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Energy conservation policies in Jordan
Energy conservation policies in Jordan
R. Aburas
Jordan imports almost all the energy required for Its social and economic development. Durlng the perlod 197484, energy consumptlon grew at an average rate of about 14%/yser, due malnly to growth in the national economy; but exacerbated by Inefficient use of energy. To allevlate the burden o1 the energy blll on the economy, the Minlstry of Energy has adopted a pollcy aimed at securlng sufflclent energy supplies at mlnlmum cost to the economy. This policy has focused on improving the efflclency of energy-use and encouraglng energy conservation in order to reduce the effect of oil Imports on foreign reserves, reduce the impact of emlsslons of toxic gases on the evlronment, and the cost of addltlonal investment In production facilitles. The energy conservaUon programme was put into application In early 1985. The energy Income elastlcity during the perlod 1985-88 has dropped from (1.4) to (1), whlch indicates a substanUal Improvement in overall energy utlllzatlon.
Jordan is totally dependent on imported crude oil and some petroleum products to meet domestic energy demand required for its socioeconomic development. During the period 1974-84, energy consumption grew at an average rate of about 14%/year. The energy bill averaged at 13% of gross national product (GNP) and consumed most of the foreign exchange earned by the exports of all Jordanian commodities during this period. The high growth in consumption was mainly due to the growth in the national economy. However, a more efficient use of energy could have been achieved without constraining economic growth. Unfortunately, the country then lacked a comprehensive national energy policy to achieve such an improvement in efficiency. To address this shortcoming, the government set up in 1984 the Ministry of Energy and Mineral Resources (MEMR) whose goals included planning, formulation of general strategies, and conducting research related to the energy sector. Since its establishment, MEMR has adopted a policy that aims at securing sufficient supply of energy at the minimum possible cost to the economy. MEMR has focused on five measures including: •
Keywords: Energy conservation; Jordan; Policy R. Aburas is Director, Industrial Energy Department, Ministry of Energy and Mineral Resources, PO Box 2310, Amman, Jordan.
•
• •
•
Development of domestic energy resources through the intensification of exploration for fossil fuels and exploitation of any economically feasibile energy resources including renewable resources such as wind, passive solar, etc. Improvement in the efficiency of energy-use and encouragement of energy conservation in order to reduce oil imports, reduce the emission of toxic gases to the environment and postpone additional investment in production facilities such as refineries and power plants. Fuel diversification which entails the shift from the use of only one form of fuel to the use of a variety of fuels. Technology transfer; to improve the abilities of its professionals by sending them abroad for training or by giving them the opportunity to work as counterparts with foreign consultants employed by MEMR to carry out feasibility studies or provide technical assistance in Jordan. Investment optimization; due to the limitation of financial resources, MEMR is using the available resources in the best possible manner. Projects are only implemented when needed and should be
0301-4215/89/060591-08503.00 © 1989 Butterworth & Co (Publishers) Ltd -
591
Energy conservation policies in Jordan
completed within the projected time. Funds should be raised at the lowest possible cost. This paper will discuss the energy conservation programme which was designed in early 1985 and which aims at improving the efficiency of energy utilization in the various economic sectors.
Energy conservation concepts A policy which encourages conservation of fuels and the application of sound management principles to the use of all forms of energy in all sectors of the economy, is a logical and effective complement to other energy policies such as exploration, pricing, and R&D.1 By restraining levels of growth in overall energy demand, energy efficiency improvements will contribute to longer term energy supply security, will result in direct cost savings for the consumer, may defer or eliminate the need to expand energy supply capacity and can also have a profound influence on the progress of the economy. Savings in total energy demand resulted from greater energy efficiency can therefore be regarded as an alternative source of supply. Energy conservation is defined as energy demand management activities that aim at increasing the efficiency of use. 2 This efficiency has two different, although not separate, components: technical efficiency and economic energy efficiency. Technical efficiency is often measured by the first law of thermodynamics, which provides a quantitative estimate of the ratio of useful energy output (of a given process or piece of equipment) to energy input. The second component, economic efficiency, refers to fuel substitution which results in providing the same energy service (eg producing steam at given temperature and pressure conditions) at a lower cost. Energy conservation potential for a given activity over a given period can be defined as the maximum amount of energy, computed either at the primary energy or end-use level, that could be saved using specific economic conditions. There are two approaches to estimating energy conservation potential. The micro approach consists of estimating at the plant level cumulative energy savings resulting from the implementation of all possible conservation measures corresponding to the selected technological and economic conditions. 3 The other approach is the macro approach, which uses a baseline ratio of energy and economy indicator (eg tonnes of oil equivalent/thousand dollars of GDP) and project it into the future according to recent past trends. By comparing this trend (for example an energy/GDP elasticity of 1.3) to other countries or any other reference, it is possible to set a macro goal, eg to reduce energy elasticity to 0.7 in seven years. Depending on the cost required, energy conservation measures are often grouped into three categories: 1International Energy Agency, Energy Conservation in lEA Countries, lEA, Paris, France, 1987. aEnergy and Development, report prepared for the Commission of the European Communities. aEnergy Demand Management and Conservation Manual for Industry and Building, prepared by Hagler, Baily and Company for the United States Agency for International Development.
592
Q
Q
•
No-cost measures, often called 'housekeeping' measures, which can be implemented very quickly and easily and at very small expense (eg shutting down equipment when not required, reducing excess air in boilers. Minor capital investment, which requires only limited expenditure, have paybacks of less than two years, and can be implemented within a few months. Major modifications which require relatively large capital expendi-
ENERGY
P O L I C Y D e c e m b e r 1989
Energy conservation poficies in Jordan
tures, have longer paybacks and require detailed feasibility studies prior to implementation.
Jordan's energy conservation programme Since early 1985, MEMR has set up a programme which aims at encouraging conservation of energy and the application of sound management principles to the use of all forms of energy in all sectors of the economy. The following measures were emphasized in the programme. 4
Proper pricing poficies The most important of these measures is an energy pricing strategy which can provide energy users with an incentive to eliminate energy waste and enable them to choose fuels on the basis of their costs to the economy. In recent years, Jordan has recognized the central importance of pricing in designing strategies to manage the energy sector and thus begin to raise prices to reflect increased costs, for both electricity and petroleum products. Consequently, Jordan has adopted pricing policies which aim at removing subsidies to the energy sector and eliminating the non-economic usage of energy. According to this policy, any increase in the cost of energy is always fully passed on to the final users. Consequently, the weighted average of retail petroleum products is higher than its import parity in all these products. However, the government recognized the necessity of making energy available to low-income groups and to export-oriented industries at relatively lower rates than those available to the other groups; even so, those prices reflect the real costs and are not subsidized. Table 1 shows 1987 energy prices in Jordan compared to these in some oil-importing and oil-exporting countries. It can be seen from Table 1 that gasoline and heavy oil prices in Jordan are almost equal to those prevailing in European countries. But, the price of gas oil is lower than that in those countries due to the fact that gas oil is used by almost all economic sectors, including exportoriented industries, and the low-income groups, which use it for space heating in winter. However, prices of all forms of energy in Jordan are much higher than those prevailing in the region.
Free audits
4R. Aburas, S. Lloyd and M. Webster,
Waste Heat Recovery in Jordan Petroleum Refinery, Energy World, No 164, November 1988.
Free audits are provided to small, medium and large industrial, commercial and transport institutions. To date comprehensive energy audits, free of charge, have been made by the Ministry in more than 40 institutions. The industrial and power generating sectors account for over 40% of the country's energy consumption and the majority of this is concenTable 1. Energy prices in Jordan compared to other countries, 1987.
ENERGY POLICY December 1989
Country (USC/litre)
Gasoline (USC/litre)
Gas oil (USC/litre)
Fuel oll (US$/tonne)
Jordan Syria Egypt France Belgium Greece
52 25 15 78 67 50
19 7 4 54 45 28
145 17 150 133 180
593
Energy conservation policies in Jordan
trated in six major industries; oil refining, power generation, cement, fertilizers, phosphate mining and potash extraction. As part of the energy conservation programme, M E M R in cooperation with Bechtel International, undertook a study on energy saving in large industries. The main objective of this study was to identify and develop practical economic measures for energy conservation to the point where the industries themselves can put them into operation. Emphasis was first given to measures involving operational improvements and requiring no capital expenditures. In all of the measures considered in this study, between 50 and 60 measures have proven to be cost-effective. In total, these measures would save over 12 GWH/year of electrical energy and between 80 000-100 000 tonnes/year of fuel oil, depending on the plant throughput. This is equivalent to more than 2% of Jordan's oil consumption in 1987. Table 2 shows a summary of the energy savings in each individual industry. MEMR, in cooperation with AFME of France, has also carried out a comprehensive study in order to improve energy consumption in the transport sector, which consumes about 40% of Jordan's total primary energy consumption. The study covered three parts: the first dealt with the issues related to infrastructure, traffic management, prices, types of fuel used by the sector, etc; the second studied the economic feasibility of establishing a drivers training centre to train the drivers in efficient driving; and the third part included an energy audit for five of the large transport companies. It was found that between 5% to 10% of the consumption of these companies could be saved after the implementation of the recommended measures. While Jordan's industrial sector is dominated by a few major industries there are a large number (about 1 500) of small and medium sized industries, each employing five to 25 employees. Most of these industries are in the food manufacturing, mining and quarrying, furniture and wood products, mineral products, machinery, and clothing subsectors. MEMR, employing its own team, carried out energy audits in more than 20 of those industries and in about 10 large commercial enterprises including hotels, hospitals, shopping centres, etc. The potential for energy savings ranges from 7% to 30% as shown in Table 3. Paybacks under one year are the rule, not the exception. The measures proposed as a result of the audits include: • • • • •
Improved operating and maintenance techniques. Better housekeeping. Heat recovery from flue gases. Improved process control and combustion control. Fuel oil preheating.
Table 2. Summary of the findings of the Energy Audit Study for large industries.
Industry Oil refinery Power plants Cement plants Fertilizer plant Phosphate mining Steel mills Glass plant Potash Total
594
Expected saving at design capacity (1 000 tonne/year)
Saving at present capacity (tonne/year) (US$1 000/year)
39 2 2 20 34 4 6 2
26 2 2 13 34 3 4 1
2 600 200 200 1 300 3 400 300 400 100
109
85
8 500
ENERGY POLICY December 1989
Energy conservation policies in Jordan
• • • • •
Substitution of gas oil by fuel oil. Improved thermal insulation. Improved lighting systems. Improved power factors. Electrical load management (peak to off-peak).
The potential savings through broad application of these types of measures in small and medium-sized industrial and commercial enterprises are estimated to be in the range of 1.5% of total oil consumption in 1987 amounting to about 45 000 tonnes of fuel/year and valued at about US$4-5 million/year.
Legislation and regulations Regulatory means are necessary to achieve energy saving programmes. Regulations covering a broad range of energy related activities and equipment such as lighting, space heating, insulation, cars, etc, 5 were issued. For example, the introduction of progressive taxes on cars by size of engine, helped to achieve a flat gasoline demand during 1984-88. However, there are still some areas where the regulatory approach should be investigated. For example, the reporting of energy consumption data could be made compulsory. Regulations should also be introduced in the factory licensing procedures to ensure that the energy efficiency of a new plant is considered carefully by both owners and designers. Regulations could also be introduced to require all firms to have their equipment efficiency checked regularly. Incentives Incentives include direct financial assistance (grants) for research, development and demonstration projects, soft loans through the Industrial Development Bank for installing energy efficient devices or equipment. In this regard the Ministry has cofinanced a demonstration project on passive solar, another for electrifying a remote village by solar cells, and utilization of wind turbines for water pumping in the same village. Consumer education Consistent with its objectives of minimizing the use of regulation and financial or fiscal incentives, the Ministry has chosen to concentrate on information, demonstration and technology transfer activities as the cornerstone of its energy efficiency promotion strategy. Information campaigns are used to create awareness on the part of consumers of the benefits of energy savings. The campaigns include brochures, pamphlets, TV films, general or specific seminars. Table 3. Summary of energy savings in some industries audited by the Mlnistry's team. Investment required
Savings
Saving/year
Payback
Plant
(US$ 000)
(US$ O00/year)
(%)
(US$ 000)
Arab Pharmaceutical Batteries factory Jordan Pipes Manufacturing Jordan sewing and netting Polystyrene factory Flour mill Yeast manufacturing Plastic bags
54 21 60 60 30 9 12 2 10 9
42 30 75 75 72 24 33 7 36 12
15 9 30 11 30 7 15 7 25 20
1.3 < 1 < 1 < 1 < 1 < < 1 <1 <1 < 1
Jordan rock wool General plastics
ENERGY POLICY December 1989
595
Energy conservation policies in Jordan
Education also includes training programmes which could be addressed to several different groups such as energy auditors, energy managers of enterprises, boiler operators and maintenance engineers. Moreover, MEMR tries always to acquire a full selection of reports and technical data related to energy efficiency from a broad range of institutions from developed countries, and make those available free of charge, to the relevant local enterprises. In addition to technical information, MEMR is building a data base of energy consumption information provided from energy-users. This information should be analysed to check on specific energy consumptions. Any variations in energy intensity should be noted and the result of analysis should be sent to the factory concerned, with comments and suggestions wherever appropriate. The information developed in the course of audits, such as the magnitude of savings obtainable from specific energy conservation measures and their typical payback periods, will be entered in the data base and used for the development of promotional literature.
Advisory services Energy users, either individuals or firms, may simply be unaware of the potential benefits of using energy efficiently or of the technical options available for doing so. First, the access to recently developed energy efficient equipment and techniques is limited. Second, as with any 'new' technology there is still considerable scepticism that significant improvements in efficiency can really be brought about. To combat this, the Ministry has decided to establish a chain of Energy Advisory Centres to provide consultative and technical services to the public, including the introduction of new energy saving equipment.
Fuel substitution Fuel diversification or fuel substitution entails the shift from the use of only one form of energy to a variety of fuels or the shift from higher value fuels to lower value fuels. An example is the shift from oil to coal or natural gas. This shift usually results in improving the cost of energy to the economy. However, the issue of oil substitution in Jordan, for a number of economic, geographical and resource reasons, cannot be considered in the same light as the issue in industrialized countries. First, the country is located in the centre of the Arab oil-exporting countries, and Jordan is interconnected with most of these countries with trade agreements which entail exchange of goods and commodities. Second, the infrastructure needed for coal or gas import requires a huge amount of investment which a country with limited financial resources, like Jordan, cannot afford. Despite the above mentioned facts, MEMR exerted a great deal of effort to convince energy consumers to shift from using higher value oil products like gas oil to lower value oil products like fuel oil or to shift from using electricity for domestic water heating to using solar energy. Monitoring the results by field surveys has indicated that the response from energy consumers is encouraging. Moreover, the first power station utilizing domestic natural gas was put into operation earlier this year. The power station consists of two gas turbines each of 30 MW capacity and the gas will come from a small gas field which has been recently discovered.
596
ENERGY POLICY December 1989
Energy conservation policies in Jordan
Barriers to energy conservation The successful definition, implementation and management of energy conservation programmes requires more than the mastering of the laws of thermodynamics. Energy conservation programmes usually require the integration of many activities, and overcoming a variety of obstacles, including problems such as lack of top management support, an inadequate decisionmaking structure, lack of information, lack of energy auditing capabilities and the unavailability of funds. The most important barriers are: 5
•
•
•
•
•
5Report of The Office of Energy, Recommendations for Industrial Energy Efficiency Program in Jordan, prepared by RCG/
Hagler, Baily, Inc, May 1988.
ENERGY POLICY December 1989
Low energy costs. When energy costs represent only a small percentage of total production cost, it is obvious that the management will not pay attention to energy savings and instead will focus on other production factors. Fortunately, energy prices in Jordan are high enough to the extent that most energy saving programmes could be cost effective. Lack of awareness of potential benefits. Energy management is a relatively new management function and it is most important that the decisionmakers in the different energy consuming enterprises understood that energy can be managed as efficiently as labour, raw materials and finance. To overcome this obstacle, MEMR always tries to involve the decisionmakers in energy consuming enterprises in seminars and provide them with information materials on the subject. Inability to define problems. Partly because of lack of awareness of the potential benefits of energy efficiency, there appears to be an inability in some enterprises to define energy related problems and to identify specific areas where saving can be made. A lack of experienced engineering personnel in the typical small enterprise is apparently a serious barrier to improvements, especially in the absence of outside help. Inability to economically evaluate the technical options. Where capital investment may be involved, small and medium-sized enterprises tend to lack the technical skills needed to examine the range of options for improving energy efficiency and select the most cost-effective solution for a specific situation. Equally important is the financial evaluation of potential conservation investments. If a plant owner cannot be convinced that an investment is financially attractive, he clearly will not invest his money. Engineers must be trained to present the case for energy efficiency in financial terms including an appraisal of any risk factors involved. Many engineers have insufficient experience in financial matters. To achieve good results, an engineer should have a basic understanding of the financial situation in his company, he must be able to relate his conservation ideas to the magnitude of profit that can be achieved by the company. Lack of energy accounting in enterprises. One reason for a lack of awareness of the significance of the cost of energy in overall production cost is the failure of book-keeping in small and medium sized enterprises to identify energy consumption as a separate line item. Energy is viewed as just another cost or overhead that has to be paid at the end of the month. Owners, also, are often unwilling to give their employees any information about costs or other financial matters. Without proper accounting of energy and 597
Energy conservation policies in Jordan
distribution of cost information to managers in an enterprise, effective energy management is impossible. MEMR is making great efforts to promote the collection and analysis of routine energy consumption data as a necessary condition to improvement in energy efficiency, because a plant manager cannot be responsible for controlling energy costs if he is ignorant of what those costs actually are.
Evaluation of Jordan's national energy programme Jordan's national energy programme was put into application in early 1985. During the period 1985-88, the energy consumption growth rate dropped to about 2.5% which is the same growth rate of the economy during the period under consideration. Consequently, the energy elasticity has dropped from (1.4) during 1974-84 to about (1) during the period 1985-88 which indicates a substantial improvement in the overall energy utilization efficiency. Examining the energy consumption of the audited enterprises showed that their rate of fuel consumption has achieved a fair improvement. However, the results of the programme will be seen more clearly in the next few years because there is always a time lag between the application and obtaining the results. Moreover, although what has been done is quite good by developing country standards, there is still a large room for improvement in all energy consuming sectors in general and in the transport and industrial sectors in particular.
Conclusions Most of the energy consuming systems in developing countries are of low efficiency due to a variety of reasons, some of those reasons are: old technology; bad operation and maintenance; lack of efficiency expertise; lack of rules and regulations for the promotion and encouragement of an energy-efficient system. Recent experience in Jordan has confirmed that developing countries can improve the efficiency of energy-use in virtually all sectors. This requires a wide range of measures, of which rational pricing has proved to be particularly important. Experience has shown that appropriate pricing usually needs to be supplemented with other demand management measures such as promotional or educational efforts, along with training and technical assistance. For large energy users, direct government assistance and support may be necessary to identify and realize the substantial savings that can be achieved through better energy management, maintenance and other low-cost improvement, as well as through large investment in retrofitting and process change. For the smaller users in all sectors, the priority is to develop the relevant policies conducive to conservation as well as suitable institutions to provide them with the information, incentives and know-how to improve their own energy efficiency. An energy efficiency programme must address the major issues of awareness especially at the top management level, technical skills to identify and resolve energy-related problems, and to provide proper financial evaluation of potential investments.
598
ENERGY POLICY December 1989
R. Aburas
Jordan imports almost all the energy required for Its social and economic development. Durlng the perlod 197484, energy consumptlon grew at an average rate of about 14%/yser, due malnly to growth in the national economy; but exacerbated by Inefficient use of energy. To allevlate the burden o1 the energy blll on the economy, the Minlstry of Energy has adopted a pollcy aimed at securlng sufflclent energy supplies at mlnlmum cost to the economy. This policy has focused on improving the efflclency of energy-use and encouraglng energy conservation in order to reduce the effect of oil Imports on foreign reserves, reduce the impact of emlsslons of toxic gases on the evlronment, and the cost of addltlonal investment In production facilitles. The energy conservaUon programme was put into application In early 1985. The energy Income elastlcity during the perlod 1985-88 has dropped from (1.4) to (1), whlch indicates a substanUal Improvement in overall energy utlllzatlon.
Jordan is totally dependent on imported crude oil and some petroleum products to meet domestic energy demand required for its socioeconomic development. During the period 1974-84, energy consumption grew at an average rate of about 14%/year. The energy bill averaged at 13% of gross national product (GNP) and consumed most of the foreign exchange earned by the exports of all Jordanian commodities during this period. The high growth in consumption was mainly due to the growth in the national economy. However, a more efficient use of energy could have been achieved without constraining economic growth. Unfortunately, the country then lacked a comprehensive national energy policy to achieve such an improvement in efficiency. To address this shortcoming, the government set up in 1984 the Ministry of Energy and Mineral Resources (MEMR) whose goals included planning, formulation of general strategies, and conducting research related to the energy sector. Since its establishment, MEMR has adopted a policy that aims at securing sufficient supply of energy at the minimum possible cost to the economy. MEMR has focused on five measures including: •
Keywords: Energy conservation; Jordan; Policy R. Aburas is Director, Industrial Energy Department, Ministry of Energy and Mineral Resources, PO Box 2310, Amman, Jordan.
•
• •
•
Development of domestic energy resources through the intensification of exploration for fossil fuels and exploitation of any economically feasibile energy resources including renewable resources such as wind, passive solar, etc. Improvement in the efficiency of energy-use and encouragement of energy conservation in order to reduce oil imports, reduce the emission of toxic gases to the environment and postpone additional investment in production facilities such as refineries and power plants. Fuel diversification which entails the shift from the use of only one form of fuel to the use of a variety of fuels. Technology transfer; to improve the abilities of its professionals by sending them abroad for training or by giving them the opportunity to work as counterparts with foreign consultants employed by MEMR to carry out feasibility studies or provide technical assistance in Jordan. Investment optimization; due to the limitation of financial resources, MEMR is using the available resources in the best possible manner. Projects are only implemented when needed and should be
0301-4215/89/060591-08503.00 © 1989 Butterworth & Co (Publishers) Ltd -
591
Energy conservation policies in Jordan
completed within the projected time. Funds should be raised at the lowest possible cost. This paper will discuss the energy conservation programme which was designed in early 1985 and which aims at improving the efficiency of energy utilization in the various economic sectors.
Energy conservation concepts A policy which encourages conservation of fuels and the application of sound management principles to the use of all forms of energy in all sectors of the economy, is a logical and effective complement to other energy policies such as exploration, pricing, and R&D.1 By restraining levels of growth in overall energy demand, energy efficiency improvements will contribute to longer term energy supply security, will result in direct cost savings for the consumer, may defer or eliminate the need to expand energy supply capacity and can also have a profound influence on the progress of the economy. Savings in total energy demand resulted from greater energy efficiency can therefore be regarded as an alternative source of supply. Energy conservation is defined as energy demand management activities that aim at increasing the efficiency of use. 2 This efficiency has two different, although not separate, components: technical efficiency and economic energy efficiency. Technical efficiency is often measured by the first law of thermodynamics, which provides a quantitative estimate of the ratio of useful energy output (of a given process or piece of equipment) to energy input. The second component, economic efficiency, refers to fuel substitution which results in providing the same energy service (eg producing steam at given temperature and pressure conditions) at a lower cost. Energy conservation potential for a given activity over a given period can be defined as the maximum amount of energy, computed either at the primary energy or end-use level, that could be saved using specific economic conditions. There are two approaches to estimating energy conservation potential. The micro approach consists of estimating at the plant level cumulative energy savings resulting from the implementation of all possible conservation measures corresponding to the selected technological and economic conditions. 3 The other approach is the macro approach, which uses a baseline ratio of energy and economy indicator (eg tonnes of oil equivalent/thousand dollars of GDP) and project it into the future according to recent past trends. By comparing this trend (for example an energy/GDP elasticity of 1.3) to other countries or any other reference, it is possible to set a macro goal, eg to reduce energy elasticity to 0.7 in seven years. Depending on the cost required, energy conservation measures are often grouped into three categories: 1International Energy Agency, Energy Conservation in lEA Countries, lEA, Paris, France, 1987. aEnergy and Development, report prepared for the Commission of the European Communities. aEnergy Demand Management and Conservation Manual for Industry and Building, prepared by Hagler, Baily and Company for the United States Agency for International Development.
592
Q
Q
•
No-cost measures, often called 'housekeeping' measures, which can be implemented very quickly and easily and at very small expense (eg shutting down equipment when not required, reducing excess air in boilers. Minor capital investment, which requires only limited expenditure, have paybacks of less than two years, and can be implemented within a few months. Major modifications which require relatively large capital expendi-
ENERGY
P O L I C Y D e c e m b e r 1989
Energy conservation poficies in Jordan
tures, have longer paybacks and require detailed feasibility studies prior to implementation.
Jordan's energy conservation programme Since early 1985, MEMR has set up a programme which aims at encouraging conservation of energy and the application of sound management principles to the use of all forms of energy in all sectors of the economy. The following measures were emphasized in the programme. 4
Proper pricing poficies The most important of these measures is an energy pricing strategy which can provide energy users with an incentive to eliminate energy waste and enable them to choose fuels on the basis of their costs to the economy. In recent years, Jordan has recognized the central importance of pricing in designing strategies to manage the energy sector and thus begin to raise prices to reflect increased costs, for both electricity and petroleum products. Consequently, Jordan has adopted pricing policies which aim at removing subsidies to the energy sector and eliminating the non-economic usage of energy. According to this policy, any increase in the cost of energy is always fully passed on to the final users. Consequently, the weighted average of retail petroleum products is higher than its import parity in all these products. However, the government recognized the necessity of making energy available to low-income groups and to export-oriented industries at relatively lower rates than those available to the other groups; even so, those prices reflect the real costs and are not subsidized. Table 1 shows 1987 energy prices in Jordan compared to these in some oil-importing and oil-exporting countries. It can be seen from Table 1 that gasoline and heavy oil prices in Jordan are almost equal to those prevailing in European countries. But, the price of gas oil is lower than that in those countries due to the fact that gas oil is used by almost all economic sectors, including exportoriented industries, and the low-income groups, which use it for space heating in winter. However, prices of all forms of energy in Jordan are much higher than those prevailing in the region.
Free audits
4R. Aburas, S. Lloyd and M. Webster,
Waste Heat Recovery in Jordan Petroleum Refinery, Energy World, No 164, November 1988.
Free audits are provided to small, medium and large industrial, commercial and transport institutions. To date comprehensive energy audits, free of charge, have been made by the Ministry in more than 40 institutions. The industrial and power generating sectors account for over 40% of the country's energy consumption and the majority of this is concenTable 1. Energy prices in Jordan compared to other countries, 1987.
ENERGY POLICY December 1989
Country (USC/litre)
Gasoline (USC/litre)
Gas oil (USC/litre)
Fuel oll (US$/tonne)
Jordan Syria Egypt France Belgium Greece
52 25 15 78 67 50
19 7 4 54 45 28
145 17 150 133 180
593
Energy conservation policies in Jordan
trated in six major industries; oil refining, power generation, cement, fertilizers, phosphate mining and potash extraction. As part of the energy conservation programme, M E M R in cooperation with Bechtel International, undertook a study on energy saving in large industries. The main objective of this study was to identify and develop practical economic measures for energy conservation to the point where the industries themselves can put them into operation. Emphasis was first given to measures involving operational improvements and requiring no capital expenditures. In all of the measures considered in this study, between 50 and 60 measures have proven to be cost-effective. In total, these measures would save over 12 GWH/year of electrical energy and between 80 000-100 000 tonnes/year of fuel oil, depending on the plant throughput. This is equivalent to more than 2% of Jordan's oil consumption in 1987. Table 2 shows a summary of the energy savings in each individual industry. MEMR, in cooperation with AFME of France, has also carried out a comprehensive study in order to improve energy consumption in the transport sector, which consumes about 40% of Jordan's total primary energy consumption. The study covered three parts: the first dealt with the issues related to infrastructure, traffic management, prices, types of fuel used by the sector, etc; the second studied the economic feasibility of establishing a drivers training centre to train the drivers in efficient driving; and the third part included an energy audit for five of the large transport companies. It was found that between 5% to 10% of the consumption of these companies could be saved after the implementation of the recommended measures. While Jordan's industrial sector is dominated by a few major industries there are a large number (about 1 500) of small and medium sized industries, each employing five to 25 employees. Most of these industries are in the food manufacturing, mining and quarrying, furniture and wood products, mineral products, machinery, and clothing subsectors. MEMR, employing its own team, carried out energy audits in more than 20 of those industries and in about 10 large commercial enterprises including hotels, hospitals, shopping centres, etc. The potential for energy savings ranges from 7% to 30% as shown in Table 3. Paybacks under one year are the rule, not the exception. The measures proposed as a result of the audits include: • • • • •
Improved operating and maintenance techniques. Better housekeeping. Heat recovery from flue gases. Improved process control and combustion control. Fuel oil preheating.
Table 2. Summary of the findings of the Energy Audit Study for large industries.
Industry Oil refinery Power plants Cement plants Fertilizer plant Phosphate mining Steel mills Glass plant Potash Total
594
Expected saving at design capacity (1 000 tonne/year)
Saving at present capacity (tonne/year) (US$1 000/year)
39 2 2 20 34 4 6 2
26 2 2 13 34 3 4 1
2 600 200 200 1 300 3 400 300 400 100
109
85
8 500
ENERGY POLICY December 1989
Energy conservation policies in Jordan
• • • • •
Substitution of gas oil by fuel oil. Improved thermal insulation. Improved lighting systems. Improved power factors. Electrical load management (peak to off-peak).
The potential savings through broad application of these types of measures in small and medium-sized industrial and commercial enterprises are estimated to be in the range of 1.5% of total oil consumption in 1987 amounting to about 45 000 tonnes of fuel/year and valued at about US$4-5 million/year.
Legislation and regulations Regulatory means are necessary to achieve energy saving programmes. Regulations covering a broad range of energy related activities and equipment such as lighting, space heating, insulation, cars, etc, 5 were issued. For example, the introduction of progressive taxes on cars by size of engine, helped to achieve a flat gasoline demand during 1984-88. However, there are still some areas where the regulatory approach should be investigated. For example, the reporting of energy consumption data could be made compulsory. Regulations should also be introduced in the factory licensing procedures to ensure that the energy efficiency of a new plant is considered carefully by both owners and designers. Regulations could also be introduced to require all firms to have their equipment efficiency checked regularly. Incentives Incentives include direct financial assistance (grants) for research, development and demonstration projects, soft loans through the Industrial Development Bank for installing energy efficient devices or equipment. In this regard the Ministry has cofinanced a demonstration project on passive solar, another for electrifying a remote village by solar cells, and utilization of wind turbines for water pumping in the same village. Consumer education Consistent with its objectives of minimizing the use of regulation and financial or fiscal incentives, the Ministry has chosen to concentrate on information, demonstration and technology transfer activities as the cornerstone of its energy efficiency promotion strategy. Information campaigns are used to create awareness on the part of consumers of the benefits of energy savings. The campaigns include brochures, pamphlets, TV films, general or specific seminars. Table 3. Summary of energy savings in some industries audited by the Mlnistry's team. Investment required
Savings
Saving/year
Payback
Plant
(US$ 000)
(US$ O00/year)
(%)
(US$ 000)
Arab Pharmaceutical Batteries factory Jordan Pipes Manufacturing Jordan sewing and netting Polystyrene factory Flour mill Yeast manufacturing Plastic bags
54 21 60 60 30 9 12 2 10 9
42 30 75 75 72 24 33 7 36 12
15 9 30 11 30 7 15 7 25 20
1.3 < 1 < 1 < 1 < 1 < < 1 <1 <1 < 1
Jordan rock wool General plastics
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Education also includes training programmes which could be addressed to several different groups such as energy auditors, energy managers of enterprises, boiler operators and maintenance engineers. Moreover, MEMR tries always to acquire a full selection of reports and technical data related to energy efficiency from a broad range of institutions from developed countries, and make those available free of charge, to the relevant local enterprises. In addition to technical information, MEMR is building a data base of energy consumption information provided from energy-users. This information should be analysed to check on specific energy consumptions. Any variations in energy intensity should be noted and the result of analysis should be sent to the factory concerned, with comments and suggestions wherever appropriate. The information developed in the course of audits, such as the magnitude of savings obtainable from specific energy conservation measures and their typical payback periods, will be entered in the data base and used for the development of promotional literature.
Advisory services Energy users, either individuals or firms, may simply be unaware of the potential benefits of using energy efficiently or of the technical options available for doing so. First, the access to recently developed energy efficient equipment and techniques is limited. Second, as with any 'new' technology there is still considerable scepticism that significant improvements in efficiency can really be brought about. To combat this, the Ministry has decided to establish a chain of Energy Advisory Centres to provide consultative and technical services to the public, including the introduction of new energy saving equipment.
Fuel substitution Fuel diversification or fuel substitution entails the shift from the use of only one form of energy to a variety of fuels or the shift from higher value fuels to lower value fuels. An example is the shift from oil to coal or natural gas. This shift usually results in improving the cost of energy to the economy. However, the issue of oil substitution in Jordan, for a number of economic, geographical and resource reasons, cannot be considered in the same light as the issue in industrialized countries. First, the country is located in the centre of the Arab oil-exporting countries, and Jordan is interconnected with most of these countries with trade agreements which entail exchange of goods and commodities. Second, the infrastructure needed for coal or gas import requires a huge amount of investment which a country with limited financial resources, like Jordan, cannot afford. Despite the above mentioned facts, MEMR exerted a great deal of effort to convince energy consumers to shift from using higher value oil products like gas oil to lower value oil products like fuel oil or to shift from using electricity for domestic water heating to using solar energy. Monitoring the results by field surveys has indicated that the response from energy consumers is encouraging. Moreover, the first power station utilizing domestic natural gas was put into operation earlier this year. The power station consists of two gas turbines each of 30 MW capacity and the gas will come from a small gas field which has been recently discovered.
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Barriers to energy conservation The successful definition, implementation and management of energy conservation programmes requires more than the mastering of the laws of thermodynamics. Energy conservation programmes usually require the integration of many activities, and overcoming a variety of obstacles, including problems such as lack of top management support, an inadequate decisionmaking structure, lack of information, lack of energy auditing capabilities and the unavailability of funds. The most important barriers are: 5
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5Report of The Office of Energy, Recommendations for Industrial Energy Efficiency Program in Jordan, prepared by RCG/
Hagler, Baily, Inc, May 1988.
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Low energy costs. When energy costs represent only a small percentage of total production cost, it is obvious that the management will not pay attention to energy savings and instead will focus on other production factors. Fortunately, energy prices in Jordan are high enough to the extent that most energy saving programmes could be cost effective. Lack of awareness of potential benefits. Energy management is a relatively new management function and it is most important that the decisionmakers in the different energy consuming enterprises understood that energy can be managed as efficiently as labour, raw materials and finance. To overcome this obstacle, MEMR always tries to involve the decisionmakers in energy consuming enterprises in seminars and provide them with information materials on the subject. Inability to define problems. Partly because of lack of awareness of the potential benefits of energy efficiency, there appears to be an inability in some enterprises to define energy related problems and to identify specific areas where saving can be made. A lack of experienced engineering personnel in the typical small enterprise is apparently a serious barrier to improvements, especially in the absence of outside help. Inability to economically evaluate the technical options. Where capital investment may be involved, small and medium-sized enterprises tend to lack the technical skills needed to examine the range of options for improving energy efficiency and select the most cost-effective solution for a specific situation. Equally important is the financial evaluation of potential conservation investments. If a plant owner cannot be convinced that an investment is financially attractive, he clearly will not invest his money. Engineers must be trained to present the case for energy efficiency in financial terms including an appraisal of any risk factors involved. Many engineers have insufficient experience in financial matters. To achieve good results, an engineer should have a basic understanding of the financial situation in his company, he must be able to relate his conservation ideas to the magnitude of profit that can be achieved by the company. Lack of energy accounting in enterprises. One reason for a lack of awareness of the significance of the cost of energy in overall production cost is the failure of book-keeping in small and medium sized enterprises to identify energy consumption as a separate line item. Energy is viewed as just another cost or overhead that has to be paid at the end of the month. Owners, also, are often unwilling to give their employees any information about costs or other financial matters. Without proper accounting of energy and 597
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distribution of cost information to managers in an enterprise, effective energy management is impossible. MEMR is making great efforts to promote the collection and analysis of routine energy consumption data as a necessary condition to improvement in energy efficiency, because a plant manager cannot be responsible for controlling energy costs if he is ignorant of what those costs actually are.
Evaluation of Jordan's national energy programme Jordan's national energy programme was put into application in early 1985. During the period 1985-88, the energy consumption growth rate dropped to about 2.5% which is the same growth rate of the economy during the period under consideration. Consequently, the energy elasticity has dropped from (1.4) during 1974-84 to about (1) during the period 1985-88 which indicates a substantial improvement in the overall energy utilization efficiency. Examining the energy consumption of the audited enterprises showed that their rate of fuel consumption has achieved a fair improvement. However, the results of the programme will be seen more clearly in the next few years because there is always a time lag between the application and obtaining the results. Moreover, although what has been done is quite good by developing country standards, there is still a large room for improvement in all energy consuming sectors in general and in the transport and industrial sectors in particular.
Conclusions Most of the energy consuming systems in developing countries are of low efficiency due to a variety of reasons, some of those reasons are: old technology; bad operation and maintenance; lack of efficiency expertise; lack of rules and regulations for the promotion and encouragement of an energy-efficient system. Recent experience in Jordan has confirmed that developing countries can improve the efficiency of energy-use in virtually all sectors. This requires a wide range of measures, of which rational pricing has proved to be particularly important. Experience has shown that appropriate pricing usually needs to be supplemented with other demand management measures such as promotional or educational efforts, along with training and technical assistance. For large energy users, direct government assistance and support may be necessary to identify and realize the substantial savings that can be achieved through better energy management, maintenance and other low-cost improvement, as well as through large investment in retrofitting and process change. For the smaller users in all sectors, the priority is to develop the relevant policies conducive to conservation as well as suitable institutions to provide them with the information, incentives and know-how to improve their own energy efficiency. An energy efficiency programme must address the major issues of awareness especially at the top management level, technical skills to identify and resolve energy-related problems, and to provide proper financial evaluation of potential investments.
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