ENV-04-184 Emissions Technology Identifies Lowest Environmental Compliance Cost Strategies in Cap & Trade Areas

Description:

Air Products & Chemicals, Inc. (APCI) has developed a unique Emission Optimizer (EO) Technology built on a patent-pending business method, which establishes a web-based emissions network that links companies’ emission-reduction plans and then identifies the lowest compliance plan cost in Mass Emission Cap & Trade areas. The EO can assist companies in the development and ongoing management of emission compliance plans among and between sites or geographies. In order to demonstrate the applicability and efficacy of this technology, Air Products modeled the Houston-Galveston Area in Texas, whose results are presented in this abstract. The Houston-Galveston Area (HGA) is classified as a "serious" ozone non-attainment area and has passed Mass Emission Cap and Trade regulations. Over 2750 point sources are subject to treatment to reduce NOx emission levels (ton/year) by 80%. Based on current point source activity levels (MMBTU/hr) and emission factors (lb NOx/MMBTU), each company must achieve specific NOx emission level limitations (“allowances”), staged between 2003 and 2008. Various treatment technologies are available for the different types and sizes of units. These technologies have different emission-reduction capabilities (lb NOx/MMBTU) and investment costs ($-hr/MMBTU). In many cases, two technologies can be combined to further reduce NOx. The EO determines the lowest cost of compliance with the Texas State Implementation Plan under the Mass Emission Cap & Trade (MECT) program, as described by Huston et al. (2002). The EO develops a solution using state-of-the-art mathematical programming-based optimization techniques. The EO consists of two components: (1) a large-scale, Mixed-Integer Linear Programming (MILP) problem to determine the lowest cost of compliance, and (2) a large-scale, Nonlinear Programming (NLP) problem, to determine the trades between companies corresponding to the investment selections determined by the MILP. These two components will be discussed in the next section. Additionally, APCI entered into an alliance agreement with VisionMonitor Software LLC, who used their Compliance Intelligence suite of products to develop the Environmental Compliance Competitive Advantage (ECCA) solution. The ECCA solution enables organizations to track, monitor, and predict their compliance with various regulatory standards and reporting requirements across the enterprise. The ECCA solution integrates data from the Texas Commission on Environmental Quality (TCEQ) and the customers' forecasted point source emission levels to provide input to the Emissions Optimizer, as highlighted in D’Aquino (2003). Air Products has applied for a patent to protect this business model. The model is configured to handle any type of emission data in any non-attainment geography.