“Stakeholder Day on the EU – Monitoring and reporting Guidelines”

1. “Stakeholder Day on the EU – Monitoring and reporting Guidelines” Technical Session II : steel works, coke ovens, sintering plants and power plants Jean-Pierre Debruxelles Technical Director EUROFER Cologne, 12 May 2005

2. Technical Session II : steel works, coke ovens, sintering plants and power plants • Presentation • Introductory remarks • Process related emissions and export gases • The integrated route (BF-BOF) • The electrical route (EAF) • Transversal aspects (accuracy, flexibility, cost-effectiveness, uncertainties, tier thresholds) • Conclusions and recommendations

3. Technical Session II : steel works, coke ovens, sintering plants and power plants I. Introductory remarks • Questions about the ongoing procedure leading to the revision of those guidelines (time line) • Consistency with other legal texts (ET directive and NAP guidance)

4. Technical Session II : steel works, coke ovens, sintering plants and power plants I. a) Time line Commission + Consortium revising the MRG (ann I.1) 13.10.2003 and 25.10.2003 January 2004 Dec 2006 June 05 March 2006 June 2006 Verification2005 Adoption of the ET Directive + OJ • Adoption of • The MRG • The NAP Guidance Report from MSs = f(MRG)– art.21 Proposal for an amending Directive(art.30)+ 2nd NAPs Deadline for revised MRG Art 24 : opt in for new gases = f(MRG) –> request from a MS or CEC initiative to adapt the MRG Art 5/6 : Permit = f(MRG)

5. Technical Session II : steel works, coke ovens, sintering plants and power plants I. a) Time line The Commission will review (the MRG) by 31 December 2006, taking into account experiences with the application of the Annexes and any revisions to Directive 2003/87/EC, with a view to any revised Annexes taking effect from 1 January 2008. “A competent authority may require the operator to change its monitoring methodology for the next reporting period if the reporting installation’s monitoring methodologies are no longer in conformity with the rules laid down in these guidelines. A competent authority may also require the operator to change its monitoring methodology for the next reporting period if the monitoring methodology under the permit has been updated in accordance with a review to be undertaken before each period referred to in Article 11(2) of the Directive.”

6. Technical Session II : steel works, coke ovens, sintering plants and power plants I. a) Time line : questions for clarification • The second NAP will be submitted by MSs to the Commission on 30 June 06 to cover the period 08-12: what about the “measures planned to monitor and report emissions in accordance with the MRG” in the installations permit (only the existing MRG is binding at the moment)? • What will happen for installations covered by a valid permit (art 5 and 6)after 1.1.08? An intermediary revision whereas the reporting period is already ongoing? • What about the opt-in for new GHG ? Will the revised MRG include provisions for those GHG? Only after 2012 ?

7. Technical Session II : steel works, coke ovens, sintering plants and power plants I. b) Consistency with other legal texts: The Communication (COM(2003) 830) on NAP guidance implementation of the criteria listed in Annex III to ET Directive) was adopted on 7 January 2004. The MRG adopted three weeks later (29 January 2004) could not take this NAP guidance into account properly in particular as far as integrated steel plants are concerned. The revision offers the possibility to correct this situation!

8. Technical Session II : steel works, coke ovens, sintering plants and power plants II. Process related emissions and export gases (1/3) Nothing prohibits in the ET Directive a Member State to allocate allowances to the operator of the installation transferring the waste gas. The NAP guidance has stated: “Where a waste gas from a production process is used as a fuel by another operator, the distribution of allowances between the two installations is a matter for Member States to decide. … a Member State may choose to allocate allowances to the operator of the installation transferring the waste gas…”

9. Technical Session II : steel works, coke ovens, sintering plants and power plants II. Process related emissions and export gases (2/3) Our proposals: Chapter 4.1.: Boundaries (page 8), 1°) All emissions from an installation shall be assigned to that installation, regardless of exports of heat or electricity or exports of waste gases (in the meaning of item 92 of COM (2003) 830) to other installations. Emissions associated with the production of heat or electricity or emissions associated with the combustion of waste gasimported from other installations shall be assigned eitherto the importing or to the transferringinstallation depending on the allocation method of the corresponding allowances

10. Technical Session II : steel works, coke ovens, sintering plants and power plants II. Process related emissions and export gases (3/3) Our proposals: Chapter 4.2.2.1.2.: “Transferred CO2” (p. 11) 2°) “CO2 being transferred to an installation as part of a mixed fuel (such as blast furnace gas or coke oven gas) shall be included in the emission factor for that fuel. Thereby, the emissions corresponding to the transferred fuel/gas will be monitored and reported by the operator of the installation who will be allocated the corresponding allowances according to the method of allocation chosen by the Member State (Cf. item 92 ofCOM (2003) 830).”

11. Technical Session II : steel works, coke ovens, sintering plants and power plants III. The integrated route (1/3) • Our proposals: Mass balance approach and “bubble concept” • a) It should be clarified that, for the sake of a sufficient accuracy the carbon mass balance approach extends across single activities. • b) The “bubble concept” should apply to an integrated steel plant • c) There must be a possibility to aggregate the different activities : • coke oven, • metal ore roasting and sintering installations, • production of pig iron and steel • power plant processing the process-related gases

12. Technical Session II : steel works, coke ovens, sintering plants and power plants III. The integrated route (2/3) Accuracy: Not possible to reach a satisfactory accuracy on the basis of the measurement of the particular material flow of every single activity. We suggest the following methodology: Apply the mass balance approach (already mentioned in the MRG) to all activities which will be summed up in an aggregated system (bubble concept). Irrespective of the ownership of the power plant this one has to be integrated into this aggregated system to ensure the highest accuracy.

13. Technical Session II : steel works, coke ovens, sintering plants and power plants III. The integrated route (3/3) Calculations: For the calculation of the emissions of the aggregated system the interactions of the different installations within the system are not taken into account. The only issue is to monitor the inputs and outputs of the aggregated system. The equation for the mass balance approach remains the same, only taking into account modified boundaries: CO2-emissions [t CO2] = (∑ (activity data input * carbon content input) – ∑ (activity data products * carbon content products) – ∑ (activity data export * carbon content export) – ∑ (activity data stock changes * carbon content stock changes)) * 3,664

14. Technical Session II : steel works, coke ovens, sintering plants and power plants IV. The electrical route (1/3) Simplification and clarification are needed to ensure a system much more coherent, straightforward and accurate. The current MRG would imply identified specific emission factors for each carbonaceous material which produces process related emissions in the EAF furnace (foaming graphite, anthracite, coke, electrode of graphite) plus combustion processes from natural gas. This evaluation will imply a high uncertainty itself.

15. Technical Session II : steel works, coke ovens, sintering plants and power plants IV. The electrical route (2/3) Proposals: 1°) Consider process related emissions as if they were combustion emissions (smelting occurring at almost 3000 ºC, materials used in the processs oxide themselves as in a real combustion. 2°) Assumptions for each carbonaceous flows (Natural Gas, pig iron and HBI/DRI, solid coals, electrodes - made of pure C) 3°) Emission factors are those included in the National Inventory, as a national average, independently whether they are associated to combustion or to process.

16. Technical Session II : steel works, coke ovens, sintering plants and power plants IV. The electrical route (3/3) Proposals: 4°) Necessary simplification regarding the Carbon mass balance calculation : C contained in scrap, ferroalloys and final recarburants = C contained in steel + small amounts retained in dusts and slag.   5º) No emissions associated to the recarburants finals additions 6°) No emissions associated to decarbonation of the very small fraction of the non-yet decarbonated part (de minimis rule) 7°) Applying the “bubble concept”.

17. Technical Session II : steel works, coke ovens, sintering plants and power plants V. Transversal aspects (accuracy, flexibility, cost-effectiveness, uncertainties, tier thresholds) • Annex I - section 10 – ISO 17025: • Accuracy is prejudiced by the requirements : in particular tier 3 requirement for net calorific value and emission factors to be measured in a laboratory that is ISO17025accredited! • Internal flows: internal measurements of input/output materials and arising process gases/fuels are performed to a high degree of accuracy and at a sufficiently high frequency to fulfil critical process control and quality monitoring functions. A more flexible approach would be to allow industry, where appropriate, to use internally generated information,subject to inspection by the competent authority. • This would improve accuracy whilst avoiding the cost burden of accreditation.

18. Technical Session II : steel works, coke ovens, sintering plants and power plants V. Transversal aspects (accuracy, flexibility, cost-effectiveness, uncertainties, tier thresholds) Annex I - section 10 – ISO 17025: b) External flows: The majority of our international suppliers of coal and alloying additions cannot affirm that the analyses of their deliveries have been performed by an accredited laboratory. This means that the MRG requirements cannot be met. The steel companies should not be forced to commission an accredited laboratory to analyse control samples, for the reason that the efforts would be disproportionate because the alloying additions account only for very small fractions of CO2 (about 2 %).

19. Technical Session II : steel works, coke ovens, sintering plants and power plants V. Transversal aspects (accuracy, flexibility, cost-effectiveness, uncertainties, tier thresholds) Annex I - section 10 – Standards: Where no applicable standards exist, procedures can be carried out where possible in accordance with draft standards or industry best practice guidelines. If certain materials are purchased by suppliers from abroad and it is not possible to assess the use of standards for calculating the carbon content the information of the supplier are considered as sufficient as it is used for the invoice and company accountability.

20. Technical Session II : steel works, coke ovens, sintering plants and power plants V. Transversal aspects (accuracy, flexibility, cost-effectiveness, uncertainties, tier thresholds) Cost-effectiveness – de minimis rule - uncertainties: The cost of monitoring small emissions will be excessive. MRG should adapt the necessary flexibility (below a certain threshold). There should be a more detailed definition of “batch” including the necessary thresholdwhen large amount of materials are procured in small batches (road trucks). The tier approach emphasises the accuracy of batch measurements without considering the combination of uncertainties with the size and number of batches (it treats 150000 tonnes coal procurement by ocean vessel like several thousands 20 tonnes trucks batches).

21. Some data for a characteristic integrated facility (9 Mt CO2/year)

22. Technical Session II : steel works, coke ovens, sintering plants and power plants V. Transversal aspects (accuracy, flexibility, cost-effectiveness, uncertainties, tier thresholds) Net Calorific Values: In the context of the mass balance approach, there is no need to report the Net Calorific Values (NCV). NCV measurement is expansive and poorly accurate while carbon analysis is easy. Easier to compute 3.664 * Activity data * Carbon content than 3.664 * Activity data * NCV *(Carbon content/NCV)

23. Technical Session II : steel works, coke ovens, sintering plants and power plants VI. Conclusions and recommendations • 1. Our proposals are aiming at a lower uncertainty and better accuracy without entailing excessive and unjustifiable administrative and analytical burdens.  • 2. It should be very explicit in the MRG that national competent authorities have discretion to apply pragmatic requirements so long as the underlying principles of completeness, consistency, transparency etc. are satisfied (case of emissions factors). • 3. A new evaluation of the MRG is desirable after the verification process will have take place (March 06).