gypsum -- phase ii benchmark...

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7. Gypsum

7.1 This Section

This section covers the gypsum sector (“Contract M”), as part of an overall project for DTI on

“EU Emissions Trading Scheme (ETS) Phase II – UK New Entrants Spreadsheet revisions”.

The overall aim of this project is to validate and revise appropriately the existing New Entrants

(NE) allocation spreadsheet. The following sub-sections present the findings for this sector.

7.2 Background and Sector Description

7.2.1 Sector Structure (DEFRA 2005b, WRAP 2005)

The gypsum sector within the UK comprises three major companies (British Gypsum, Knauf

and Lafarge). The sector’s main output is plaster products for use in the construction industry.

Gypsum (calcium sulphate dihydrate, CaSO4.2H2O) is a mineral that has found many uses in the

construction industry, from use as a retarding additive in cement to being the main compound

used in industrial building plasters and wallboards (plasterboard). There are two main forms of

gypsum that are used by the sector:

• Natural gypsum (mined); and,

• Synthetic desulphogypsum (a byproduct from flue gas desulphurisation at large

power plants).

The total UK production of gypsum (natural and synthetic) in 2000 was estimated as

approximately 3 million tonnes. UK annual production of bagged plaster in 2000 was around

700,000 tonnes (more than 60 million bags) and over 200 million square metres (Mm2) of

plasterboard. UK production levels of all types of gypsum products have increased since 2000

to meet market demand. The UK gypsum industry directly employs approximately 2,500 with

over 20,000 indirectly employed as merchants, installers, etc. The gypsum industry is one of

the few fully integrated industries within the field of construction products. The companies

which mine gypsum also process it and manufacture the value-added products and systems used

extensively in construction and other industries.

The sector operators are part of a Climate Change Agreement (CCA) through the Gypsum

Products Development Association (GPDA). This agreement was revised in 2004 and sets a

sector target to reduce specific energy consumption by 8.1% from 2000 to 2010 (DEFRA

2005c). The sites in the CCA each use different measures of production to define their specific

energy consumption but kWh/m2 of plasterboard is the most common. CCA data indicates that

all gypsum facilities were re-certified at the end of 2004 either because they have met their

individual targets outright, or through a mixture of trading and/or product mix corrections. The

GPDA (2006) have stated that they believe UK manufacturing plants are amongst the most

efficient in Europe, although at the time of writing there is no specific independent information

available to confirm this.

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The overall demand for gypsum in the UK for all uses in 2004 is estimated to be 4.6-5.0 Mtpa

(WRAP 2005). It is estimated that, by 2010 the overall demand for gypsum in the UK will rise

by 2.0–2.5 Mtpa, to a reach an overall total of 6.6–7.5 Mtpa (WRAP 2005). It is predicted that

by 2010 the plasterboard sector will have grown to utilise approximately 5.0 Mtpa (WRAP

2005). A recent report by Oxford Economic Forecasting predicts gypsum sector growth rates of

5% per annum with a corresponding 34% increase in sector CO2 emissions over the period

2008-2012 (OEF 2006). These growth rates are comfortably in excess of those recorded by the

construction sector and reflect a rising share of gypsum products in the construction material

market. Data from the GPDA (2006) indicates UK production of gypsum products in 2003-

2005 as summarised in Table 7.1.

Table 7.1 Summary of UK Gypsum Manufacture in 2003-2005 (GPDA 2006)

Quantity of Gypsum Product Manufactured (t) Product 1

2003 2004 2005

Bagged plaster 1,073,675 1,164,318 1,190,863

Plasterboard (assumed densjty 8.7 kg/m

2) 2,091,065 2,223,736 2,347,622

Coving (assumed density 1 kg/linear m) 25,661 23,750 22,055

Glass reinforced gypsum (GRG) (assumed gypsum density 12 kg/m

2) 36,211 35,290 37,588

Total 3,226,612 3,447,093 3,598,129

Note 1: The density of gypsum products varies between manufacturers and typical values have been used to estimate the mass of gypsum manufactured.

The demand for plasterboard is increasing as a substitute for traditional wet plaster techniques.

This is a consequence of the growth in timber and metal-framed buildings and also the increased

demand for prefabricated, off-site construction to reduce on-site building times. Because of

these changing methods, the plasterboard growth rate is higher than the general building

industry growth. Gypsum plants can produce a mixture of different types of plasterboard,

coving, GRG and bagged plaster and can vary their product mix within equipment limits to meet

market demand. However, the potential for manipulation of the product mix is very limited

since specific equipment is needed for each type of product. All gypsum plants have raw

material driers and calcining kilns. However, a bagged plaster plant will have a bagging line

whilst a plasterboard plant will have a paper facing conveyor line and a GRG plant will have a

glass-fibre product forming line. These distinct technologies will be easily verifiable by

inspection of the design plans and/or factory equipment. Therefore the possibility of

manipulation of the product mix to gain extra allowances is very limited without major plant

additions/modification which would be a genuine new entrant.

Gypsum does not compete directly with the cement sector; cement is a structural load-bearing

material whilst gypsum products are not. The process for gypsum manufacture is not the same

as for cement although both industries do use rotary kilns. The calcining process in the cement

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sector involves the release of process CO2, whereas in the gypsum sector no process CO2 is

released from calcining.

Approximately 360 million m2 of plasterboard was used in UK construction in 2004 (ONS

2005), of which 40 million m2 (11%) was net imports. Detailed statistics on waste plasterboard

arisings are currently scarce, but it is estimated that some 300,000 tonnes of waste plasterboard

are generated each year from new construction activity, largely as offcuts (WRAP 2005).

Plasterboard waste arising out of demolition and refurbishment projects is more difficult to

quantify, but may amount to between 0.5 and 1.0 million tonnes per year. The majority of

plasterboard waste has traditionally been landfilled, as it has been classified as a non-hazardous

inert waste able to be co-disposed of with other wastes. However, since July 2005, the EU

Landfill Directive requires that high sulphate wastes (including plasterboard and other waste

gypsum products) be landfilled in separately engineered cells, segregated from other waste

types, in non-hazardous landfill sites. Research programmes are underway in the sector to

explore opportunities to recycle plasterboard into the gypsum production process. In future this

may lead to changes in the specific fuel use and CO2 emissions of the sector which is an issue

for new entrant allocation.

Flue-gas desulphurisation (FGD) of power station emissions is the largest production method of

gypsum used in plasterboard manufacture. The emission stacks of certain coal fired power

stations incorporate ‘scrubbers’ which remove much of the sulphur from the waste gas, so

reducing emissions of sulphur dioxide. The by-product of this process is gypsum. This gypsum

is also sometimes referred to as desulphogypsum (DSG). Its use is increasing as the technology

is installed in more power stations under the requirements of the Large Combustion Plant

Directive and the IPPC Directive. It is increasingly being used in plasterboard manufacture as it

is a very pure form of gypsum. It is noted that Gypsum companies have a majority control over

UK mined gypsum so that DSG is an attractive source for other gypsum users, particularly

cement manufacturers. The table below summarises UK gypsum sources in 2002 and 2004

indicating a rise in the use of synthetic gypsum to at least 40% of total UK consumption.

Further growth is DSG use by the gypsum sector is expected as more UK power plants install

FGD units, thereby increasing the availability of DSG. DSG has a higher purity than natural

gypsum and is a desirable feedstock. It is noted that DSG typically has higher moisture levels

than natural gypsum and therefore requires more energy for drying in the gypsum

manufacturing process. Otherwise DSG is used in the same products as synthetic gypsum

allowing higher product quality to be achieved but at the expense of more energy use for drying.

Table 7.2 Summary of UK Gypsum Sources in 2002 and 2004 (WRAP 2005)

Gypsum Source Quantity in 2002 (Mt) Quantity in 2004 (Mt)

Natural gypsum (UK mined) 1.7 1.7

Synthetic gypsum (UK produced) 0.8-1.2 1.9

Net imports (natural and synthetic) 0.6-0.8 1.0-1.5

Total 3.1-3.7 4.6-5.1

The European gypsum and anhydrite industry operates around 220 sites and generates

employment directly and indirectly for 400,000 people (WRAP 2005). The overall European

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sector turnover is estimated at over €3 billion. Worldwide natural gypsum resources are large

and widely distributed with more than 90 countries producing gypsum. Mine production was

estimated at around 106 million tonnes in 2004. The largest producer is the United States,

producing some 18 million tones in 2004, of which 26% was synthetic gypsum (WRAP 2005).

There is limited international competition from global companies. Plasterboard is a commodity

material, but there is competitive advantage in manufacturing close to the market although

imports to the UK are still significant.

7.2.2 Process Overview

Gypsum occurs naturally as a mineral ore (calcium sulphate dihydrate, CaSO4.2H2O) that can be

quarried using conventional extraction techniques. If the moisture content of the mined ore is

greater than 0.5% by weight (%w/w), the ore must be first dried in a rotary dryer or heated roller

mill.

Synthetic gypsum is mainly produced as a by-product of wet flue gas desulphurisation (FGD) in

large power stations, through the reaction between limestone slurry and sulphur dioxide in the

flue gas;

CaCO3 + SO2 + 2H2O � CaSO4.2H2O + CO2

Synthetic gypsum resulting from this process is often termed desulphogypsum. Several other

forms of synthetic gypsum exist as a result of industrial processes, including titanogyspum

(titanium dioxide manufacture), phosphogypsum (phosphoric acid and phosphate fertiliser

manufacture) and fluorogypsum (hydrofluoric acid manufacture). Desulphogyspum has a

higher purity than mined gypsum and weighs less. The lighter weight has production benefits,

allowing more plasterboard to be made in less time. Its disadvantage is that higher moisture

levels (8-12% free moisture) mean more energy is required for drying. FGD gypsum may be

pressed and spun at source (the FGD unit), but it is not dried by compression at any gypsum

product or plasterboard manufacturing site.

The high moisture content of the raw material dihydrate gypsum (natural or synthetic) make it

unsuitable for use in plasters and wallboards. It must first be partially dehydrated at a

temperature of ~120°C in order to form a boiled plaster hemihydrate compound (calcium

sulphate hemihydrate, CaSO4.½H2O). This results in a loss of 1½ moles of water and a

reduction in molecular mass from to 172 to 145 g/mol. As a result one tonne of dihydrate

gypsum feedstock produces 0.84 tonnes of hemihydrate gypsum product. Further dehydration

of the boiled plaster at ~200°C results in ‘stucco’ which is used to manufacture plasterboard,

whilst calcination at a temperature of ~1300°C creates building plaster. Temperature controls

and rate of heating are crucial factors in the manufacture of various forms of gypsum. Two

combustion techniques are used by the sector to dry the dihydrate gypsum;

• Dehydration using kettle calciners; and,

• Dehydration using rotary kilns.

The rotary kilns and kettle calciners are usually operated using natural gas or distillate fuel oil as

their main fuel source. It is the combustion of these fuels that generate the sector’s contribution

to CO2 emissions. The CO2 emissions per unit of production varies between gypsum plants

according to the product mix and the technology type employed. There are no process CO2

emissions arising from gypsum manufacture.

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Plasterboard is made from ‘stucco’ mixed with additives, processed into a board and usually

faced with a paper covering. Once formed the plasterboard is allowed to set and then dried to a

specific moisture content before being cut to size and final finishing. Many different types of

plasterboard are made, each requiring different levels of energy input for drying, such as:

• different thicknesses;

• boards with specialist properties such as being particularly fire or moisture

resistant, or for sound insulation (acoustic) uses; and,

• composite boards formed from plasterboard with layers such as insulation bonded

to it.

There are also glass-fibre reinforced gypsum (GRG) building boards which do not have paper

facings and are not described as plasterboard. These boards are heavier than standard

plasterboard and typically require more heat input for drying/curing. Plasterboard can also be

recycled and this requires removal of the paper facing and reprocessing of the gypsum core via

the normal gypsum product manufacturing route.

In summary there are three main sources of CO2 emissions in gypsum product manufacture

which any allocation methodology must account for:

• Drying the raw gypsum feed (natural or synthetic) to achieve ~0.5%w/w moisture;

• Calcining the gypsum at high temperature; and,

• Drying of the final plasterboard product.

7.2.3 Phase I incumbent and new entrant installations

Identification of how sector is covered under EU ETS

The gypsum manufacturing sector is not included as a named sector in the EU ETS. Also, since

the UK applied a ‘medium’ definition of combustion in phase I, gypsum sites were not covered

even though many have aggregate combustion plant capacity of >20MWth for process heating.

The government have announced that in Phase II gypsum manufacture will be covered by the

following definition:

“The manufacture of gypsum products at installations with a rated thermal input exceeding 20

megawatts, where the processes on the site include grinding, calcining and board drying (if

applicable)” (DEFRA 2006)

There are believed to be six sites covered by this definition (i.e. those with CCA agreements for

the Gypsum sector as listed below). There are also a number of smaller sites that are owned by

gypsum manufacturers including mines without processing facilities and ‘secondary product’

manufacturing (e.g. adhesives and coatings for the construction industry). We assume that these

associated operations would not be covered by phase II of the EU ETS.

CO2 emissions from sector

There are six gypsum manufacturing installations in the sector CCA:

• British Gypsum, East Leak, Leicestershire

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• British Gypsum, Kirkby Thore, Cumbria

• British Gypsum, Robertsbridge, East Sussex

• British Gypsum, Sherburn in Elmet, Leeds

• Knauf UK, Sittingbourne, Kent

• Lafarge Plasterboard Ltd., Bristol

The table below summarises the total fuel use at these sites in 2003-2005 based on data

provided by the GPDA (2006). The direct CO2 emissions are calculated using standard fuel

emission factors from the FES new entrant allocation report1.

Table 7.3 Summary of Gypsum Sector Fuel Use and CO2 Emissions for 2003-2005 (GPDA 2006)

Total Sector Fuel Consumption (kWh)

Year

Natural gas Gas oil/Diesel oil

LPG/Propane Total

Total CO2 Emissions

(t CO2)

2003 2,045,607,497 13,553,455 6,345,502 2,065,506,454 393,513

2004 2,230,757,897 11,488,511 10,959,398 2,253,205,806 429,237

2005 2,325,912,366 9,041,347 9,727,540 2,344,681,253 446,421

From this data it is possible to calculate average CO2 emissions per unit of production for all

gypsum products in the most recent CCA milestone year of 2004. Data from Table 7.1 indicates

total UK production of gypsum of 3.45 Mt in 2004. Based on this data the average UK

emission factor for gypsum production in 2004 is estimated at 125 kgCO2/t gypsum. Also

from this data it is estimated that UK average energy consumption for gypsum production in

2004 was 654 kWh/t gypsum. These values provide an initial benchmark in that any new plant

would be expected to achieve this current level of efficiency as a minimum. The 2010 CCA

sector target requires a further 5.8% reduction on 2004 energy consumption levels to achieve

approximately 629 kWh/t gypsum (DEFRA 2005c).

Data provided by the GPDA (2006) for use in this study also indicates a range of fuel

consumption figures for different products as summarised in the table below.

1 EU Emissions Trading Scheme – Calculating the Free Allocation for New Entrants, Report for DTI

produced by Future Energy Solutions (FES), November 2004,

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Table 7.4 Summary of Gypsum Sector Fuel Use by Product Type for 2003-2005 (GPDA 2006)

Specific Fuel Consumption (kWh/t) for Product

Value

Bagged Plaster Plasterboard Coving1 GRG

Minimum 260 637 No data 1198

Maximum 547 915 No data 1322

Average 393 794 No data 1267

Note 1: Some sites producing plasterboard and GRG also produce limited quantities of coving but the energy use for this is not separated out. The relatively small quantity of energy used for coving manufacture is therefore already captured in the plasterboard and GRG figures.

The above data indicates a significant variation in energy use between manufacturers for each

type of product. The minimum specific energy use figures are those for the best performing

plants which represent BAT for gypsum product manufacture. Taking the UK product mix in

2005 from Table 7.1, and assuming that all producers could achieve the minimum specific fuel

consumption from the Table 7.4, the average sector energy use would be 515 kWh/t which is

significantly below the 2010 CCA target. However, energy use is a function of the raw material

moisture content, process technology employed and drying requirements for the product mix

and therefore it is unrealistic for all operators to achieve the minimum specific fuel consumption

in practice. The increased energy use for plasterboard and GRG compared to bagged plaster is

due to heat input for drying.

The sector can continue to optimise the energy efficiency of its plants by the methods such as

optimising burner performance, scheduling, process control and waste heat recovery, although

there is now limited scope for such improvements and no significant additional potential has

been identified as a result of the CCA 2004 target review.

It is noted that the majority of fuel use (99% by energy content) in the sector is natural gas. Only

a small proportion of energy comes from other fuels and this may include non-process use for

ancillary equipment and heating of buildings. It appears that CO2 emissions from the sector can

be estimated to within 1% of actual for each site by assuming that natural gas is the only fuel,

with a standard emission factor of 0.19 kgCO2/kWh (gross basis).

Identification of Non-benchmarked incumbents, Benchmarked incumbents and New Entrants

There is no existing Phase I NE allocation method for gypsum manufacture, and no gypsum

installations are currently covered by the EU ETS.

7.2.4 Possible new entrant technologies in Phase II

Brief description of known or likely new entrants and market developments

There is an expectation/speculation of significant investment at selected sites in the gypsum

sector to meet future construction sector requirements for bagged plaster and plasterboard

products. However, the exact scale and number of new plants/developments that are likely to

come on-stream in Phase II (2008-2012) are difficult to predict at this early stage (i.e. 3-7 years

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ahead). A potential future increase in FGD produced gypsum and in gypsum recycling also

makes it difficult to predict future gypsum sector developments. Data provided by the DTI

indicates that Phase II new entrants may include one new plant operated by Lafarge which is

due to come on stream in 2007. A plant operated by Knauf (location details not provided) and

one operated by British Gypsum (at East Leake) also underwent a significant expansion in 2005

and these may therefore be classed as new entrants in phase II due to lack of historical

emissions data.

Summary of possible types of New Entrants in Phase II

A summary of possible types of New Entrants in Phase II is given in Table 7.5.

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Type of New Entrant Is this type of New

Entrant

realistically

possible in Phase

II? (Y/N)

Technology type(s)? Fuel type(s)? Other relevant details

New installation Y New gypsum manufacturing installations

are likely in the UK.

Rotary kilns and kettle

calciners are usually operated

using natural gas or distillate

fuel oil as their main fuel

source. Biofuel use is a

possibility to reduce CO2

emissions in future but would

require further research by

operators and possibly kiln

design modifications to ensure

product quality is not adversely

affected.

It is difficult to predict what new plants will come on

line in Phase II due to the commercial confidentiality

of operator's production and development plans.

The demand for bagged plaster and plasterboard

products is increasing as a result of changes to

building regulations and government targets for new

house construction. Increasing fuel prices and

tightening environmental regulation of the sector are

also drivers for new plant investment. The GDPA is

aware of plans by Lafarge to open a new gypsum

plant in the UK in the near future.

New piece of equipment

to increase capacity

Y New process units to expand production

capacity are possible at existing gypsum

plants. In theory, an operator could

install any one of the main types of

process unit found at gypsum plants as

part of a capacity increase.






possibility in future.

The demand for production of gypsum products is

increasing. Operators can choose between

desulpho-gypsum which is a byproduct of flue gas

desulphurisation (FGD) at power stations and mined

gypsum as a raw material. Desulpho-gypsum has a

higher purity than natural gypsum but requires more

energy for drying due to its higher moisture content.

Extension to existing

piece of equipment to

increase capacity

Y Modifications to existing gypsum plants

to increase production and replace end-

of-life equipment are likely. In theory,

an operator could rebuild/extend any one

of the main types of process unit found

at gypsum plants as part of a capacity

increase.






possibility in future.

The GPDA consider UK operators to be amongst the

most energy efficient in the European gypsum sector

and are part of a sectoral Climate Change

Agreement (CCA).

Other Sector Notes There is an expectation/speculation of significant investment at selected sites in the gypsum sector to meet future construction sector requirements

for bagged plaster and plasterboard products. However, the exact scale and number of new plants/developments that are likely to come on-stream

in Phase II (2008-2012) are difficult to predict at this early stage (i.e. 3-7 years ahead). Increasing supplies of FGD produced gypsum also makes it

difficult to predict future gypsum sector developments.

Table 7.5 Summary of possible types of New Entrants in Phase II

7.3 Review of Relevant Data

7.3.1 Data sources

The Gypsum Products Development Association (GPDA) has been contacted to obtain data on

gypsum plants. The data and comments provided have been used to inform the assessment and

development of alternative allocation methods. A range of additional data sources on gypsum

plant energy use and CO2 emissions have been obtained and reviewed, as follows:

• Recent DEFRA and WRAP reports on the gypsum sector;

• Digest of UK Energy Statistics 2005;

• US Environmental Protection Agency (USEPA) data on gypsum sector emissions;

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• Journal articles on gypsum manufacture;

• FES report and spreadsheet on NER allocations, including methods for CHP units,

and boilers; and

• Papers on allocation methodologies from other member states.

The above data sources have been useful in assessing aggregate energy use figures for the sector

and some sites. However, the data available is limited since energy use and CO2 emissions from

the gypsum manufacturing sector are not separated out in national energy statistics and GHG

inventories and are typically totalled together with those for all other mineral-based industries.

Also, data for specific plants and types of process unit has been difficult to obtain since this

information is normally considered confidential by operators.

7.3.2 Data from literature

Data from literature searches and other sources on emission factors and capacity utilisation /

load factors of best operating practice installations relevant to Phase II New Entrants is

summarised in Table 7.6 below. The only readily available literature source of fuel use and CO2

emission data for individual process units is from the USEPA. This type of data is usually

treated as confidential by the operators. The USEPA report (2005) presents data for a number

of plants with different types of rotary ore dryers and flash calciners. The table therefore simply

represents the variation in emission factors from typical US plant.

Table 7.6 Data from literature searches and other sources on emission factors and capacity utilisation / load factors of best operating practice installations relevant to Phase II New Entrants (USEPA 2005)

Type of installation and process unit 1 Specific CO2

emissions range (kg/t feed)

Specific CO2 emissions average (kg/t feed)

Flash calciner with no control 60-65 60

Flash calciner (fuel unknown) with Fabric filter 60-65 60

Flash calciner (gas fired) with no control 42-49 45

Flash calciner (gas fired) with Fabric filter 48-55 50

Calciner with Fabric filter 55-75 65

Rotary ore dryer with no control 21-25 23

Rotary ore dryer with Fabric filter 15 15

Rotary ore dryer (gas fired) with Cyclone 3.9-4.8 4.3

Rotary ore dryer (gas fired) with Cyclone/fabric filter 3.5-4.5 4.1

Note 1: Variation in specific emissions is a function of feed moisture content and dryer/calciner efficiency. Pollution control devices such as cyclones/fabric filters generally have a negligible effect on CO2 emissions. Based on the above data the USEPA use standard (average) emission factors of 55 and 12 kgCO2/t feed for gypsum calciners and gypsum rotary ore driers respectively. This gives total emission 67 kg CO2 per tonne of feed but does not include product drying in the case of plasterboard. It can be assumed that one tonne of raw gypsum feed results in approximately 0.84 tonnes of product due to the loss of water.

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From the table above the key points are as follows:

• The lowest specific CO2 emissions for raw material drying is around 4 kg/t feed for

gas-fired units. However this varies significantly with the feed moisture content

and fuel type;

• The lowest specific CO2 emissions for calcining is around 45 kg/t feed for gas-fired

units. However this varies with the moisture content of the feed, plant

configuration and fuel type giving higher values for some plants;

• The lowest specific CO2 emissions for gypsum plants in the US study appear to be

in the region of 49 kg/t feed for gas-fired units. This equates to total emissions of

approximately 58 kgCO2/t product or energy use of 310 kWh/t product assuming

natural gas firing but this does not include emissions or energy use from product

drying in the case of plasterboard; and,

• The above data represents typical US plant based on monitoring carried out in the

last 20 years and does not necessarily represent BAT for current plant. Since the

above US data is not comprehensive it is not further analysed. Data from UK

operators may be more appropriate to accurately benchmark energy use or CO2

emissions for UK process units.

7.3.3 Benchmarks used in other contexts, including other Member States (if available)

Investigations have been undertaken to try to identify benchmarking approaches for new

entrants in other Member States. Overall, the extent of information available within the tight

timescales of this study has been limited. Furthermore, information will tend to relate to Phase I

approaches, and hence may not be indicative of approaches in Phase II, which this study is

focussed on. Notwithstanding this, it is useful to consider these approaches, as briefly

summarised below.

Denmark

The Danish NAP assumes an efficiency factor of 0.9 for new entrants but no distinction is made

between sectors for this factor. No discussion of new entrant benchmarks or formula.

Germany

New entrants are granted allocation on BAT benchmarks. These benchmarks are established for

installations with comparable products, and derived from BAT for new installations in that

class. Also, each product category will have a benchmark. New entrants that don’t have defined

benchmarks will be granted allowance based on BAT.

New entrant formula (industry non-specific);

Allocationi = Ci ·P

iU ·BAT,

where

i is an index for the installation;

Ci is the installation-specific output capacity in MW;

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P

iU is the projected utilisation or load factor by installation; and

BAT BAT benchmark for emissions per output unit, here CO2/MW

Netherlands

Ai = Ev · P · β · C

Where

Ai = Allocation (tCO2/year);

Ev = Emissions from combustion averaged for 2001 to 2002 (tCO2/year), information

not readily available on the specific approach for new entrants operational after that

time;

P = Production growth as a factor for the total of the years 2003-2006 (relative index);

β = energy consumption of the world’s best divided by the installation’s actual energy

consumption in the benchmark year 1999 (relative index);

C = Allocation factor (relative index).

Sweden

Allocation05-07 = k x Projected output05-07 x BM / BAT

Where

k = Scale factor applied to fuel-related emissions from combustion installations in the

energy sector. For non energy sector sites, k = 1.0;

Projected output05-07 = emissions in accordance with projected produced quantity of

installation-specific product 2005-2007. Only production based on fossil fuels is meant

for electricity and heat production;

BM = Benchmark emission factor;

BAT = Corresponds to estimated specific emissions at installation (tCO2/t product).

Other Member States

For a number of other Member States, the readily available information simply indicates that

new entrant allocations are to be based on BAT levels of performance. This applies to Czech

Republic, Ireland, Malta, Portugal (explicitly stating BAT Reference Documents), Slovenia

(also referencing BAT Reference Documents), and Spain.

From the available information, it appears that the Netherlands is the only member state we are

currently aware of that provides a specific benchmark for gypsum and this involves use of a

confidential sector energy efficiency target which is similar to the UK CCAs.

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7.4 Review of Phase I Benchmarks

7.4.1 Characterisation of existing New Entrant allocation benchmarks

The existing allocation methodology (used in Phase I) for new entrants from the FES report2

and spreadsheet3 do not cover the gypsum sector.

In the FES report, load factors and allocation methodologies are given for standard boilers (i.e.

‘other combustion plant >20 MW’) and CHP plants operating in any sector. However, in

gypsum manufacturing plant, the main fuel use is for direct process heating (i.e. drying and

calcining) and therefore none of the existing allocation methodologies from other sectors can

readily be applied to gypsum. The gypsum sector cannot be compared with cement/lime

production processes since there is no process CO2 emitted from gypsum kilns and they operate

at lower temperatures than cement kilns using a single fuel type.

7.4.2 Validation of existing New Entrant allocation spreadsheet

Since the Phase I benchmarking methods for new entrants do not cover gypsum manufacture it

is not possible to make any meaningful validation of the existing new entrant spreadsheet for

gypsum.

It is concluded that the existing new entrant benchmarking methods are not comprehensive

enough to cover gypsum new entrants. The list of key gypsum processes below indicates the

potential scope of coverage of the new entrant benchmarking in the gypsum sector:

GYPSUM PROCESSES (to be considered by new entrant benchmarking methods)

Raw material drying Natural gypsum drying

Synthetic gypsum drying

Calcining Kettle calciners

Rotary kilns

Final product drying Plasterboard drying lines and ovens

(including different plasterboard grades)

Auxiliary facilities Site services/utilities (unlikely to be significant in relation to other process energy use)

2 EU Emissions Trading Scheme – Calculating the Free Allocation for New Entrants, Report for DTI

produced by Future Energy Solutions (FES), November 2004.

3 Calculating the Allocation for New Entrants: spreadsheet for applicants by FES, updated 23

rd May 2005,

available at www.dti.gov.uk.

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7.5 Assessment of proposed benchmarks

7.5.1 Potential alternative New Entrant allocation methods

On the basis of our investigations there are two types of alternative benchmarking allocation

methodology that may be appropriate for use in the gypsum sector, as follows:

Option 1 – Single Benchmark Fuel Consumption Approach

This approach would use a single value for benchmark energy consumption in gypsum

manufacture.

As summarised in Section 7.3.2 the lowest specific energy consumption values for gypsum

manufacture in the US appear to be in the region of 310 kWh/t product based on gas-fired units.

However, this data cannot be reasonably used for benchmarking as it is not well referenced and

does not appear to include energy use for board drying. From Table 7.4 the lowest equivalent

value for UK plants (bagged plaster production only) is 260 kWh/t product and the difference

most likely reflects different feed moisture content. From Section 7.2.3 the average UK energy

consumption by gypsum plants (including bagged plaster, plasterboard, coving and GRG) in

2004 appears to be in the region of 654 kWh/t product. The UK sector CCA requires a further

reduction in average energy use to achieve around 629 kWh/t product by 2010.

Therefore, based on available data an initial energy consumption benchmark for all UK gypsum

sector new entrants of 629 kWh/t could be chosen by way of example. It is noted that the final

level at which this benchmark would be set cannot be determined without further data

submission from the sector operators to include feed moisture content and a more detailed

breakdown of plant energy use in the sector. This initial benchmark level would assume that

gypsum new entrants should be able to achieve the sector 2010 CCA target during phase II of

the EU ETS (i.e. 2008 to 2012) by application of BAT for energy efficiency. The allocation

would also assume natural gas use since this is the principal fuel and also represents BAT in

terms of reducing CO2 emissions. The allocation equation would then be:

Ai = Ci * Us/100 * SEC * EF

Allocation = Capacity * Utilisation * Benchmark Specific

Energy Consumption

* Emissions

Factor

tCO2 tonnes product capacity

% kWh/ tonne product tCO2 /kWh fuel

Where:

Parameter / Variable Value

SEC 629 kWh/t product

EF 0.00021 tCO2/kWh

Us 80%

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This approach would be transparent and simple. However, the problem with this approach is

that a single benchmark value for all gypsum manufacture would not take account of variations

in the raw material moisture content, type of kiln used or (most significantly) the product mix.

Although the DTI do not wish to differentiate based on the raw material quality or technology

type, product mix is a key differentiating factor. It is noted that product mix cannot be changed

significantly once the plant has been installed and can be easily verified.

It is environmentally advantageous to use synthetic gypsum so as to avoid further mining of

finite natural gypsum resources. However, as synthetic gypsum contains more moisture, there is

an energy penalty. The CCAs have a mechanism to correct for the differing energy demands

when using natural or synthetic gypsum. The above equation could lead to a shortage of

allowances for some plants using large quantities of synthetic gypsum with a high moisture

content. However, it may be possible to arrange for the moisture content of synthetic gypsum to

be reduced and hence reduce energy demand. FGD gypsum is dried by using centrifuges and by

pressing in addition to thermal drying. There is some potential for negotiation on moisture

content with the suppliers as there is mutual benefit in gypsum producers taking

desulphogypsum byproduct from power plant operators. Also as more FGD is installed, the

market will change from scarcity to surplus of synthetic gypsum, hence the price will decline.

This could force power station operators to optimise moisture content for the gypsum

manufacturers, thereby reducing gypsum operator energy use for drying. It is noted that the

landfill tax to dispose of any surplus FGD gypsum is sufficient to prevent a shift to lower

moisture natural gypsum which does not incur the same energy penalty to process (as in theory

the producers of FGD gypsum should be willing to pay manufacturers of gypsum products up to

the level of the landfill tax to take any surplus away).

Option 2 - Product Specific Benchmark Fuel Consumption Approach

This approach uses a product-specific benchmark for fuel consumption which takes into account

the varying drying requirements for each main product type. The benefit of this approach is that

it is more likely to meet the needs of each plant but the approach is less standardised than

Option 1. The benchmarks are based upon the best achievable values from Table 7.4. It is

noted that the GPDA claim that UK plant are amongst the most efficient in Europe but have

provided no data to demonstrate this (GPDA 2006). The only available published data from the

US appears to indicate that the best UK bagged plaster plant is more efficient than the best US

plant in the study. Therefore, on the basis of available data the best performing UK plants

(which includes some new plants built in the last 2 years) are considered to represent BAT.

This assumption also aligns with the requirement that new entrants should be allocated based on

use of modern technology and energy efficient design, thereby incentivising the implementation

of energy saving techniques. The allocation equations under this option would be as follows:

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Ai = Ci * Us/100 * SECs * EF

Allocation = Capacity * Utilisation *

Benchmark Specific Energy

Consumption for product

* Emissions

Factor



Where:


SECs 260 kWh/t product for bagged plaster

637 kWh/t product for plasterboard and coving

1198 kWh/t product for glass reinforced gypsum (GRG)

EF 0.00021 tCO2/kWh

Us 80%

The benefit of this approach is that it accounts for the variation in energy use between different

product types. Each plant is designed to produce a certain product mix and there is little

potential for change of product mix without major plant modifications/additions. There is also

some accounting of average feed moisture content since the benchmark figures include current

UK consumption of desulphogypsum. However specific factors for differentiation based on

feed moisture is not included since this would award extra allowances for use of a higher

moisture feed.

Load Factors and Plant Capacity

Gypsum plants can operate at high load factors of between 90 and 100% with production output

close to rated capacity although more detailed data would have to be provided by the sector

operators to verify this (GPDA 2006). The operator’s future production plans will typically

assume a high plant load factor although there may be some small variations based on the type

of kiln in use, maintenance schedules and projected sales volumes. Also, as gypsum products

are likely to remain in demand in the UK due to increasing construction use, operators will tend

to run their plants at maximum achievable throughput. No detailed data on plant load factors is

available as operators typically consider this data to be commercially confidential. It is

suggested that a standard load factor of 80% be used for the sector as a whole, in the absence of

more detailed information. The value used for plant capacity should be the nameplate capacity

of the equipment on a ‘final product’ basis and should be backed up with verifiable data such as

relevant sections of the PPC permit for the site. A plant is typically designed to produce a

specified number of tonnes (or square metres) of final product (be that bagged plaster,

plasterboard, coving or GRG) and this cannot easily be changed one the plant is operating

without significant equipment modification/additions. The plant production capacity is also

defined in any contract between the operator and process design/construction company and is

therefore easily verified.

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Fuel Emission Factors

There is a strong argument for use of a standard fuel factor for all gypsum manufacture based on

natural gas. This is because 99% of the sectors fuel use is natural gas and this also represents

clean technology option. Use of a natural gas fuel factor will not lead to any significant under

or over allocation for individual operators.

Summary

From the above information both Options 1 and 2 have some benefits and limitations.

However, Option 2 is more likely to meet the overall aims of the study in terms of feasibility

and preventing any significant under or over allocation. Option 2 also has the backing of the

GPDA. It is based on actual product mix output and this aligns with the approach taken for

other sectors. Option 2 also provides and incentive for production methods which are less

energy intensive as operators are not awarded extra allowances for use of high moisture feeds.

It is concluded that Option 2 is the most robust alternative allocation method for the purposes of

new entrant allocation.

The following table briefly considers the key elements of the existing NE allocation spreadsheet

and summarises details of proposed revisions. The proposals are then justified against the

agreed evaluation criteria in the following section.

Table 7.7 Summary assessment of key elements of existing New Entrant allocation spreadsheet and proposals for potential revision

Tests to be applied to existing NE allocation spreadsheet

Answer / Details of proposed revision

Source of data

Differentiation: should there be less or more differentiation within the sector (i.e. differentiating based on sub-product, raw materials, technology, fuel, efficiency etc)? If so, what should it be?

The existing NE spreadsheet does not cover the gypsum sector.

The proposed allocation Option 2 uses a standard energy use benchmark for each main type of gypsum product.

is the emission factor consistent with sector best practice

4? If “No”, what should

it be?


The Proposed NE allocation Option 2 uses a standard energy use benchmark combined with a standard emissions factor based on natural gas as the fuel.

Data on best practice for UK plants

Level at which benchmark is set

is the load factor realistic for new entrants in that sector? If “No”, what should it be?


The proposed NE allocation Option 2 uses a standard load factor of 80%.

Expert judgement

4 Interpreted as ‘Best Available Techniques’ (BAT), as defined in the IPPC Directive. In practice, within

the scope of this study it will only be possible to assess this in broad indicative terms at a sectoral level. It

is clearly not within our scope to define BAT at the level of detail that would be required for a site

specific PPC Permit.

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Overall, the proposals for potential revisions to the formulae to be used in the New Entrant

allocation spreadsheet are:

Ai = Ci * Us/100 * SECs * EF

Allocation = Capacity * Utilisation *

Benchmark Specific Energy

Consumption for product

* Emissions

Factor



Where:


SECs 260 kWh/t product for bagged plaster

637 kWh/t product for plasterboard and coving

1198 kWh/t product for glass reinforced gypsum (GRG)

EF 0.00021 tCO2/kWh

Us 80%

And:

• The operator specifies the plant capacity based on the process design final product

output. Where a single plant makes more than one product then the total allocation

is calculated by summing the individual allocations for each product type.

• Values for operator-specified parameters should be verifiable. For example, the

new entrant application could be supported by a technical annex which includes a

copy of relevant parts of the PPC permit or plant design documentation to justify

the plant capacity.

7.6 Evaluation of Proposed Benchmarks

Feasibility

• A single benchmark for all gypsum products would not recognise the significant

variation in energy use for drying different products. Therefore the proposed

product-based benchmarks are considered to be the most feasible and would not

lead to significant under or over allocation.

• The suggested benchmarks for each product type are based on best practice in UK

plant and any new entrant would be expected to achieve this level of performance

through application of BAT. This is considered to be achievable given that new

plant will employ the latest technology and energy efficiency measures compared

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to existing ageing UK gypsum plant which may be 10 or more years old.

Furthermore, gas is used as the benchmark fuel.

• The load factor and fuel emission factor have been standardised based on available

data. The chosen values do not require verification and should not lead to

significant under or over allocation.

• The value used for plant capacity should be the nameplate capacity of the

equipment based on design final product volume and should be backed up with

verifiable data such as relevant sections of the PPC permit for the site and design

documentation. The potential for artificial manipulation of the claimed plant

capacity by varying product mix is very limited since specific equipment is needed

for each type of product. All gypsum plants have raw material driers and calcining

kilns. However, a bagged plaster plant will have a bagging line whilst a

plasterboard plant will have a paper facing conveyor line and a GRG plant will

have a glass-fibre product forming line. These distinct technologies will be easily

verifiable by inspection of the design plans and/or factory equipment. Therefore

the possibility of manipulation of the plant capacity and product mix to gain extra

allowances is very limited without major plant additions/modification which would

be a genuine new entrant.

• The operator will specify the type of product or product mix for the new capacity.

Ultimately by checking key documents including design / production plans, the

information on expected product mix can be verified. Given the much higher

investment costs for GRG and its higher price, it is unlikely that a site constructed

for GRG will not produce that.

Incentives for clean technology

• In general there is always an incentive to apply the cleanest technology unless the

benchmark directly includes technology as a parameter. The proposed benchmark

does not take site-specific feed moisture into account as doing so would award

extra allowances for use of a high moisture feed. Therefore it maintains an

incentive to use low-moisture feedstock. Similarly, there is no choice of fuel type.

Gas is used as the benchmark fuel as in most of the sector and already today gas

accounts for 99% of fuel consumption in the gypsum sector.

• The differentiation by product type is needed due to the significant variation in

product specific energy consumption. There is difference of a factor of 4 to 5

between bagged plaster and Glass Reinforced Gypsum. A difference of that

magnitude needs to be reflected in the benchmark. Therefore there is differentiation

into 3 product types.

• The proposed benchmark makes no differentiation between natural gypsum

feedstock, desulphogypsum or recycled plasterboard. This ensures that recycling

of potential waste streams is not discouraged but equally it does not reward

operators with extra allowances for use of lower quality raw materials.

Competitiveness and impact on investment

• Traditionally, there has been limited international competition in gypsum products.

Currently about 30% of the domestic demand is imported plasterboard. Imports

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have increased in recent years to meet UK construction demand but new UK plants

have now come on line/are planned to reduce the need for imports. On the UK and

European market there are three main companies competing. Benchmark CO2

emissions for plasterboard are about 120 kg per tonne. With a CO2 allowance price

of 25 €/tonne, the maximum potential impact is about £2/tonne of product. If the

plasterboard price is assumed to be in the order of £100 to £150 per tonne the

impact is slightly above 1%. The difference between the specific energy

consumption for bagged plaster and plaster board is factor of almost 3 and

therefore, using the low SEC value would only give the plasterboard producers

40% of their need. This would amounts to a potential impact on costs of about

£1.20 per tonne of product. Therefore the benchmark differentiates between types

of product to avoid competitive distortion.

• The proposed benchmark is believed to be close to meeting site need if the operator

applies the most efficient equipment. By allowing the product specific benchmarks

there should be no distortion of the domestic market favouring companies with a

certain expected product profile. As the calculation above illustrates, the value of

the potential under-allocation of using the lowest SEC is not particularly high. On

the other hand, 1% on of sales value could be around 10% of profit margin. No

detailed studies have been made on the gypsum sector and the potential impact of

the EU ETS. Therefore, the possibilities of passing on additional costs to the

consumers and other key issues have not be addressed. Accordingly, it is not

possible to assess whether a significant under allocation would affect investment

and production decisions within the industry. The benchmarks proposed are

designed to prevent any significant under or over allocation.

• The proposed benchmark method uses UK plant data as the basis for setting a

benchmark for new entrants. UK Plant is considered by the GPDA to be amongst

the most efficient in Europe and any new entrant should use BAT to minimise

energy use per unit of production.

• The existing UK gypsum plants that will be entering into phase II have historical

CCA data from which to make allocations using a grandfathering approach. Those

plants which do not have enough historical data are relatively new plants and they

would be expected to already be using BAT and attaining the benchmark levels of

energy efficiency. It is concluded that no significant under or over allocation is

likely for existing plants or new entrants.

• The proposed benchmark method uses a standard fuel factor based on natural gas

use. The majority of sector fuel use (99%) is already from gas and therefore this

does not affect competitiveness.

Consistency with incumbent allocations

• The gypsum sector is not currently covered by the EU ETS. If the benchmark were

to be applied to all existing plants an under allocation of approximately 20% across

the sector is estimated to occur. Existing plants that do not have enough historical

data are likely to be already operating at BAT levels and therefore the benchmark

would not lead to significant under or over allocation.

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• Gypsum plants tend to operate at high load factors and therefore a standard value

of 80% has been used for new entrants which is considered to be consistent with

incumbents.

7.7 References

DTI 2005. Digest of UK Energy Statistics 2005. Department of Trade and Industry. 2005.

DEFRA 2005a. Revised UK National Allocation Plan (NAP) for the EU ETS. Department of

the Environment, Food and Rural Affairs. 14 February 2005.

DEFRA 2005b. EU Emission Trading Scheme: Phase II Expansion Sector Specific Analysis:

Foundries, Integrated Steelworks, Glass, Gypsum and Rock Wool. September 2005.

DEFRA 2005c. Climate Change Agreements - Results of the Second Target Period

Assessment. Department of the Environment, Food and Rural Affairs. July 2005.

DEFRA 2006. EU ETS Phase II Expansion - Explanatory Note. Department of the

Environment, Food and Rural Affairs. March 2006.

EA 1995. IPC Guidance Note S2 1.01: Combustion Processes: Large Boilers and Furnaces

50MW(th) and Over. Environment Agency. November 1995.

EA 2006. Pollution Inventory England & Wales. Environment Agency. www.environment-

agency.gov.uk (accessed January 2006).

GPDA 2006. Communication with Crispin Dunn-Meynell, Gypsum Products Development

Association. February 2006.

OEF 2006. Research on Output Growth Rates and Carbon Dioxide Emissions of the Industrial

Sectors of EU-ETS. Oxford economic Forecasting and the Carbon Consortium. Report for the

DTI. February 2006.

ONS 2005. UK Products Sales and Trade Statistics 2004: Plaster Products and Plasterboard

(PRA 26620 and PRA 26530). Office of National Statistics. 2005.

USEPA 2005. Emission Factor Documentation for AP-42 Section 11.16 - Gypsum

Manufacturing. US environmental protections Agency. 2005.

WRAP 2005. Review of Plasterboard Material Flows and Barriers to Greater Use of Recycled

Plasterboard. Waste and Resources Action Programme. November 2005.