Emission Trading Scheme and the Effect of Carbon Fee on Petroleum Refineries

Henry O. Orugba, Samuel E Ogbeide, Christian Osagie

Abstract


The high volume of green house gases released from petroleum refineries has contributed greatly to global warming. The crude distillation unit of a refinery being an energy-intensive unit generates high volume of greenhouse gases. Unlike solid and liquid pollutants that can easily be handled and treated, gaseous pollutants are difficult to handle once they are generated, hence an effective means of reducing their generation is paramount.  Because of the cost penalty placed on defaulters, emission trading scheme has been an effective way of controlling the release of these obnoxious gases into the environment as refiners would seek alternative processing schemes that reduce emissions. The crude distillation unit of the refinery under study was simulated in Aspen Hysys. The unit was designed to process 125,000bpsd of a blend of three Nigerian crudes. Greenhouse gases from the unit were targeted from direct (heating sources) and indirect (electricity usage) respectively. The concept of global warming potential was adopted to estimate the carbon (iv) oxide equivalent of the greenhouse gases from the unit. A methodology to allocate emission quota to a refinery was developed and a carbon fee of $5 per tonne was placed for above- limit emissions. The crude distillation unit was found to have a base generation of 491576.27tonne/yr of carbon (iv) oxide equivalent while it pays $491,576.25per year for above-limit emission. The sensitivity analysis revealed that the gross profit is quite sensitive to carbon fee.  


Keywords


Green house gases; refinery; emission quota; carbon fee; global warming potential

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DOI: https://doi.org/10.24203/ajas.v7i5.5947

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