Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis

1. Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis Antonio Valero, Sergio Usón, César Torres & Alicia Valero CIRCE – Centro de Investigación de Recursos y Consumos Energéticos. Universidad de Zaragoza (Spain)

2. Motivation • The key point of Industrial Symbiosis is the use of waste flows produced by an industry as inputs for another, in order to close materials cycles. • A waste is considered as: • A by-product: producer viewpoint • A resource: consumer viewpoint • Prices determination must: • Use accurate and objective accounting methodologies • Use cost based on physical roots How fair prices of recycled wastes can be determined? Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 2

3. Objetives • Evaluation Tools in Industrial Symbiosis • Material and Energy Flow Analysis (MFA) • Life Cycle Analysis (LCA) • Energy and Exergy Analysis • Recycling Cost-Benefit Analysis (CBA) • Environmental Input-Output Analysis • Thermoeconomics Thermoeconomicsis proposed to solve this question in cooperation to other evaluation methodologies Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 3

4. Outline • Exergy and Thermoeconomics • Exergy Input-Output Analysis • Application to an Eco-Industrial Park • Conclusions Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 4

5. Thermoeconomics • Integration of industrial systems with interchange of resources, products and wastes implies energy savings. • Thermoeconomics(Tribus and Evans, 1962), is a general theory of energy saving. • It evaluates the quantity and quality of energy and material flows by means of the Exergy. • It evaluates the cost of the flows in terms of resources consumption, by means of the concept of Exergy Cost. • It can be applied to different level of decision and problems: cost accounting, optimization, diagnosis,… Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 5

6. Exergy, Purpose and Efficiency Exergy is the maximum amount of work that a system or flow produce while interacting with the environment. Second Law Analysis states for any energy process: Exergy Input – Exergy Output = Irreversibility > 0 • The efficiency of a productiveprocess is defined as: Efficiency = Production / Resources < 1 Resources – Products = Wastes + Irreversibility > 0 Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis

7. Efficiency and Cost The exergy unit cost of a energy process is: Unit Consumption = Resources / Production < 1 • The unit exergy cost is the inverse of the efficiency : The amount of resources (measured in exergy) required to obtain a unit of product. Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 7 7

8. Irreversibility and Cost Exergy cost of a product is the amount of resources (measured in exergy) required to obtain a desired quantity of that product. The exergy cost is a cumulative magnitude that accounts all the irreversibilities and wastes generated to obtain a product Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis

9. Exergy Input-Output Analysis • Input-Output Analysis depicts inter-industry relations of an economic system. • Input-Output analysis (IO) is applied in many economic fields including issues related to Industrial Ecology. • Traditionally uses different quantity units for energy and material flows. • If monetary units are used for costs, arbitrariness may be introduced. • Thermoeconomic Input-Output, formely Symbolic Exergoecononomics (Valero and Torres, 1988): • Uses exergy as single unit of energy and material flows, independently of their economic value • Uses the productive structure based on the definition of process efficiency. • Is able to objectively allocate the costs of products interchanged. • Can help to rationalize the general problem of resources savings achieved through waste integration. Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 9

10. The Fuel-Product Table The Fuel-Product Table is the matrix representation of the productive process interdependence of a system The inputs of each process are their resources (Fuel) The outputs of each process are their products Each element Eij is the part of the product of process –i– used as a resource by component –j– . 0 is the environment. (Fuel) (Product) (External resources) (Final demand) Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 10

11. Production Model • Processes are characterized by exergy unit consumptions • The Thermoeconomic IO model allows determine the production of each component as a function of: • The system demand: • The efficiency of each process: • The productionmatrix is defined as: • The production of each component is given by: Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 11

12. The Cost Model • The exergy cost satisfies the following properties: • It depends on the exergy of the external resources • The production costs are distributed proportionally to the exergy. • The production costs of each component are equal the cost of the resources required to obtain it plus the cost of the residues generated. • The unit production costs could be computed as: • The Total Resources for a desired demand is given by: Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 12

13. Eco-Industrial Park Example “A eco-industrial park is defined as an industrial system of planned materials and energy exchanges that seeks to minimize energy, raw materials and waste and build sustainable economic, ecological and social relationship” US President Council of Sustainable Developent (1996) • Our Eco-Industrial Park example integrates: • A coal fired power plant producing 350 MW • A cement factory with a capacity of 650000 ton/year • A gas fired boiler for heat district that produces 11 kg/s of steam at 8.5 bar and 310ºC • The flow integration analyzes: • To replace the part of the steam produced in the gas-fired boiler with steam bleeding produced in the power plant. • To replace 10% of mass flow rate of clinker production by fly ashed produced in the power plant Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 13

14. Eco-Industrial Park Example Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 14

15. Productive Structure: Isolated Systems Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 15

16. Productive Structure. Integrated System Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 16

17. Fuel-Product (Exergy IO) Table Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 17

18. Integration Exergy Cost Saving Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 18

19. Strategies to Fair Price Assessment • Exergy cost of the integrated system • Distribution of exergy cost saving • By-product criteria: Assess the total cost saving to the main product • Fair-price criteria: Distribute the total cost saving according to economical criteria, such as: • Level of investment. • Subsystems production. • Subsystems resources consumption. Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis

20. Cost Assessment Analysis Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis

21. Conclusions • Thermoeconomic Input-Output Analysis is proposed for the analysis of integrations that characterize Industrial Ecology: • Systematic methodology (Input-Output Analysis) • Based on physical roots (Second Law Analysis). • The approach can play a significant role for solving several important problems of Industrial Ecology: • Guidelines for establishing fair prices for by-products • Physical costs of matter and energy streams • Impact on natural resources consumption reduction • Effect on waste reduction Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 21

22. Perspectives • This paper is a first and promising step in the application of Themoeconomics to Industrial Symbiosis. • All thermoeconomic techniques developed during years for the analysis, optimization and diagnosis of energy systems can be applied now to Industrial Symbiosis • Evaluation methodologies of Industrial Symbiosis could be applied to Thermoeconomics: • Material Flow Analysis • Life Cycle Assessment • Environmental Input Output Analysis Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis 22

23. Thanks for your attention! Thermoeconomics as a Tool for a Fair Product Cost Allocation in Industrial Symbiosis Thermoeconomics as a tool for a fair product cost allocation in Industrial Symbiosis 23