February 2008
By Graeme Rodden, Editor
Despite what some may say or think, the US is serious about the problem of increased greenhouse gas (GHG) emissions. In early 2007, McKinsey & Company launched the US Greenhouse Gas Abatement Mapping Initiative. It worked with numerous environmental NGOs, industry experts, academics and companies, including Honeywell and Shell. The program studied GHG emissions within the US and evaluated opportunities to reduce them, "using tested approaches and high-potential emerging technologies."
In December 2007, McKinsey and its co-publisher, The Conference Board, issued its findings in a report: Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?
Simply stated, despite the measures being taken by corporations and even individuals to shrink their carbon footprint, US government agencies report that if left unchecked, annual GHG emissions will rise to 9.7 gigatons of carbon dioxide equivalents (CO2e) by 2030 from 7.2 gigatons in 2005.
The drivers
What's driving the increase in emissions? First is the continued expansion of the economy. Then, there is rapid growth in the buildings and appliances and transportation sectors. This is driven by a forecasted increase of 70 million in the population and rising personal consumption. Finally, there is an increase of carbon-based power generation driven by the expected construction of new coal-fired plants "without carbon capture and storage (CCS) technology."
Interestingly, for the forest products industry, the report states that the growth in emissions would be accompanied by a "gradual decrease in the absorption of carbon by US forests and agricultural lands." This decline follows 50 years of increasing absorption. Carbon absorption is forecast to fall to 1.0 gigaton in 2030 from 1.1 gigatons in 2005.
The McKinsey team analyzed more than 250 options, ‘encompassing efficiency gains, shifts to lower carbon energy sources and expanded carbon sinks." The options were then grouped in three ranges: lower, middle and upper. The report states that the grouping is based according to the "magnitude of change that would be required in behaviors, policy, technology (or all three)."
For example, the lower case range, while the least costly, would only reduce annual GHG emissions by about 1.3 gigatons through 2030, which would not be enough to bring the projected levels of GHG back to current levels.
The central; conclusion of the report states that the US could reduce GHG emissions in 2030 by 3-4.5 gigatons of CO2e by using "tested approaches and high-potential emerging technologies. These reductions would involved pursuing a wide array of abatement options at marginal costs less than $50/ton, with the average net cost to the economy being far lower if the nation can capture sizable gains from energy efficiency." But, it would require a "strong, coordinated, economy-wide action" that would need to begin almost immediately.
The report found that "abatement opportunities are highly fragmented and widely spread across the economy." Without a doubt, it will take money to reduce emissions significantly. For its middle range case (3 gigatons), the report says it would take an average investment of $50 to $60 billion/yr through 2030.
Five sectors, all of which touch the pulp and paper industry in some way, offer clusters of abatement potential. In order of cost (lowest to highest), the clusters are:
- Buildings and appliances: Improved heating, ventilation and air conditioning.
- Increasing fuel efficiency in vehicles and reducing the carbon intensity of transportation fuels: The report says that lower carbon content fuels such as cellulosic biofuels, could reduce GHG by 100-370 megatons. However, this is very dependent on "innovation rates and near-term commercialization."
- Studying various options available across the energy-intensive portions of the industrial sector: These are fragmented – equipment upgrades, process changes, motor efficiency, combined heat and power (CHP).
- Expanding and enhancing carbon sinks: As well as increasing forested area, it would also mean improvements to soil management.
- Reducing the carbon intensity of electrical power generation. This would mean moving to renewable sources such as wind and solar as well as the use of CCS technology on coal-fired electric generation.
However, for this to succeed, the report stresses that the US needs to implement strong economy-wide abatement programs. The report provides a number of possible policy options.
It applies to pulp and paper
Although the report did not delve specifically into the pulp and paper industry, as noted, much of what was reported about the industrial sector, applies to pulp and paper. For example, in 2005, the industry was responsible for 5% of the 2.2 gigatons of GHG emissions in the industrial and waste sector.
The reference case estimates that GHG emissions from the sector will increase by 24% by 2030 (0.9%/yr). However, emissions from this sector will rise more slowly than those from other sectors such as power and transportation. This is due to a decrease in "energy intensity" in the pulp and paper industry among others.
The McKinsey team was able to identify 620 megatons of abatement potential that would cost less than $50/ton. This included the recovery and destruction of industrial non-CO2 GHG; CCS; increased CHP generation and better energy efficiency.
Many mills are currently using or looking at CHP generation. The report states that increasing CHP capacity could reduce CO2 emissions by 80 megatons. "About 65% of the potential incremental CHP capacity is in medium (5-59 MW) or large (50+ MW) systems that can be achieved at near negative cost. Although smaller systems may have less favorable economics, location is also important. CHP economics are heavily location driven; a small installation in the northeast could break even while in another region, it would be less attractive.
Improving energy efficiency is another popular option for the pulp and paper industry. This includes the use of advanced process control, energy recovery and improved preventive maintenance. Upgrading electric motors and "improving end use specific systems" (i.e., improvements to system components, load-size matching and speed control) to increase efficiency are other measures this industry has taken.
The report is specific on process innovations for pulp and paper. Although compared with iron and steel, and aluminum, the potential reduction in energy intensity is smaller (8% versus 28% and 32% respectively of a 70-megaton potential), the report cites black liquor gasification, new drying processes and paper recycling as options.
To read the report or to download it (it is available free of charge), go to: www.conference- board.org/publications/reports.cfm.
Pulp & Paper magazine is FREE to qualified subscribers. Click here to find out more.
