing in Bangladesh, for in-
stance CDM and Gold Standard
Develop a tool box of possible emission reduction initiatives
Preparation the first ideas to of a sector-level Measurement, Reporting
and Verification (MRV) system;
Drafting the initial ideas for a NAMA proposal, including the examples of
mitigation potential, costs, barriers and policy options;

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NAMA proposal for the steel sector in Bangladesh
The overall goal of this NAMA preparatory work is to present appropriate mitiga-
tion options within the steel sector in Bangladesh and to suggest relevant incen-
tives to enhance implementation of nationally appropriate mitigation actions, in
line with the countrys national development priorities and climate change strate-
gies and, in general, to shed further light into the on-going international discus-
sions (under the UNFCCC) around this topic.

This project is only covered the initial consideration and should be followed-up by
a full-scale feasibility covering the entire steel sector. But the extension is outside
the scope of the grant contract. Further surveys and implementation can be done
in several steps in order to secure progress and momentum.

The project is developed fully in line with the Bangladesh Climate Change Stra-
tegy and Action Plan 2009. Without any larger screening it has been agreed to
focus on the steel sector as it can have significant impact on the sustainable
1development in Bangladesh. The steel sector has to some extent been an over-
looked sector in relation to environment and energy as it is mainly a domestic
sector.

As part of the larger grant financed project by the NCF and the Danish Embassy
a pilot investment project (Vikrampur Steel Ltd) co-financed by Vikrampur Steel
Ltd and MEL is under implementation and the experience until now from the pilot
project and training have been integrated in the proposal for this NAMA.

3.4 Stakeholder mapping


Part of the project has also been to work in a transparent and inclusive manner
and an important part of this is to have extensive stakeholder consultations and
communication with stakeholders based on bilateral meetings.

Below is an overview of the key stakeholders identified and they have all been
informed about the project. In this first part of the project the focus has been
DOE, MoF, Steel Associations and the steel mills.

In the overview only selected key stakeholders are presented. For instance only
one steel mill is mentioned, but of course all still mills should be part of the pro-
ject.

No. Stakeholder Function Role in the project

1 Department of Coordinating and Facilitating and coordinat-


Environment regulatory authori- ing this project in Bangla-
ty of environmen- desh
tal issues. Focal
point for UNFCCC

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NAMA proposal for the steel sector in Bangladesh
2 Ministry of Power, Responsible for New energy efficiency initi-
Energy and Min- developing now atives.
eral Resources policies and strat-
(MPEMR) egies. Stable and affordable gas
and electricity supply.
Managing the
power utilities

3 Ministry of Indus- Responsible for Should be involved as re-


tries (MoI) developing new sort Ministry
policies & strate-
gies for promo-
tion, expansion
and sustainable
development of
Industrial sector
of the country.

4 Ministry of Fi- Managing dis- MOF is together with


nance (MOF) bursements and MOEF (DOE) responsible
recurrent expendi- for the mobilization and
tures of the whole allocation of budgets to
state economy. climate change programs
and projects.

5 Vikrampur Steel A steel work Vikrampur has been in-


Ltd placed roughly 60 volved in identifying the
km north from NAMA in the steel sector
Dhaka. and and should also be a part-
Vijkrampur Steel ner in the continuation of
Ltd has a medium the development of this
sized steel mill. NAMA together with other
steel works

6 Bangladesh Auto BARSMA repre- BARSMA will be instru-


Re-rolling & Steel sents 15 of the mental with regard to mobi-
Mills Association larger steel pro- lizing its members for the
(BARSMA), ducers in Bangla- planned outreach
desh. measures in the context of
technology deployment and
promotion, training and up-
scaling to reach mitigation
potential at scale through-
out the sector.

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NAMA proposal for the steel sector in Bangladesh
7 Bangladesh Steel BSMOA repre- BSMOA will be instrumen-
Mill Owners As- sents approxi- tal with regard to mobilizing
sociation mately 120 steel its members for the
(BSMOA), producers in planned outreach
Bangladesh. measures in the context of
technology deployment and
promotion, training and up-
scaling to reach mitigation
potential at scale through-
out the sector.

8 Bangladesh Re- BRMA represents BRMA will be instrumental


Rolling Mills As- approximately with regard to mobilizing its
sociation (BRMA), 140 companies in members for the planned
the Bangladesh outreach measures in the
steel sector. context of technology de-
ployment and promotion,
training and up-scaling to
reach mitigation potential at
scale throughout the sec-
tor.

9 Danish Embassy Danish Embassy, The Embassy can provide


Bangladesh, sup- liaison and other support
ported the first functions using its bilateral
phase of the relations with the Bangla-
NAMA develop- desh government and net-
ment ( sponsor) works.

Maybe the Embassy can


also in the future support
the implementation of the
project with funds

10 NDF Sponsor NDF could consider to


support the implementation
phase

11 NEFCO Administration of Could support NDF in the


the funds alloca- administration in case of
ted by NDF future support

12 Modern Erection Engineering com- Modern Erection will play


Limited (MEL) pany based in the role as one of the local
Dhaka, Bangla- technology provider and

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NAMA proposal for the steel sector in Bangladesh
desh. The com- will be in charge of the site
pany possesses installation and have the
full-fledged facili- contact to the site.
ties to undertake
any metal fabrica-
tion works.

13 Viegand Maage Danish Consul- Support with technical ex-


(VM) tancy Company pertise.

Specialist in
providing energy
audits, analyses,
feasibility studies,
financial and
technical decision

14 NIRAS NIRAS A/S is a Support with NAMA and


multidisciplinary MRV expertise
international con-
sultancy compa-
ny.

15 Bangladesh De- A state owned Could be part of a future


velopment Bank Bank with normal financial scheme.
Ltd banking opera-
tions. Administrat-
ing loans from
abroad

Table 5. Stakeholders

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NAMA proposal for the steel sector in Bangladesh
Schematic presentation

DOE

O
Steel Association

MPEMR
Steel Mills

MoI

MOF Banks and Sponsors

NIRAS/VM/MEL

Figure 3 Overview of key stakeholder interactions..

DOE has been the coordinating government institution for this project on behalf
of the host country and the DOE is also the focal point for any communication
with UNFCCC, in particular in the context of submitting NAMA proposals to the
UNFCCC NAMA registry (see below).

The presentation is a simplified overview to present the key players and the main
interaction routes.

3.5 Stakeholder consultations


Part of the project has also been to work in a transparent and inclusive manner.
This has been a focus area for the DOE and several interactions with potential
stakeholders have been arranged during the project period.

Two larger stakeholder consultations have been performed one in March 2014
and one in May 2014.

th
At the stakeholder meeting 12 March 2014 the focus has been the private sec-
tor involvement and the focus have been the three steel associations: The Bang-
ladesh Auto Re-Rolling & Steel Mills Association (BARSMA), Bangladesh Steel
Mill OwnersAssociation (BSMOA) and the Bangladesh Re-Rolling Mills Associa-
tion (BRMA) and individual steel mills (see picture 2). The steel mills and steel

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NAMA proposal for the steel sector in Bangladesh
association have shown very strong interest and several follow up meetings have
been held.

st
The stakeholder meeting 21 May has had a broader approach and the stake-
holder meeting was coordinated and managed by the DOE. The approach has
been to present the findings of the NAMA proposal and secure feedback from
the involved stakeholders. The stakeholder meeting has had a good mix of Gov-
ernment representatives, like the DOE, the steel mill associations, steel mills,
other initiatives managed by GIZ and the sponsors NCF represented by NEFCO
and the Danish Embassy. (see picture 3 5)

Picture 2. Stakeholder meeting March 2014

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NAMA proposal for the steel sector in Bangladesh
Picture 3. Stakeholder meeting, May 2014

Picture 4. Stakeholder meeting, May 2014

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NAMA proposal for the steel sector in Bangladesh
Picture 5. Stakeholder meeting, May 2014

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NAMA proposal for the steel sector in Bangladesh
4 NAMA

4.1 What are NAMAs ?

A NAMA is a voluntary measure for mitigating GHG emissions. NAMAs can be


implemented in all countries, including developing countries, like Bangladesh.

There is no internationally agreed definition of NAMAs and therefore it is to a


high degree up to the individual country to define this. Therefore NAMAs will
probably not be limited as long as they are in line with national development
plans, result in mitigation of GHG emissions, and have an impact that can be
measured, reported and verified.

The political and administrative framework for NAMAs will probably be evolving,
but NAMA seems to be new standard element of the international climate policy
regime.

NAMAs entered as a topic in the climate policy debate through the 2007 Bali
Action Plan when the Conference of Parties (COP) to the United Nation Frame-
work Convention on Climate Change (UNFCCC) agreed to using NAMAs to ad-
dress mitigation in a broader scale.

The agreements from the COP 16 in Cancun in 2010 recognise two categories of
NAMAs those developing using domestic means (domestically supported NA-
MAs) and those requiring international support NAMAs (international supported
NAMAs). The support could for instance be financial assistance, technology
transfer and/or capacity building.

At COP 16 In Cancun it was also agreed that developing countries can apply
NAMAs to achieve a deviation from business-as-usual (BAU) emissions by 2020.
Many countries submitted NAMA concepts, but not Bangladesh, to the
UNFCCC.

At COP 17 in Durban it has been decided to set-up a prototype NAMA Registry.


Furthermore international guidelines for the reporting and verification of develop-
ing Countries GHG emissions at the national level have been put in place
through the biennial update report (BUR) and international consultation and
analysis (ICA) system. It should be noted that no international agreement on
MRV guidelines at NAMA level has been reached.

At the COP 18 in Doha limited progress was made in relation to NAMA develop-
ment and instead it was decided to start a New Market Mechanism (NMM) of
which only very rudimentary decisions could be made on at COP 18 in Doha.
The NMM will need much more detail to be a fully operation mechanism and it

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NAMA proposal for the steel sector in Bangladesh
could also partly be defined a NAMA. It is generally thought of as a market-
based mechanism with baseline and credit approach (with an almost similar
basic principal as the CDM but potentially on a sector basis). NMM should func-
tion under the guidance of COP. In parallel the possibility for more bottom-up
and country-driven mitigation action has been opened through the Framework for
Various Approaches (FVA) which will function less UNFCCC-centric. Both are
possible means of receiving finance for achieved emission reductions in the
NAMA framework, for instance for the steel sector. Therefore the focus in this
assignment will still be the NAMA concept.

At the COP 19 in Warsaw limited progress has been observed related to NAMA
and the focus is to have a treaty in place at the COP in Paris in 2015 and realis-
tic NAMA will only be a formal part of a climate agreement afterwards.

4.2 NAMA models

As mentioned in above section two types of NAMAs have been identified and
acknowledge by the COPs: Unilateral support NAMAs and international sup-
ported NAMA.

In case of a carbon market, above NAMA types could receive complementary


funding in the form of carbon credits for emission reductions (often called NAMA
crediting. It should be noticed that the credited NAMAs has not been
acknowledge in the COP decisions.

A credited NAMA could as example be structured in two ways 1) sector crediting


or 2) sector trading.

Sector crediting

Sector crediting would be based on an agreed emissions threshold or no-lose


target at sector level. That is, countries would agree on a level of emissions for
a sector. This threshold could be either in terms of absolute emissions or intensi-
ty-based, for example in terms of emissions per unit of GDP, emissions per unit
of electricity generated, etc. The developing country could then undertake ac-
tions to reduce its emissions to the agreed level, either unilaterally or with some
international support. If emissions are reduced below the target, the developing
country would receive credits. If the target is not achieved, there would often be
i
no penalties. But a model with penalties could be established.

Sector trading

By contrast, sector trading would follow the cap-and-trade approach. The sector
target would be a mandatory cap and the developing country would receive trad-

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NAMA proposal for the steel sector in Bangladesh
able units ex ante, essentially equivalent to the assigned amount units (AAUs)
industrialised countries receive under the Kyoto Protocol. If the country manages
to reduce its emissions below its target, it would thereby achieve a surplus of
trading units which it could sell. If the country does not achieve the sector target,
it would need to buy trading units to cover the shortfall.

NAMA Overview

In the below table is an overview of the different NAMA types adjusted.

International recognised NAMAs

Unilateral supported NAMAs This is solely a domestic administrated


and supported system

International supported NAMAs This is international supported system


with different type of support.

Possible future credited NAMAs

Sector crediting Sector crediting would be based on an


agreed emissions threshold or no-
lose target at sector level.

Sector trading Sector trading would follow the cap-


and-trade approach

Table 6. Different types of NAMA

4.3 Advantages and disadvantages of sector NAMA

The purpose of the section is to present an overall view of possible advantages


and disadvantages for developing a NAMA in the steel sector. The idea is mainly
to secure that this is taken into consideration when developing a NAMA. De-
pendent of the specific model of implementation a disadvantage and due to for
instance policy measures be implemented as an advantage.

Advantages :

Can address issues of competitiveness (if all competitors are

included)

Promotes technologies/actions with low greenhouse gas emission

May help tailor and channel financial assistance/investment

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NAMA proposal for the steel sector in Bangladesh
Bangladesh can be the lead in forming the new market mechanism,
NAMA steel.

Disadvantages :

May advantage richer countries with capacity to meet standards, tilting


balance away from low income countries

May advantage richer companies with capacity to meet standards, tilting


balance away from poorer companies.

May require countries/companies with advanced technologies to give up


their competitive edge

Scaling to global solution requires multiple agreements, and will not be


limited to steel sector.

Under a sector mechanism with a no-lose target, emitters reducing emissions


cannot be sure that their efforts will not be invalidated by other emitters who
increase their emissions above the baseline level. Setting baselines for sector
emissions and policy implementation is notoriously difficult, especially if having to
ii
be negotiated politically.

4.4 Bangladesh climate mitigation actions and efforts relevant for steel
sector

International climate negotiations

At the Cop 15 in Copenhagen a decision from the Copenhagen Accord that both
Annex 1 and non-Annex 1 could forward pledges for the National Appropriate
iii
Mitigation Actions. Bangladesh has not forwarded any pledges.

Bangladesh is an active participant in the Cartegena Dialogue for Progressive


Actions including binding targets for developing countries.

UNFCCC reporting

The Bangladesh Initial national communication to the United Nations Framework


Convention on Climate Change has been published by UNFCCC the 1 Decem-
iv
ber 2002. The initial national communication do not describe the steel industry
as a priority for mitigation actions. As mitigation action is Environmental Man-
agement Systems (EMS) in industries described.

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NAMA proposal for the steel sector in Bangladesh
The Second National Communication of Bangladesh to the UNFCCC has been
v
finalized in October 2012. The steel sector has been identified as an important
sector for GHG mitigation actions, mainly for re-rolling mills.

The mitigation potential for different mitigation measures, including steel mills
has been calculated. Out of 21 mitigation measures steel mill is the seventh most
attractive mitigation measure. For the steel sector there is the following sum-
mary:

Abatement measure Rehabilitation, steel mill


$ US/ton CO2 -10.74
Unit type 7500 ton of steel
Emission reduction, ton CO2/ Unit 372
Unit penetration by 2030 750,000 ton of steel
Emission reduction, ton CO2 /year 37000
Table 7. Abatement costs in the Steel Sector, Bangladesh

In the SNC the assumptions are described and the uncertainties are stressed.
There are no specific references to the assumptions so it is not possible to verify
the data and furthermore elaborate on this data and assumptions and it is not
specified what is included in rehabilitation of steel mill.

Establishment of national initiatives

In the Interim Action Plan for Improvement of Energy Efficiency & Conservation
vi
of 14 October 2012 it is stated a new unit will be established in the Ministry of
Power, Energy and Mineral Resources and this unit should will be named Sus-
tainable & Renewable Energy Development Authority (SREDA) The unit is es-
tablished and in operation.

SREDA will broadly regulate and oversee the energy efficiency and conservation
activities in industrial, commercial and residential sectors.

This is a broad approach but the steel mills should be able to benefit from
SREDA.

4.5 NAMAs in the steel sector from other countries

Globally the steel sector has been and is under investigation for potential NA-
MAs. These surveys are all in a very initial stage and therefore it is not possible
to incorporate experience from these in the development of the NAMA in the
steel sector in Bangladesh.

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NAMA proposal for the steel sector in Bangladesh
5 STEEL IN A GLOBAL PERSPECTIVE

Global overview

Over 1.5 billion tons of crude steel are produced and used every year. Currently
vii
most steel is produced and used in China.

According to the International Energy Agency, the iron and steel industry ac-
counts for approximately 4-5% of the total world CO2 emissions. On a global
scale 1.9 tonnes of CO2 are emitted for every tonne of steel produced.

In a global context there is significant and continued growth which prevents the
demand for steel being met by means of recycling of the end-of-life steel prod-
ucts and therefore it is necessary to continue converting virgin iron into steel. In
2012 the world crude steel production was 1.55 billion metric tons and nearly
viii
every year there is an annual increase in the crude steel production .

In the past 30 years the steel industry has reduced its energy consumption per
tonne of steel produced by 50%. Some steel mills have made significant im-
provements and for many steel mills in some development countries, including
Bangladesh, have nearly not had any focus on energy efficiency.

A critical element in reducing the carbon emissions from the steel life cycle is to
optimise the use of recycled materials. Steel can be nearly infinitely recycled
without loss of properties or performance. The sector the steel recovery rates are
estimated at 85% for construction, 85% for automotive, 90% for machinery and
50% for electrical and domestic appliances.

The production of steel results in the generation of by-products that can reduce
CO2 emissions by substituting natural resources in other industries. The recovery
and use of the steel industry by-products has contributed to a material efficiency
rate of 97% worldwide.

Use of finished steel can contribute to a longer life time of projects and improve
the carbon footprint of different products.

World Steel Association

The World Steel Association members have agreed on a framework to reduce


the carbon footprint associated with the manufacture and use of steel. The idea
is that in order to reduce the carbon emissions from steels life cycle, it is essen-
tial to take a full life cycle approach. This approach not only considers the emis-
sions associated with the manufacture of steel products, but also the reduction in
energy consumption associated with the use of new generation-steels in lighter

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NAMA proposal for the steel sector in Bangladesh
and stronger products. Further, the inherent recyclability of steel must be given
prominent consideration in the search for sustainable materials for the future.

The World Steel Association has a framework for a lower carbon development
consisting of four building blocks:

1. Development and application of new steels to improve energy efficiency


of steel-using products

2. Research and development of new steelmaking technologies

3. All steel mills use best available technologies through benchmarking and
technology transfer.

4. Common measurement and reporting system for steel plant CO 2 emis-


sions. The reporting system uses a common agreed methodology and
the World Steel Association is working on having this methodology as an
ISO standard

The World Steel Association has invited all companies, also non-members of the
Association to use the data collection system and methodology to calculate the
CO2 emission reduction. The goal is to have one uniform methodology to calcu-
late CO2 emission reductions from the steel sector in a global scale.

The methodology for calculating CO2 emissions incorporates the three scopes of
ix
the GHG Protocol . A user guideline for CO2 emissions data collection has also
x
been developed

Steel mills can on an annual basis forwarded data collected according to the
methodology. The data must be complete, verifiable and approved for each year
of collection. The collection process is overseen by world Steel Association staff
and verified by a panel of experts who review all submissions against standard-
ised parameters and guidelines.

The data is held in the strictest confidence and will be known only to the compa-
ny or site itself and World Steel Association project staff. A participating company
or site will receive a report showing the process route average emission data and
range to which it can compare itself. The recognition scheme is governed by the
World Steel Association Board of Directors.

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NAMA proposal for the steel sector in Bangladesh
6 BANGLADESH

6.1 Overview and Strategy


Bangladesh is already one of the most vulnerable countries in the world to
weather and natural disasters. Floods, tropical cyclones, storm surges and
droughts are predicted to become more frequent and severe in the coming
years. The government thus recognises that climate change is a development as
well as an environmental priority, and is committed to developing and incorporat-
ing potential response measures that reduce the impacts of climate change into
the overall development planning process. Bangladesh is focusing primarily on
building a platform for climate-resilient growth through adaptation measures, but
is also taking steps to pave the way for mitigation and low carbon growth.

Given that Bangladesh has very low levels of GHG emissions, its climate change
strategies are couched within the government's long-term vision to eradicate
xi
poverty and to achieve national economic and social wellbeing based on the
Outline of the Perspective Plan, Vision 2021 which includes Mitigating the
Impact of Climate Change as a part of the strategy to ensure sustainable devel-
xii
opment and Bangladesh Climate Change Strategy and Action Plan . In 2009
the Bangladesh Climate Change Strategy and Action Plan has been updated
xiii
and approved by the Government of the Peoples Republic of Bangladesh. .

The Climate Change Action Plan is a 10 year programme (2009-2018) and in the
first 5 year period (2009-2013), the programme comprise of six pillars: 1) Food
security, social protection and health 2) Comprehensive Disaster Management,
3) Infrastructure, 4) Research and knowledge management, 5) Mitigation and
low carbon development and 6) capacity building and institutional strengthening.

In the pillar 5) Mitigation and low carbon development there are 5 priority areas
and two of these are a) seek the transfer of state-of the art technologies from
developed countries to ensure that we follow a low-carbon growth path (e.g.,
clean coal and other technologies and b) Review energy and technology poli-
cies and incentives and revise these, where necessary, to promote efficient pro-
duction, consumption, distribution and use of energy.

The development of a NAMA in the steel sector is fully in line with the above
mentioned strategy and action plan and the two indicated pillars of the action
plan.

6.2 Overview of the CDM procedure and specific CDM projects

CDM procedure

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NAMA proposal for the steel sector in Bangladesh
On 13 October 2003, Bangladesh government established a Designated Nation-
al Authority (DNA) for approving CDM projects in Bangladesh. It is a two tier
approval process through both the (1) National CDM Board and (2) National
CDM Committee. The structure of the two boards are presented below in figure 4
and figure 5.

National CDM Board

Chairperson Members Member Secretary

Planning Commission,
Ministry of Environment
and Forests, Industries,
Agriculture, Foreign
Affairs, Communications,
Science information and Director (Technical)
Secretary, Ministry of
Communication Department of
Environment and Forests
Technology, Power, Environment
Energy & Mineral
Resources, ERD, LGED,
BOI, Bangladesh Bank,
Department of
Environment and others

Figure 4 Structure of the National CDM Board.

National CDM Committee

Chairperson Members Member Secretary

Planning Commission
Secretary/Secretaries of Director General,
Principal Secretary to the
the Relevant Ministries Department of
Prime Minister
including the Ministry of Environment
Environment and Forests

Figure 5 Structure of the National CDM Committee

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NAMA proposal for the steel sector in Bangladesh
Sustainable development criteria to approve CDM projects

The sustainable development criteria to approve CDM projects were defined for
four different dimensions, as follows:
Environmental
o Global environment: GHG emissions reduction;
o Local environment improvement (e.g. air, water, soil);
o Efficient resource utilization
Economic
o Contribution to the reduction of foreign expenditures
o Contribution to national debt reduction
o Cost-effectiveness
Social
o Poverty alleviation
o Creation of new jobs
o Creating of new economic activities
o Positive impacts on local communities
o Positive health impact
o Gender equity (women empowerment, equitable distribution of
wealth)
Technological
o Transfer of clean and cost effective technologies
o Contribution to the sustainable use of natural resources
o Ease of adaptation to local condition

These criteria should be discussed during the NAMA development and shall be
incorporated as appropriate.

CDM projects

According to the DOE primo February 2013, it has been stated that 14 CDM
projects have been approved by DNA of Bangladesh. 7 projects have been reg-
istered at CDM Executive Board but later 1 project was cancelled, so total regis-
tered project at CDM Executive Board stands at 6. However, the numbers of
CDM projects are very small in the country compared to its emission reduction
potentials.

The DOE has approved 7 projects, which have not yet been registered by CDM-
EB.

In the industrial sector Bangladesh has successfully CDM experience within the
brick-making industry.

There is no experience working with CDM in the steel sector in Bangladesh.

In a global scale several CDM projects in the steel sector have been implement-
ed. These projects are facing the same type of problems as other CDM project in

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NAMA proposal for the steel sector in Bangladesh
other sectors, for instance the lower number of emission reductions than ex-
pected. But it is in general difficult to take the experience from steel works iin
other countries as they are most often much larger than a steel work in Bangla-
desh.

6.3 Overview of the Gold standard procedure and specific Gold Stand-
ard projects

xiv
Among the voluntary carbon market programmes the Gold Standard is the
most relevant for potential steel projects.

In the Gold Standard programme there is no formal requirement of host country


approvals and therefore the Bangladesh authorities have not set-up a formal
system approval system for Gold Standard projects. The DNA and CDM national
committee have until now a voluntary basis forwarded recommendation to Gold
Standard projects if considered relevant.

The DNA does not follow the Gold Standard project closely.

There are no Gold Standard steel projects in Bangladesh.

6.4 Baselines, Standardised Baselines and grid emission factors

According to the DOE the actual grid emission factor for electricity is 0.67 kg
xv
CO2e/kWh for projects in Bangladesh. and for natural gas it is 0.2
xxxi
CO2e/kWh .

6.5 Overview of the key characteristics of the industrial sector

According to the Second National Communication the different industrial indus-


tries have developed differently during recent years. Especially the garment in-
dustry has had a significant and positive development, but also the beverages,
pharmaceutical and cements industries have performed well. The agro-
processing industry has not had a positive development.

The development in the steel sector has not been described in the Second Na-
tional Communication and really no systematic overview exist.

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NAMA proposal for the steel sector in Bangladesh
6.6 Overview of the key characteristics of the steel sector

Overview of the steel mills

xviii
Bangladesh has about 300 operating steel re-rolling mills and some large
scale units have set up for both steel smelting and rolling (l-rot and cold roiling).
These 300 mills only have automatisation to a very limited degree and the steel
re-rolling used is a very simple manufacturing process. Steel ingots are heated in
a furnace and after achieving pre-determined temperature these are passed
through a series of rollers to achieve specific size and shape to form bars, ,
plates, rods or other products. Many of the mills have scrap smelting facilities.
The energy is consumed both in the form of electricity and thermal energy to
heat ingots. Considerable amount of energy is needed for materials handling.
Electricity is a raw material for this sector and most companies use grid electrici-
ty and Most mills have standby electricity generation capacity'. Re-heating fur-
naces use natural gas as resource whereas arc/induction furnaces use electricity
either by passing a current thought the charge material or by inducing a magnet-
ic field around the charged material. The melting process is the most energy
intensive process in the steel making process. Steel re-rolling mills process steel
ingots into iron rods and flat bars. The annual production total of all mills in Bang-
ladesh is about 2.5 million tons. The process is simple: a gas-fired furnace sof-
tens steel ingots which are then drawn through a series of rollers to produce rods
of different sizes. The ingots come from the so-called 'steel mills' where scrap
iron (derived mainly from ship breaking or steel waist locally or imported) is
xvi
melted in induction furnaces.

Supplementary to the above 300 mills there are supplementary approximately 15


mills which are larger and have automatisation to a high degree and these are
xviii
also organised in own association.

Most of the companies can be categorized as small and medium sized compa-
nies. In the further development of the project there will be a need for further
information from each company and as a courtesy a questionnaire concerning
the steel mills has been prepared and enclosed as annex A.

In the steel production in Bangladesh there is potential for introduction of new


technologies, reduce energy consumption, improve the working conditions and
increase the production.

There is a growing demand for steel in Bangladesh and therefore steel is cur-
rently being imported. The steel products produced in Bangladesh are for the
domestic market. More steel production capacity is therefore expected to be
established in the years to come and due to the countrys infrastructure many of
these will be small and medium-sized.

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NAMA proposal for the steel sector in Bangladesh
The supply of raw material to the steel mills is scrap from all over Bangladesh
and scrap are from ships.

Bangladesh does not have any production of steel based on iron ore.

Organisation of the Steel sector

The Bangladesh Re-Rolling Mills Association (BRMA) has 140 member compa-
xvii
nies

Bangladesh Steel Mill Owners' Association (BSMOA) has approximately 120


xviii
member companies.

Bangladesh Auto Steel and Re-Rolling Mill Association (BARSMA) has approxi-
xviii
mately 15 member companies .

Bangladesh Steel and Engineering Corporation (BSEC) is established with the


objective to contribute to the development of infrastructural facilities of the coun-
try, create the base for industrial growth, make human and material movement
xix
faster and easier, and help utilize sea and river transportation system.

Permits and annual monitoring and clearance.

A new steel mill will need to apply for a construction and production permit and
during the process an industrial facility will be categorized in one of the four cat-
egories 1) Green 2) Orange A 3) Orange B or 4) RED.

The industries with highest potential negative impact of the environment will be
categorized in the category RED. The Iron/steel sector is considered to be RED.
As final stage of approval As part of the final approval the company shall have
issued an environmental clearance.

Each company in operation will have an obligation to follow an environmental


management plan. The steel mill shall prepare an annual monitoring plan and
the DOE shall issue an Environmental Clearance Certificate.

Other environmental issues

The international fleet of ship are selling ships for scrapping in Bangladesh.
There is not a detailed testing in Bangladesh whether these imported ships have
been transporting radioactive material. This is an un investigated potential risk
for the steel sector as part of the raw material in the steel processing industry is
scrap from ships

In Vikrampur Steel Ltd it has been investigated in 2012 whether any radioactivity
could be detected in the production site. The test result indicated no radioactivity.

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NAMA proposal for the steel sector in Bangladesh
6.7 Energy production, consumption and supply in Bangladesh

According to the Second National Communication of Bangladesh to the United


Nations Framework Convention on Climate Change the energy sources are Nat-
ural gas, diesel, kerosene, gasoline, jet fuel, lubricants, furnace oil, LPG, natural
gas liquids, coal and biomass.

Natural gas is the absolutely most dominant fossil fuel in Bangladesh. The natu-
ral gas is for instance used for the grid electricity generation, industrial captive
electricity generation and industrial process heating.

Furnace oil is used in furnaces in various industries.

Natural gas from 18 producing gas-fields accounts for 74% of the total commer-
cial energy supply. This is supplemented by a small amount of indigenous coal
and hydro. Nearly all of the liquid fuel, which represents 16% of the commercial
energy, is imported. Bangladesh also imports 2-3 million tons of coal for brick
manufacturing.

The net consumption of electricity has had on average increased with 12 % from
2000 to 2010. To sustain similar high real growth rates in GDP as in the last
couple of years (between 6 and 7 %.), it is necessary to keep a minimum
xx
electricity growth rate at a factor of 1.5 of the GDP growth rate. If the growth
rate in GDP continues this trend, it is plausible that the growth in consumption of
electricity also will continue.

45
40
35
Biollions of KWH

30
25
20
15
10
5
0
1980 1985 1990 1995 2000 2005 2010

xxi
Figure 6. Net consumption of electricity in billions of kWh, Bangladesh.

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NAMA proposal for the steel sector in Bangladesh
The proven plus probable reserve of gas as on December 2008 stood at 12.2
TCF while the gas production in the year 2008-09 was 0.65 TCF. This gives a
static Reserve/Production ratio of 20 years; with increasing gas consumption the
depletion time would be less than 10 years. Since 1998 there has been very little
exploration activity, and only a small gas field (Bangura, 0.44 TCF) was discov-
ered in 2004. As a result of rapid growth of energy demand and limited explora-
xxii
tion activities the country is facing and will face a shortage of natural gas.
Unless changes are made, Bangladesh will need to import both oil and gas. This
will lead to an increase in the cost of making electricity.

50.000.000.000

40.000.000.000

30.000.000.000

20.000.000.000

10.000.000.000

0
1980 1985 1990 1995 2000 2005 2010

Coal Hydroelectric Natural gas Oil

Figure 7 Electricity production (kWh) distributed among sources

The price of electricity is heavily subsidized by the government. The prices both
for the bulk users (distribution companies) and the retailers/end-users are deter-
mined by the independent authority Bangladesh Energy Regulatory Commission.
Since February 2011 the commission has increased the retail tariff by 43.75
xxiii
%.

The CO2 emissions have along with total consumption of fossil fuels increased.
However, in 2010 the CO2 emission pr. capita in Bangladesh was around 28 %.
of the average CO2 emission pr. capita in South Asia. This indicates a gap in the
CO2 emissions between Bangladesh and the rest of South Asia, which com-
bined with the economic growth, makes it very likely, that the total CO2 emission
will continue to increase.

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NAMA proposal for the steel sector in Bangladesh
60000

50000

CO2 emission (kt)


40000

30000

20000

10000

0
1980 1985 1990 1995 2000 2005 2010

xxiv
Figure 8 Total CO2 emission from Bangladesh

The latest overview of CO2 emissions from the industrial sector is from 2005 and
in the industrial sector the Iron and steel sector accounts for 3% of the CO 2
emissions in the industrial sector.

6.8 Electricity produced on Gas engine VS electricity from grid

6.8.1 Description of the connection between gas engine, factory and electricity
grid
The figure below shows the normal connection between a gas engine and the
steel factory. The engine is normally near the factory and produces electricity
that is delivered directly to the factory for instance for the induction furnaces. At
some systems their possibilities to deliver the electricity to the grid when there
are no production but this is not the case at Vikrampur.

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NAMA proposal for the steel sector in Bangladesh
Loss

Natural gas Possibility to


Elektricitet
deliver to grid
Engine Electricity grid

Factory

Figure 9. Electricity supply in the steel factory

6.9 Electricity prices


This section briefly describes the relationship between electricity from the grid
and electricity from own gas engine. Viegand Maage have seen several steel
factories in Bangladesh and some of them have their own gas engine producing
electricity from natural gas. Many of the small producers, however, do not own
engines and rely on power from the grid. The figure below shows the overall in
the engine:

Heat Loss

Natural Gas Electricity


Engine

Figure 10. Production of electricity

Natural gas is burned in the engine, which produces electricity and heat is emit-
ted from the engine. The different steel factories Viegand Maage has seen in
Bangladesh have had engines of a Western brand, such as Rolls Royce. Bang-
ladesh does not have a large production of engines and therefore these are usu-
ally imported. The efficiency of these engines Viegand Maage has estimated to
40%. This based on estimations and discussion with experts within the field.

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NAMA proposal for the steel sector in Bangladesh
Calculation of electricity price from engine:

Effeciency () = 40 %

3
The electricity from combustion om 1 Nm natural gas en the engine can be
calculated from:

The price for the electricity produced on the engine is then:

Electicity from the grid. The electricity price is:

Electricity,grid = 6,71 BDT/kWh = 0,06 Euro/kWh

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NAMA proposal for the steel sector in Bangladesh
7 LESSONS LEARNED FROM CDM, VOLUNTARY MARKET AND
EMISSION TRADING SCHEMES

7.1 Experience and lessons learned from CDM


CDM is well-known and therefore a general introduction is not needed. Only the
main conclusions of the experience will be highlighted in the general CDM sec-
tor. In the following sub-sections more specialised topics relevant for the steel
sector will be considered Suppressed demand, standardised baselines and co-
benefits.

CDM in general

Description

As mentioned the CDM is well-known and it has actively been used for more
than 10 years and therefore the general introduction is not needed.

In this section some general experience from CDM is presented and of course It
is a generalised picture, but it should indicate some points which should be con-
sidered carefully when developing a NAMA.

Conclusions

The additionality test has to some extent shown to be unpredictable and a delay-
ing factor.

A system with UNFCCC accreditation system with Designated Operational Enti-


ties is a slow and costly exercise.

The Bangladesh and international experience with CDM can be summarised in


the following bullet points:

- Important to establish a simple national approval system to avoid unnec-


essary bureaucracy and delay.

- High upfront costs, the PDD costs, validation and verification are consid-
ered very high

- The pay-back time of an investment is long.

- Low number of CERs from a project in Bangladesh and therefore not at-
tractive in a global market.

- Limited experience due to the limited number of projects.

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NAMA proposal for the steel sector in Bangladesh
These are important issues which should be considered when developing a
NAMA.

CDM steel sector

Description

In CDM the main part of the steel projects have been using the Approved consol-
idated baseline and monitoring methodology ACM0012 Consolidated baseline
methodology for GHG emission reductions from waste energy recovery projects

For smaller projects in the steel sector it could also be have been interesting to
consider AMS II D, Energy efficiency and fuel switching measures for industrial
facilities

Conclusions

Several suitable CDM methodologies are available for the steel sector. The ac-
tual CDM methodologies and CDM steel projects are mainly for larger projects
which are very different from the Bangladesh context.

Suppressed demand

Description

Under the CDM, suppressed demand is defined as a Scenario where future


anthropogenic emissions by sources are projected to rise above current levels,
due to the specific circumstances of the host Party. CDB-EB has at EB meeting
68 prepared guidelines for having suppressed demand in CDM methodologies.

The concept of suppressed demand is included in some CDM methodologies to


consider situations where key services such as lighting and heating, water sup-
ply, waste disposal and transportation are only available in quantities that are
insufficient to meet basic human needs before the implementation of a CDM
project activity. This can be due to low income and lack of technolo-
gies/infrastructures or resources for its implementation.

Until now 8 CDM methodologies have included the suppressed demand ap-
proach, for instance clean drinking water and rural electrification

Until now the suppressed demand in the industrial production sector has not
been addressed in the CDM methodologies..

But the approach with improved electricity supply have been addressed both
through new renewable energy supply sources and through grid extension.

Conclusions

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NAMA proposal for the steel sector in Bangladesh
The steel sector has not been a priority for the CDM when developing sup-
pressed demand methodologies.

The steel mills in Bangladesh are operating under suppressed demand condi-
tions, for instance due to unstable electricity supply.

Standardised baseline

Description

In 2011 and 2012 it has within CDM been a priority to develop standardized
baselines. Below is an overview of the main decisions and key issues.

Guidelines for the establishment of sector specific standardised baselines (EB 65


A 23) November 2011

Guidelines for Quality Assurance and Quality Control of data used in the estab-
lishment of standardised baselines (EB 66 A 49) February 2012

Procedure for the submission and consideration of standardised baselines (EB


68 A 32) July 2012

The QA/QC Guidelines include the quality control (QC) procedures and the quali-
ty assurance (QA) procedures.

The following data quality objectives are intended to guide the implementation of
the QA/QC procedures : 1) Relevance 2) Completeness 3) Consistency 4) Cred-
ibility 5) Currentness 6) Accuracy 7) Objectivity 8) Conservativeness 9) Security
10) Transparency 11) Traceability

The CDM also require less information for LDC countries, like Bangladesh.

The development of standardized baselines is a data-intensive process, but


many of these parameters mentioned could be standard in the development of
the MRV system in a NAMA.

As no real experience in using the standardized baseline on project level, it is


unknown how the standardized baseline will work in practice.

Until now Bangladesh has no experience in developing stardardized baselines


within CDM. A draft proposal is under development by a group of the Bangla-
desh Consultant.

Conclusion

It seems that it has not been a priority to develop a standardized baseline for the
steel sector yet.

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NAMA proposal for the steel sector in Bangladesh
It should be considered to incorporate elements from CDM when establishing
and managing the baseline and baseline emissions from the steel sector.

Co-benefit

Description

Under EB 70 meeting report in November 2012 it is mentioned The Board ap-


proved the voluntary tool for describing sustainable development co-benefits of
CDM project activities and PoAs, in response to a request from the CMP in its
decision 8/CMP.7. The tool is available to view on the UNFCCC CDM website at
<http://cdm.unfccc.int/Reference/volSDtool/index.html>. The Board took note
that the voluntary tool will be available for use by project participants and coordi-
nating managing entities in 2013 and that the secretariat will inform the Board
xxv
and the public when the voluntary tool is operational.

It means that UNFCCC and EB have recognised the importance of co-benefits,


but due to the recent decision there is no lessons learned.

This is a very new concept and really no experience in using this voluntary tool
for evaluating sustainable development co-benefits.

Conclusions

A NAMA in the steel sector will due to actual status before implementation gain a
lot of co-benefit when implemented and therefore it must be in the interest of the
Bangladesh Government to have co-benefit and sustainable as part of a NAMA.
Probably it should an a voluntary basis as it is quite difficult to quantify co-
benefits.

7.2 Experience and lessons learned from the voluntary carbon market

Suppressed demand

Description

Gold Standard has included the suppressed demand approach in several meth-
odologies.

For small industries two methodologies have been developed in 2013.

1) Suppressed demand methodology for low GHG food preservation. The meth-
odology comprises project activities which (i) provide food preservation with low-
er associated greenhouse gases emissions and (ii) expand the food preservation

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NAMA proposal for the steel sector in Bangladesh
beyond pre-project levels. Among others, the following activities are explicitly
included in this methodology: Installation of new equipment (either on a new site
or as capacity expansion) based on renewable energy technology to provide the
energy required for all or part of the food preservation process for new or existing
project sites. The suppressed demand approach is based on nutrition level ,
2100 kcal/person and this cannot be transferred to the steel industry.

2) GS Suppressed demand small-scale energy use for the processing of agricul-


tural products.

Conclusions

These newly developed suppressed demand Gold Standard methodologies


gives a trend that an increased capacity and production have been taken into
consideration when calculating the number of potential CO2 emission reductions.

The industrial plants, like steel production, have not been the focus in this devel-
opment.

7.3 Experience and lessons learned from Emission Trading Schemes

The description of the Emission Trading Scheme has been extended as it should
give an idea of how a model could be developed in Bangladesh and the conclu-
sion sector few points are highlighted which Bangladesh should consider in clari-
fying a future system

Description

The following countries and regions are involved seriously in Emission trading
schemes:1) EU-ETS, 2) Switzerland, 3) Australia, 4) South Korea, 5) New Zea-
land, 6) China, 7) Japan 8) USA (California) and 9) Canada (Quebec).

Probably the most developed is the EU-ETS and furthermore they have an inter-
esting approach with benchmarking for the period 2013-2020, which could be of
interest in developing a model in Bangladesh. Therefore the EU-ETS model for
free allocation in the period 2013-2020 is described in more detail.

In the EU-ETS for the period 2013-2020 the free allocation is based on bench-
xxvi xxvii
marking. . . The allocation is based on data given from the relevant com-
panies from 2011 and 2012. The general principle is that the amount of free allo-
cation should decrease over the years. But for installation with international
competition the installation will have the same amount of free allowances, each
year. This is valid for the steel sector. The EU sector guidance document has
xxviii
also a decision on the free allocation of allowances for steel . The guidance
document is part of a group of documents, which are intended to support the EU

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NAMA proposal for the steel sector in Bangladesh
Member States in the coherent implementation throughout the EU of the new
allocation methodology for Phase III of the EU ETS (2013-2020)

The guidance document gives and requires the following information for each
product referred to by a product benchmark:

Relevant information for a product benchmark

Value of the product benchmark

Carbon leakage exposure

Definition of the unit of production

Definition and explanation of products covered

Definition and explanation of processes and emissions covered

Calculation of preliminary allocation

Determination of the historical activity level

Table 8. Information for a product benchmark

In the EU Guidance Document n9 on the harmonized free allocation methodol-


ogy the steel sector has also been evaluated, mainly for Electric Arc Furnaces
(EAF).

In Bangladesh the induction furnaces are much more common than EAF. But the
presentation of the model for EAF in the EU-ETS for the period 2013-2020, could
be as model for Bangladesh to consider.

In the EU Guidance Document n9 on the harmonized free allocation methodol-


ogy has been developed for both EAF carbon steel and EAF high alloy steel.

For EAF carbon steel the following is valid:

EAF carbon steel

Value of the product bench- 0.283 allowances/tonne (one allowance is 1


mark tonnes CO2e)

Carbon leakage exposure Exposed

Definition of the unit of produc- Tonne of crude secondary steel ex-caster


tion

Definition and explanation of Steel containing less than 8% metallic alloying

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NAMA proposal for the steel sector in Bangladesh
products covered elements and tramp elements to such levels
limiting the use to those applications where no
high surface quality and processability is re-
quired.

Definition and explanation of All processes directly or indirectly linked to the


processes and emissions cov- process units 1) electric arc furnace 2) second-
ered ary metallurg,3) casting and cutting, 4) post-
combustion unit, 5) dedusting unit, 6) vessels
heating stands 7) casting ingots preheating
stands, 8) scrap drying and 9) scrap preheat-
ingare included.

For the determination of indirect emissions, the


total electricity consumption within the system
boundaries shall be considered.

Processes downstream of casting, e.g. rolling


and reheating for hot rolling, are not included.

Calculation of preliminary allo- The product benchmark for EAF carbon steel is
cation based on total emissions since energy pro-
duced from fuels is exchangeable for energy
from electricity. Allocation should however be
based on direct emissions only.

Determination of the historical Median annual production in the baseline peri-


activity level (HAL) od as determined and verified in the baseline
data collection (expressed in units of product).

Table 9. EAF Carbon Steel

For EAF high alloy steel the following is valid:

EAF high alloy steel

Value of the product bench- 0.352 allowances/tonne (one allowance is 1


mark tonnes CO2e)

Carbon leakage exposure Exposed

Definition of the unit of produc- Tonne of crude secondary steel ex-caster


tion

Definition and explanation of Steel containing 8% or more metallic alloying

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NAMA proposal for the steel sector in Bangladesh
products covered elements or where high surface quality and
processability is required.

Definition and explanation of All processes directly or indirectly linked to the


processes and emissions cov- following process units 1) electric arc furnace,
ered 2) secondary metallurgy, 3) casting and cutting,
4) post-combustion unit, 5) dedusting unit, 6)
vessels heating stands, 7) casting ingots pre-
heating stands, 8) slow cooling pit, 9) scrap
drying and 10) scrap preheating are included.

For the determination of indirect emissions, the


total electricity consumption within the system
boundaries shall be considered.

The process units FeCr converter and cryogen-


ic storage of industrial gases are not included.
Processes downstream of casting, e.g. rolling
and rehearing for hot rolling, are not included
either.

Calculation of preliminary allo- The product benchmark for EAF carbon steel is
cation based on total emissions since energy pro-
duced from fuels is exchangeable for energy
from electricity. Allocation should however be
based on direct emissions only.

Determination of the historical Median annual production in the baseline peri-


activity level (HAL) od as determined and verified in the baseline
data collection (expressed in units of product).

Table 10. EAF high alloy steel

For both the EAF carbon steel and EAF high alloy steel the annual allocation can
be calculation based on this formula.

Annual allocation = I((direct emission + heat import in emissions)/( direct emis-


sion + heat import in emissions + indirect emission )) * benchmark * HAL

Conclusions

Through the EU-ETS and the allocation of allowances model can illustrate the
complexity of what is needed to be done in case a trading scheme and/or alloca-
tion scheme should be developed in Bangladesh. It will of course be different
calculation models and parameters due to size differences and technology dif-
ferences between the EU and Bangladesh.

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NAMA proposal for the steel sector in Bangladesh
8 POTENTIAL ENERGY AND ENVIRONMENTAL PROJECTS

8.1 Introduction
During the preparation of Second National Communication of Bangladesh (SNC)
different mitigation options have been analysed based on 6 different parameters.

Based on this investigation energy efficiency at steel re-rolling mills should be


one of the priorities.

Furthermore the cost-effectiveness of 21 mitigation actions in Bangladesh has


been analyzed. Rehabilitation of steel mills has been the seventh most financially
attractive mitigation action.

A catalogue of the best available technologies and practices to save energy and
reduce environmental impacts in the steel industry is to be found in this refer-
xxix
ance.

At a stakeholder meeting the 26 October 2013 with the Bangladesh Steel Mills
Owners Association the sustainable and environmental friendly development of
steel mills where discussed and the Steel Association identified 10 priority areas
for a further effort:

Priority proposed by the Steel Mills Owners Association

1 To erect modern technology

2 To minimize wastage

3 To reduce the gas and electric consumption

4 To improve the management system

5 To control and reduce air and water pollution

6 To develop a material transport system

7 To minimize labour by using modern technology

8 To improve quality of products relative to other developing countries

9 To increase quality of projects including establishing laboratory, to


secure in accordance with international standards.

10 To secure supplies of equipment are from a diversity of countries.

Table 11. Priority list prepared by SMOA

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NAMA proposal for the steel sector in Bangladesh
The consultant team has in close cooperation with the stakeholder identified
where an effort could be done immediately

Below is a presentation of the 4 very important environmental and energy pro-


jects in the steel sector in Bangladesh. Other important environment and energy
projects are shortly described in Annex B. All ideas could be considered as an
integrated part of the NAMA, but the focus at this stage has been to focus on the
4 selected ideas in development of the steel sector and the NAMA in Bangla-
desh. For each potential project the background information and relevance for
Bangladesh is described, and a concrete example is presented with calculation
of both technical and economical characteristics, co-benefits and also potential
barriers.

For each solution a toolbox, a summary table, with the focus on three parame-
2
ters 1) CO2 emission reduction 2) Cost and 3) Pay-back time . The costs cover
both costs for construction work, equipment, operation, maintenance and consul-
tancy services. The costs of consultancy services in the preparation and imple-
mentation period are estimated to be 10 % of the investment costs. It covers cost
for mill-specific feasibility studies and design. The costs of consultancy services
in the operation phase are estimated to be five % of operation and maintenance
costs. Revenue only includes savings in consumption of electricity and gas, not
revenue from increases in production due to capacity increases (which in some
cases are significant). Both the total number of relevant mills and the number of
mills with own power production are subject to great uncertainty, therefore the
simple payback of the reheating and training program are calculated both for a
mill with and without own power production. It is assumed that whether a mill
uses gas, or electricity do not affect the investment or maintenance and opera-
tion cost, but only the yearly savings.

8.2 Reference mill


In order for the plant descriptions and example of calculations to be consistence
and comparable then a reference plant is defined. The plant is categorized as a
medium size plant in a Bangladeshis context. The plant is deviated in to two
production lines, one scrap melting line and one re-rolling line (only one of each
line).

Scrap melting:
The plant is producing 5 batches per day in average in an induction furnace. The
induction furnace has a capacity of 7 ton per batch. There are 320 production
days per year. Based on these assumptions then the yearly production will be
11,200 tones.
The specific electricity consumption is assumed to be 700 kWh/ton

2
Calculated as the initial investment divided by the yearly earnings

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NAMA proposal for the steel sector in Bangladesh
Re-rolling:
The plant capacity is estimated to be 50 ton per day and with 320 production
days, then the yearly production will be 16,000 tones.
The specific gas consumption is assumed to be 615 kWh/ton.

Bottlenecks:
All projects in Bangladesh will be facing bottleneck, which for various reasons
challenges the introduction of new project/technology. Below is listed some of
the most significant bottlenecks that has been identified.

Weak power disruption

Unstable gas supply

Unstable raw material supply

Many steel re-rolling mills are facing problems in pay their full utility bills.

Many steel re-rolling mills operate on a very informal basis, which may
include intermittent operation. It would be very difficult to convince them
to invest in modernization without also undertaking other efforts to be-
come more commercial

High quality and independent, detailed audits are required to reflect indi-
vidual steel mill layout and requirements; there is limited capacity for this
in Bangladesh

8.3 Optimisation of the melting process Waste heat recovery from the
induction furnace

8.3.1 Introduction
One of the main focus areas in relation to the melting process is treatment and
utilisation of the off gas from the furnace and this can be improved at almost all
steelwork shops in Bangladesh.

About 47 % of the total energy input is leaving the process with the slag, cooling
water and fume gas. The fume gas accounts for approximately 20% of the total
xxx
input, which is equivalent to 130 kWh/ton of produced steel .

The selected example is a project where the incoming scrap is preheated with
fume gas from the furnace, which will lead to a reduction in the energy consump-
tion.

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NAMA proposal for the steel sector in Bangladesh
8.3.2 Project description
The scrap is preheated by thermal radiation from the furnaces opening, a con-
vective heat transfer from the off gasses (natural and forced) and by a combus-
tion process taking places in the incoming scrap.

For this purpose the scrap is transported counter flow to the fumes in a closed
transporting system. When the hot fume gas is passing the cold incoming scrap
then heat is being transferred form the fume gas to the scrap. The fumes are
transported by a suction blower and released to the surrounding or to a fume gas
treatment system (e.g. scrubber system).

The blower must be adjusted to prevent intrusion of excess air into the scrap as
this will act as a coolant, but at the same time there must be enough oxygen
present the secure a complete combustion of all combustibles. The oxygen will
be drafted from lot between the basket and the furnace rim. This combustion will
take place just outside the opening where the combustibles react with the oxy-
gen in the air creating heat.

In order to get a good heat transfer in the transporting system it is of great im-
portance that scrap size is optimised, meaning an increase in the surface area
between the scrap and fume gas and that all impurities are removed. The pre-
sent of impurities also contributes to a higher energy consumption in the melting
process and an increase in the amount of slack, which again increase the heat
loss.

At present different pre-heating systems has been developed for different types
of furnaces. Among others the following can be mentioned:

Charging buckets
Fuchs Shaft preheater
BBS Brusa Process
Consteel Continuous Scrap Preheater

8.3.3 Example of savings


A theoretical example is given on a pre-heating system for a 7 ton furnace, which
produces 5 batches per day; 320 day per year. The example is based on a me-
dium size plant with a typical production pattern. In the example focus will be on
energy and carbon dioxide.

Calculations can show the following heat transfer elements contribute to pre heat
the scrap:
Radiation 31 kWh/ton
Natural conviction 2 kWh/ton
Forced conviction 4 kWh/ton
Combustion 53 kWh/ton

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NAMA proposal for the steel sector in Bangladesh
Total 90 kWh/ton

In practice approximately 40- 50% of the theoretically possibly can within reason
be utilised.

With this assumptions the yearly saving can be achieved are:

[ ] [ ] [ ]

The above mentioned number can be typical for a company in Bangladesh.


xv
In Bangladesh the grid factor is 0.67 ton CO2/MWh by using the grid factor the
specific saving will be 0.027 ton CO2/ton steel, which is equivalent to a yearly
saving of 304 tons CO2.

The grid factor is a generally grid factor for Bangladesh. Often the electricity is
produced on site and therefor local conditions will affect the grid factor.

8.3.4 Co-benefits
The preheating will also have a positive effect on the following parameters:

Reduction of production time: Less time to heat


o Increased the production capacity: Due to the reduction in pro-
duction time.
Reduction in the slag amount: Better pre-treatment (sorting of the scrap),
will reduce the amount of slag.
Improved environmental impact
o Reduction of carbon emission: Related to energy saving and
better pre-treatment of the scrap.
o Reduction of dust particles: The scrap will act a filter, drawing
the dust back to the furnace.
Improved working environment
o Reduction of toxic fumes: To a great extent the scrap and fume
gas will be treated in a closed system.
o Reduction of exposure to high temperatures. The scrap will be
feed into the system away from the furnace, where the tempera-
ture is significantly reduced.

8.3.5 Measurements and monitoring


In this section an example is given on how the measuring must be conducted,
both in relation to the baseline measurements and in relation to the situation after
the installation of the heat recovery system. It is important that the two set of

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NAMA proposal for the steel sector in Bangladesh
measurements is conducted in the same way and under conditions that are
comparable.

From each batch the value of the specific electricity consumption must be deter-
mined (kWh/ton of scrap). Many different parameters influence the electricity
consumption, and therefore these parameters must be taking in to account when
making the measurements.
Due to the variety of the different parameters then the measurements must be
conducted over a period of 3 days for both the baseline and the situation after
the implementation of the heat recovery system, in order to get as representa-
tively picture of the consumption as possible.

The selection of the specific measuring period must be made together with the
site, in order to get as good a representative picture of the production as possi-
ble.

In the sections below the different parameters that need to be measured or regis-
tered are described.

8.3.5.1 Electricity
The electricity consumption must be measured on the furnace (all included, eg.
on the high voltages side of the transformer). The measurements must as a min-
imum contain the effect in kW, the time in seconds and the integrated effect the
energy consumption in kWh. All the data must be stored (locked) for a period of
time that is at least as long at the measuring period (three days). Based on the
data then it should be possible to generate specific data for a batch (kWh/batch)
and for at tone of steel (kWh/ton steel).

8.3.5.2 Batch Time


The time for each batch must be measured in order to determine if there is an
improvement in production capacity. This measure will properly come together
with electricity measurements.

8.3.5.3 Scrap
The mass of each batch must be measured. The measurements must be made
on a calibrated scale and the measurements must be made in kg. A truck on the
site can be used to measure a batch (eg. the truck that delivers the scrap). The
truck can use the scale onside which is used on a daily bases if measuring the
incoming scrap. Measured batched of scrap must be made ready in an area only
allocated for the purpose, in order to secure a complete control to the batch con-
tent. The batch must be made approximately 25 % bigger then what is normally
expected in order to secure that the furnace can by 100 % full. The surplus of
scrap must then afterwards bed measured on the scale again and then the sur-

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NAMA proposal for the steel sector in Bangladesh
plus will be deducted from the total mass in order to find the exact mass of the of
there measuring period .

Pictures of the incoming scrap (each batch) must be taken in order to quantify
the composition of the scrap charge to the furnace in each batch.

8.3.5.4 Additives
The mass of all the additives must be measured. The measurement must be
made on a calibrated scale and the mass of the additives must be related to
each batch. The measurements must be made in kg and the scale must be
placed close to the furnaces, in order to ease the measurements.

8.3.5.5 Slag
The mass of all the slag that are removed from the batch during the specific melt
must be measured. The measurements can be done on the same truck as the
batch is measured. Then all the slag must be collected in a slag pot and meas-
ured when the slag is cooled down. Alternative the measurement must be made
on a calibrated scale which is placed close to the furnace.

8.3.5.6 Product losses


In the casting process losses are related to the runners, bars and casting sys-
tem. In order to determine the losses all the runners and cut offs from the bars
must be collected and measured. The measurements can be made manually on
a scale after steel has cooled down. The measurements must be made in kg and
can be done on the same scale as slag (can be done together with the slag).

8.3.5.7 Product
The mass of the casted product must be measured. It is suggested to use the
trucks to transport the product to the truck scale for the measuring of the mass.
The measurements must be made in kg.

For all the mass measurements a recording of the results is preferred (if possi-
ble).

8.3.5.8 Visual monitoring of quality:


In order to determine the quality of the scrap, then s visual evaluation must be
made. The evaluation must be made on the following parameters:
Quality (The quality can be determined by sorting and describing the
content of the scrap. Eg. distribution of metal, impurities, type of metal
and type of impurities).
Density (The density of the scrap can be determined by weighing the
scrap in a controlled volume).

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NAMA proposal for the steel sector in Bangladesh
Size (size need to be described by weight, geometry and other charac-
ter).

8.3.5.9 Measuring program and activities

Time line Description of the activity


Project preparation The project must secure that all relevant part-
ners are informed about the activities.
The project must assist the site preparing for the
measurements.
The project must make a logistic plan together
with the site for the measuring period is going to
be conducted.
Site preparation All workers involved direct or indirect in the
measurement must be informed about the activ-
ities.
The workers must be prepared for that the pro-
duction time can be extended on the days of the
measurements.
A scale must be installed on the furnace roof to
measure the additives.
A scale must be installed on the casting floor to
measure the losses and the slag.
There must made room on the furnace roof for
the batches to be measured.
Installation/preparation An electrical meter must be installed on site by
of measuring equip-
an external company. The meter must as a min-
ment
imum measure the effect [kW], time [s] and en-
ergy [kWh]. The company must prepare a report
that contains the effect over time and the total
energy consumption for each batch.

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NAMA proposal for the steel sector in Bangladesh
Day one-four (prepara- All workers must be instructed.
tion)
Equipment must be installed.
Arias for scrap batches must be cleared.
Batched for the first measuring day must be
prepared.
The furnace roof must be cleared so only the
actual batch can be positioned.
Day five Measurements on 75 % of full production must
(measuring)
be conducted
Batched for the second measuring day must be
prepared
Day six Measurements on 100 % of full production must
(measuring)
be conducted
Batched for the third measuring day must be
prepared
Day seven Measurements on 100 % of full production must
(measuring)
be conducted

Day eight All the temporary installations etc. is being re-


(Rea-establishing site)
established

Table 12. Proposal measuring programme.

The tables below (13-15) shows and example on how data from each batch can
be collected.

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NAMA proposal for the steel sector in Bangladesh
The tables 13 to 15 are examples of how data from each batch can be collected.

Because the energy consumption is related to the mass then the specific value
of energy per mass of output must be calculated. This value can also be used to
bench mark with similar productions.

By collecting a sample of batches then the mean values for the previous and
new situation can be compared on a specific basis. The deviation of the specific
values must then med used to calculate the savings and other co-benefits.

8.3.6 Investment and maintenance costs


In Bangladesh there is no tradition for heat recovery and therefore the total
budget costs for the systems are not yet known. Budgets for the pilot project heat
recovery system will be used as an indicator for the project costs.

Investment:

Consultancy services for preparation and implementation: 6,500 Euro

Construction work and equipment: 65,000 Euro

Yearly operational and maintenance costs:

Consultancy services for operation and maintenance: 150 Euro/year

Maintenance costs 3,000 Euro/year

Yearly savings(if the production is based on electricity) 28,254 Euro/year

Simple payback (electricity) 2,78 years

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NAMA proposal for the steel sector in Bangladesh
With a total number of steel producers in Bangladesh of 300 and assuming that
the above case is a representative case of an average steel producer in Bangla-
desh, then the total investments and savings will be:

Investment 21.45 mio. Euro

Yearly savings 7.3 mio. Euro

91,000 tons CO2

As can be seen from the above figures the potential for heat recovery is even
higher. It is expected that the recovery system can be improved further towards
the theoretically possible. The investment is expected to decrease if the system
will be produced on a commercial basis and in a standard setup. The project
have an expected lifetime on 10 to 15 years depending on the level of maintains.

8.3.7 Barriers
The following barriers have been identified for this specific type of project pro-
posal:

Conservative sector

Pilot technology

Change of focus from direct financial return to indirect financial return in


terms of energy and environment.

Probably a need to optimize laws and regulation

8.3.8 Toolbox
Description pro- Heat recovery on induction furnace. The purpose of this
posed initiative project is to recover heat from the furnace opening to
preheat the incoming scrap. The scrap is transported
counter flow to the fumes from the furnace. The hot fumes
are heating up the cold incoming scrap.

Actual situation Heat recovery system on induction furnaces is not used in


any of the many melting shops in Bangladesh. The main
reason for this is that the melting technique is a relative
old and inefficient method and therefore no recovery sys-
tems has been develop for that melting method.

CO2 emission re- If implemented on all the melting shops (approx. 300) the
duction savings will be in the magnitude of 91,000 tonne of CO2
per year.

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NAMA proposal for the steel sector in Bangladesh
Cost If implemented on all the melting shops (approx. 300) the
total investment will be in the magnitude of 19.5 mio. Eu-
ro.

Pay-back time The simple payback with the current figures will be 2.78
years.

Table 16. Heat Recovery on Induction Furnace

8.4 Optimisation of the reheating process Waste heat recovery from


the reheating furnace

8.4.1 Introduction
The purpose of this project is to utilise the energy content in the off gas from the
reheating process to preheat the incoming combustion air. In Figure an illustra-
tion of a combustion air preheating system is shown. These systems are often
referred to as regenerative heat exchanger. This type of system has been intro-
duced in Bangladesh through different initiatives funded by various international
donors. According to (ref: Bangladesh, Roadmap for Energy Efficiency Improve-
ments and Demand Side Management, Dhaka, September 2009) only a very
small part of the reheating furnaces are modern mill, which indicate that there
are room for further improvements.

Figure 11. Air preheating with recovered heat from off gas

8.4.2 Project description


When a combustion process is taking place, then a part of the energy content
released by the combustion process is used to heat up the passive components
in the combustion air (all others then oxygen). By preheating the combustion air
then these components, takes up less amount of energy from the combustion
process.

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NAMA proposal for the steel sector in Bangladesh
The amount of passive components in air accounts for approximately 79 vol-%,
meaning that 79 vol-% of the volume flow dont contribute to the release of ener-
gy, but are only passing through the reheating furnace. To secure a full combus-
tion the combustion is normally run with an over stoichiometric combustion,
which result in an extra flow of passive components, but also of oxygen that is
not being burned.

By letting off gas pass through a heat exchanger counter flow to the combustion
air. Then waste energy is used to heat up the passive components and the sur-
plus of oxygen to a certain temperature, which will then reduce the consumption
of natural gas for that purpose.

8.4.3 Example of savings


Theoretical example of an air pre-heating systems
When looking at the mass stoichiometric ration between air and natural gas then
it is approximately 17. So for a stoichiometric combustion of 17 kg natural gas 17
kg of atmospheric air is needed (it is often seen that the combustion process is
over stoichiometric which means that the process runs with an air surplus). With
an over stoichiometric combustion the additional air will be heated without any
positive output and therefor this will also contribute to the additional heat losses
through the chimney.

With the following assumptions the magnitude of energy saving can be calculat-
ed:
Stoichiometric combustion
Air preheat to T = 400 C
Ambient air temperature of 20 C

( )

Base on the above assumption it is possible reach an energy saving of approxi-


mately 13 %. There is a potential that the energy saving can be increased even
further, partly because the process is likely over stoichiometric and partly be-
cause that in most cases there is a potential of preheating the air to a higher
temperature because the off gas temperature is in the range of 650 - 750 C and
in some cases even higher.

Practical example of an air pre-heating systems

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NAMA proposal for the steel sector in Bangladesh
Two studies have been made in Bangladesh, with regards to air preheat. One is
xxii
a general study (study one) and one is based on experience from 14 installa-
xxxi
tions (study two)

Study one
The study states that a saving of 28-33% can be achieved by installing the air
preheating system. The savings result in a reduction in gas consumption of 25
3
Nm /ton, which is equivalent to 243 kWh/ton. The investment is estimated to be
euro 14,894 (USD 20,000).

Study two
This study states that a saving of 31 % can be archived by installing the air pre-
heating system. In the cases shown in the article this is equivalent to an averag-
3
es saving of 19.8 Nm /ton, which is equivalent to193 kWh/ton. The investment is
estimated to be euro 4,692 (USD 6,300).

By looking at the information above and using average values, then the potential
savings is in the magnitude of 30 % which is equivalent to 218 kWh/ton steel and
12 kg CO2/ton steel. With the reference production this will have a yearly carbon
saving 192 ton, an energy cost saving of euro 29,000 and an investment of euro
9,800. In both the cases above the simple payback will be less than one year.

Specific saving Unit


Energy 218 kWh/ton steel
Carbon 0,012 Ton CO2/ton steel
Table 17. Estimated savings with product preheat

8.4.4 Co-benefits
Besides the obvious energy and carbon savings there are also a relative big
saving in product due to the reduction of scale losses. The scale losses have an
estimated economic value in the same magnitude as the energy savings.

8.4.5 Measurements and monitoring


In order to measure and monitor the savings one must be able to measure the
product and the gas consumption both before and after the installation of the air
preheating system. Individual meters are not common and therefore it must be
expected that permanent meters should be installed. By having the permanent
meters it is possible measure on one specific batch in order make detailed inves-
tigations and it is also possible to monitor the system over a period of time.

8.4.6 Investment and maintenance costs


The investment are in the two studies varying from euro 4,692 to euro 14,894.
Compared to the savings both investments have a simple payback less than one
year. The air preheating system is thermodynamic systems with no additional
moving parts. The performance of the system is depending on the performance

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NAMA proposal for the steel sector in Bangladesh
of the heat exchanger, which is affected by fouling, corrosion and other defects.
This can be monitored by the following the specific gas consumption. The added
heat exchanger could increase maintenance cost. It is estimated that a service
check must be performed with an interval of 6 month to a year or if the specific
consumption decreases. The service check is estimated to cost euro 1,560 per
year.

Investment:

Estimated consultancy services for preparation and implementation: 1,489 Euro

Construction works and equipment: 4,692 14,894 Euro

Yearly operational and maintenance costs:

Consultancy services for operation and maintenance: 100 Euro

Maintenance costs 1,560 Euro

Yearly saving 16,000 Euro/year

Sample payback (study two) 1.14 years

The lifetime for the project is expected to be 15 years.

8.4.7 Barriers
See the chapter about barriers and bottlenecks

8.4.8 Toolbox
Description pro- Installing at air preheating system on the reheating fur-
posed initiative nace.

Actual situation Some of the companies have installed air preheating sys-
tems, but here are still sites without.

CO2 emission re- If the savings is archived on all 300 sites in Bangladesh
duction then the yearly carbon saving will be 57,721 ton. Because
the air preheating systems is already installed on some
sites the saving will be less.

Cost The total investment will be euro 4,915,000 if installed on


all 300 sits.

Pay-back time The simple payback is 1.15 year

Table 18. Installation of a preheating system

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NAMA proposal for the steel sector in Bangladesh
8.5 Combustion and feed control system

8.5.1 Introduction
Often there are no control or regulation systems on the reheating furnace. The
reheating furnaces parameters are regulated once and then the system is run-
ning with fixt parameters. If the system is trimmed properly form the beginning
then the system is running optimally until some of the parameters for some rea-
son are changed. The changes will decrease the optimised trim of the system.

8.5.2 Project description


The purpose of this project is to introduce a control system that can control the
process as a function of the input and output parameters and then optimise the
process accordantly. The input parameters are:
Product feed
Gas flow
Air flow
Oxygen content in the off gas
Off gas temperature
Furnace temperature

Based on the input and a number of boundaries then an iterative process is


started in order to adjust the product feed, gas and air flow into an optimal ratio.
An illustration of the system can be seen in the following figure.

Figure 12 combustion and feed control

8.5.3 Example of savings


By implementing combustion and feed control systems the saving is estimated to
approximately 10 %, depending on the individual site conditions. In this example
it is assumed that variable speed drive is installed on the product feed screw and
the air blower and a control system including all measuring system. It is assumed
that the existing burner can modulate the gas flow and additional oxygen is not
included.

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NAMA proposal for the steel sector in Bangladesh
The 10 % is equivalent to 61 kWh per ton of product, which is equivalent to a
yearly saving of 8,170 euro per year. The investment is estimated to eu-
xxii
ro18.900. .

Specific saving Unit


Energy 61 kWh/ton steel
Carbon 0,012 Ton CO2/ton steel

Table 19. Estimated savings with product preheat

8.5.4 Co-benefits
By installing feed control then the capacity of the reheating furnace then the ca-
pacity of the furnace will increase, because the production time will be reduced.
A reduction in production time will also reduce the scale losses. Scale losses can
be as high as 6 %, which can be reduced with op to 32 % which in our reference
example will give a yearly cost saving about euro 98,000.

8.5.5 Measurements and monitoring


The control system must be able to read out key point indicators (KPI) for the
system. The indicators must show gas consumption per product, oxygen content
in the off gas. Thiess KPIs can vary with in a defined boundary and if the KPIs
exceeds thesis boundaries then action must be taken in order to trim the system.

8.5.6 Investment and maintenance costs

Investment:

Estimated consultancy services for preparation and implementation: 1,890 Euro

Construction works and equipment: 18,900 Euro

Yearly operational and maintenance costs:

Consultancy services for operation and maintenance: 100 Euro

Operational and Maintenance costs 1,560 Euro

Yearly savings 4,036 Euro/year

Sample payback 8.75 years

The expected lifetime for the project is 15 years.

The maintenance costs is assumed to be in the same magnitude as the air pre-
heating project which is euro 1,560 per year.. If the other benefits shuts as scale

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NAMA proposal for the steel sector in Bangladesh
losses and increased production are included then the simple payback will be
less than one year.

8.5.7 Barriers
See the chapter about barriers and bottlenecks.

Besides the listed bottlenecks the installation and trimming of the control system
requires special skills in programming and combustion techniques.

8.5.8 Toolbox
Description pro- Installation of feed control system that secure minimum
posed initiative gas consumption, a maximum production capacity and an
optimal combustion.

Actual situation Only modern sites have this application today.

CO2 emission re- If the savings is archived on all 300 sites in Bangladesh
duction then the yearly carbon saving will be 16,285 ton.

Cost The total investment will be euro 6,237,000 if installed on


all 300 sits.

Pay-back time The simple payback is 8.75 year

Table 20. Installation of feed control system.

8.5.9 Other ways of optimising the reheating furnace.


In the following section a number of different ways of optimising the reheating
furnace is listed and shortly described.

8.5.9.1 Optimising existing air preheating systems


During several visits to different sites in Bangladesh, it has been discovered that
some of the existing air preheating systems where not running optimally. This
was discovered because at high temperature in off gas chimney where meas-
ured (130-180C).This indicates that there is still room for improvements.
The following activities can improve the efficiency of the system:
Cleaning the system so fouling in the heat exchanger is reduced.
Inspection of leakages in the heat exchanger and repairing if any
Extending the heat transferring area
Evaluating the ration between air, gas and product

8.5.9.2 Regenerative burner


As an alternative to the air preheating system a regenerative burner can be in-
stalled. The regenerative burner has two ceramic regenerators that are heated
up by the exhaust gas. During the combustion one side of the burner combust
fuels while the other side accumulates the exhaust heat into the heat recovery
generator. After a period of time then the burner switch so the one accumulating

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NAMA proposal for the steel sector in Bangladesh
heat combusts the fuel and the other now accumulates the exhaust heat. An
illustration of the burner can be seen in Figure .

Figure 13. Regenerative burner

8.5.9.3 Oxyfuel burners


An Oxyfule system is a system where nitrogen is eliminated as ballast in the
combustion and heat transfer process by replacing the air with industrial grade
oxygen. By using oxygen then the fossil fuel consumption can be reduced by up
to 50 percent and reduces CO2 levels correspondingly.

NOx levels can also be kept low, as there is no nitrogen in the oxy-fuel combus-
tion process.

Furnace control is good, and the flame temperature of modern oxyfuel burner
technology is lower.

Furnace throughput can be boosted by up to 50 percent, providing extra produc-


tion capacity, which can be used to concentrate production and better accom-
modate peak volumes and maintenance activities.

Oxy-fuel installations are powerful and space-efficient and are thus easy to retro-
fit in any existing furnace, requiring less maintenance compared to air-fuel sys-
tems with ventilator fans, bulky flue gas systems and recuperators.

8.5.9.4 Product preheat


The idea of the project is to use the off gas to preheat the incoming bar or plates
(could also be used after the air preheater). The bars and plates are reheated
from ambient temperature to etc. 600 C. The off gas temperature from the re-
heating furnaces can be as high as 400 C.
The saving potential can be estimated to about 5 % of the natural gas consump-
tion in the reheating furnace.

8.5.9.5 Minimising heat losses from the reheating furnace


The idea here is to minimize the heat losses from the furnaces by improving the
insulation and reducing openings. During several investigations in Bangladesh it

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NAMA proposal for the steel sector in Bangladesh
was found that the insulation of the furnaces where in a bad condition or not
existing. Furthermore there were found several direct openings to the furnace
chamber. Reducing the heat losses for the furnace is relatively easy and the
investment is limited.

8.6 Training program

8.6.1 Introduction
The purpose of the training program is to educate staff at different level on how
to optimise the production in terms of energy efficiency, environment, health &
Safety and capacity.

8.6.2 Project description


Each training program must be tailor made for each site because there is a varia-
tion in how the production is handled and the state of the equipment from site to
site. Many of the improvements that will be implemented can be replicated from
site to site, if they are adjusted to the individual site conditions.
The training program must be made at different levels which addresses staff at a
level where there decisions effects the production. Each level of staff must be
addressed with a different approach in order for them to be able to relate and
adapt to the content of the training. It is crucial for the long term success of the
training program that the training is presented in a way that the staff understand
the purpose of conducting the different activities and therefore the staff must be
approached in different ways. The staff can be categorised in three different
categories:
1. Managing director
2. Site manager
3. Daily workers

Managing director
The managing director approached to new changes is how much will it costs
and what are the benefits. The managing director needs to be involved in the
overall decisions for the planned activities and possible investments. It is im-
portant that he backup all the initiatives.

Initially it is suggested that the site managing director should spend a day on the
site together with the training project team showing the workers and the site
manager that he/she is involved in the training program.

When the training program is finished it is important to discuss all measures with
the managing director and show them any benefits and investments. The man-
aging director are the only one who can decide which measures that can be
implemented afterwards therefore the site managers are the most important
player in the program and they need to be secure in the program and savings.

The managing director must be presented with recommendations that is sup-


ported with figures savings (and other benefits) and investments.

Site manager

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NAMA proposal for the steel sector in Bangladesh
The site managers approached to new changes is why do it. The site manager
is in charge of the daily operation on site. The site manager plays an important
role because their job is to make sure that the workers are following the different
activities in the daily work. The site manager doesnt need to know the exact
savings potentials but need to understand why this measure should be done. For
instance; they need to know that it is essential to wear a helmet to improve
health and safety.

The site manager must be presented with simple drawings illustrating why the
activity is done and how.

Workers
The workers approached to new changes are how to do it. The daily workers
are the peoples with the lowest level of education many of them have never
been to school. Therefore it is important that they understand precise what to do.
It is important that the actives are presented directly at site and shown by the site
manager supervised by the training team.

The new changes in routines and/or new equipment must be presented to the
workers by illustration and by training on site.

Training team
The training team must consist of experienced training team leader from a local
or international (if an international consultant is leading the team, then a local
consultant partner is needed) consultant company and one or two staff members
from the steel company (at a site manager level).

8.6.3 Example of a training program


If the training program should be successfully conducted it is important that all
three partners in the training team work together as a team.

Preparation stage
Step 1: Site visit is conducted and a screening list is developed on the
basis of that.
Participants: Training team
Step 2: Draft training program is developed.
Participants: Training team
Step 3: Draft training program and potential investments is presents to the
managing director and adjustments are made in order to meet the
steel companies ambitions.
Participants: Training team and managing director
Step 4: The details of the training program and investments are planned.
Participants: Training team
Step 5: Training program and investments are presented to the site man-
ager
Participants: Training team, managing director and site manager

Making investments
Step 6: Investments are been made, under supervision from the training
team and local suppliers.
Participants: Training team, managing director and site manager

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NAMA proposal for the steel sector in Bangladesh
Conducting training program
Step 7: Training of the site manager is being conducted
Participants: Training team and site manager
Step 8: Training of the workers
Participants: Training team, site manager and workers

Evaluation of training
Step 9: Evaluating the outcome of the training activities
Participants: Training team

Step 10: Presenting the evaluation and giving recommendations to future


activities.
Participants: Training team, managing director and site manager

The outcome of the training program is difficult to predict because of the variation
in the conditions from site to site. In the table below are listed different activities
an impact on the different measures.

The effect of each measure


Health & Environ-
Measure no. Capacity Energy
Safety ment
General
Using safety equipment X
Dividing the working area in two
zones with different requirements X
regarding safety.
Introducing routines for evaluat-
ing different parameters with a X X X X
certain frequency (Year wheel)
Scrap year
Using the magnet to sort the
X X X
scrap
Sorting the scrap and organizing
X X
the scrapyard
Melting and casting
Collecting and reuse of oil for
X
greasing the casting molds
Optimizing the control of the fur-
X X X
nace
Off gas cleaning system (scrub-
ber system installed primo De- X X
cember 2013)
Continuous casting process X X
Decrease the number of minutes
X X
between every tap

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NAMA proposal for the steel sector in Bangladesh
Moving the blower on top of the
X X
furnace
Installing a shredder or a Share to
size the scrap to optimal heat X X
recovery and capacity.
Adjusting the fan motor in the
X
suction pipe the actual demand
Utilization of water cooling
Feed stock control system X X
Re-rolling
Feed control X X
Reducing heat losses X X
Installing or optimizing existing
X X
heat recovery system
Table 21. Suggested measures

During an evaluation on a production site it was estimated that a training pro-


gram will result in a saving that is equivalent to half of the specific savings that
can be archived by the scrap preheating. This is equal to 325,000 kWh/year,
which is equivalent to a financial saving of 20,674 euro/year. Depending on the
extent of the training programme and whether international consultancy is in-
volved then the cost of the training program will cost EURO 5,000 - 15,000..

8.6.4 Co-benefits
Besides the direct measurable benefits then the staff level of education will be
raised. The mind-set of the staff will be change in a way that they will start to
think about the positive effects of improvements. In a long terms perspective this
will secure that the optimisation initiative is maintained and maybe others are
developed and conducted.

8.6.5 Measurements and monitoring


Depending on the specific activities that are conducted then specific measuring
and monitoring setups will be conducted. As an overall measurements the spe-
3
cific consumptions can be measured on a site level, eg. Nm gas per ton product
and kWh electricity per ton product.

8.6.6 Investment and maintenance costs


In order to secure that a high performance is kept then the training program must
be repeated with a certain frequency. This must be done to educating new staff
and also to evaluate the site in the light of new technology and/or boundary con-
ditions. The cost of repeating the training program is in the order of 3,000 to
5,000 euro depending on whether national or international consultants are used.
For the estimates below it is assumed that the training is conducted by interna-
tional consultants once every year.

Investment:

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NAMA proposal for the steel sector in Bangladesh
Consultancy services for preparation and implementation: 1,500 Euro

Construction works and equipment: 5,000 15,000 Euro

Yearly operational and maintenance costs:

Consultancy services for operation and maintenance: 250 Euro

Maintenance costs 3,000 5,000 Euro

Yearly savings for electricity based production 20,674 Euro/year

3
Simple payback 1.07 years

For gas-based production the yearly operational cost exceeds the yearly sav-
ings.

8.6.7 Barriers
See the chapter about barriers and bottlenecks.

The steel sector in Bangladesh is a conservative sector and therefore it can be


difficult to introduce new ideas and technology.

The educational level is also low and some of the staff has never been given any
education. This can give some educational challenges.

8.6.8 Toolbox

Description pro- The purpose of the training program is to educate staff at


posed initiative different level on how to optimise the production in terms
of energy efficiency, environment, health & Safety and
capacity.

Actual situation Training of staff is very limited. It is often learning by do-


ing.

CO2 emission re- Depending on the actives


duction

Cost Depending on the actives

Pay-back time Estimated to 1.07 years.

Table 22. Training programme

3
The simple payback is calculated based on the maximum estimate for investment and
Yearly operational and maintenance costs

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NAMA proposal for the steel sector in Bangladesh
9 BASELINE
The basis for setting up a proper baseline is to have a well-developed strategic
planning and political decision making on climate change mitigation. Furthermore
it needs to be based on robust analysis of currents past development and future
trends of the greenhouse gases (GHG) emissions. In order to calculate the
emissions reductions from a NAMA, a business-as-usual (BAU) scenario needs
to be developed that covers the entire period for which the NAMA is scheduled to
be implemented. The BAU scenario would reflect the development of GHG
emissions in the absence of the NAMA.

At the time of writing, there is no officially widely accepted definition of BAU


scenarios for NAMAs. This is due to the fact that there are no rules for NAMA
development defined by the United Nations Framework Convention on Climate
Change (UNFCCC), and thus every government developing a NAMA is free to
choose its BAU scenario as it wishes, and to report it in their National Communi-
cations and the forthcoming Biennial Update Reports. Therefore it is needed to
discuss different definitions of BAU that have been used in international climate
policy in order to derive an approach to BAU definition for the NAMA in the steel
sector in Bangladesh.

According to the Intergovernmental Panel on Climate Change (IPCC), an a


(BAU) emission scenario is a plausible representation of the future development
of emissions of substances that are potentially active based on a coherent and
internally consistent set of assumptions about driving forces (such as demo-
graphic and socioeconomic development, technological change) and their key
relationships (IPCC, 2006).

The situation is made more complex by the existence of the concept of base-
line that is often used interchangeably with BAU. We follow this usage while
acknowledging that Although the definition of BaU scenario and baseline may
differ under particular circumstances (e.g. when the baseline is more stringent
than BAU, for example in the context of market mechanisms ).

In this study it will not be possible to define the baseline as this will require an in-
depth study and a high-level political process in Bangladesh.

Therefore at this stage there can only be few recommendation which could be
the starting point when setting up a proper baseline.

The first issue should be transparency. The baseline scenario could be defined
as a scenario that describes future greenhouse-gas emissions levels in the ab-
sence of future, additional mitigation efforts and policies , while the United Na-
tions Framework Convention on Climate Change (UNFCCC) defines the base-
line scenario - for Clean Development Mechanism (CDM) and Component Pro-
ject Activities (CPA) projects - as a scenario that reasonably represents the
anthropogenic emissions by sources of GHG that would occur in the absence of

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NAMA proposal for the steel sector in Bangladesh
the proposed CDM project activity or CPA. This definition does not really clarify
the approach, but fortunately, over time the following principles for baseline set-
ting could be: Transparency, Conservativeness, Internal consistency, Appropri-
ateness and adequacy of calculations/assumptions, Accuracy, measurability and
reliability of data and Limitation of uncertainties

The second point could be conservativeness which tries to prevent an overesti-


mate of key parameters it does not resolve the problem that development of any
parameter is difficult to predict, especially in the long run. A forecast that is seen
as conservative by one observer might be seen as highly optimistic by another
one. Therefore, a credible process of selecting the sources of parameter values
is crucial. Parameters could be:

- defined by official development plans of the government (which


often might be too optimistic)

- forecast by international institutions (which are less likely to be too


optimistic, but might be unrealistic due to lack of specific country knowledge)

- forecast by independent stakeholders in the country (researchers,


local financial institutions), which may be the least biased source.

The steel sector is expected to be booming in the coming years, so there is a


potential for higher CO2 emissions in a future scenario and therefore it should be
decided which scenarios should be developed and to set-up the baseline trends
in future scenarios, for instance 2020, 2030 and 2050.

Setting a baseline for a NAMA is an eminently political exercise. Choice of a


stringent baseline will mean that the NAMA generates less greenhouse gas miti-
gation than if a lenient baseline is chosen. However, a lenient baseline may low-
er the credibility of the host country and reduce the likelihood that the NAMA
receives support from industrialized countries or that it could generate emissions
credits under the new market mechanism/framework for various approaches.
The government should therefore assure that BAU development is done in a
conservative and transparent way.

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NAMA proposal for the steel sector in Bangladesh
10 COST ESTIMATES AND ECONOMIC ANALYSES IN THE STEEL
SECTOR

10.1 Introduction

During this preliminary study it can only be a very rough estimate of the potential
in the CO2 emission reductions partly due to limited information of the number
and specific characteristics of the individual steel mill. Furthermore the mitigation
actions at a site is very dependent on the characteristics of the specific mill.

In the Bangladesh Roadmap for Energy Efficiency Improvements and Demand


Side Management pages 50-51 and 62 the mitigation potential and a cost esti-
mate has been done for part of the steel sector and only part one steel mill.

Through above roadmap the technology used for steel rod making the following
interventions have been identified to increase energy efficiency: 1)Installing a
recuperator 2) Increasing insulation on furnace and 3) Installing flue gas analyzer
and Programmable Logic Controller (PLC) control. A recuperator is basically a
gas-gas heat exchanger that utilizes heat of the exhaust gases from the reheat-
ing furnace to preheat the air used in the combustion of natural gas in the fur-
nace. Thus, the recuperator functions as a heat recovery unit. High quality insu-
lation helps to cut down radiation losses from the furnace wall. A flue gas ana-
lyzer determines the excess air level of the exhaust gas. Along with a program-
mable logic controller the flue gas analyser helps in optimizing the air-fuel ratio
so that complete combustion at minimum excess air can be obtained. It is ex-
3
pected that the retrofit would result in reducing the SEC by 25 m per Ton of
steel rod.

A project that will retrofit 50 steel re-rolling mills by installing the above men-
tioned items is envisaged. The investment required to retrofit a typical mill is
given below: Recuperator with all piping - $ 20,000 Insulation - $ 10,000 Measur-
ing equipment and Controllers - $ 20,000 Investment for one mill: $ 50,000; The
total investment cost for the 50 steel re-rolling mills $ 2.5 million.

Option Steel Re-rolling Mill (50 mills)

Investment (Million US$) 2.5

Project Life (Year) 15

Energy Saving per Year 0.353 BCF

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NAMA proposal for the steel sector in Bangladesh
CO2 Reduction (Ton/year) 19,000

CO2 Reduction over Project Life (Ton) 285,000

$/Ton-CO2 8.77

Potential per Year 1.06 BCF

Table 23. Results study re-rolling mills.

The above study is the most developed in the steel sector in Bangladesh.

10.2 Economic analyses


This section assesses the economic flow on a pre-feasibility level. Based on the
preliminary findings, the section includes estimates for the total capital (CAPEX)
and operational (OPEX) expenditures, and the generated savings presented in
section 8.

Based on this, the preliminary value of the project in terms of the net present
value (NPV) and internal rate of return (IRR) are calculated. A baseline analysis
is carried out along with different sensitivity analysis for installation in a single
mill. For the Waste heat recovery from the reheating furnace and the Combus-
tion and feed control system projects, the cost and NPV for the investments are
also calculated on a sector level. For the Waste heat recovery form induction
furnace project and the Training program the NPV and IRR are only calculate in
the case where electricity form the grid is used. The case with own power pro-
duction will be addressed below, but not calculated. The 15 auto mills are not
included in this analysis. The gas and electricity price are subject to some uncer-
tainty - especially the electricity price for electricity form own power production.
Therefor the NPV and IRR for Waste heat recovery form induction furnace and
training program are only calculated for mills without own power production.

The NPV and financial flow for the single investments and all four investments
together can be found in annex C.

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NAMA proposal for the steel sector in Bangladesh
10.2.1 Data assumptions

The calculations are based on constant prices of 2013 in Euro. This implies an
inflation-free analysis. Taxes, customs and duties are included in the analysis. A
4
10 %. real discount rate is used .

For the economic analysis the cost estimate from Vikrampur is used. In the base-
line the costs for all mills are identical to the cost of Vikrampur.

Financing plan: The analysis contains two different financing scenarios. In the
baseline case the projects are assumed to be 100 % self-financed, whereas the
second scenario assumes that 80 % of CAPEX will be financed by loans. The
loan disbursal is done in the preparation and implementation period. The repay-
ment period follow the expected lifespan of the projects. A real interest rate at 5
%. are used. Principal repayments are assumed to be annual and divided equal-
ly over the term and to be made at the end of the year.

The CAPEX includes the investment costs described in section 8 for the 4 pro-
jects and the cost of technical assistance. The price of technical assistance is
assumed to 10 % of the investment costs.

OPEX includes the yearly cost described in section 8, and interest rate pay-
ments. For the training project it is assumed that it is necessary to conduct a
retraining every year to maintain the yearly saving in electricity.

The revenue consists only of the electricity and gas saved from the 4 projects.
Effects like increased capacity are excluded. The price of electricity and natural
gas is assumed to be at its current level. This is given in section 6.7 a rather
conservative estimate.

The projects are estimated to be developed over two years, starting with prepa-
ration in 2014, and implementation in 2015. The lifespan of the projects are set in
accordance with section 8. The financial flow of the first waste heat recovery
project is depicted in figure 14 below.

4
In accordance with the discount rate used by the Ministry of Environment and Forests in
the rapport Second National Communication of Bangladesh to United Nations
Framework Convention on Climate Change

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NAMA proposal for the steel sector in Bangladesh
Figure 14. Financial flow of the first waste heat recovery project.

All these assumptions are subject to a high degree of uncertainty, therefore


these following sensibility analysis are made:

A 20 %. increase in the electricity price

20 %. increase in both CAPEX and OPEX costs

10.2.2 Budget and financing

Table 24, Project budget overview in EUR is illustrated in below table 24 and it
shows the total costs and savings for the 4 projects separately and for all the
projects in total, given that the projects are implemented on a single mill. A more
detailed spreadsheet overview of the cash flow of the four projects can be found
in annex C. For maintenance the most conservative estimate from section 8 are
always used.

Waste heat Waste heat


Combustion
recovery recovery
and feed Training
form induc- from the Total
control program
tion fur- reheating
system
nace furnace

Consultancy services for prepa-


6.500 1.489 1.890 1.500 11.379
ration and implementation

Construction work and


65.000 14.894 18.899 15.000 113.793
equipment
CAPEX 71.500 16.383 20.789 16.500 125.172
Consultancy services for opera-
150 100 100 250 600
tion and maintenance
Operation and maintenance 3.000 1.560 1.560 5.000 11.120

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NAMA proposal for the steel sector in Bangladesh
Total OPEX 3.150 1.660 1.660 5.250 11.720

Annual electricity savings 28.854 - - 20.674 49.527

Annual gas savings - 15.966 4.036 - 20.002

Revenue 28.854 15.966 4.036 20.674 69.530


Table 24, Project budget overview in EUR

10.2.3 Results
The table 25 below shows the financial performance of the four projects in a 100
% self-finance scenario. The Net Present Values are positive for all projects ex-
cept for combustion and feed control system project. The project has an IRR on
8 % which is just below the discount rate. It is worth noticing, that with a 20 %
increase in the gas price or a 20 % decrease in the CAPEX and OPEX the NPV
for the Combustion and feed control system turns positive.

Waste heat Waste heat


Combustion
recovery recovery
and feed Training
form induc- from the
control program
tion fur- reheating
system
nace furnace

NPV 70.900 76.266 -2.400 71.734


Baseline
IRR 33% 81% 8% 106%
CAPEX
NPV 55.775 71.446 -7.954 56.479
and OPEX
20 %
IRR 26% 67% 3% 68%
higher
CAPEX NPV 86.025 81.086 3.154 72.647
and OPEX
20 % lower IRR 43% 102% 14% 113%
Electricity NPV 100.205 96.339 2.675 85.559
and natural
gas prices
20 % IRR 41% 98% 13% 108%
higher
Table 25, Financial Performance (EUR), Self-financed scenario

The table 26 below shows the financial performance of the four projects, if they
are 80 % of the investment cost are financed by loan with a 5 % real interest
rate. Now all projects have a positive NPV even the Combustion and feed control
system with an IRR on 14 %. The project is sensible to a 20 % increase in
CAPEX and OPEX. It should be noted, if the interest rate moves closer to 10 %,
then the NPV in 80 % loan financed scenario moves closer to the NPV of the 100
%. self-financed scenario.

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NAMA proposal for the steel sector in Bangladesh
Waste heat Waste heat
Combustion
recovery recovery
and feed Training
form induc- from the
control program
tion fur- reheating
system
nace furnace

NPV 80.443 79.034 1.113 73.936


Baseline
IRR 110% 306% 14% 405%
CAPEX NPV 67.226 74.768 -3.739 59.121
and OPEX
20 % IRR 82% 252% -4% 248%
higher
CAPEX NPV 93.659 83.300 5.965 74.408
and OPEX
20 % lower IRR 151% 380% 37% 411%
Electricity NPV 109.748 99.107 6.187 87.761
and natural
gas prices
20 % IRR 143% 366% 32% 393%
higher
Table 26, Financial Performance (EUR), 80 % loan financed scenario

The below figure shows the savings per ton CO2 reduced for the projects exclud-
ing the training program, because the CO2 reduction for the training program is
difficult to quantify.

450
400
350
300
Euro/ton CO2

250
200
150
100
50
0
-50
-100
Waste heat Waste heat Combustion Total
recovery form recovery from and feed
induction the reheating control system
furnace furnace

Figure 15, Euros saved per ton CO2 reduced for the projects

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NAMA proposal for the steel sector in Bangladesh
11 OVERVIEW MITIGATION POTENTIAL AND COST ESTIMATES
BASED ON THIS SURVEY

The cost of implementing a NAMA is very much dependent on the boundary of


the NAMA and furthermore it is also very dependent on the number and type of
mitigation actions proposed.

The economic analyses in this study is limited to four important actions at a steel
works in Bangladesh.

Assuming that the four projects are implemented at all the 300 steel mills the
5
total yearly CO2-reduction will amount to 181,291 tonnes . This will lead to a total
investment cost of EUR 37.6 mio.. If the combustion and feed control system is
excluded from NAMA due to its long payback time and negative net present val-
ue, the yearly reduction in CO2 will amount to 165,000 tonnes with a total in-
vestment cost of EUR 31.3 mio. If the 4 project only are implemented on 200 out
of the 300 steel mills the yearly reduction in CO2 will be 120,860 tonnes and the
total investment cost EUR 25 mio The net present value for implementing the
four project at all the 300 steel mills is EUR 65 mio.

In case all the proposed project ideas in this report are implemented the costs
could be larger than EUR 100 mio.

5
Please note that this includes the CO2-reduction form the training program which is hard
to quantify.

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NAMA proposal for the steel sector in Bangladesh
12 INCENTIVE STRUCTURE

12.1 Introduction
On a policy level there are a significant number of different incentive models
which can enhance the potential number of CO2 emission reductions. This can
best be illustration by a breakdown in sectors.

Sector Policy

Industrial processes Performance standards for electric motors, etc.

Industrial energy use Carbon tax, energy tax, tax reduction for energy effi-
ciency

Waste Regulations

Energy production Feed-in tariff, green credit lines etc

Transportation Fuel efficiency standard

Buildings Building codes, green credit lines, energy efficiency


certificates

Table 27. Policy level incentive models.

In the Steel sector several of these policy measures can be used when establish-
ing a NAMA.

One of the challenges in the steel sector is that it is a domestic sector with nearly
no export and therefore there will be limited international pressure to improve the
environmental and CSR values within the steel sector.

12.2 Discussion
Often the actual measurements and recordings of energy consumption is in the
lower end in Bangladesh compared to expectations. Probably a potential mech-
anism will grant support to a lower consumption per produced unit and therefore
it will not be an advantage to have reported low consumption at this stage. This
is positive to ensure the high credibility of the whole NAMA set-up in the steel
sector in Bangladesh. It can give incentive to offer more reliable data when cal-
culating the baseline for the NAMA in the steel sector.

vii
According to the Second National Communication the Bangladesh Government
has recently declared tax exemption for Solar panels. It should be considered
whether it could be a tool also to develop the steel sector.

vii
According to the Second National Communication page it is also mentioned
that the Bangladesh Government has established soft loan USD 15 million for

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NAMA proposal for the steel sector in Bangladesh
renewable energy projects. Soft loans will definitely support the development
steel sector.

Furthermore the electricity price and natural gas price are low and lower then
often seen on the global market. It should be investigated further whether in-
creased tariffs, carbon tax, can be an incentive to install energy efficiency.

It could be considered to link an incentive to the Specific Energy Consumption


(SEC) in cubic meters of gas per Ton of steel produced. A support system could
be connected to the lower SEC value the higher the support. A threshold could
also be introduced and above/below consequences of the threshold could be
established. Efficient production can be promoted through this incentive model.

Several countries, including Denmark, have established a grant support system


for energy savings.

The establishment of an international carbon trading will attract financing oppor-


tunities for the steel sector and furthermore it will contribute to more focus on the
environment and CSR values.

12.3 Recommendation
Several policy measures can be used to improve the steel mills in Bangladesh.
The following should be investigated further carbon tax, exemption of tax, green
credits lines, performance standard and regulation.

A more detailed investigation is needed to clarify whether performance standards


for different type of equipment could be a way forward.

It should also be investigated further whether a more controlled system of the


scrap collection could support environmental improvements and the energy per-
formance at the steel mills.

There is a significant need for investment funds also, so above initiatives should
be combined with credits lines, so-called green credit lines.

Maybe tax exemption could be a relative straight forward model to promote en-
ergy savings measures.

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NAMA proposal for the steel sector in Bangladesh
13 MRV SYSTEM

13.1 Introduction
As was agreed upon at COP 16 and further defined at COP 17, MRV is a central
component in frameworks for emissions mitigation actions through NAMAs in
developing countries. The key objective of MRV is to increase the transparency
of mitigation efforts made by the developing countries as well as build mutual
confidence among all countries.

In simple terms MRV with regards to the implementation of NAMAs, it is defined


as:

Measurement (M) collect relevant information on pro-


gress and impacts

Reporting ((R) present the measured information in a


transparent and standardised manner

Verification (V) assess the completeness, consistency


and reliability of the reported infor-
mation through an independent pro-
cess.

Table 28. Definition of MRV

13.2 Discussion

Organisation

For Bangladesh it is a priority to develop a MRV based on national authorities to


secure a transparent, reliable, efficient and cost-effective system.

When developing a monitoring system it should be the specific steel mill that
should perform the actual measurements and reporting at the specific mill.

The verification could be based in

1) the Ministry of Environment and Forest, Department of Environment and


the related regional offices of the Ministry.

Or

2) the Ministry of Power, Energy and Mineral Resources

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NAMA proposal for the steel sector in Bangladesh
As stated earlier the Ministry of Power, Energy and Mineral Resources has es-
tablished a new unit and this unit has been named Sustainable & Renewable
Energy Development Authority (SREDA)

SREDA will broadly regulate and oversee the energy efficiency and conservation
activities in industrial, commercial and residential sectors. Furthermore SREDA
will have a possibility to verify energy efficiency measures.

The set-up in these two Ministries will have the following advantages and disad-
vantages.

MOEF, DOE MPEMR, SREDA

Advantage Advantage

An existing administrative set-up and Will be responsible for energy efficien-


responsible for performing the annual cy for instance in steel sector.
environmental certification at the steel
mills.

The Ministry is focal point in the


UNFCCC

Disadvantage Disadvantage

Lack of human resources. The administrative structure is under


establishment. Probably SREDA will
also lack human resources.

Will not have the authority to act for


instance in relation to toxic gases and
the working environment.

Table 29. Different models for an administrative set-up

According to the DOE it is most likely that MOEF will be the responsible organi-
sation. But it should be noted that no formal decision has been taken.

Boundary

The boundary could be the physical boundary of each steel production mill.

Penalties & pass/fail conditions

Existing schemes currently in place all have a pass/fail condition defined. With-
out these conditions, no effective MRV can exist. If there is no consequence of

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NAMA proposal for the steel sector in Bangladesh
failing to meet requirements, verification loses its purpose. However, the effects
xxxii
of the pass/fail conditions can differ.

The specific measurements which could be included in the MRV system

In the presentation of the different mitigation options in chapter 8 possible mod-


els for measurements have been proposed. This should be an input to setting up
an concrete MRV system

It could be an obligation to measure the 1) The electricity consumption, 2) Natu-


ral gas consumption and 3) Tons steel produced. Furthermore it could be pro-
posed to measure the 1) amount of waste, 2) CSR value including working con-
dition, maybe on a voluntary basis. Whether it should be an obligation or volun-
tary need to scrutinized further.

13.3 Recommendation

The NAMA in the steel sector needs to be further defined before the MRV sys-
tem should be further developed. If possible the boundary should be the bounda-
ry of the steel mills

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NAMA proposal for the steel sector in Bangladesh
14 FINANCIAL SUPPORT AND MECHANISMS
This phase of the project is supported by NDF and The Danish Embassy, but it
only covers the initial steps in the NAMA development in the steel sector.

The project does not include a plan for the follow-up after this initial phase. This
section has been included to guide the project after this initial phase as further
financial support is needed.

It can be a long and cumbersome process to secure the financing for the full
scale implementation in one step. Therefore it is recommend to select the most
urgent tasks through bilateral funds which should secure the project is progress-
ing and securing the momentum is not lost. Furthermore it will contribute to a
more focused effort for the full scale implementation of the project.

In the actual carbon market with CDM and the voluntary market project, like Gold
Standard, the main part of the income to the projects have been after implemen-
tation and the projects have been in operation and CO 2 emission reductions
have been monitored and verified. I can be an important contribution in the oper-
ation and maintenance phase, but a mechanism is needed to secure support to
the investments.

The supported NAMA should only to a limited extent support project after they
have been implemented, but it should be noted that this has not been decided.
But having the future possibilities of traded or credited NAMAs in mind these
should also be investigated further.

In the UN climate negotiations it has still not been decided whether a traded or
credited NAMAs will be part of a future regime. In case these type of NAMAs will
be in force in a UN system it will only be after 2020.

For the steel sector it should be possible to quantify and measure actual emis-
sion reductions and therefore it is possible with CO2 trading schemes.

Bangladesh should also focus on this opportunity in developing and supporting a


new market mechanism.

The NAMA in the steel sector in Bangladesh is characterised with a strong com-
mitment in Bangladesh. The project is supported by the DOE, the three steel
associations, Vikrampur and MEL. This gives a good foundation for attracting
funds for implementation in close cooperation with the international partners
Viegand Maage and NIRAS.

The first section below focus on pilots and second section focus on the securing
financing until the full-scale implementation of the NAMA in the steel sector. Both
pilots and full scale can be combined with crediting of CO2 emission reductions,
if suitable.

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NAMA proposal for the steel sector in Bangladesh
Financing for implementation of NAMA
It has been shown that several investments presented in this study are commer-
cial attractive and these can be implemented by having commercial loans. But
this is only happening to a very limited extent in Bangladesh due to different
barriers also presented in this study.

Therefore at this stage it should be considered to attract donor funding as part of


the financial package as an incentive to overcome the different barriers. So at
this stage a package of donor grants and commercial loan should be the most
realistic package. Probably the commercial loans should be administrated
through a set-up in Bangladesh, for instance different banks operating in Bang-
ladesh. Part of the grant component could be structured as a soft loan. A de-
tailed financial package can only be proposed when the NAMA has been further
developed.

Several potential sources administrated in Bangladesh have been investigated


further for pilot projects or maybe full scale implementation 1) Climate Change
Trust Fund (CCTF) and 2) Bangladesh Climate Resilience Fund. During the
stakeholder meeting in May 2014 the DOE evaluated that these opportunities
have limited possibilities due to the timing. Instead the Bangladesh Develop-
ment Bank Ltd) has established a credit line for energy efficiency measures. This
should be explored further in case it is decided to continue the project.

The UN Green Climate Fund must be an opportunity to promote NAMA struc-


tures for a future mechanism and also potential financing of concrete projects.
xxxiii
. Bangladesh has an alternate Board member of the Green Climate Fund

As a grant component is needed potential financial sources, for instance Japan,


UNDP, Denmark, NDF, World Bank. KfW, and others should be investigated
further.

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NAMA proposal for the steel sector in Bangladesh
15 DISCUSSIONS AND ANALYSES

15.1 Organisation of NAMA work in Bangladesh

Until now there has not been taken a formal decision on how the NAMA admin-
istration should be organised in Bangladesh.

The future NAMA development is closely linked to UNFCCC process and there-
fore the NAMA could be link to MOEF, DOE as this institution acting as focal
point for part of the UNFCCC activities, like CDM. Maybe it will be most efficient
for Bangladesh to select only one focal point to coordination of communication
with UNFCCC and for instance individual countries or institutions to secure a
consistent approach from the Bangladesh Authorities.

For any NAMA in Bangladesh the DOE could be involved together all the rele-
vant resort Ministries or other relevant institutions. In case a working group is
established for a NAMA it could maybe be chaired by the DOE.

Maybe the model of CDM in Bangladesh with a two level administration both
National CDM board and National CDM Committee could be simplified to have
only one level as it must be more efficient and cost-effective.

It should be recommended that Bangladesh Authorities clarify issue this in the


nearest future to avoid a delaying process at a later stage.

The organisation of the work is very much the internal business of the public
administration and politicians in Bangladesh. The viewpoint shall only be consid-
ered as inspiration for an efficient administration.

15.2 NAMA Steel building blocks

Recycle Steel pro-


steel waste ducts

Electricity By -
Steel mill
supply products

Gas supply Carbon


footprint

Figure 16. Steel mill supply streams and products.

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NAMA proposal for the steel sector in Bangladesh
In Bangladesh the three main supply streams to a steel mill are recycle steel
waste (scrap), electricity supply and gas supply. The output from a steel mill can
be grouped in three: the steel products, the by-products and then carbon foot-
print in the end products.

The presentation of the building blocks can be an important input when develop-
ing the NAMA including setting up the project boundaries.

Electricity and natural gas consumption - Quality MRV system

The priority is to establish a NAMA with focus on CO2 emission reduction and a
well-functioning and transparent MRV system to ensure high credibility of the
emission reductions for this project.

Therefore on of the focus areas in the NAMA will be the improvement of the pro-
duction facility to less consumption of electricity or natural gas per produced
tonnes steel. The success and credibility of this type of NAMA is dependent on
the local willingness and interest for establishing a functioning Monitoring, Re-
porting and Verification (MRV) system.

Recycle steel waste

In Bangladesh the raw material for the steel production is nearly 100% scrap. It
is important that all the initiatives initiated by the NAMA, also focus on the side
effect related to each initiative. Eg. if an off gas systems including waste heat
recovery and a scrubber is installed, then it is important address how to deal
with:

Waste from sorting the scrap

Slag from the melting production

Slag from the scrubber

Product waste

Waste from casting: Oil and casting moulds

Ect.

If these issues is not addressed then there is a risk that the problems just
move elsewhere.

To limited the handling and secure a high efficiency the as much waste as
possible must be recycled on site.

All the remaining waste streams from the production must be integrated in the

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NAMA proposal for the steel sector in Bangladesh
Other emissions, waste handling and workers environment. - Sustainability
criteria and co-benefits.

The focus on the production facility by improving the energy efficiency has also
significant co-benefits with less emission from the factory and directly improve-
ments in the working environment. Furthermore an improved production will also
minimise the amount of waste. These benefits are difficult to quantify and fur-
thermore the benefits are mainly not CO2 emission reductions. Therefore it is
recommended to report these benefits on a voluntary basis.

Furthermore if other improvements at the mills, for instance installation of filters


on the fumes, Improved CSR values, and so on, it could also be reported to in-
crease the attention and hopefully most often a positive evaluation of the mills.
This should be part of a reporting either voluntary or binding.

These co-benefits should be described as part of the reporting, but it could be on


a voluntary basis, as under the CDM with the recent approved guidelines.

Reporting the voluntary co-benefits should be a model which could attract further
financing for implementing a supported NAMA and it could also increase the
value of any future traded CO2 emission reduction.

Products

As mentioned earlier the output from a steel mill can be grouped in three: the
steel products, the by-products and then carbon footprint in the end products.

The products are mentioned at this stage as it should be considered carefully


how this should be included in a NAMA as it is often overlook to considered
products when developing a NAMA.

Obligation and voluntary

A NAMA should be built up so part of the parameter should be monitored and/or


measured through a systematic detailed procedure and a part could be done on
a more lose and less formal basis.

Obligation Voluntary

The electricity consumption Minimizing the amount of waste

Natural gas consumption CSR value

Tons steel produced Working condition

Table 30. Proposal for measuring both as an obligation and on a voluntary basis

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NAMA proposal for the steel sector in Bangladesh
Administration of MRV system.

The only realistic set-up for monitoring and reporting should be done by the in-
volved steel mill. The data should be gathered by the national authorities with the
mandate to monitor, report, verify and enforce. Using the existing structures this
fits best with DOE , but in the future it can be an advantage to SREDA involved
as it will of the main tasks for SREDA in the future.

If a third party verify is needed this could be done by the World Steel Association
as they have an already established infrastructure. This should be clarified with
the World Steel Association whether it is a realistic opportunity.

Administration of allocated allowances.

After the estimation of the amount of allowances for each steel mill, Bangladesh
could decide a model for allocation and actual distribution of allowances to each
company. Different models can be considered 1) free allocation and 2) auction-
ing.

The allocation model is a country approach and not limited to one specific sector.
This should be addressed in a national context and the same approach should
be for all potential NAMAs in Bangladesh.

Suppressed demand situation

The steel mills in Bangladesh are operating under suppressed demand condi-
tions, for instance due to unstable electricity supply. This should be taken into
consideration when preparing the baseline.

It means that a baseline could be establish based on a theoretical scenario hav-


ing an international function steel plant as a baseline.

Standardised baselines

The above established suppressed demand baseline could also be considered


as a standardised baseline.

15.3 NAMA models in the steel sector

Preferred NAMA approach

The point of departure is to establish a supported NAMA for the steel sector in
Bangladesh. Maybe with potential for developing the NAMA into a sector credit-
ing or sector trading NAMA.

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NAMA proposal for the steel sector in Bangladesh
Many issues can be addressed to improve the conditions at a steel mill in Bang-
ladesh. It could be 1) the electricity consumption 2) natural gas consumption 3)
all the emissions 4) scrap handling system, and 5) improvements for the workers
environment.

It should be a priority to address the main part of the abovementioned issues, but
it should be noted that some issues are better and more efficient to address in a
NAMA than others in order to ensure credibility and an efficient administrative
system. Therefore the focus should be to establish NAMA with a reliable and
relatively easy quantifiable MRV system.

A NAMA model proposed by Bangladesh Authorities should have high transpar-


ency and integrity which can contribute as model for a future New Market Mech-
anism under for instance UNFCCC or as a bilateral arrangement, for instance
with Japan. This strong MRV model is the best to attract international buyers of
the CO2 emission reductions in any future regime or now as the supported
NAMA by attracting grant financing.

NAMA Models

During the development of this phase of the project at least two models for
NAMA development have been proposed. The characteristics are presented
below.

It should be noted that further model for a future regime in Bangladesh should be
developed and evaluated. But the two models are an input to further dialogue.

Model 1

- Covering the entire steel production sector.

- The boundary of each steel production mill should be the physical


boundary of the production site.

- Based on this the baseline for the required/recommended electricity or


natural gas /tons steel produced should be established. This should be
an estimate based on the installation of new technologies, like WHR and
other initiatives.

- The steel mills could be forced to work to achieve this threshold, for in-
stance through penalties or it could be a voluntary target .

- In case a company is below the baseline, then they can maybe receive
tradeable units which can be sold to other Bangladesh steel mills which
have not fulfilled the target and/or also to the international market.

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NAMA proposal for the steel sector in Bangladesh
- The Government should also be obligated to establish legislation which
could promote introduction of new technologies.

- The emission factors for establishing the CO2 emission baseline should
be the actual grid emission factor and/or the factors for natural gas. In
case other fuel are used the factors for these fuels should be included.

- The monitoring report should be done by the mill and verified by the De-
partment of Environment (DOE) or another appointed authority, for in-
stance SREDA.

- The MRV cost can be relatively high

Model 2

- Covering the entire steel production sector.

- The boundary of each steel production mill should be the physical


boundary of the production site.

- The actual electricity consumption and/or natural gas per produced tons
steel should be the baseline and this can be based on actual purchasing
of electricity and natural gas and the actual selling of steel products. Any
improvement of this meaning a lower electricity consumption per pro-
duced tons steel should be credited in one way or another. It could be a
tradeable unit for instance to the international community or internally in
Bangladesh.

- The emission factors for establishing the CO2 emission baseline should
be the actual grid emission factor and/or the factors for natural gas. In
case other fuel are used the factors for these fuels should be included.

- The monitoring report should be done by the company and verified by


the the Department of Environment (DOE) or another appointed authori-
ty, for instance SREDA.

- The Government should also be obligated to establish legislation which


could promote introduction of new technologies.

15.4 Can the NAMA steel in Bangladesh be developed as a stand-alone


system ?

The main question is whether it possible to have a NAMA in the steel sector in
Bangladesh, if the neighbour countries, like India is not part of the NAMA also.

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NAMA proposal for the steel sector in Bangladesh
The steel products produced at steel mills in Bangladesh are nearly only for the
domestic market, so a stand-alone NAMA in the steel sector for Bangladesh will
only be limited dependent on NAMA or non-NAMAs from other countries.

Of course this is very dependent on the final design of NAMA.

15.5 NAMA seeking support for implementation


xxxiv
The UNFCCC has released four NAMA templates. . The four NAMA tem-
plates are 1) NAMA seeking support for preparation, 2) NAMA seeking support
for implementation, 3) Other NAMAs for recognition and 4) Information on sup-
port for NAMAs. Due to the stage of the development of this project it has been
xxxv
agreed to fill in NAMA seeking support for implementation .

It should be noted that one of the key design elements of the templates are flexi-
bility and there is basically not developed any guidance documents. This flexibil-
ity gives an opportunity, but also an obligation, to fill in these documents carefully
so it suits both Bangladesh and also potential donor countries.

Even if UNFCCC template is filled in it will be crucial to contact potential donors


to avoid any delay in this successful started and important NAMA.

It should be highlighted that the data template is filled in by a preliminary estima-


tion. A more detailed survey should give a better result. Furthermore the pro-
posed financial package is the first proposal and it can be elaborated further by
the Bangladesh authorities.

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NAMA proposal for the steel sector in Bangladesh
16 CONCLUSIONS

16.1 Summary of conclusions


In a global context the steel sector is one of the sectors with greatest potential for
CO2 emission reductions whilst offering development co-benefits at the same
time. Therefore, the steel sector is being looked at as a candidate for the devel-
opment of Nationally Appropriate Mitigation Activities (NAMA) in many countries,
including Bangladesh.

Bangladesh is in the forefront with the development of a NAMA in the steel sec-
tor and is in the position to set an example and pilot a NAMA in such an im-
portant sector with regard to reducing global greenhouse gas (GHG) emissions.

The development of a NAMA in the steel sector is a priority for the Bangladesh
Government and this NAMA is coordinated by the Department of Environment.
The NAMA development is strongly supported by the three steel associations 1)
Bangladesh Auto Re-Rolling & Steel Mills Association (BASMA), 2) Bangladesh
Steel Mill OwnersAssociation (BSMOA) and 3) the Bangladesh Re-Rolling Mills
Association (BRMA). The support letters from the steel associations are en-
closed as annexes D-F.

Bangladesh will go for a supported NAMA for the Steel sector with an option to
extended it to a crediting NAMA or trading NAMA. In case of any kind of trad-
ing/crediting international it should be the voluntary market. It should be high-
lighted that the key focus shall be to develop a full scale implementation of a
supported NAMA. The precise model will currently be developed and adjusted
due to the development in the UNFCCC climate negotiation. To some extent the
development is also dependent on the interest of the potential sponsors.

Based on the field studies in the steel sector several very attractive projects have
been identified. The projects have both a direct savings with regards to energy
and CO2 but they also have indirect benefits in terms of capacity and working
environment. The indirect benefits can have savings that in some cases are
larger than the direct savings. Many of the projects are estimated to have so
attractive paybacks so they can be self-financed. A part of the project proposals
needs support eg. in terms of low interest rates or other incentive support. It is
important to point out that the site conditions very from site to site and that the
conditions will have a high influence on the benefits and investments.

The following key findings should be including in the NAMA development and
implementation.

A supported NAMA is a priority and a detailed MRV system should be


developed. The MRV system should include both CO2 emissions and co-
benefits.

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NAMA proposal for the steel sector in Bangladesh
The supported NAMA should include an option for crediting or trading of
CO2 emission reductions.

The development of the baseline should be the required/recommended


electricity or natural gas /tons steel produced.

In the climate space the CDM and voluntary market have developed
methodologies, initiated standardised approach and suppressed demand
approach. These should be integrated to highest possible degree to se-
cure the NAMA is in line with international standard.

The monitoring should be done by the company and verified by the De-
partment of Environment (DOE) or another appointed authority, for in-
stance SREDA. It is crucial to have a national validation and verification
system to avoid costly international system, like CDM. In case it will be
decide to involve an international institution/association in the verification
process, it will be considered to involve for instance the World Steel As-
sociation.

The steel sector in Bangladesh consists of very different levels of steel


mills, from basically just a steel mill with one furnace to fully large au-
tomatized steel mills. This will be a challenge when developing a NAMA
covering the entire sector

The actual knowledge and overview of the steel sector is limited and an
effort should be done to prepare an inventory for this sector. Only based
on the full-scale inventory covering the steel sector a final decision of
how to develop a NAMA can be decided.

The focus in the NAMA development should be an incentive structure ra-


ther than a penalty system. This is more in line with the proposed NAMA
model 2.

Furthermore it should be highlighted that further international support is needed.


This could be support to either pilot projects or the full-scale implementation. It is
a priority to continue the development of the NAMA without losing momentum
due to lack of financial resources.

16.2 Recommendation of next actions

The NAMA proposal for the steel sector in Bangladesh is one of the most ad-
vanced for NAMAs in the steel sector in a global context and therefore it should
be developed further so it can be used by other countries and in the same as an
input to the international climate negotiations. The implementation of this NAMA
can make a huge difference for the steel sector in Bangladesh.

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NAMA proposal for the steel sector in Bangladesh
The NAMA concept and the model for implementation could be presented and
facilitated through the UN Green Climate Fund in the future. But realistic it will
take some years before operational.

The full scale implementation could be in one package, but it could be time-
consuming to have progress here. But small minor studies and investment pro-
ject could be handled separately and in parallel with this to secure progress of
the full scale financing and implementation. This could for instance be further
support from different Nordic funds and countries and it could also be German
funds.

The implementation of pilot projects at selected steel works could be a model to


secure real progress, concrete input to the details of the NAMA development and
the results from the pilot projects can be an important input to the international
climate negotiations.

The concrete experience from the pilot projects can in may phases of both the
NAMA development and the climate negotiations.(see figure 17) It will for sure
also contribute to a higher degree of ownership to the whole process by the steel
works as the climate negotiations to some extent from distance can be seen
hypothetical and unpredictable. This is important as the steel sector has to invest
resources into this whole process.

NAMA IMPLEMENTATION AND OPERATION

PILOT
PROJECTS

International CLIMATE NEGOTIATIONS AND AGREEMENTS

Figure 17. The link between pilot projects, NAMA implementation in Bangladesh
and the international climate negotiations.

There are very limited resources in the Ministry to process documents for moving
the NAMA forward, for instance clarification of who is responsible for the NAMA,
set-up a monitoring system, agreed baseline for all the steel mills. This need to
be addressed when discussions are made on the real implementation.

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NAMA proposal for the steel sector in Bangladesh
Some immediate actions could be considered for instance:

The following issues need to be tackled and related key actions have been iden-
tified to continue with the initiated activities under the NAMA framework towards
innovative, sustainable and low-emission development in the Bangladesh steel
sector:

Establish an overview of the steel industry in Bangladesh. A study


should be initiated and it can be started when funds are available. This
will be a fundamental study and can improve the final design and imple-
mentation of the NAMA in the steel sector.

Determination of an accurate baseline for the programme is crucial.

National Monitoring, Reporting and Verification (MRV) system needs to


be established. Such a MRV system could be inspired by the Danish
model for registering energy savings, for example. In this model the
amount of savings can be documented either by specific measurements
or by default values for a number of standardized solutions. This could
be a cost-effective solution for establishing a MRV system in a least de-
veloped country (LDC) context, here Bangladesh.

Development of an incentive system with policy and finance measures to


support and attract broader stakeholder engagement, in particular the
individual steel mills.

Investment analysis conducted as part of the first NAMA development


phase financed by the NCF showed positive NPVs and high IRRs for a
significant number of proposed activities/technologies. Some of these
activities will be implemented as pilot activities under the proposed next
phase of the NAMA in the steel sector.

More accurate cost estimates will result from energy and investment au-
dits to get a more accurate picture of the required investment costs for
the implementation of energy efficiency measures and related technolo-
gy deployment at scale.

In parallel with commencing the NAMA pilot activities capacity develop-


ment measures both with respect to institutional capacities and human
resources in the public and private sector need to be conducted, e.g. in
the Department of the Environment (DoE) and among private sector ac-
tors.

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NAMA proposal for the steel sector in Bangladesh
18 ANNEX A QUESTIONNAIRE STEEL MILLS

The questionnaire has been forward to MOEF, DOE in February 2013 to start
facilitating the gathering of information from the specific steel mills. Probably the
main part of the data will only be gathered when it is decided to make a full-scale
implementation.

National Appropriate Mitigation Action (NAMA) development in the


steel sector in Bangladesh

Questionnaire for Steel and re-rolling mills

1. General Information

Ref. No Question Answer


1.1 Name of com-
pany
1.2 Address
1.3 Contact person
1.4 Contact details
e-mail/phone

2. Company information

Ref. No Question Answer


2.1 Year of establishment
company
2.2. Years of establishment
of main production
lines
2.3 Type of operation 1)
steel mill 2) re-rolling
mill or 3) steel and re-
rolling mill
2.4 Number of employees,
average in year 2012
2.5 Annual turnover in
2012 (or 2011)

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NAMA proposal for the steel sector in Bangladesh
3. Environmental administrative information

Ref. No Question Answer


3.1 Latest environmental certi-
ficate, date
3.2 DOE district office, name

4. Energy consumption

Ref.No Question Answers


Consumption Consumption Consumption
2012 2011 2010
4.1 Annual elec-
tricity con-
sumption
(kWh)
4.1.1. Annual elec-
tricity con-
sumption for
rods (kWh)
4.1.2. Annual elec-
tricity con-
sumption for
flat bars
(kWh)
4.1.3 Annual elec-
tricity con-
sumption for
ingots (kWh)
4.1.4 Annual elec-
tricity con-
sumption for
other prod-
ucts (kWh)
4.2 Annual natu-
ral gas con-
sumption
(Nm3)
4.2.1. Annual natu-
ral gas con-
sumption for
rods (Nm3)
4.2.2. Annual natu-
ral gas con-
sumption for
flat bars
(Nm3)

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NAMA proposal for the steel sector in Bangladesh
4.2.3. Annual natu-
ral gas con-
sumption
ingots (Nm3)
4.2.4. Annual natu-
ral gas con-
sumption
other prod-
ucts (Nm3)
4.3 Furnace oil
(fuel oil) (l)
4.4 Other

5 Energy production

Ref.No Question Answers


Consumption Consumption Consumption
2012 2011 2010
5.1 Own annu-
al electrici-
ty produc-
tion (kWh)
5.2 Own annu-
al renewa-
ble electric-
ity produc-
tion (kWh)

6 Raw material

Ref.No Question Answers


Quantity Quantity 2011 Quantity
2012 2010
6.1 Amount of
mixed scrap
(tonnes)
6.2 Amount of
ship scrap
(tonnes)
6.3 Total
amount of
raw material
(tones)

7 Produced products

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NAMA proposal for the steel sector in Bangladesh
Ref.No Question Answers
Quantity Quantity 2011 Quantity
2012 2010
7.1 Rods (ton-
nes)
7.2 Flat bars
(tonnes)
7.3 Ingots (ton-
nes)
7.4 Other (ton-
nes)

8 Recommendation of energy saving projects

Ref. No Question Answer


8.1 Priority 1 ener-
gy saving pro-
ject
8.2 Priority 2 ener-
gy saving pro-
ject

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NAMA proposal for the steel sector in Bangladesh
19 ANNEX B SUPPLEMENTARY PROPOSAL OF POTENTIAL
INITIATIVES IN THE STEEL SECTOR

Overview of other potential initiatives which could be further develop and incor-
porated in the NAMA proposal

Title Description

Direct rolling and Another way of reducing the energy consumption in


Continuous casting the re-rolling part of the production is to make a direct
rolling of the melted scrap. Today scrap is melted (at
temperatures of up to 1600 C) in the induction furnace
and a special moult.

The melted scrap is then set to cool down in the


moults. Afterwards the steel in the heated in a reheat-
ing furnace and processed in the rollers. It is possible
to save the whole heating in the reheating furnace by
rolling direct from the induction furnace.
In order to be able to do so the casting process needs
to be continuous. A continuous casting will contribute
to increase the possibility for a higher production, re-
duce the losses and decrease the specific consump-
tion on both the induction furnace and on the rolling
line.
Increase the produc- In case the melting furnaces need to be changed or
tion capacity need significant maintenance, it could be considered to
replace the furnaces with furnaces with higher capaci-
ty.

At Vikrampur it could for instance be considered to


replace the three 6 tons furnaces with two 15 tons
furnaces.

When a replacement of the furnace is considered then


the furnace technology should also be considered. The
EAF technology is much more efficient both with re-
gards to capacity and consumption. The EAF have
some other requirements for the power supply that
must be taking in to consideration.

Optimisation of the Re-rolling motors are used to roll the reheated steel in
re-rolling process to the size of the final product. Today many of the re-
rolling motors and roller motors use high voltages DC, with a gearing that

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NAMA proposal for the steel sector in Bangladesh
gears matches the speed needed for the re-rolling job. The
DC typically has an overall efficiency in the magnitude
70 % (some cases even lower). If the DC is replaced
by an AC motor and a variable speed drive without
gearbox the overall inefficiency increases to 85 %.

Feed stock control In many of the sites feed was manually operated in to
system the furnace, with no indication of the efficiency of the
melting process. The melting process is affected by a
number of parameters for example Magnectic fields,
meniscus shape (geometry of melt), velocity of feed
etc. By knowing these parameters it is possible to ad-
just the feed of scrap and additives to the energy in-
duced in the furnace. Besides saving energy it also
improve the quality of the product, reduces the losses
and reduce the production time.

In order to get more control of the melting procedure,


then the use of a shredder can be of great advantages.
The shredder cuts up all the scrap in to small bits. By
charging with more compact material then the capacity
increases, the consumption decreases and the lifetime
of the refractory is extended. All impurities from the
shredded scrap can be removed by using the magnetic
crane to sort the scrap se next project description
below.

Sorting and scrap The scrap can have a large variation in the size and
yard organization composition. By sorting the scarp an estimate of 5-10
% of the irrelevant scarp can be removed, the particle
size of the scarp can be optimized and the handling
can be facilitated. By using cleaner scarp, the produc-
tion yield will improve, the quantity of the slag will be
reduced, and a certain reduction of dust emission will
also happen. The energy consumption will also be
reduced due to a smaller amount of slag being heated.

Heat conversion The product is often stored between the furnace and
the rolling lines. This gives a certain degree of freedom
in order to plan the production on the two production
lines, during this storage time the product will cool
down. This will led to a loss in energy because the
product will have to be reheated before it can be rolled.
To reduce the loss of energy the product can be ther-
mal insulated from the surrounding or the production

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NAMA proposal for the steel sector in Bangladesh
can be made continues.

Hot boxes or insulation chambers can be used to pro-


mote heat retention in the steel and to provide a link
between the source of the hot stock and the furnace.
Semi-finished product, which cannot be charged im-
mediately are stored in unheated, heat-insulated box
instead of being stored in open stockyards.

Another method for preventing heat loss between the


furnace and the re-rolling mill is insulation shields (heat
retaining covers) installed between the furnace dis-
charge and the rolling stands.

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NAMA proposal for the steel sector in Bangladesh
20 ANNEX C ECONOMIC MODELLING

20.1 Optimisation of the reheating process Waste heat recovery

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NAMA proposal for the steel sector in Bangladesh
20.2 Optimisation of the reheating process Waste heat recovery from
the reheating process

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NAMA proposal for the steel sector in Bangladesh
20.3 Combustion and feed control system

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NAMA proposal for the steel sector in Bangladesh
20.4 Training program

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NAMA proposal for the steel sector in Bangladesh
21 ANNEX D. SUPPORT LETTER FROM BANGLADESH AUTO RE-
ROLLING & STEEL MILLS ASSOCIATION

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NAMA proposal for the steel sector in Bangladesh
22 ANNEX E. SUPPORT LETTER FROM BANGLADESH STEEL MILL
OWNERSASSOCIATION

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NAMA proposal for the steel sector in Bangladesh
23 ANNEX F. SUPPORT LETTER FROM BANGLADESH RE-ROLLING
MILLS ASSOCIATION

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NAMA proposal for the steel sector in Bangladesh
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viii
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xxvi
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www.niras.com NCF and Danish Embassy: 114


NAMA proposal for the steel sector in Bangladesh
xxvii
COMMISSION DECISION of 27 April 2011 determining transitional Union-wide rules
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xxviii
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xxx
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xxxi
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xxxii
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xxxiii
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xxxiv
http://unfccc.int/cooperation_support/nama/items/6945.php

xxxv
http://unfccc.int/cooperation_support/nama/items/6982.php

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