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Potential options to reduce GHG emissions in Venezuela
Applied Energy, Vol. 56, Nos 3/4, pp. 265 286, 1997 © 1997 Published by Elsevier Science Ltd All rights reserved. Printed in Great Britain ELSEVIER
PII:
S0306-2619(97)00010-X
0306-2619/97517.00+0.00
Potential Options to Reduce G H G Emissions in V e n e z u e l a Nora Pereira, Yamil Bonduki, and Martha Perdomo Venezuelan Case Study to Address Climate Change, Ministry of Environment and Renewable Natural Resources, Ministry of Energy and Mines Torre Oeste, Piso 19, Ofic. 19-3, Parque Central, Caracas, Venezuela
ABSTRACT This paper presents a summary of the technologies and practices that could be implemented in Venezuela in order to contribute to both climate change mitigation and national development efforts. The mitigation analysis concentrates on options to reduce C02 emissions generated from the energy sector and land-use change. From the mitigation options analyzed for the energy sector it was determined that the most effective are those in the transportation sector (switching to larger capacity vehicles, reduced private vehicle share, and switching fuels for public transportation from gasoline to natural gas), both in terms of contribution to emissions reduction and costs. Regarding the options for industry, boilers conversion from liquids to natural gas shows negative cost, but to a considerably lower extent that for the transportation sector. Efficiency improvements of natural gas boilers, which presents close to zero cost, is more effective in reducing emissions than boiler conversion. Increase in hydro power generation is the alternative with the highest total cost but it is very effective in reducing emissions. From the mitigation options analyzed for land-use change, it was established that the forest sector has a considerable potential for reducing C02 emissions through the adoption of sustainable forest practices, especially by slowing the rate of forest loss and degradation. Maintenance of already existing biomass in natural forests should be the first priority of forest measures to reduce the amount of carbon released to the atmosphere. Forest protection and management of native forest represent the two options with the highest carbon conservation potential and the lowest carbon unit cost. Expansion of the forest cover through the development of intensive forest plantations also presents a high potential to offset carbon emissions in Venezuela. An analysis of the barriers to mitigation options implementation shows that in the energy sector, low energy prices represent the main barrier to any mitigation program. Another important limitation to mitigation strategies implementation is the lack of 265
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N. Pereira, Y. Bonduki, M. Perdomo
institutional capacity and legal instruments for developing the mitigation measures. In the forest sector the primary causes of forest clearing in the country are not related to forest activities, so the definition of feasible mitigation options will depend upon a good understanding of other economic sectors and how they account for land-use change. Land tenure, rural poverty, political interests, and weak implementation of land-use planning instruments and environmental laws are considered to be the key limitations to any effort dealing with forest conservation. Land tenure, economicfactors, and lack of incentives represent some of the most important barriers to the development of forest plantations and agroforestry systems in the country. © 1997 Published by Elsevier Science Ltd. INTRODUCTION The Government of Venezuela ratified the United Nations Framework Convention on Climate Change (UNFCCC) in December 1994. The Convention requires all parties to develop and publish national inventories of anthropogenic greenhouse gas (GHG) emissions as well as national plans to reduce or control emissions, taking into account their common but differentiated responsibilities and their specific national and regional development priorities, objectives, and circumstances. Within this context, the Ministry of Environment and Renewable Natural Resources and the Ministry of Energy and Mines developed the "Venezuelan Case Study to Address Climate Change." The Study was initiated in October 1993, with the financial and technical assistance of the Government of United States (through the U.S. Country Studies Program) and the Global Environment Facility (through the United Nations Environment Programme. The objectives of the Study are (i) to develop a national inventory of anthropogenic emissions and removals of all greenhouse gases, (ii) to assess GHG mitigation options, and (iii) to formulate a national climate change action plan. According to the national GHG emissions inventory, 1the primary sources of CO2 in Venezuela are energy combustion (56%) and deforestation (42%). The sources are the energy sector (59%) (fugitive emissions from the oil- and gas-production systems) and the agricultural sector (29%). This paper presents a summary of the technologies and practices that could be implemented in Venezuela that would contribute to climate change mitigation and national development efforts. The selection of the sectors included in the mitigation options assessment was based on a detailed analysis that took into consideration the contribution of the main sources of national GHG emissions, the relevant natural and socio-economic characteristics of the country, the potential technologies for emissions reduction, and local experience in related fields. The mitigation analysis concentrates on options to reduce CO2 emissions generated from the energy sector and land-use change. In the energy sector, the analysis was centered on the energy industry, the transportation sector, and the manufacturing industry, since these three sectors jointly generate 94% of the CO2 emissions from energy combustion.
GHG emissions in Venezuela
267
The mitigation analysis for land-use change is based in the forestry sector. The analysis considers two broad categories of sustainable forest practices: management and conservation of existing forests to reduce or avoid carbon emissions and management for expanding forest cover to increase carbon storage. MITIGATION OPTIONS IN THE ENERGY SECTOR Venezuela has diverse and abundant energy resources. The total volume of proven energy reserves in 1995 was 112.5 billion barrels of oil equivalent (BOE), of which oil represented 63.8% of the total, natural gas 28.1%, coal 7.9%, and hydroenergy 0.2%. The technical potential for renewable energies, including solar, wind, biomass, geothermal, and mini-hydro, has been conservatively estimated at more than 4 million BOE/day. Because of decreased exports of crude oil and oil products, oil production decreased from 3.78 million BOE/day in 1970 to 2.35 million B O E / d a y in 1994. Power generation capacity increased from 2677 MW in 1970 to 18,613 MW in 1994. The ratio of thermal to hydro capacity, which was 68:32 during the 1970s, changed to 24:76 in 1994 thanks to the completion of the Guri hydropower plant. Population that had access to electricity services jumped from 60% in 1970 to 90% in 1994. The main changes in the structure of final energy consumption in the last 20 years include (i) an increased share of natural gas in industrial consumption from about 45% in 1970 to almost 52% in 1994, (ii) an increased share of LPG in household consumption from less than 10% in 1970 to almost 40% in 1994, and (iii) an increased share of electricity in total final consumption from 7.9% in 1970 to 14% in 1994 (in the industrial sector) and from 26% to almost 50% (in the household sector) in the same time period. Methods
The GHG mitigation assessment includes selecting options and evaluating their impacts, including the associated costs, on CO2 emissions and the energy system. To identify, evaluate, and compare possible mitigation options, an integrated study of the national energy supply and demand systems was carried out. Two scenarios were considered, according to the Guidebook for Mitigation Assessments: ~" The baseline scenario described the plausible future of the Venezuelan energy system. No specific actions to reduce GHG emissions are taken; but this scenario does include some adoption of enhanced technologies and actions to obtain a greater efficiency in the use of resources. The second scenario, a mitigation scenario, describes a similar future as the baseline scenario regarding the evolution of macroeconomic and social aspects, but assumes that efforts will be made to encourage the adoption of mitigation measures. The assessment included the following activities:
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N. Pereira, Y. Bonduki, M. Perdomo
development of a macroeconomic scenario; projection of baseline energy demand using the LEAP model;3 evaluation of the ~ower system expansion, using the ELECTRIC module of the ENPEP model and the PLHITER model; construction and projection of the energy system's supply and demand network using the BALANCE module of the ENPEP model; estimates of the baseline scenario parameters; identification and assessment of potential mitigation options; impact assessment of several mitigation options using the BALANCE module; and identification of barriers and feasible mitigation options.
CO2 emissions were estimated by fuel type, using the emission factors of the IPCC methodology. The cost-benefit evaluation was conducted with the BALANCE module results, using the following approach: The mitigation costs are the incremental costs for implementing mitigation options, calculated as the difference between the costs in the mitigation and the baseline scenarios. These incremental costs result from the additional costs that the final user has to cover, the differences in energy supply costs as a result of changes in the final consumption, and the supplier's income differences in both the domestic and exportation markets resulting from the implementation of a specific mitigation option. Final user costs consider fuel, operation and maintenance, and capital costs. The BALANCE module provides results for each of these costs per year, throughout the study period. Costs are discounted to 1990 at 10% and then aggregated to obtain the total mitigation cost for the whole period. BASELINE SCENARIO
Assumptions The baseline scenario for the 1990-2025 period was based on a macroeconomic scenario that assumes sustained economic development, where the barriers that currently restrict the country's economic development will be overcome but no major structural changes will take place. The oil industry reduces its participation in the gross domestic product (GDP) from 28% in 1990 to 24% in 2025, while, as a result of developments in the aluminum and petrochemical industries, the manufacturing industry's share increases from 15% to 17%. A moderate decrease in the contribution of the service sector is assumed as are a reduction in annual population growth rate (from 2.4% in 1990 to 2.1% in 2025) and a GDP growth of 4% per year for the same period. In the sectoral energy demand scenarios, changes in energy-use intensities are assumed as a result of improvements in equipment efficiency, better energy management, and changes in lifestyle. In the simulation, a gradual increase in energy prices is set forth until they reach their opportunity cost (FOB export costs) in the case of oil fuels, or their marginal cost, in the case of natural gas and
269
GHG emissions in Venezuela
electricity, in 1996. However, this policy has not been fully implemented due to social and political implications. The baseline scenario assumes transformations in the energy system as a result of economic development, but no additional efforts are made to establish specific policies or measures to control or reduce GHG emissions. Results
Primary energy production, 1000 million BOE in 1990, would double by 2010 and would be 4.6 times higher by 2025. Table 1 shows that this high increase (4.4% annually) is brought about by fossil fuel production, encouraged by exports that grow approximately 5% per year. Final consumption of fossil fuels and use for electrical generation grows by 3.3% and 2.6% per year respectively (Table 2). TABLE 1
Primary energy production (103 BOE). Baseline scenario Year
Crude oil Natural gas Coal Hidroenergy Total
1990
834,126 132,975 11,188 22,264 1,000,553
1995
1,005,187 160,245 16,900 35,624 1,217,956
2000
2005
1,230,066 196,095 26,195 42,450 1,494,806
2010
1,509,317 1,872,833 240,613 298,564 41,119 65,106 49,386 51,094 1,840,435 2,287,597
2015
2,338,686 372,829 103,698 52,261 2,867,474
2020
2025
2,925,804 466,427 165,800 50,582 3,608,613
3,662,565 583,881 265,769 53,221 4,565,436
TABLE 2
Fossil fuels use (103 BOE). Baseline scenario Year
Exports Final consumption Electricity
1990
2000
2005
2010
2015
718941 188523
1995
889732 220203
1108915 252327
1387752 290749
1743383 342178
2198904 408137
2020
2785910 490869
3518514 587240.3
2025
53184
17719
15116
16998
40167
64318
98520
130141
960648
1127654
1376358
1695499
2125728
2671359
generation Total
3375299 4235895.3
In the baseline scenario, hydroelectricity generation increases to 88,544 GWh by 2011, remaining constant thereafter through the study period. After 2011, the increase in demand is met with natural gas thermal generation. Final energy consumption, 189 million BOE in 1990, almost doubles by the year 2010 and would almost triple by 2025. This represents a growth of 3.3% annually during the period, which is lower than the average growth assumed for the GDP (3.9%). Final fossil fuel consumption grows at 3.3% annually, while electricity consumption grows at 3.0%. Natural gas shows the highest growth (4.2% per year), increasing its share of the total final consumption from 33% in 1990 to 44% in 2025. With respect to energy consumption by sector, the industrial sector shows the highest growth, with an annual rate of 4%, followed by transportation (2.7%), residential, services, and other sectors (1.6%).
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Table 3 shows the estimates of CO2 emissions generated by the energy-sector activities, distributed by sector and fuel. The growth of emissions from final energy consumption (2.9%) is lower than the growth of energy consumption, primarily due to a higher use of natural gas instead of liquid fuels that have a higher carbon content. TABLE 3
CO2 emissions (103 ton). Baseline scenario Year 1990 Final consumpt ion by sectors Industry 24818 Transport 29180 Residential 4272 Total 58269 Final consumption by fuels Oil 38347 Natural gas 18951 Coal&Coke 972 Electricity 0 Biomass 0 Total 58269 Electricity gen,.~ration Diesel 972 Residual 5411 Natural gas 13182 Total 19565
1995
2000
2005
2010
2015
2020
2025
30110 33001 4674 67785
36174 35945 4973 77091
43780 38832 5444 88056
53306 44142 5866 103315
65036 51956 6428 123419
79826 61658 7048 148532
94600 73216 7449 175265
43064 23695 1026 0 0 67785
46731 29285 1076 0 0 77091
50700 36229 I 128 0 0 88056
57347 44785 1183 0 0 103315
66879 55294 1246 0 0 123419
78853 68362 1317 0 0 148532
89741 84126 1398 0 0 175265
0 0 6007 6007
0 0 5196 5196
0 0 5906 5906
0 0 14079 14079
0 0 22744 22744
0 0 33075 33075
0 0 43659 43659
MITIGATION OPTIONS ASSESSMENT Industrial S e c t o r - - S t e a m G e n e r a t i o n
Two mitigation options were considered for boilers operating in branches classified by the International Standard Industrial Classification (ISIC) of all economic activities: (31) Foods, Beverages, and Tobacco; (35) Chemicals and Coal; and (37) Basic Metals. These three branches together consume 82% of the energy used in steam generation. The options are converting boilers from liquid fuels to natural gas and improving the efficiency of existing natural gas boilers through annual maintenance programs, s In the baseline scenario, only the incorporation of new natural gas burning boilers is considered to meet the increased steam requirements in this sector, which slightly raises the average efficiency of the equipment. Option 1: Boiler Conversion from Liquid Fuels to Natural Gas
With this option, a new burner is substituted and pressure regulators and automatic valves are installed. Efficiency of the converted natural gas boiler reaches 85%. Implementation of this option is assumed to begin in year 2000 and finish by 2005, when all liquid fuel boilers will have been replaced. Table 4
GHG emissions in Venezuela
271
shows the investment and operation costs involved in the application of this mitigation option; Table 5 summarizes energy savings, CO2 emissions reductions, and the cost for the final user, which decreases. TABLE 4
Investment and characteristics of boiler conversions from liquid fuels to natural gas Industrial branch Food, beverage & tobacco Chemicals Basic Metals
Power (liP)
Investment (10t S/plant)
O&M Cost ($/BOE)
Efficiency (%)
Capacity 10a BOE~ear
250
10.03
0.23
85
5.54
150 150
9.43 9.43
0.38 0.38
85 85
3.32 3.32
TABLE 5
Differences between boilers conversion mitigation option and baseline scenario Year
2000
E n e r g y c o n s u m p t i o n for steam generation (103 BOE) Baseline 24531 Energy Saving 101 % 0.4 C O 2 emissions (103 TON) Baseline 7921 C02 r e d u c t i o n 71 % 0.9 Final u s e r costs (10a $) Baseline 166 Mitigation -3.8 % 2.3
2005
2010
2015
2020
2025
29013 498 1.7
34325 458 1.3
40863 463 1.1
48587 1764 3.6
57706 1835 3.2
9318 333 3.6
11019 303 2.6
13109 309 2.4
15608 327 2.1
18646 386 2.1
192 -19.7 10.3
263 -17.3 6.6
313 -18.5 5.9
438 -19.5 4.3
525 -24.6 4.5
Option 2: Natural Gas Boiler Maintenance Program
Combustion adjustment is one of the measures that increases boiler efficiency. This adjustment consists of obtaining a correct oxygen-fuel mixture in order to have complete combustion for the type of burner used. Other items in the maintenance program include the elimination of steam leaks, sealing the oxygen chamber, cleaning the fireside boiler tube, proper repair of the refractors, adjustment and proper cleaning of burners, and adequate inspection of control and safety devices. Implementation of this option is assumed to begin in 2000, initially on 20% of existing boilers, and will be progressively extended to the year 2004, when all the boilers will have been attended to. This option will only be adopted in Branches 31 (foods, beverages, and tobacco) and 35 (chemicals and coal), where natural gas boiler efficiency is about 78% and is supposed to increase up to 82%. The yearly operating and maintenance costs for implementing this option, as well as the new boiler efficiencies assumed for this mitigation measure, are shown in Table 6. Table 7 shows results related to energy savings, CO2 emissions reduction, and the final user costs, which decrease.
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TABLE 6
Operations and maintenance costs and boiler efficiency improvements for natural gas boiler improvements Industrial branch Food, beverage & tobacco
Chemicals
Year O & M Costs
2000
2001
2002
2003
2004
2005-2025
$/BOE Efficiency % O & M Costs $/BOE Efficiency %
0.15
0.16
0.18
0.19
0.20
0.20
78
79
80
81
82
82
0.21
0.22
0.24
0.25
0.27
0.27
78
79
80
81
82
82
TABLE 7
Differences between natural gas boilers maintenance program mitigation option and baseline scenario Year 2000 Energy consumption for steam generation (103) BOE Baseline 21089 Energy saving 228 % 1.1 CO 2 emissions (10~TON) Baseline 6751 C02 reduction 76 % 1.1 Final user costs (106 $) Baseline 135.4 Mitigation -1.0 % 0.7
2005
2010
2015
2020
2025
24838 1325 5.3
29270 1604 5.5
34742 1928 5.6
41177 2309 5.6
48733 2759 5.7
7901 447 5.7
9303 543 5.8
11030 656 6.0
13091 787 6.0
15598 944 6.1
154.4 -6.0 3.9
211.5 -9.5 4.5
249.8 -11.8 4.7
350.9 -17.1 5.0
419.5 -21.5 5.1
Industrial Sector m Direct Heat
In 1990, the basic metals industries (Branch 37) accounted for 41% of the total energy consumption in the manufacturing industry and 50% of direct heat consumption. 6The steel and aluminum industries consume almost all the energy for direct heat in Branch 37. Two mitigation options were formulated: changes in iron mineral reduction, and combustion efficiency improvement in natural gas furnaces for foundry and lamination. The baseline scenario considers development of the steel and aluminum industries under the following assumptions: (i) energy demand for direct heat will increase at an annual rate of 4.2%, (ii) there will be no action concerning relevant changes in processes, and (iii) there will be some improvement in energy efficiencies due to the renewal and introduction of new equipment.
273
GHG emissions in Venezuela Option 3: Changes in Direct Reduction of Iron Ore
Table 8 presents the characteristics of available technology in the Venezuelan steel industry. Because they are the most important in terms of capacity and production, the "H&L" and "Midrex" technologies were considered in the mitigation analysis. When analyzing consumption of natural gas per ton of production for each technology, a significant difference (4.86 BOE/ton and 2.04 BOE/ton) is observed. This difference is due to the fact that (1) the actual value of the "H&L" technology is more than double the theoretical value (2.1 BOE/ton) and (2) the "H&L" is the oldest reduction technology and did not fully achieve the designed production levels. Thus, CO2 emissions reduction could be obtained through improving the energy efficiency of the "H&L" technology or through a process of conversion or substitution by more efficient technologies. Furthermore, the Midrex technology could also be improved. TABLE 8
Direct reduction iron technologies in the Venuzuelan steel industry Technology Product Capacity 103 TON/year Production 10~TON/year Present state
Input Furnace type
Gas Treatment Pressure Specific energy consumption Natural gas BOE/TON Electricity BOE/TON (1) Actual Values (2)Theorical Values
"H & L .... DRI 2,163.00 1,172.00 Operation Lump/Pellet s Reducing Shaft Batching Process Reforming 5 Bar
Midrex . . . . DRI 1,630.00 1,615.00 Operation Lump/Pellets
Arex . . . . DRI 450.00
Reducing Shaft Continuous Process Reforming Atmospheric
Reducing Shaft Fluid Bed
Fluid Bed
Continuous Continuous Process Auto Reforming Reforming Atmospheric 10 Bar
Continuous
4.86 (1) 0.08 (1)
2.04 (1) 0.06 (1)
1.86 (2) 0.05 (2)
3.17 (2) 0.09 (2)
Project Lump/Pellets
Fior . . . . Finmet" HBI HBI 400.00 1,000.00 404.00 Operation Project Fine Fine
3.01 (2) 0.12 (2)
Reformin~ 10 Bar
This mitigation option was developed under the assumption that efficiency for the "H&L" technology will improve from 43% by year 2000 to 73% by 2025 and will be maintained at 80% for the "MIDREX" technology. Technological changes from "H&L" to "MIDREX" are assumed to take place in years 2005 and 2010, while improvements to "MIDREX" will occur by 2015, with investments of US $200 million, US $255 million, and US $280 million, respectively. Table 9 presents energy savings, CO2 emissions reduction, and the final user costs obtained for this option.
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N. Pereira, Y. Bonduki, M. Perdomo
TABLE 9 Differences between direct reduction iron mitigation option and baseline scenario Year Energy consumption (103 BOE) Branch 37 (Baseline) Process (Baseline) Energy Saving % / Branch 37 % / Process CO 2 emissions (10a TON) Branch 37 (Baseline) Process (Baseline) Reduction % / Branch 37 % / Process Final user costs (million $) Branch 37 (Baseline) Process (Baseline) Mitigation % / Branch 37 % / Process
1990
2000
2005
2010
2015
2020
11830 3881 0 0% 0%
17325 5923 278 1.6% 4.7%
21104 7305 752 3.6% 10.3%
25544 9003 2387 9.3% 26.5%
31195 11088 3131 10% 28.2%
36632 13095 3698 10% 28.2%
2840 1302 0 0% 0%
3928 1987 93 2.4% 4.7%
4684 2451 252 5.4% 10.3%
5542 3020 801 14.5% 26.5%
6665 3720 1050 15.8% 28.2%
7745 4393 1241 16% 28.2%
972 82 0 0% 0%
1541 118 -17 1.1% 14.4%
1803 139 -46 2.6% 33.1%
2151 172 -86 4.0% 50.0%
2556 202 -129 5.0% 63.9%
3623 276 -138 3.8% 50.0%
It is important to bear in mind that only 20-30% of the gas used in direct reduction furnaces is consumed as fuel for direct heat; the rest is used as process gas (feedstock use). The results obtained considered only natural gas used as fuel for direct heat, which represents part of the potential of energy savings and emissions reduction. If saving process gas were included, the emissions reduction potential would be higher because when this gas is used, only 12% of the carbon is sequestered and the rest is emitted. Thus, mitigation costs per ton of CO2 might be considerably reduced. Option 4: Combustion Efficiency Improvement in Natural Gas Furnaces
In this mitigation option, a typical furnace was considered, based on reheating lamination furnaces of steel products and furnaces for aluminum alloys. The thermal efficiency of furnaces was found to be low. The main assumptions are (i) energy efficiency increases from 42% by year 2000 to 70% by 2025; (ii) increases of yearly operation and maintenance costs of 20$/BOE by year 2000; and (iii) investments of US $0.4 million by 2010. Table 10 presents energy savings, CO2 emissions reduction, and final user costs. Transportation Sector
Large cities in Venezuela have high vehicle densities and low fuel efficiency because of fleet age, poor maintenance, and high traffic volume.7 To accelerate improvements in fuel efficiency in the transport sector, the Venezuelan government is developing an ambitious plan, focusing the effort initially on the public transport fleet.
GHG emissions in Venezuela
275
TABLE 10
Differences between furnaces using natural gas mitigation options and baseline scenario Year E n e r g y c o n s u m p t i o n (10 3 BOE) Branch 37 (Baseline) Furnaces (Baseline) Energy saving % / Branch 37 % / Furnaces C O 2emissions (103 TON) Branch 37 (Baseline) Furnaces (Baseline) Reduction % / Branch 37 % / Furnaces Final user costs (million $) Branch 37 (Baseline) Furnaces (Baseline) Mitigation % / Branch 37 % / Furnaces
1990
2000
2005
2010
2015
2020
11830 1586 0 0% 0%
17325 2374 158 0.9% 6.7%
21104 2959 197 0.9% 6.7%
25544 3511 1135 4.4% 32.3%
31195 4353 1406 4.5% 32.3%
36632 5164 1669 4.6% 32.3%
2840 532 0 0% 0%
3928 796 53 1.3% 6.7%
4684 993 66 1.4% 6.7%
5542 1178 381 6.9% 32.3%
6665 1460 472 7.1% 32.3%
7745 1732 560 7.2% 32.3%
972 40 0 0% 0%
1541 58 -17 1.1% 29.5%
1803 69 -20 1.1% 29.0%
2151 84 -21 1.0% 25.0%
2556 99 -25 1.0% 25.0%
3623 138 -27 0.7% 19.5%
Three mitigation options were assessed: switching to larger capacity vehicles, reduced share of private vehicles, and switching from gasoline to natural gas vehicles. The baseline scenario considers a road vehicle fleet of 2.7 million units in 1990, where passenger vehicles represent 81%, and freight vehicles 19%. Average road transportation demand growth rate for the 1990-2025 period is assumed to be 3.4% per year for both passenger-krn and freight ton-km. Regarding the demand structure evolution, private vehicles represented 33% of the total passenger demand in 1990; their share is assumed to grow to 40% by 2025. Public transportation share is assumed to decrease from 63% in 1990 to 56% by 2025. In this segment, small buses decrease from 25% in 1990 to 22% by 2025. Railroad share maintains a small percentage of about 3.5%. Freight transportation maintains almost a constant structure along the period 1990-2025; light two-axle trucks' share is about 7%, heavy two-axle trucks, 14%, three-axle trucks, 43%, and four-axle trucks 36%. Option 5: Switching to Larger Capacity Vehicles This option considers the switching of public transportation from small buses to large buses. A switching of light duty trucks to heavier trucks is also assumed. The main assumptions are: private and public transport shares in total passenger transportation demand are the same as the baseline scenario. Public transportation shows the following changes: small buses disappear by 2010; medium buses 1990-2025 annual growth rate changes slightly from 3.03% in the baseline case to 2.85% for this option; large buses share increases from 23% in 1995 to 35% in 2025.
N. Pereira, Y. Bond~tki, M . Perdomo
276
In addition, the share of two-axle light-duty vehicles in freight transportation demand decreases from 8% in 1990 to 1.6% in 2025, while in the baseline scenario its share was almost constant. Heavy-duty vehicles' freight share increases at 5.5% yearly during the period; in baseline, it is constant. Table 11 presents energy savings, CO2 emissions reduction, and mitigation costs for the final user. TABLE 11 Differences between switching to larger capacity vehicles mitigation options and baseline scenario Year
1995
Energy consumption (103 BOE) Baseline Energy saving % CO2 emissions (103 TON) Baseline CO2 reduction % Final user costs (million $) Baseline Mitigation %
2000
2005
2010
2015
2020
74906 962 1.3
81335 3904 4.8
87536 9383 10.7
99378 12971 13.0
117019 15990 13.7
134263 18651 13.9
31378 394 1.2
34073 1598 4.7
36666 3840 10.5
41621 5312 12.8
49012 6556 13.4
56326 7654 13.6
5301 -57 1.0
7388 -312 4.2
9348 -784 8.4
11815 -1115 9.4
14652 -1428 9.7
16321 -1617 9.9
Option 6: Reduced Share of Private Vehicle Private vehicles' share in passenger transportation demand (pass-km) decreases in relation to baseline scenario, while large buses' share increases according to the following assumptions: private vehicles' share is maintained at 34%; annual growth during the 1990-2025 period is 3.5%, compared to 4% in the baseline scenario; large buses' share increases from 23% in 1990 to 28% in 2025, which represents an annual growth of 4% against 3.3% in the baseline scenario. Table 12 presents energy savings, CO2 emissions reduction, and mitigation costs for the final user. TABLE 12
Differences between reduced private vehicles share mitigation option and baseline scenario Year Energy consumption (103 BOE) Baseline EnerhC¢ saving % CO 2 emissions (103 TON) Baseline CO 2 reduction O/o Final user costs (million $) Baseline Mitigation %
1995
2000
2005
2010
2015
2020
74906 407 0.5
81335 974 1.2
87536 1754 2
99378 2804 2.8
117019 4207 3.6
134263 5644 4.2
31378 168 0.5
34073 402 1.2
36666 723 2.0
41621 1156 2.8
49012 1734 3.5
56326 2327 4.1
5301 -42 0.8
7388 -111 1.5
9348 -209 2.2
11815 -345 2.9
14652 -531 3.6
16321 -684 4.2
GHG emissions in Venezuela
277
Option 7: Switching from Gasoline to Natural Gas Vehicles The Venezuelan government has initiated a promotion plan to switch vehicles from gasoline to natural gas in public transportation, taking into account that the gas price is significantly lower than gasoline. The plan includes subsidies for motor conversion. The assumptions for this option are the following: public transport demand is the same as in the baseline scenario; conversion to natural gas by year 2000 will affect 10,000 small buses, 15,000 medium buses, 10,000 taxis, and 25,000 lightduty trucks; all new public transportation demand will be satisfied by natural gas. Energy intensity is the same in both gasoline and natural gas vehicles. Table 13 presents energy savings, CO2 emissions reduction and mitigation costs for the final user. TABLE 13 Differences between switching gasoline to natural gas vehicles mitigation option and baseline scenario Year Energy consumption (103 BOE) Baseline Energy saving % CO 2 emissions (103TON) Baseline CO22 reduction % Final user costs (million $) Baseline Mitigation %
1996
2000
2005
2010
2015
2020
74906 -109 0.2
81335 -493 0.6
87536 -415 0.5
99378 -241 0.2
117019 -285 0.2
134263 -296 0.2
31378 -0.5 0.002
34073 127 0.4
36666 428 1.2
41621 839 2.0
49012 1228 2.5
56326 1228 2.2
5301 -15 0.3
7388 -129 1.7
9348 -229 2.4
11815 -300 2.5
14652 -445 3.0
16321 -438 2.7
Electricity Generation
In the baseline scenario hydroelectricity generation increases to 88,544 GWh by 2011, remaining constant thereafter through the study period. After 2011, the demand increase is covered with natural gas thermal generation. Consequently, an increase in hydroelectrical generation would contribute to CO2 emission reduction. Venezuela has an economically usable hydroelectrical potential in the High Caroni and Caura rivers estimated at 10,000 MW of capacity and 65,000 GWh/year. s Feasibility studies to develop this potential have been carried out, but without enough cost data to perform a complete mitigation assessment; however, a case study of the power system that only included the Tayucay project was carried out.
Option 8: Increase of Hydroelectric Capacity with Tayucay Plant Project characteristics are as follows: capacity of 3000 MW; annual energy of 15,300 GWh; six units of 500 MW each; beginning operation of three units by year 2012 and three units by year 2013; cost of 2130 S/kw.
278
N. Pereira, Y. Bonduki, M. Perdomo
The development of Tayucay plant would imply an investment cost increase of about US $700 million and an operating and maintenance costs decrease of US $72 million. Table 14 presents energy savings, COx emissions reduction, and mitigation costs for the electricity generation system. TABLE 14
Differences between Tayucay plant mitigation option and baseline scenario Year
1990
1995
2000
2005
2012
2015
2020
2025
Energy consumption (103
BOE) Baseline Energy saving % CO 2 emission (103TON) Baseline CO2 reduction % Electricity generation cost (million $) Baseline Mitigation %
53184 0 0
17719 0 0
15116 0 0
16998 0 0
46855 5779 12
64318 11337 18
98590 10118 10
130141 10685 8
19565 0 0
5944 0 0
5071 0 0
5702 0 0
15719 1939 12
21577 3803 18
33075 3394 10
43659 3585 8
452 0 0
350 0 0
339 0 0
397 0 0
482 113 23
521 111 21
618 129 21
707 145 20
Summary of Results
The cumulative impacts and costs for each mitigation option are summarized in Table 15. The most effective options are those in the transportation sector, in terms of both contribution to emissions reduction and costs. For the three transportation options considered, the cost were negative, which means that their application would provide benefits for the national energy system. TABLE 15
Cumulative impacts and costs of mitigation options (1990-2025) Mitigation options Manufacture industry Steam generation Option 1 Boilers conversion Option 2 Natural gas boilers Direct heat Option 3 Iron reduction Option 4 Natural gas furnaces Transportation Option 5 Switching larger capacity Option 6 Reduced private share Option 7 Switching to natural gas Electricity generation Option 8 Tayucay proiect TOTAL Baseline CO 7 emissions
Energy saving 103 BOE
C02 reduction 103 TON
% C02 reduction/ Baseline
Total cost million $
Unit cost S/ION CO7
11602 45137
7847 15340
0.21 0.41
-120 10
-15.3 0.64
57829 25828
19400 8665
0.52 0.23
1593 692
82 80
372000 96000 -10000
153000 39600 20000
4.07 1.05 0.53
-23613 -9695 -3000
-154 -246 -146
144850
48594
1.29
1742
36
312446 3,757,950
8.31
-32391
279
GHG emissions in Venezuela
Regarding the manufacturing industry options, boiler conversion from liquid fuels to natural gas also reflects negative costs, but to a considerably lower extent than for the transportation sector; likewise, the emissions reduction is also considerably lower in comparison with the rest of the options. Efficiency improvement of natural gas boilers, which presents close to zero cost, is more effective in reducing emissions than boilers conversion but not in terms of unit cost. Among the options showing a positive cost, efficiency improvement of natural gas furnaces presents the lowest total cost but is not effective in reducing emissions; therefore, it has a high unit cost that is very close to that of the option for changes in the iron-reduction process, which requires higher investments. The increase in hydro power generation is the option with the highest total cost but it is very effective in reducing emissions; compared to direct heat options, unit cost is less than half. Figure 1 shows the "discrete step" curve with the cost and the extent of the emissions reduction of each option. CO2 emission reduction of 220 million tons is obtained from negative cost options, which represents 6% of CO2 emissions in the baseline scenario. All of the options were analyzed separately. Neither the interdependency that may exist between them nor the effects that they may have in the energy system if they were jointly implemented have been assessed. However, it should be noted that they are highly independent actions, except for those in the transportation sector, which may require a few adjustments in order to apply them together. In spite of these limitations, and the small number of analyzed options, cost curves were built in order to have some global results for the energy system. Table 16 shows the estimated series for average and incremental costs while Figure 2 shows the corresponding curves. TABLE 16
Cumulative costs of energy sector mitigation options Mitigation option 6 5 7 1 2 8 3 4
C02reduct~n Incremen~lcost($/FON (I~TON) CO?I 39600 192600 212600 220447 235787 284381 293046 312446
-246 -154 -146 -15 1 36 80 82
Total cost (miUion$)
Average cost ($/TONCO?r
-9695 -33308 -36308 -36428 -36418 -34676 -33984 -32391
-245 -173 -171 -165 -154 -122 -116 -104
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N. Pereira, Y. Bonduki, M. Perdomo
MITIGATION OPTIONS IN THE FOREST SECTOR
Forest Clearing and Greenhouse Gas Emissions According to the last comprehensive study of vegetation cover in Venezuela, the forested area of the country in 1980 was roughly 57 million hectares, 9 which represents more than 60% of the national territory. About 75% of this forested land is classified as closed forests and more than 70% is located in the southern region of the country, where the Amazonian Basin is also located. Agriculture and pasture activities, as well as other development projects, have affected large areas of forest in the country. Logging is not considered to be a major cause of deforestation because wood production is based on a few species and trees are harvested selectively. However, logging leads indirectly to deforestation as the forest areas are opened up through road construction and are, consequently, subject to further intrusion by agricultural colonists. The annual rate of forest dearing in Venezuela has not been consistently documented. Rough estimates have provided a wide range of annual forest clearing, from less than 300,000 h a / y r 1° up to 600,000 ha/yr. 11 For the greenhouse gas emissions inventory, 1 the average deforestation area was estimated to be approximately 517,000 ha/year during the last decade. Forest clearing accounts for about 44% of national CO2 emissions (carbon emitted from disturbed forest soils is not included in this estimate). Biomass burning that occurs in conjunction with changes in land use is also an important contributor to trace gas emissions. Biomass burning accounts for approximately 5% of methane, 26% of nitrous oxides, 6% of nitrogen oxides, and 34% of carbon monoxide.
Mitigation Options Analysis The mitigation analysis for the forest sector considered the options that have been traditionally considered priority government programs to manage, enhance, and protect the country's forest resources. These options are natural forest protection and management, establishment of industrial and smallscale plantations, and development of agroforestry systems. The mitigation assessment involved the following steps: (i) construction of a baseline scenario to determine possible trends of carbon emissions from forest clearing; (ii) assessment of carbon storage in pilot forestry projects and associated costs; (iii) construction of mitigation scenarios to assess Venezuela's potential for storing carbon, based on forest practices; and (iv) identification of main barriers for options implementation.
GHG emissions in Venezuela
281
Baseline Scenario
The baseline for carbon dioxide emissions from land-use change in Venezuela was developed from assumptions regarding carbon emissions from forest conversion and carbon sequestration and conservation in forest plantations and managed natural forest. The assumptions use rough estimates of the rate at which land will be converted to and from forest use. Estimates of carbon emissions and sequestration are based on the IPCC/OECD methodology for national greenhouse gas emissions inventory. Annual cleared area is assumed to drop by 30-40% toward 2025, as a result of new policies to control and reduce degradation of natural forests. On the other hand, the country is going through an important economic crisis that might already be affecting the process of land-use change. The government has reduced subsidies for agricultural activities, while high inflation rates have increased the cost of developing new agricultural lands and also created a significant reduction in wood consumption and production. These trends could bring about an additional 20% reduction in the baseline deforested area. Thus, annually cleared area in the 1990-2025 period is expected to decrease steadily. From an average of 517,000 ha/yr, deforestation drops to 232,000 h a / y r by 2025, which implies a deforestation rate reduction of one-third compared to the 1990s figure. The total forest area of the country will then be reduced from an estimate of 51.8 million ha in 1990 to 38.1 million ha in 2025. Carbon dioxide emissions from forest clearing (excluding those from disturbed forest soils) will reach about 54,000 Gg by 2025, a significant reduction with respect to the base year (84,790 Gg). Emissions do not decrease in the same proportion as deforestation because average biomass density of cleared forests was estimated to increase from 115 tons of dry matter (t dm) per ha to 160 t d m / h a , based on the assumption that a great fraction of forest clearing will occur in areas less affected by human intervention. Regarding carbon sequestration, the scenario assumes that the annually planted area will be comparable to the average planted area during 1970-90 (20,000 ha/yr). The area of managed natural forest for sustainable wood production is estimated to double the average of the previous period, reaching about 14,000 ha/yr, as a result of ongoing government policies to encourage the adoption of sustainable forest practices and improve harvesting control. Based on these assumptions, annual carbon dioxide sequestration has been estimated to be 11,000 Gg by 2025. Net carbon dioxide emissions will then reach about 43,000 Gg, which represents a decline of approximately 45% with respect to the base year (79,260 Gg). In addition to lower deforestation rates, the increase of the managed forest area is responsible for reduction of net carbon dioxide emissions in this scenario.
282
N. Pereira, Y. Bonduki, M. Perdomo
Carbon Storage in Forestry Projects Two different forest projects, an industrial plantation (Uverito) and a managed protected area (Ticoporo Reserve), were used as case studies to extrapolate this local experience to a broader context that includes carbon emissions reduction and sequestration. Project selection was based on the following criteria: (i) should be considered successful or with high implementation potential, (ii) applicable on larger scale in the country, (iii) based on sustainable forestry practices, and (iv) should cover a wide range of possible mitigation options. Carbon sequestration potential and associated costs were evaluated for both the Uverito Plantations and the Ticoporo Reserve in order to assess the value of these projects as mitigation options. 12 Information and data used for developing the case studies were obtained from the Co4rporaci6n Venezolana de Guayana 13 and the Venezuelan Forest Service. The carbon stock accounting method is from Swisher) s The costs and carbon storage results for each project type are summarized in Table 17.
TABLE 17 Carbon storage and associated costs by project category Proiect t ~ e Plantation Agroforestry Forest reserve Managed forest Total
Land area (1(~~ ha )
Carbon storage densi~, (tC/ha)
Total carbon stora[~e(MtC )
Cost ($ha)
Cost ($/tC)
24 26 22 100 172
52 27 94 75 62
1.3 0.7 2.1 7.5 11.6
905 550 375 700 630
17 20 4 9 10
Mitigation Scenarios The results of carbon storage densities and associated costs of the case studies are used to determine the amount of carbon that might be stored in the country through the implementation of similar forestry options under two different scenarios: a technical potential scenario and a constrained scenario. In both cases, the following mitigation options are included: forest protection, forest management in small areas, forest management in large areas, smallscale forest plantations, industrial plantations, and agroforestry systems. The technical potential scenario is based on estimates of the amount of land technically suitable for the development of mitigation options, without considering socioeconomic, legal, and other limitations. However, the potential land areas that could theoretically be fully allocated for mitigation options development were adjusted in order to avoid overestimation of carbon sequestration potential. Consequently, the results of this scenario might be considered a rather conservative upper limit to the amount of potential carbon storage through the adoption of proposed options. In this scenario, the mitigation analysis was carried out only for year 2025.
283
GHG emissions in Venezuela
Estimates of available land for each mitigation option relied on (i) studies that have characterized potential land use of the country, based only on physical parametersy 6 and (ii) assumptions made on the amount of land that could be allocated for mitigation options development, based on technical considerations. For the options for forest protection and management, potentially available areas were also analyzed within the context of the baseline scenario in order to assess the amount of forest that could be subject to sustainable management practices. Thus, the total amount of land potentially available for mitigation options implementation has been estimated to be about 19.7 million hectares, while total carbon storage reaches 1437 MtC (Table 18). TABLE 18
Potential forest mitigation options and carbon storage in Venezuela year 2025. Technical scenario
Mitigation option Protected areas Forest m a n a g e m e n t small areas Forest m a n a g e m e n t large areas Small scale plantations Large scale plat tations Agroforestry sys tern Total
Potential area (10,~ha)
Carbonstorage density (tC/ha)
4000 600 - 1000 9000 310 - 470 4500 1000 19690
94 75 75 52 62 27
Total potential carbon storage (MtC) 376 45 - 75 675 16 - 24 279 27 1437
Unit cost (S/tO 4 9 9 17 17 20
Based on the results of average unit mitigation costs from the two case studies, total investment cost for this scenario has been estimated to be about US $13.7 billion. The constrained scenario tries to provide a more realistic picture of the country's potential to store carbon, since socioeconomic factors may limit the actual availability of land for the purpose of storing carbon. However, given the difficulties of assessing the influence of economic, institutional, legal, demographic, and cultural factors on present and future land-use decisions, estimates of the land area that could actually be allocated for each mitigation option were based on rough projections of a feasible development of the forestry sector in Venezuela by 2025. Thus, the total land area in this scenario represents less than 50% (about 9 million ha) of the total suitable land estimated in the technical scenario. Total carbon storage in this mitigation scenario reaches 695 MtC by 2025 (Table 19). Total investment cost for this scenario has been estimated to be about US $5.7 billion.
284
N. Pereira, Y. Bonduki, M. Perdomo
TABLE 19 Carbon storage potential in Venezuelan forest under the constrained scenario (2000-2025) Mitigation option Protected areas Forest management - - s m a l l areas Forest m a n a g e m m t - large areas Small-scale planlation Large -scale plar tation A~oforestry system Total
2000 400 25
A r e a / 1 Y ha) 2005 2015 1100 1700 105 225
2025 2300 375
Carbon storage 2000 2005 37.6 103.4 1.9 7.9
(million tC) 2015 2025 159.8 216.2 16.9 28.1
1200
2800
3900
5200
90.0
210.0
292.5
390.0
15 35 10 1685
30 105 25 4165
110 450 80 6465
225 700 210 9010
0.8 2.2 0.3 132.8
1.6 6.5 0.7 330.1
5.8 27.9 2.2 505.1
11.7 43.4 5.7 695.1
Analysis of Results
This general analysis of mitigation options in the forest sector shows that there is a considerable potential in Venezuela for reducing CO2 emissions through the adoption of sustainable forest practices, especially by slowing the rate of forest loss and degradation. Maintenance of already existing biomass in natural forests should be the first priority of forest measures to reduce the amount of carbon released to the atmosphere. More importantly, forestry projects designed within the context of climate change issues basically address deforestation, which is a significant environmental problem in Venezuela. Based on the two case studies and the mitigation scenarios, protection and management of native forests represent the two options with the highest carbon-conservation potential and the lowest carbon unit cost. Expansion of the forest cover through the development of intensive forest plantations also presents a high potential to offset carbon emissions. ISSUES IN MITIGATION OPTIONS IMPLEMENTATION In the energy sector, low energy prices represent the main barrier to any mitigation program. In spite of the last energy price increase, prices of oil products and natural gas are still below the exportation FOB value and the marginal costs, respectively. Energy still maintains a low share of the users' cost structure, which limits interest in investments in energy-efficiency improvement. Even assuming future price increases in the baseline scenario, other types of measures will be needed to promote and encourage mitigation programs in the energy sector since, in general, the users have other priorities and, in many cases, more attractive investment opportunities. Also, in most cases, users lack the knowledge of how to achieve a rational energy consumption and the associated benefits. Measures should be oriented at developing education and
GHG emissions in Venezuela
285
training programs, energy auditing, adequate financial mechanisms, and equipment standards. Another important limitation to implementation of mitigation strategies is the lack of institutional capacity and legal instruments for developing the mitigation measures. Venezuela lacks adequate institutional arrangements to create effective energy demand management. In the forest sector, stopping or drastically reducing deforestation, through the application of effective measures to protect native forests, may appear to be a rather simple and high-impact alternative for offsetting greenhouse gas emissions. However, the primary causes of forest clearing in Venezuela are not related to forest activities and, consequently, the definition of feasible mitigation options will depend upon a good understanding of other economic sectors and how they affect land-use change. Land tenure, rural poverty, political interests, and weak implementation of land-use planning instruments and environmental laws are key limitations to any forest conservation efforts. Forest plantations might be considered more applicable in the longer run due to the higher costs involved in the development of this type of project. Land tenure, economic factors, and lack of incentives are the most important barriers to the development of forest plantation and agroforestry systems in the country. Community participation, local benefits, institutional capacity and competence, as well as the involvement of non-government organizations are other relevant issues that need to be addressed in an assessment of forestry projects for offsetting carbon emissions in Venezuela. Given the social issues involved in the land-use change processes that have characterized Venezuela, a closer analysis of the main constraints and opportunities for the implementation of mitigation options will have to consider non-carbon benefits as the key component of such initiatives. Political decisions to implement mitigation programs and the allocation of financial resources for program promotion and development are other important factors for both the energy and forest sectors. Any mitigation initiative, regardless of the associated economic benefits, will require adequate financing and human resources for planning and implementation. REFERENCES 1.
2.
Caso-Estudio Venezuela sobre Cambios Clim~ticos (CVCC), Preliminary greenhouse gas emissions inventory. Ministry of Environment and Renewable Natural Resources, Ministry of Energy and Mines, Caracas, Venezuela, 1995~ Sathaye, J. & Meyers, S., Greenhouse gas mitigation assessment: a guidebook. U.S. Country Studies Program. Kluwer Academic Publishers, 1996.
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°
4.
.
.
.
8.
9. 10. 11. 12. 13. 14. 15. 16.
N. Pereira, Y. Bonduki, M. Perdomo
SEI-B, Stockholm Environment Institute. Long-range energy alternatives planning system (LEAP): overview. SEI, Boston, MA, USA, 1993. ANL-EESD, Argonne National Laboratory, Energy and Environmental System Division, Energy and power evaluation program (ENPEP). Documentation and users manual. ANL, Illinois, USA, 1994. Mantilla, Y. & Pereira, N., Opciones de mitigaci6n en la generaci6n de vapor en la industria manufacturera. CVCC, Caracas, Venezuela, 1996. Garcia, E. & Pereira, N., Opciones de mitigaci6n del uso de la energia para calor directo en las industrias met~ilicas b~isicas. CVCC, Caracas, Venezuela, 1996. Segnini, A.M. & Pereira, N., Mitigation options in Venezuelan transportation sector. CVCC, Caracas, Venezuela, 1996. Jimenez, E., Plan de expansi6n de generaci6n 1994-2023. CVCC, Caracas, Venezuela, 1996. Ministerio del Ambiente y de los Recursos Naturales Renovables, Mapa de la vegetaci6n actual de Venezuela. MARNR, Caracas, Venezuela, 1982. Catal~in, A., E1 Proceso de deforestaci6n en Venezuela entre 1975 y 1988. MARNR, Caracas, Venezuela, 1993. FAO, Forest resources assessment 1990: tropical countries. Rome, 1993. Bonduki, Y. & Swisher, J., Options for mitigating greenhouse gas emissions in Venezuela's forest sector: a general overview. Interciencia, 20 (2) (1995) 380-7. Corporaci6n Venezolana de Guayana, Programa de desarrollo forestal del oriente de Venezuela. CVG, Caracas, Venezuela, 1993. Servicio Forestal Venezolano (Seforven), Programa para la recuperaci6n de la Reserva Forestal Ticoporo. MARNR, Caracas, Venezuela, 1993. Swisher, J.N., Cost and performance of CO2 storage in forestry projects. Biomass and Bionergy, 1 (6) (1991) 317-28. Ministerio del Ambiente y de los Recursos Naturales Renovables, Areas potenciales para plantaciones forestales. MARNR, Caracas, Venezuela, 1991.
PII:
S0306-2619(97)00010-X
0306-2619/97517.00+0.00
Potential Options to Reduce G H G Emissions in V e n e z u e l a Nora Pereira, Yamil Bonduki, and Martha Perdomo Venezuelan Case Study to Address Climate Change, Ministry of Environment and Renewable Natural Resources, Ministry of Energy and Mines Torre Oeste, Piso 19, Ofic. 19-3, Parque Central, Caracas, Venezuela
ABSTRACT This paper presents a summary of the technologies and practices that could be implemented in Venezuela in order to contribute to both climate change mitigation and national development efforts. The mitigation analysis concentrates on options to reduce C02 emissions generated from the energy sector and land-use change. From the mitigation options analyzed for the energy sector it was determined that the most effective are those in the transportation sector (switching to larger capacity vehicles, reduced private vehicle share, and switching fuels for public transportation from gasoline to natural gas), both in terms of contribution to emissions reduction and costs. Regarding the options for industry, boilers conversion from liquids to natural gas shows negative cost, but to a considerably lower extent that for the transportation sector. Efficiency improvements of natural gas boilers, which presents close to zero cost, is more effective in reducing emissions than boiler conversion. Increase in hydro power generation is the alternative with the highest total cost but it is very effective in reducing emissions. From the mitigation options analyzed for land-use change, it was established that the forest sector has a considerable potential for reducing C02 emissions through the adoption of sustainable forest practices, especially by slowing the rate of forest loss and degradation. Maintenance of already existing biomass in natural forests should be the first priority of forest measures to reduce the amount of carbon released to the atmosphere. Forest protection and management of native forest represent the two options with the highest carbon conservation potential and the lowest carbon unit cost. Expansion of the forest cover through the development of intensive forest plantations also presents a high potential to offset carbon emissions in Venezuela. An analysis of the barriers to mitigation options implementation shows that in the energy sector, low energy prices represent the main barrier to any mitigation program. Another important limitation to mitigation strategies implementation is the lack of 265
266
N. Pereira, Y. Bonduki, M. Perdomo
institutional capacity and legal instruments for developing the mitigation measures. In the forest sector the primary causes of forest clearing in the country are not related to forest activities, so the definition of feasible mitigation options will depend upon a good understanding of other economic sectors and how they account for land-use change. Land tenure, rural poverty, political interests, and weak implementation of land-use planning instruments and environmental laws are considered to be the key limitations to any effort dealing with forest conservation. Land tenure, economicfactors, and lack of incentives represent some of the most important barriers to the development of forest plantations and agroforestry systems in the country. © 1997 Published by Elsevier Science Ltd. INTRODUCTION The Government of Venezuela ratified the United Nations Framework Convention on Climate Change (UNFCCC) in December 1994. The Convention requires all parties to develop and publish national inventories of anthropogenic greenhouse gas (GHG) emissions as well as national plans to reduce or control emissions, taking into account their common but differentiated responsibilities and their specific national and regional development priorities, objectives, and circumstances. Within this context, the Ministry of Environment and Renewable Natural Resources and the Ministry of Energy and Mines developed the "Venezuelan Case Study to Address Climate Change." The Study was initiated in October 1993, with the financial and technical assistance of the Government of United States (through the U.S. Country Studies Program) and the Global Environment Facility (through the United Nations Environment Programme. The objectives of the Study are (i) to develop a national inventory of anthropogenic emissions and removals of all greenhouse gases, (ii) to assess GHG mitigation options, and (iii) to formulate a national climate change action plan. According to the national GHG emissions inventory, 1the primary sources of CO2 in Venezuela are energy combustion (56%) and deforestation (42%). The sources are the energy sector (59%) (fugitive emissions from the oil- and gas-production systems) and the agricultural sector (29%). This paper presents a summary of the technologies and practices that could be implemented in Venezuela that would contribute to climate change mitigation and national development efforts. The selection of the sectors included in the mitigation options assessment was based on a detailed analysis that took into consideration the contribution of the main sources of national GHG emissions, the relevant natural and socio-economic characteristics of the country, the potential technologies for emissions reduction, and local experience in related fields. The mitigation analysis concentrates on options to reduce CO2 emissions generated from the energy sector and land-use change. In the energy sector, the analysis was centered on the energy industry, the transportation sector, and the manufacturing industry, since these three sectors jointly generate 94% of the CO2 emissions from energy combustion.
GHG emissions in Venezuela
267
The mitigation analysis for land-use change is based in the forestry sector. The analysis considers two broad categories of sustainable forest practices: management and conservation of existing forests to reduce or avoid carbon emissions and management for expanding forest cover to increase carbon storage. MITIGATION OPTIONS IN THE ENERGY SECTOR Venezuela has diverse and abundant energy resources. The total volume of proven energy reserves in 1995 was 112.5 billion barrels of oil equivalent (BOE), of which oil represented 63.8% of the total, natural gas 28.1%, coal 7.9%, and hydroenergy 0.2%. The technical potential for renewable energies, including solar, wind, biomass, geothermal, and mini-hydro, has been conservatively estimated at more than 4 million BOE/day. Because of decreased exports of crude oil and oil products, oil production decreased from 3.78 million BOE/day in 1970 to 2.35 million B O E / d a y in 1994. Power generation capacity increased from 2677 MW in 1970 to 18,613 MW in 1994. The ratio of thermal to hydro capacity, which was 68:32 during the 1970s, changed to 24:76 in 1994 thanks to the completion of the Guri hydropower plant. Population that had access to electricity services jumped from 60% in 1970 to 90% in 1994. The main changes in the structure of final energy consumption in the last 20 years include (i) an increased share of natural gas in industrial consumption from about 45% in 1970 to almost 52% in 1994, (ii) an increased share of LPG in household consumption from less than 10% in 1970 to almost 40% in 1994, and (iii) an increased share of electricity in total final consumption from 7.9% in 1970 to 14% in 1994 (in the industrial sector) and from 26% to almost 50% (in the household sector) in the same time period. Methods
The GHG mitigation assessment includes selecting options and evaluating their impacts, including the associated costs, on CO2 emissions and the energy system. To identify, evaluate, and compare possible mitigation options, an integrated study of the national energy supply and demand systems was carried out. Two scenarios were considered, according to the Guidebook for Mitigation Assessments: ~" The baseline scenario described the plausible future of the Venezuelan energy system. No specific actions to reduce GHG emissions are taken; but this scenario does include some adoption of enhanced technologies and actions to obtain a greater efficiency in the use of resources. The second scenario, a mitigation scenario, describes a similar future as the baseline scenario regarding the evolution of macroeconomic and social aspects, but assumes that efforts will be made to encourage the adoption of mitigation measures. The assessment included the following activities:
268 • • • • • • • •
N. Pereira, Y. Bonduki, M. Perdomo
development of a macroeconomic scenario; projection of baseline energy demand using the LEAP model;3 evaluation of the ~ower system expansion, using the ELECTRIC module of the ENPEP model and the PLHITER model; construction and projection of the energy system's supply and demand network using the BALANCE module of the ENPEP model; estimates of the baseline scenario parameters; identification and assessment of potential mitigation options; impact assessment of several mitigation options using the BALANCE module; and identification of barriers and feasible mitigation options.
CO2 emissions were estimated by fuel type, using the emission factors of the IPCC methodology. The cost-benefit evaluation was conducted with the BALANCE module results, using the following approach: The mitigation costs are the incremental costs for implementing mitigation options, calculated as the difference between the costs in the mitigation and the baseline scenarios. These incremental costs result from the additional costs that the final user has to cover, the differences in energy supply costs as a result of changes in the final consumption, and the supplier's income differences in both the domestic and exportation markets resulting from the implementation of a specific mitigation option. Final user costs consider fuel, operation and maintenance, and capital costs. The BALANCE module provides results for each of these costs per year, throughout the study period. Costs are discounted to 1990 at 10% and then aggregated to obtain the total mitigation cost for the whole period. BASELINE SCENARIO
Assumptions The baseline scenario for the 1990-2025 period was based on a macroeconomic scenario that assumes sustained economic development, where the barriers that currently restrict the country's economic development will be overcome but no major structural changes will take place. The oil industry reduces its participation in the gross domestic product (GDP) from 28% in 1990 to 24% in 2025, while, as a result of developments in the aluminum and petrochemical industries, the manufacturing industry's share increases from 15% to 17%. A moderate decrease in the contribution of the service sector is assumed as are a reduction in annual population growth rate (from 2.4% in 1990 to 2.1% in 2025) and a GDP growth of 4% per year for the same period. In the sectoral energy demand scenarios, changes in energy-use intensities are assumed as a result of improvements in equipment efficiency, better energy management, and changes in lifestyle. In the simulation, a gradual increase in energy prices is set forth until they reach their opportunity cost (FOB export costs) in the case of oil fuels, or their marginal cost, in the case of natural gas and
269
GHG emissions in Venezuela
electricity, in 1996. However, this policy has not been fully implemented due to social and political implications. The baseline scenario assumes transformations in the energy system as a result of economic development, but no additional efforts are made to establish specific policies or measures to control or reduce GHG emissions. Results
Primary energy production, 1000 million BOE in 1990, would double by 2010 and would be 4.6 times higher by 2025. Table 1 shows that this high increase (4.4% annually) is brought about by fossil fuel production, encouraged by exports that grow approximately 5% per year. Final consumption of fossil fuels and use for electrical generation grows by 3.3% and 2.6% per year respectively (Table 2). TABLE 1
Primary energy production (103 BOE). Baseline scenario Year
Crude oil Natural gas Coal Hidroenergy Total
1990
834,126 132,975 11,188 22,264 1,000,553
1995
1,005,187 160,245 16,900 35,624 1,217,956
2000
2005
1,230,066 196,095 26,195 42,450 1,494,806
2010
1,509,317 1,872,833 240,613 298,564 41,119 65,106 49,386 51,094 1,840,435 2,287,597
2015
2,338,686 372,829 103,698 52,261 2,867,474
2020
2025
2,925,804 466,427 165,800 50,582 3,608,613
3,662,565 583,881 265,769 53,221 4,565,436
TABLE 2
Fossil fuels use (103 BOE). Baseline scenario Year
Exports Final consumption Electricity
1990
2000
2005
2010
2015
718941 188523
1995
889732 220203
1108915 252327
1387752 290749
1743383 342178
2198904 408137
2020
2785910 490869
3518514 587240.3
2025
53184
17719
15116
16998
40167
64318
98520
130141
960648
1127654
1376358
1695499
2125728
2671359
generation Total
3375299 4235895.3
In the baseline scenario, hydroelectricity generation increases to 88,544 GWh by 2011, remaining constant thereafter through the study period. After 2011, the increase in demand is met with natural gas thermal generation. Final energy consumption, 189 million BOE in 1990, almost doubles by the year 2010 and would almost triple by 2025. This represents a growth of 3.3% annually during the period, which is lower than the average growth assumed for the GDP (3.9%). Final fossil fuel consumption grows at 3.3% annually, while electricity consumption grows at 3.0%. Natural gas shows the highest growth (4.2% per year), increasing its share of the total final consumption from 33% in 1990 to 44% in 2025. With respect to energy consumption by sector, the industrial sector shows the highest growth, with an annual rate of 4%, followed by transportation (2.7%), residential, services, and other sectors (1.6%).
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Table 3 shows the estimates of CO2 emissions generated by the energy-sector activities, distributed by sector and fuel. The growth of emissions from final energy consumption (2.9%) is lower than the growth of energy consumption, primarily due to a higher use of natural gas instead of liquid fuels that have a higher carbon content. TABLE 3
CO2 emissions (103 ton). Baseline scenario Year 1990 Final consumpt ion by sectors Industry 24818 Transport 29180 Residential 4272 Total 58269 Final consumption by fuels Oil 38347 Natural gas 18951 Coal&Coke 972 Electricity 0 Biomass 0 Total 58269 Electricity gen,.~ration Diesel 972 Residual 5411 Natural gas 13182 Total 19565
1995
2000
2005
2010
2015
2020
2025
30110 33001 4674 67785
36174 35945 4973 77091
43780 38832 5444 88056
53306 44142 5866 103315
65036 51956 6428 123419
79826 61658 7048 148532
94600 73216 7449 175265
43064 23695 1026 0 0 67785
46731 29285 1076 0 0 77091
50700 36229 I 128 0 0 88056
57347 44785 1183 0 0 103315
66879 55294 1246 0 0 123419
78853 68362 1317 0 0 148532
89741 84126 1398 0 0 175265
0 0 6007 6007
0 0 5196 5196
0 0 5906 5906
0 0 14079 14079
0 0 22744 22744
0 0 33075 33075
0 0 43659 43659
MITIGATION OPTIONS ASSESSMENT Industrial S e c t o r - - S t e a m G e n e r a t i o n
Two mitigation options were considered for boilers operating in branches classified by the International Standard Industrial Classification (ISIC) of all economic activities: (31) Foods, Beverages, and Tobacco; (35) Chemicals and Coal; and (37) Basic Metals. These three branches together consume 82% of the energy used in steam generation. The options are converting boilers from liquid fuels to natural gas and improving the efficiency of existing natural gas boilers through annual maintenance programs, s In the baseline scenario, only the incorporation of new natural gas burning boilers is considered to meet the increased steam requirements in this sector, which slightly raises the average efficiency of the equipment. Option 1: Boiler Conversion from Liquid Fuels to Natural Gas
With this option, a new burner is substituted and pressure regulators and automatic valves are installed. Efficiency of the converted natural gas boiler reaches 85%. Implementation of this option is assumed to begin in year 2000 and finish by 2005, when all liquid fuel boilers will have been replaced. Table 4
GHG emissions in Venezuela
271
shows the investment and operation costs involved in the application of this mitigation option; Table 5 summarizes energy savings, CO2 emissions reductions, and the cost for the final user, which decreases. TABLE 4
Investment and characteristics of boiler conversions from liquid fuels to natural gas Industrial branch Food, beverage & tobacco Chemicals Basic Metals
Power (liP)
Investment (10t S/plant)
O&M Cost ($/BOE)
Efficiency (%)
Capacity 10a BOE~ear
250
10.03
0.23
85
5.54
150 150
9.43 9.43
0.38 0.38
85 85
3.32 3.32
TABLE 5
Differences between boilers conversion mitigation option and baseline scenario Year
2000
E n e r g y c o n s u m p t i o n for steam generation (103 BOE) Baseline 24531 Energy Saving 101 % 0.4 C O 2 emissions (103 TON) Baseline 7921 C02 r e d u c t i o n 71 % 0.9 Final u s e r costs (10a $) Baseline 166 Mitigation -3.8 % 2.3
2005
2010
2015
2020
2025
29013 498 1.7
34325 458 1.3
40863 463 1.1
48587 1764 3.6
57706 1835 3.2
9318 333 3.6
11019 303 2.6
13109 309 2.4
15608 327 2.1
18646 386 2.1
192 -19.7 10.3
263 -17.3 6.6
313 -18.5 5.9
438 -19.5 4.3
525 -24.6 4.5
Option 2: Natural Gas Boiler Maintenance Program
Combustion adjustment is one of the measures that increases boiler efficiency. This adjustment consists of obtaining a correct oxygen-fuel mixture in order to have complete combustion for the type of burner used. Other items in the maintenance program include the elimination of steam leaks, sealing the oxygen chamber, cleaning the fireside boiler tube, proper repair of the refractors, adjustment and proper cleaning of burners, and adequate inspection of control and safety devices. Implementation of this option is assumed to begin in 2000, initially on 20% of existing boilers, and will be progressively extended to the year 2004, when all the boilers will have been attended to. This option will only be adopted in Branches 31 (foods, beverages, and tobacco) and 35 (chemicals and coal), where natural gas boiler efficiency is about 78% and is supposed to increase up to 82%. The yearly operating and maintenance costs for implementing this option, as well as the new boiler efficiencies assumed for this mitigation measure, are shown in Table 6. Table 7 shows results related to energy savings, CO2 emissions reduction, and the final user costs, which decrease.
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N. Pereira, Y. Bonduki, M. Perdomo
TABLE 6
Operations and maintenance costs and boiler efficiency improvements for natural gas boiler improvements Industrial branch Food, beverage & tobacco
Chemicals
Year O & M Costs
2000
2001
2002
2003
2004
2005-2025
$/BOE Efficiency % O & M Costs $/BOE Efficiency %
0.15
0.16
0.18
0.19
0.20
0.20
78
79
80
81
82
82
0.21
0.22
0.24
0.25
0.27
0.27
78
79
80
81
82
82
TABLE 7
Differences between natural gas boilers maintenance program mitigation option and baseline scenario Year 2000 Energy consumption for steam generation (103) BOE Baseline 21089 Energy saving 228 % 1.1 CO 2 emissions (10~TON) Baseline 6751 C02 reduction 76 % 1.1 Final user costs (106 $) Baseline 135.4 Mitigation -1.0 % 0.7
2005
2010
2015
2020
2025
24838 1325 5.3
29270 1604 5.5
34742 1928 5.6
41177 2309 5.6
48733 2759 5.7
7901 447 5.7
9303 543 5.8
11030 656 6.0
13091 787 6.0
15598 944 6.1
154.4 -6.0 3.9
211.5 -9.5 4.5
249.8 -11.8 4.7
350.9 -17.1 5.0
419.5 -21.5 5.1
Industrial Sector m Direct Heat
In 1990, the basic metals industries (Branch 37) accounted for 41% of the total energy consumption in the manufacturing industry and 50% of direct heat consumption. 6The steel and aluminum industries consume almost all the energy for direct heat in Branch 37. Two mitigation options were formulated: changes in iron mineral reduction, and combustion efficiency improvement in natural gas furnaces for foundry and lamination. The baseline scenario considers development of the steel and aluminum industries under the following assumptions: (i) energy demand for direct heat will increase at an annual rate of 4.2%, (ii) there will be no action concerning relevant changes in processes, and (iii) there will be some improvement in energy efficiencies due to the renewal and introduction of new equipment.
273
GHG emissions in Venezuela Option 3: Changes in Direct Reduction of Iron Ore
Table 8 presents the characteristics of available technology in the Venezuelan steel industry. Because they are the most important in terms of capacity and production, the "H&L" and "Midrex" technologies were considered in the mitigation analysis. When analyzing consumption of natural gas per ton of production for each technology, a significant difference (4.86 BOE/ton and 2.04 BOE/ton) is observed. This difference is due to the fact that (1) the actual value of the "H&L" technology is more than double the theoretical value (2.1 BOE/ton) and (2) the "H&L" is the oldest reduction technology and did not fully achieve the designed production levels. Thus, CO2 emissions reduction could be obtained through improving the energy efficiency of the "H&L" technology or through a process of conversion or substitution by more efficient technologies. Furthermore, the Midrex technology could also be improved. TABLE 8
Direct reduction iron technologies in the Venuzuelan steel industry Technology Product Capacity 103 TON/year Production 10~TON/year Present state
Input Furnace type
Gas Treatment Pressure Specific energy consumption Natural gas BOE/TON Electricity BOE/TON (1) Actual Values (2)Theorical Values
"H & L .... DRI 2,163.00 1,172.00 Operation Lump/Pellet s Reducing Shaft Batching Process Reforming 5 Bar
Midrex . . . . DRI 1,630.00 1,615.00 Operation Lump/Pellets
Arex . . . . DRI 450.00
Reducing Shaft Continuous Process Reforming Atmospheric
Reducing Shaft Fluid Bed
Fluid Bed
Continuous Continuous Process Auto Reforming Reforming Atmospheric 10 Bar
Continuous
4.86 (1) 0.08 (1)
2.04 (1) 0.06 (1)
1.86 (2) 0.05 (2)
3.17 (2) 0.09 (2)
Project Lump/Pellets
Fior . . . . Finmet" HBI HBI 400.00 1,000.00 404.00 Operation Project Fine Fine
3.01 (2) 0.12 (2)
Reformin~ 10 Bar
This mitigation option was developed under the assumption that efficiency for the "H&L" technology will improve from 43% by year 2000 to 73% by 2025 and will be maintained at 80% for the "MIDREX" technology. Technological changes from "H&L" to "MIDREX" are assumed to take place in years 2005 and 2010, while improvements to "MIDREX" will occur by 2015, with investments of US $200 million, US $255 million, and US $280 million, respectively. Table 9 presents energy savings, CO2 emissions reduction, and the final user costs obtained for this option.
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N. Pereira, Y. Bonduki, M. Perdomo
TABLE 9 Differences between direct reduction iron mitigation option and baseline scenario Year Energy consumption (103 BOE) Branch 37 (Baseline) Process (Baseline) Energy Saving % / Branch 37 % / Process CO 2 emissions (10a TON) Branch 37 (Baseline) Process (Baseline) Reduction % / Branch 37 % / Process Final user costs (million $) Branch 37 (Baseline) Process (Baseline) Mitigation % / Branch 37 % / Process
1990
2000
2005
2010
2015
2020
11830 3881 0 0% 0%
17325 5923 278 1.6% 4.7%
21104 7305 752 3.6% 10.3%
25544 9003 2387 9.3% 26.5%
31195 11088 3131 10% 28.2%
36632 13095 3698 10% 28.2%
2840 1302 0 0% 0%
3928 1987 93 2.4% 4.7%
4684 2451 252 5.4% 10.3%
5542 3020 801 14.5% 26.5%
6665 3720 1050 15.8% 28.2%
7745 4393 1241 16% 28.2%
972 82 0 0% 0%
1541 118 -17 1.1% 14.4%
1803 139 -46 2.6% 33.1%
2151 172 -86 4.0% 50.0%
2556 202 -129 5.0% 63.9%
3623 276 -138 3.8% 50.0%
It is important to bear in mind that only 20-30% of the gas used in direct reduction furnaces is consumed as fuel for direct heat; the rest is used as process gas (feedstock use). The results obtained considered only natural gas used as fuel for direct heat, which represents part of the potential of energy savings and emissions reduction. If saving process gas were included, the emissions reduction potential would be higher because when this gas is used, only 12% of the carbon is sequestered and the rest is emitted. Thus, mitigation costs per ton of CO2 might be considerably reduced. Option 4: Combustion Efficiency Improvement in Natural Gas Furnaces
In this mitigation option, a typical furnace was considered, based on reheating lamination furnaces of steel products and furnaces for aluminum alloys. The thermal efficiency of furnaces was found to be low. The main assumptions are (i) energy efficiency increases from 42% by year 2000 to 70% by 2025; (ii) increases of yearly operation and maintenance costs of 20$/BOE by year 2000; and (iii) investments of US $0.4 million by 2010. Table 10 presents energy savings, CO2 emissions reduction, and final user costs. Transportation Sector
Large cities in Venezuela have high vehicle densities and low fuel efficiency because of fleet age, poor maintenance, and high traffic volume.7 To accelerate improvements in fuel efficiency in the transport sector, the Venezuelan government is developing an ambitious plan, focusing the effort initially on the public transport fleet.
GHG emissions in Venezuela
275
TABLE 10
Differences between furnaces using natural gas mitigation options and baseline scenario Year E n e r g y c o n s u m p t i o n (10 3 BOE) Branch 37 (Baseline) Furnaces (Baseline) Energy saving % / Branch 37 % / Furnaces C O 2emissions (103 TON) Branch 37 (Baseline) Furnaces (Baseline) Reduction % / Branch 37 % / Furnaces Final user costs (million $) Branch 37 (Baseline) Furnaces (Baseline) Mitigation % / Branch 37 % / Furnaces
1990
2000
2005
2010
2015
2020
11830 1586 0 0% 0%
17325 2374 158 0.9% 6.7%
21104 2959 197 0.9% 6.7%
25544 3511 1135 4.4% 32.3%
31195 4353 1406 4.5% 32.3%
36632 5164 1669 4.6% 32.3%
2840 532 0 0% 0%
3928 796 53 1.3% 6.7%
4684 993 66 1.4% 6.7%
5542 1178 381 6.9% 32.3%
6665 1460 472 7.1% 32.3%
7745 1732 560 7.2% 32.3%
972 40 0 0% 0%
1541 58 -17 1.1% 29.5%
1803 69 -20 1.1% 29.0%
2151 84 -21 1.0% 25.0%
2556 99 -25 1.0% 25.0%
3623 138 -27 0.7% 19.5%
Three mitigation options were assessed: switching to larger capacity vehicles, reduced share of private vehicles, and switching from gasoline to natural gas vehicles. The baseline scenario considers a road vehicle fleet of 2.7 million units in 1990, where passenger vehicles represent 81%, and freight vehicles 19%. Average road transportation demand growth rate for the 1990-2025 period is assumed to be 3.4% per year for both passenger-krn and freight ton-km. Regarding the demand structure evolution, private vehicles represented 33% of the total passenger demand in 1990; their share is assumed to grow to 40% by 2025. Public transportation share is assumed to decrease from 63% in 1990 to 56% by 2025. In this segment, small buses decrease from 25% in 1990 to 22% by 2025. Railroad share maintains a small percentage of about 3.5%. Freight transportation maintains almost a constant structure along the period 1990-2025; light two-axle trucks' share is about 7%, heavy two-axle trucks, 14%, three-axle trucks, 43%, and four-axle trucks 36%. Option 5: Switching to Larger Capacity Vehicles This option considers the switching of public transportation from small buses to large buses. A switching of light duty trucks to heavier trucks is also assumed. The main assumptions are: private and public transport shares in total passenger transportation demand are the same as the baseline scenario. Public transportation shows the following changes: small buses disappear by 2010; medium buses 1990-2025 annual growth rate changes slightly from 3.03% in the baseline case to 2.85% for this option; large buses share increases from 23% in 1995 to 35% in 2025.
N. Pereira, Y. Bond~tki, M . Perdomo
276
In addition, the share of two-axle light-duty vehicles in freight transportation demand decreases from 8% in 1990 to 1.6% in 2025, while in the baseline scenario its share was almost constant. Heavy-duty vehicles' freight share increases at 5.5% yearly during the period; in baseline, it is constant. Table 11 presents energy savings, CO2 emissions reduction, and mitigation costs for the final user. TABLE 11 Differences between switching to larger capacity vehicles mitigation options and baseline scenario Year
1995
Energy consumption (103 BOE) Baseline Energy saving % CO2 emissions (103 TON) Baseline CO2 reduction % Final user costs (million $) Baseline Mitigation %
2000
2005
2010
2015
2020
74906 962 1.3
81335 3904 4.8
87536 9383 10.7
99378 12971 13.0
117019 15990 13.7
134263 18651 13.9
31378 394 1.2
34073 1598 4.7
36666 3840 10.5
41621 5312 12.8
49012 6556 13.4
56326 7654 13.6
5301 -57 1.0
7388 -312 4.2
9348 -784 8.4
11815 -1115 9.4
14652 -1428 9.7
16321 -1617 9.9
Option 6: Reduced Share of Private Vehicle Private vehicles' share in passenger transportation demand (pass-km) decreases in relation to baseline scenario, while large buses' share increases according to the following assumptions: private vehicles' share is maintained at 34%; annual growth during the 1990-2025 period is 3.5%, compared to 4% in the baseline scenario; large buses' share increases from 23% in 1990 to 28% in 2025, which represents an annual growth of 4% against 3.3% in the baseline scenario. Table 12 presents energy savings, CO2 emissions reduction, and mitigation costs for the final user. TABLE 12
Differences between reduced private vehicles share mitigation option and baseline scenario Year Energy consumption (103 BOE) Baseline EnerhC¢ saving % CO 2 emissions (103 TON) Baseline CO 2 reduction O/o Final user costs (million $) Baseline Mitigation %
1995
2000
2005
2010
2015
2020
74906 407 0.5
81335 974 1.2
87536 1754 2
99378 2804 2.8
117019 4207 3.6
134263 5644 4.2
31378 168 0.5
34073 402 1.2
36666 723 2.0
41621 1156 2.8
49012 1734 3.5
56326 2327 4.1
5301 -42 0.8
7388 -111 1.5
9348 -209 2.2
11815 -345 2.9
14652 -531 3.6
16321 -684 4.2
GHG emissions in Venezuela
277
Option 7: Switching from Gasoline to Natural Gas Vehicles The Venezuelan government has initiated a promotion plan to switch vehicles from gasoline to natural gas in public transportation, taking into account that the gas price is significantly lower than gasoline. The plan includes subsidies for motor conversion. The assumptions for this option are the following: public transport demand is the same as in the baseline scenario; conversion to natural gas by year 2000 will affect 10,000 small buses, 15,000 medium buses, 10,000 taxis, and 25,000 lightduty trucks; all new public transportation demand will be satisfied by natural gas. Energy intensity is the same in both gasoline and natural gas vehicles. Table 13 presents energy savings, CO2 emissions reduction and mitigation costs for the final user. TABLE 13 Differences between switching gasoline to natural gas vehicles mitigation option and baseline scenario Year Energy consumption (103 BOE) Baseline Energy saving % CO 2 emissions (103TON) Baseline CO22 reduction % Final user costs (million $) Baseline Mitigation %
1996
2000
2005
2010
2015
2020
74906 -109 0.2
81335 -493 0.6
87536 -415 0.5
99378 -241 0.2
117019 -285 0.2
134263 -296 0.2
31378 -0.5 0.002
34073 127 0.4
36666 428 1.2
41621 839 2.0
49012 1228 2.5
56326 1228 2.2
5301 -15 0.3
7388 -129 1.7
9348 -229 2.4
11815 -300 2.5
14652 -445 3.0
16321 -438 2.7
Electricity Generation
In the baseline scenario hydroelectricity generation increases to 88,544 GWh by 2011, remaining constant thereafter through the study period. After 2011, the demand increase is covered with natural gas thermal generation. Consequently, an increase in hydroelectrical generation would contribute to CO2 emission reduction. Venezuela has an economically usable hydroelectrical potential in the High Caroni and Caura rivers estimated at 10,000 MW of capacity and 65,000 GWh/year. s Feasibility studies to develop this potential have been carried out, but without enough cost data to perform a complete mitigation assessment; however, a case study of the power system that only included the Tayucay project was carried out.
Option 8: Increase of Hydroelectric Capacity with Tayucay Plant Project characteristics are as follows: capacity of 3000 MW; annual energy of 15,300 GWh; six units of 500 MW each; beginning operation of three units by year 2012 and three units by year 2013; cost of 2130 S/kw.
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The development of Tayucay plant would imply an investment cost increase of about US $700 million and an operating and maintenance costs decrease of US $72 million. Table 14 presents energy savings, COx emissions reduction, and mitigation costs for the electricity generation system. TABLE 14
Differences between Tayucay plant mitigation option and baseline scenario Year
1990
1995
2000
2005
2012
2015
2020
2025
Energy consumption (103
BOE) Baseline Energy saving % CO 2 emission (103TON) Baseline CO2 reduction % Electricity generation cost (million $) Baseline Mitigation %
53184 0 0
17719 0 0
15116 0 0
16998 0 0
46855 5779 12
64318 11337 18
98590 10118 10
130141 10685 8
19565 0 0
5944 0 0
5071 0 0
5702 0 0
15719 1939 12
21577 3803 18
33075 3394 10
43659 3585 8
452 0 0
350 0 0
339 0 0
397 0 0
482 113 23
521 111 21
618 129 21
707 145 20
Summary of Results
The cumulative impacts and costs for each mitigation option are summarized in Table 15. The most effective options are those in the transportation sector, in terms of both contribution to emissions reduction and costs. For the three transportation options considered, the cost were negative, which means that their application would provide benefits for the national energy system. TABLE 15
Cumulative impacts and costs of mitigation options (1990-2025) Mitigation options Manufacture industry Steam generation Option 1 Boilers conversion Option 2 Natural gas boilers Direct heat Option 3 Iron reduction Option 4 Natural gas furnaces Transportation Option 5 Switching larger capacity Option 6 Reduced private share Option 7 Switching to natural gas Electricity generation Option 8 Tayucay proiect TOTAL Baseline CO 7 emissions
Energy saving 103 BOE
C02 reduction 103 TON
% C02 reduction/ Baseline
Total cost million $
Unit cost S/ION CO7
11602 45137
7847 15340
0.21 0.41
-120 10
-15.3 0.64
57829 25828
19400 8665
0.52 0.23
1593 692
82 80
372000 96000 -10000
153000 39600 20000
4.07 1.05 0.53
-23613 -9695 -3000
-154 -246 -146
144850
48594
1.29
1742
36
312446 3,757,950
8.31
-32391
279
GHG emissions in Venezuela
Regarding the manufacturing industry options, boiler conversion from liquid fuels to natural gas also reflects negative costs, but to a considerably lower extent than for the transportation sector; likewise, the emissions reduction is also considerably lower in comparison with the rest of the options. Efficiency improvement of natural gas boilers, which presents close to zero cost, is more effective in reducing emissions than boilers conversion but not in terms of unit cost. Among the options showing a positive cost, efficiency improvement of natural gas furnaces presents the lowest total cost but is not effective in reducing emissions; therefore, it has a high unit cost that is very close to that of the option for changes in the iron-reduction process, which requires higher investments. The increase in hydro power generation is the option with the highest total cost but it is very effective in reducing emissions; compared to direct heat options, unit cost is less than half. Figure 1 shows the "discrete step" curve with the cost and the extent of the emissions reduction of each option. CO2 emission reduction of 220 million tons is obtained from negative cost options, which represents 6% of CO2 emissions in the baseline scenario. All of the options were analyzed separately. Neither the interdependency that may exist between them nor the effects that they may have in the energy system if they were jointly implemented have been assessed. However, it should be noted that they are highly independent actions, except for those in the transportation sector, which may require a few adjustments in order to apply them together. In spite of these limitations, and the small number of analyzed options, cost curves were built in order to have some global results for the energy system. Table 16 shows the estimated series for average and incremental costs while Figure 2 shows the corresponding curves. TABLE 16
Cumulative costs of energy sector mitigation options Mitigation option 6 5 7 1 2 8 3 4
C02reduct~n Incremen~lcost($/FON (I~TON) CO?I 39600 192600 212600 220447 235787 284381 293046 312446
-246 -154 -146 -15 1 36 80 82
Total cost (miUion$)
Average cost ($/TONCO?r
-9695 -33308 -36308 -36428 -36418 -34676 -33984 -32391
-245 -173 -171 -165 -154 -122 -116 -104
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MITIGATION OPTIONS IN THE FOREST SECTOR
Forest Clearing and Greenhouse Gas Emissions According to the last comprehensive study of vegetation cover in Venezuela, the forested area of the country in 1980 was roughly 57 million hectares, 9 which represents more than 60% of the national territory. About 75% of this forested land is classified as closed forests and more than 70% is located in the southern region of the country, where the Amazonian Basin is also located. Agriculture and pasture activities, as well as other development projects, have affected large areas of forest in the country. Logging is not considered to be a major cause of deforestation because wood production is based on a few species and trees are harvested selectively. However, logging leads indirectly to deforestation as the forest areas are opened up through road construction and are, consequently, subject to further intrusion by agricultural colonists. The annual rate of forest dearing in Venezuela has not been consistently documented. Rough estimates have provided a wide range of annual forest clearing, from less than 300,000 h a / y r 1° up to 600,000 ha/yr. 11 For the greenhouse gas emissions inventory, 1 the average deforestation area was estimated to be approximately 517,000 ha/year during the last decade. Forest clearing accounts for about 44% of national CO2 emissions (carbon emitted from disturbed forest soils is not included in this estimate). Biomass burning that occurs in conjunction with changes in land use is also an important contributor to trace gas emissions. Biomass burning accounts for approximately 5% of methane, 26% of nitrous oxides, 6% of nitrogen oxides, and 34% of carbon monoxide.
Mitigation Options Analysis The mitigation analysis for the forest sector considered the options that have been traditionally considered priority government programs to manage, enhance, and protect the country's forest resources. These options are natural forest protection and management, establishment of industrial and smallscale plantations, and development of agroforestry systems. The mitigation assessment involved the following steps: (i) construction of a baseline scenario to determine possible trends of carbon emissions from forest clearing; (ii) assessment of carbon storage in pilot forestry projects and associated costs; (iii) construction of mitigation scenarios to assess Venezuela's potential for storing carbon, based on forest practices; and (iv) identification of main barriers for options implementation.
GHG emissions in Venezuela
281
Baseline Scenario
The baseline for carbon dioxide emissions from land-use change in Venezuela was developed from assumptions regarding carbon emissions from forest conversion and carbon sequestration and conservation in forest plantations and managed natural forest. The assumptions use rough estimates of the rate at which land will be converted to and from forest use. Estimates of carbon emissions and sequestration are based on the IPCC/OECD methodology for national greenhouse gas emissions inventory. Annual cleared area is assumed to drop by 30-40% toward 2025, as a result of new policies to control and reduce degradation of natural forests. On the other hand, the country is going through an important economic crisis that might already be affecting the process of land-use change. The government has reduced subsidies for agricultural activities, while high inflation rates have increased the cost of developing new agricultural lands and also created a significant reduction in wood consumption and production. These trends could bring about an additional 20% reduction in the baseline deforested area. Thus, annually cleared area in the 1990-2025 period is expected to decrease steadily. From an average of 517,000 ha/yr, deforestation drops to 232,000 h a / y r by 2025, which implies a deforestation rate reduction of one-third compared to the 1990s figure. The total forest area of the country will then be reduced from an estimate of 51.8 million ha in 1990 to 38.1 million ha in 2025. Carbon dioxide emissions from forest clearing (excluding those from disturbed forest soils) will reach about 54,000 Gg by 2025, a significant reduction with respect to the base year (84,790 Gg). Emissions do not decrease in the same proportion as deforestation because average biomass density of cleared forests was estimated to increase from 115 tons of dry matter (t dm) per ha to 160 t d m / h a , based on the assumption that a great fraction of forest clearing will occur in areas less affected by human intervention. Regarding carbon sequestration, the scenario assumes that the annually planted area will be comparable to the average planted area during 1970-90 (20,000 ha/yr). The area of managed natural forest for sustainable wood production is estimated to double the average of the previous period, reaching about 14,000 ha/yr, as a result of ongoing government policies to encourage the adoption of sustainable forest practices and improve harvesting control. Based on these assumptions, annual carbon dioxide sequestration has been estimated to be 11,000 Gg by 2025. Net carbon dioxide emissions will then reach about 43,000 Gg, which represents a decline of approximately 45% with respect to the base year (79,260 Gg). In addition to lower deforestation rates, the increase of the managed forest area is responsible for reduction of net carbon dioxide emissions in this scenario.
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Carbon Storage in Forestry Projects Two different forest projects, an industrial plantation (Uverito) and a managed protected area (Ticoporo Reserve), were used as case studies to extrapolate this local experience to a broader context that includes carbon emissions reduction and sequestration. Project selection was based on the following criteria: (i) should be considered successful or with high implementation potential, (ii) applicable on larger scale in the country, (iii) based on sustainable forestry practices, and (iv) should cover a wide range of possible mitigation options. Carbon sequestration potential and associated costs were evaluated for both the Uverito Plantations and the Ticoporo Reserve in order to assess the value of these projects as mitigation options. 12 Information and data used for developing the case studies were obtained from the Co4rporaci6n Venezolana de Guayana 13 and the Venezuelan Forest Service. The carbon stock accounting method is from Swisher) s The costs and carbon storage results for each project type are summarized in Table 17.
TABLE 17 Carbon storage and associated costs by project category Proiect t ~ e Plantation Agroforestry Forest reserve Managed forest Total
Land area (1(~~ ha )
Carbon storage densi~, (tC/ha)
Total carbon stora[~e(MtC )
Cost ($ha)
Cost ($/tC)
24 26 22 100 172
52 27 94 75 62
1.3 0.7 2.1 7.5 11.6
905 550 375 700 630
17 20 4 9 10
Mitigation Scenarios The results of carbon storage densities and associated costs of the case studies are used to determine the amount of carbon that might be stored in the country through the implementation of similar forestry options under two different scenarios: a technical potential scenario and a constrained scenario. In both cases, the following mitigation options are included: forest protection, forest management in small areas, forest management in large areas, smallscale forest plantations, industrial plantations, and agroforestry systems. The technical potential scenario is based on estimates of the amount of land technically suitable for the development of mitigation options, without considering socioeconomic, legal, and other limitations. However, the potential land areas that could theoretically be fully allocated for mitigation options development were adjusted in order to avoid overestimation of carbon sequestration potential. Consequently, the results of this scenario might be considered a rather conservative upper limit to the amount of potential carbon storage through the adoption of proposed options. In this scenario, the mitigation analysis was carried out only for year 2025.
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Estimates of available land for each mitigation option relied on (i) studies that have characterized potential land use of the country, based only on physical parametersy 6 and (ii) assumptions made on the amount of land that could be allocated for mitigation options development, based on technical considerations. For the options for forest protection and management, potentially available areas were also analyzed within the context of the baseline scenario in order to assess the amount of forest that could be subject to sustainable management practices. Thus, the total amount of land potentially available for mitigation options implementation has been estimated to be about 19.7 million hectares, while total carbon storage reaches 1437 MtC (Table 18). TABLE 18
Potential forest mitigation options and carbon storage in Venezuela year 2025. Technical scenario
Mitigation option Protected areas Forest m a n a g e m e n t small areas Forest m a n a g e m e n t large areas Small scale plantations Large scale plat tations Agroforestry sys tern Total
Potential area (10,~ha)
Carbonstorage density (tC/ha)
4000 600 - 1000 9000 310 - 470 4500 1000 19690
94 75 75 52 62 27
Total potential carbon storage (MtC) 376 45 - 75 675 16 - 24 279 27 1437
Unit cost (S/tO 4 9 9 17 17 20
Based on the results of average unit mitigation costs from the two case studies, total investment cost for this scenario has been estimated to be about US $13.7 billion. The constrained scenario tries to provide a more realistic picture of the country's potential to store carbon, since socioeconomic factors may limit the actual availability of land for the purpose of storing carbon. However, given the difficulties of assessing the influence of economic, institutional, legal, demographic, and cultural factors on present and future land-use decisions, estimates of the land area that could actually be allocated for each mitigation option were based on rough projections of a feasible development of the forestry sector in Venezuela by 2025. Thus, the total land area in this scenario represents less than 50% (about 9 million ha) of the total suitable land estimated in the technical scenario. Total carbon storage in this mitigation scenario reaches 695 MtC by 2025 (Table 19). Total investment cost for this scenario has been estimated to be about US $5.7 billion.
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TABLE 19 Carbon storage potential in Venezuelan forest under the constrained scenario (2000-2025) Mitigation option Protected areas Forest management - - s m a l l areas Forest m a n a g e m m t - large areas Small-scale planlation Large -scale plar tation A~oforestry system Total
2000 400 25
A r e a / 1 Y ha) 2005 2015 1100 1700 105 225
2025 2300 375
Carbon storage 2000 2005 37.6 103.4 1.9 7.9
(million tC) 2015 2025 159.8 216.2 16.9 28.1
1200
2800
3900
5200
90.0
210.0
292.5
390.0
15 35 10 1685
30 105 25 4165
110 450 80 6465
225 700 210 9010
0.8 2.2 0.3 132.8
1.6 6.5 0.7 330.1
5.8 27.9 2.2 505.1
11.7 43.4 5.7 695.1
Analysis of Results
This general analysis of mitigation options in the forest sector shows that there is a considerable potential in Venezuela for reducing CO2 emissions through the adoption of sustainable forest practices, especially by slowing the rate of forest loss and degradation. Maintenance of already existing biomass in natural forests should be the first priority of forest measures to reduce the amount of carbon released to the atmosphere. More importantly, forestry projects designed within the context of climate change issues basically address deforestation, which is a significant environmental problem in Venezuela. Based on the two case studies and the mitigation scenarios, protection and management of native forests represent the two options with the highest carbon-conservation potential and the lowest carbon unit cost. Expansion of the forest cover through the development of intensive forest plantations also presents a high potential to offset carbon emissions. ISSUES IN MITIGATION OPTIONS IMPLEMENTATION In the energy sector, low energy prices represent the main barrier to any mitigation program. In spite of the last energy price increase, prices of oil products and natural gas are still below the exportation FOB value and the marginal costs, respectively. Energy still maintains a low share of the users' cost structure, which limits interest in investments in energy-efficiency improvement. Even assuming future price increases in the baseline scenario, other types of measures will be needed to promote and encourage mitigation programs in the energy sector since, in general, the users have other priorities and, in many cases, more attractive investment opportunities. Also, in most cases, users lack the knowledge of how to achieve a rational energy consumption and the associated benefits. Measures should be oriented at developing education and
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training programs, energy auditing, adequate financial mechanisms, and equipment standards. Another important limitation to implementation of mitigation strategies is the lack of institutional capacity and legal instruments for developing the mitigation measures. Venezuela lacks adequate institutional arrangements to create effective energy demand management. In the forest sector, stopping or drastically reducing deforestation, through the application of effective measures to protect native forests, may appear to be a rather simple and high-impact alternative for offsetting greenhouse gas emissions. However, the primary causes of forest clearing in Venezuela are not related to forest activities and, consequently, the definition of feasible mitigation options will depend upon a good understanding of other economic sectors and how they affect land-use change. Land tenure, rural poverty, political interests, and weak implementation of land-use planning instruments and environmental laws are key limitations to any forest conservation efforts. Forest plantations might be considered more applicable in the longer run due to the higher costs involved in the development of this type of project. Land tenure, economic factors, and lack of incentives are the most important barriers to the development of forest plantation and agroforestry systems in the country. Community participation, local benefits, institutional capacity and competence, as well as the involvement of non-government organizations are other relevant issues that need to be addressed in an assessment of forestry projects for offsetting carbon emissions in Venezuela. Given the social issues involved in the land-use change processes that have characterized Venezuela, a closer analysis of the main constraints and opportunities for the implementation of mitigation options will have to consider non-carbon benefits as the key component of such initiatives. Political decisions to implement mitigation programs and the allocation of financial resources for program promotion and development are other important factors for both the energy and forest sectors. Any mitigation initiative, regardless of the associated economic benefits, will require adequate financing and human resources for planning and implementation. REFERENCES 1.
2.
Caso-Estudio Venezuela sobre Cambios Clim~ticos (CVCC), Preliminary greenhouse gas emissions inventory. Ministry of Environment and Renewable Natural Resources, Ministry of Energy and Mines, Caracas, Venezuela, 1995~ Sathaye, J. & Meyers, S., Greenhouse gas mitigation assessment: a guidebook. U.S. Country Studies Program. Kluwer Academic Publishers, 1996.
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SEI-B, Stockholm Environment Institute. Long-range energy alternatives planning system (LEAP): overview. SEI, Boston, MA, USA, 1993. ANL-EESD, Argonne National Laboratory, Energy and Environmental System Division, Energy and power evaluation program (ENPEP). Documentation and users manual. ANL, Illinois, USA, 1994. Mantilla, Y. & Pereira, N., Opciones de mitigaci6n en la generaci6n de vapor en la industria manufacturera. CVCC, Caracas, Venezuela, 1996. Garcia, E. & Pereira, N., Opciones de mitigaci6n del uso de la energia para calor directo en las industrias met~ilicas b~isicas. CVCC, Caracas, Venezuela, 1996. Segnini, A.M. & Pereira, N., Mitigation options in Venezuelan transportation sector. CVCC, Caracas, Venezuela, 1996. Jimenez, E., Plan de expansi6n de generaci6n 1994-2023. CVCC, Caracas, Venezuela, 1996. Ministerio del Ambiente y de los Recursos Naturales Renovables, Mapa de la vegetaci6n actual de Venezuela. MARNR, Caracas, Venezuela, 1982. Catal~in, A., E1 Proceso de deforestaci6n en Venezuela entre 1975 y 1988. MARNR, Caracas, Venezuela, 1993. FAO, Forest resources assessment 1990: tropical countries. Rome, 1993. Bonduki, Y. & Swisher, J., Options for mitigating greenhouse gas emissions in Venezuela's forest sector: a general overview. Interciencia, 20 (2) (1995) 380-7. Corporaci6n Venezolana de Guayana, Programa de desarrollo forestal del oriente de Venezuela. CVG, Caracas, Venezuela, 1993. Servicio Forestal Venezolano (Seforven), Programa para la recuperaci6n de la Reserva Forestal Ticoporo. MARNR, Caracas, Venezuela, 1993. Swisher, J.N., Cost and performance of CO2 storage in forestry projects. Biomass and Bionergy, 1 (6) (1991) 317-28. Ministerio del Ambiente y de los Recursos Naturales Renovables, Areas potenciales para plantaciones forestales. MARNR, Caracas, Venezuela, 1991.