Energy Efficiency Assignment

�o. 3

Assignment Title:

ENERGY, ECONOMICAL, AND ENVIRONMENTAL

IMPACT OF IMPLEMENTING FUEL ECONOMY

STANDARD FOR CARS IN MALAYSIA

Edited by:

Emad Sadeghi�ezhad

KGH080002

Lecturer:

T.M.I. Mahlia

Academic Year-(Semester): Session 2008/2009-(Sem. 2)

1

Contents

List of Tables………………………………………………………………...2

List of Figures……………………………………………………………….3

Nomenclature………………………………………………………………..4

Summary…………………………………………………………………….5

1. Introduction……………………………………………………………….6

2. Survey Data……………………………………………………………….7

3. Methodology……………………………………………………………...8

3.1. Fuel Saving (FS)……………………………………..………... 10

3.2. Bill saving (BS)………………………………………………... 10

3.3. Emission reduction………………………...…………………... 10

4. Results and Discussions………………………………………..………..11

6. Conclusions……………………………………………………………...15

References………………………………………………………………….16

2

List of tables:

Table 1: Number of cars……………………………………………………..7

Table 2: Emission based on fuel types………………………………………7

Table 3: Input data for economical analysis…………………………………7

Table 4: Fuel savings and economical analysis……………..……………...11

Table 5: Bill Saving and emission reduction…………………………..…..12

3

List of Figures:

Fig 1: Fuel savings per year………………………………………………..13

Fig 2: Amount of bill savings per year……………………………………..13

Fig 3: Economical analysis………………………………………………...14

Fig 4: Emission reduction………………………………………………….14

4

�omenclature

5

Summary

The growing world economy calls for saving natural resources with sustainable

development framework. This paper intends to look at the environment-energy interface

(impacts on the environment stemming form the energy sector) and to propose measures

for reducing this impact without trying to impede economic development. In addition,

this paper estimates the amounts of energy subsidies about 20% of Gross Domestic

Product (GDP) in 2019 if the conditions do not change. Meanwhile, environmental

damage from air pollution has been assessed by scaling according to GDP per capita

measured in purchase power parity (PPP) terms. Using this approach, the total damage

from air pollution in 2001 was assessed about $7billion; equivalent to 8.4% of nominal

GDP. Lacking price reform and control policies, the authors estimate that damage in Iran

will grow to 10.9% of GDP by 2019. In line with difficulties of eliminating subsidies, a

list of 25 measures has been analyzed, using the environmental cost-benefit analysis and

based on cost-effectiveness of the policies to verify which ones would be implemented.

Finally the financial effects of implementing different combinations of price reform and

carrying out those policies on the state budget, damage costs and subsidies have been

calculated. Implementation of fuel economy standards in the world has become a

compulsory for most f ever country in order to increase the efficiency in fuel

consumption, financial, and the emission reduction. This emission reduction has become

an international issue regarding of the green house effect of industrial and transportation

sector’s emission. This paper attempts to analyze cost benefit of implementing energy,

economical and environmental impact of implementing fuel economy standard for car in

Malaysia. The calculations were made based on growth of number of car and decrease of

fuel consumption from 1050 liter/year to 780 liter/year in Malaysia. In this case we are

going to survay the Fuel saving, Annual net saving, Net saving, Cumulative present value

and emission reduction by reducing fuel consumption. The number of cars increase from

1,356,678 in 1987 to 6,473,261 in 2005 it is predictable that it grow up to about

16660638 in 2020. Therefore, efficiency improvement of this appliance will give a

significant impact in the future of fuel consumption in this country. Furthermore, it has

been found that implementing an energy efficiency standard for cars is economically

justified.

6

1. Introduction As environmental mitigation justifies any attempts for reconstruction of internal

and global institutions based on sustainable development approach, but economic growth

is also required for improving the living standards of the population, reducing poverty,

and to address the various environmental issues, which are not restricted to the energy-

environment interface (The World Bank, 2000). In this regard, policymaking in the most

sensitive cases like energy related subjects has a unique priority. The impact of fuel

economy standards will be analyzed in the matter of energy savings, economical savings

(bill savings, fuel savings), and the last is the environmental impact. The environmental

impact will be analyzed regarding to the reduction of fuel usage that will decrease the

amount of fuel emissions (CO2, SO2, NOx, and CO). The mainstreaming tool for

integrating environmental concerns into the energy sector is an Energy- Environment

Review (EER), which aims to assist the country to better integrate energy sector

development and investments with improving the protection of the environment

simultaneously without hindering the economic development of the country. The main

strategic objectives of EER studies are to: (a) facilitate more efficient use and substitution

of traditional fuels; (b) protect the health of urban residents from air pollution due to fuel

combustion; (c) promote environmentally sustainable development of energy resources;

energy use on global climate change; and (e) develop capacity for environmental

regulation, monitoring and enforcement. The strategy sets a course of action using three

key instruments: policy assistance, knowledge management and targeted investments. It

also emphasizes that local, regional and global problems are excellent opportunities for a

developing country to address the environmental problems at all levels.

In addition, the emphasis here has been on the link of energy pricing policies to

the environment, and of the effects of eliminating subsidies on energy for the reduction of

environmental damage costs. The emission reduction is divided into four groups of

emission caused by the power generation that are used for the power to drive the motor,

that are coal, petroleum, and gas. The pollutant that are produced by the power

generations, are CO2, SO2, NOx, and the most dangerous CO. By reducing the amount of

energy needed by the industry to produce the goods, will off course reduce the amount of

emission of those dangerous gases.

7

2. Survey Data The data available in this study are; the numbers of cars,

Table 1: Number of cars Table 2: Emission based on fuel types

Year �umber of Cars

1987 1356678 1988 1427283 1989 1534166 1990 1678980 1991 1824679 1992 1942016 1993 2088300 1994 2302547 1995 2553574 1996 2886536 1997 3271304 1998 3452852 1999 3787047 2000 4145982 2001 4557992 2002 5001273

Table 3: Input data for economical analysis

Description Values Year standard enacted 2009 Discount rate 7% Incremental cost RM 5.75 Life span 10 years Baseline Fuel Consumption

1050 litre/year

Current average fuel price

RM 2.20/litre

Fuel economy standards 780 litre/year

Annual efficiency improvement

3%

Shipment survival factor 100% Petrol CO2 Emission 2.31 kg/litre

CO2 SO2 �O x CO Coal 1.1800 0.0139 0.0052 0.0002

Petroleum 0.8500 0.0164 0.0025 0.0002Gas 0.5300 0.0005 0.0009 0.0005

Hydro 0.0000 0.0000 0.0000 0.0000Others 0.0000 0.0000 0.0000 0.0000

8

3. Methodology There are several opportunities to assess environmental damages but considering

costs and infrastructure of such works, Benefit Transfer (BT) could be a preferable way

for a developing country (Pearce, 2000). So the study consisted of the following steps,

which were considered essential components to enable a country to "internalize the

externalities", in energy sector:

(i) Analysis of the current situation concerning energy generation and use For this

step, a vast amount of information with emphasis on the oil and gas sector was collected.

Also final energy consumption was analyzed by consuming sectors. The importance of

subsidies for the development use patterns was clearly identified.

(ii) Evaluation of the growth prospects with regards to energy generation and use In

this part, forecasts of the probable development of energy consumption under different

scenarios was made for 2009, 2014 and 2019. An assessment of the current situation was

undertaken in terms of energy usage and expected growth rate. Finally, energy demand

forecasts were made for several scenarios: (a) a reference case with no sector policies or

measures and constant real prices (broadly representative of present pricing policy,

business as usual scenario); (b) inclusion of specific spectral measures; (c) fast, medium

or slow price reform, i.e. and (d) a combination of price reform and spectral measures.

(iii) Identification of the environmental issues induced by the generation and use of

energy and estimation of the costs of the damages The emphasis was on air pollution,

and here on the situation in Tehran using a benefit transfer model, so pollutants (PM10,

NOx, SO2, CO and NMVOCs, CH4, CO2) estimated damage costs. Forecast of damage

costs was also undertaken based on the energy demand scenarios mentioned in step 2

above.

(iv) Evaluation of the proposed mitigating measures for the previously identified

environmental problems The objective here has been to identify measures in terms of

sector policies that can demonstrate significant reductions in environmental impacts at

reasonable costs. Where feasible, such measures or policies have been assessed using

cost-benefit analysis model, which includes opportunity, and damage costs and allows

fair comparisons to be made between and within different sectors. Policies for which such

a cost-benefit analysis could be made were categorized into three types: (a) cost effective

without the inclusion of any of the damage costs; (b) cost effective if local damage

9

costs are included and; (c) only cost effective if local and global damage costs are

included.

Environmental problems due to energy sector Six major pollutants with potential

health hazard are normally used to describe the impact on the atmosphere from energy

(fossil fuel) production and use. These pollutants are carbon monoxide (CO), sulphur

dioxide (SO2), oxides of nitrogen (NOx), ozone (O3), particulate matter PM 10),

hydrocarbons (HC) or Non-Methane Volatile Organic Compounds (NMVOCs)

and lead (Pb) (McGranahan and Murray, 2003). The latter is not longer considered as

being a problem in Malaysia, since the use of leaded fuel has been banned. The air

quality in Kuala Lumpur is worse than in the other parts of the country and especially the

concentrations of CO and PM 10 sometimes exceed the World Health Organization's

(WHO) guidelines and maximum allowable limits by more than 300 percent. In Kuala

lumpur, schools are occasionally closed and residents are asked to remain indoors due to

the health risks of heavy air pollution. In addition to the huge amount of pollutants

produced by mobile and stationary sources, A study was conducted in Malaysia on health

effects of air pollutants. Admittance of persons with acute situations of respiratory or

cardiovascular problems to the emergency wards of five hospitals in Kuala Lumpur have

been put in relation to ambient air concentrations of six major air pollutants, namely

Sulphur dioxide (SO2), nitrogen dioxide (NO2), carbon monoxide (CO), total

hydrocarbons (THC) and suspended particles <10 µm (PM 10). During an observed 140

days period, 1160 patients with pulmonary or cardiovascular problems had been admitted

to the five hospitals covered by the investigation. The study revealed significant relations

of health problems with SO2 and NO2 concentrations. A study on air quality in Malaysia

revealed the mortality risk associated with particulates (PM 10) as being at 4000 deaths

per year due to this pollutant. To this, an about equal number of cancer cases caused

annually by exposure to NOx has to be added. Solid waste is not directly related to the

energy sector, except perhaps through the possibility to obtain methane (CH4) from well-

managed landfills. However, it is a pressing environmental problem, especially in urban

areas with a day

This study and data analysis is using the following terms:

10

3.1. Fuel savings (FS)

Fuel savings from retrofitting is the difference between useful energy of efficient

and inefficient (BAU) motor. This can be calculated using the following equation:

FS = AS x UFS

3.2. Bill savings (BS) The bill savings of motor retrofit is a function of energy savings and the average

price of electricity (PE). The average price of electricity in KL is RM 0.235. The

potential bill savings by motor retrofit is calculated by the following equation:

BS = FS x PE

3.3. Emissions reduction (ER)

The envi ronmental impact from retrofitting is potential reduction of

greenhouse gasses or other element that caused negative impact to the environment. The

common emission reductions are usually, CO2, SO2, NOx and CO. The emission

reduction is a function of energy savings. The emission reduction can be expressed

mathematically by the following equation:

ERpollutant = sum (Pfuel x m) x ES

Pfuel : percentage of power sourced from this fuel

m : mass of pollutant per kWh

11

4. Result and DiscussionThe result of calculation using the listed formulas for fuel savings, bill savings, and emission reduction, are presented as follows:

Applicable Scaling Unit Fuel Fuel Fuel Efficiency BusinessShipment Stock Factor Saving Saving Savings Improvement Standard as Usual Standard

Sh AS SF UFS FS FS IE BAU STD BAU STDYear �o. of cars (litre/year) (litre/year) (Mlitre/year) (litre/year) (litre/year) (Mlitre) (Mlitre)1999 3787047 1868361 52186382000 4145982 2037915 72565532001 4557992 2236689 94932422002 5001273 2385297 118785392003 5053856 2140883 140194222004 5520538 2769229 167886512005 6012316 3045352 198340032006 6529190 3403410 232374132007 7071160 3813274 270506872008 7638226 4019918 310706052009 8230388 4379209 35449814 1.00 270.00 9571449780 9571.45 1 37222304700 27650854920 37222.30 27650.852010 8847646 4763240 40213054 0.88 238.85 9604733282 9604.73 0.97 40956995499 31352262217 40957.00 31352.262011 9490000 5200346 45413400 0.77 207.69 9432013846 9432.01 0.94 44823025800 35391011954 44823.03 35391.012012 10157450 5668723 51082123 0.65 176.54 9017959407 9017.96 0.91 48808968527 39791009120 48808.97 39791.012013 10849996 5746402 56828525 0.54 145.38 8261993250 8261.99 0.88 52509557100 44247563850 52509.56 44247.562014 11567638 6238180 63066705 0.42 114.23 7204158225 7204.16 0.85 56287034213 49082875988 56287.03 49082.882015 12310376 6755054 69821759 0.31 83.08 5800576902 5800.58 0.82 60116534499 54315957597 60116.53 54315.962016 13078210 7297024 77118783 0.19 51.92 4004244502 4004.24 0.79 63970030499 59965785997 63970.03 59965.792017 13871140 7864090 84982873 0.08 20.77 1765028901 1765.03 0.76 67816332654 66051303753 67816.33 66051.30

Table 4: Fuel savings and economical analysis

12

Bill Savings Fuel Type Emission ReductionBS BS Coal Petrol Gas Hydro CO2 SO2 �O_x CO

Year (RM) (millionRM)

kton ton ton ton

2009 21057189516 21057.19 17.34% 2.21% 51.55% 28.90% 4753.30 29005.80 13599.88 2841.282010 21130413221 21130.41 18.00% 2.00% 50.00% 30.00% 4748.58 29582.58 13792.40 2785.372011 20750430462 20750.43 18.74% 1.81% 48.55% 30.90% 4657.83 29658.50 13739.43 2677.282012 19839510694 19839.51 19.56% 1.64% 47.20% 31.60% 4463.06 29072.10 13372.91 2510.602013 18176385150 18176.39 20.46% 1.49% 45.95% 32.10% 4111.40 27413.71 12514.61 2260.892014 15849148095 15849.15 21.44% 1.36% 44.80% 32.40% 3616.43 24690.09 11181.43 1942.242015 12761269183 12761.27 22.50% 1.25% 43.75% 32.50% 2946.69 20599.30 9251.92 1544.402016 8809337904 8809.34 23.64% 1.16% 42.80% 32.40% 2064.80 14776.46 6580.90 1055.522017 3883063582 3883.06 24.86% 1.09% 41.95% 32.10% 926.55 6784.86 2996.17 461.82

Table 5: Bill Saving and emission reduction

13

Fig 1: Fuel savings per year

Fuel Savings

0.00

2000.00

4000.00

6000.00

8000.00

10000.00

12000.00

2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Mlit

re

Fig 2: Amount of bill savings per year

Bill Savings

0.00

5000.00

10000.00

15000.00

20000.00

25000.00

2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Mill

ion

RM

14

Fig 3: Economical analysis

0

10000

20000

30000

40000

50000

60000

70000

80000

2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Mlit

re BAUSTD

Fig 4: Emission reduction

Emission Reduction

0

5000

10000

15000

20000

25000

30000

35000

2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

mas

s

CO2 (kton)SO2 (ton)NOx (ton)CO (ton)

15

5. Conclusions The fuel savings for fuel economy standards plays a significant figure in the

Malaysia. Fuel savings reaches 10000 Mega litre for 2009, and decrease every year

because of the efficiencies always approach the value of stability (standards)

The amount of bill savings reaches RM 20000 billion, which are very significant

for the growth of the national economy.

The last is the emission reduction reaches 5000 kiloton for CO2, and so with the

other type of emission.

The fuel economy standards have been proven to be very important and

significant for the financial savings for the country, and also play a vey important role for

the emission reduction because of the power generation.

16

References [1] Dr. Indra Mahlia, Energy Efficiency Standard-Energy and environmental Impact,

Lecture Paper of Energy Efficiency, 2007

[2] Stefano JD. Energy efficiency and the environment: the potential for energy efficient

lighting to save energy and reduce carbon dioxide emissions at Melbourne University,

Australia. Energy – The Int Journal 2000;25:823-839.

[3] Lee AHW. Verification of electrical energy savings for lighting retrofits using short-

and long-term monitoring. Energy Convers Mgmt 2000;41:1999-2008.

[4] Guan FM, Mills E, Qin Z. Energy efficient lighting in China. Energy Policy

1997;25:77-83.

[5] Kazakevicius E, Gadgil E, Vorsatz D. Residential lighting in Lithuania. Energy Policy

1999;27:603-611.

[6] Philips. Product Catalogue–Family Detail: Lamps Compact Fluorescent Integrated,

www.lighting.philips.com, 2003.

[7] Turiel I, Atkinson B, Boghosian S, Chan P, Jennings J, Lutz J, McMahon JE, Pickle

S, Rosenquist G. Advanced technologies for residential appliance and lighting market

transformation, Energy and Buildings 1997; 26:241-252.

[8] Vorsatz D, Shown L, Koomey J, Moezzi M, Denver A, Atkinson B. Lighting market

sourcebook for the U.S. Lawrence Berkeley Laboratory, University of California,

Berkeley. 1997.

[9] McMahon J, Liu X., Turiel I, Hakim SH, Fisher D.Uncertainty and Sensitivity

analyses of ballast life-cycle cost and payback period. Lawrence Berkeley Laboratory,

University of California, Berkeley. 2000.

[10] Mahlia TMI. Emissions from electricity generation in Malaysia, Renewable Energy

2002; 27(2):293-300.

[11] Masjuki HH, Mahlia TMI, Choudhury IA. Potential electricity savings by

implementing minimum energy efficiency standards for room air conditioners in

Malaysia, Energy Convers and Mgmt 2001; 42:439-450.