Thermoeconomic Modeling as a Tool for Internalizing Carbon Credits into Multiproduct System Analysis

Abstract

In the context of emissions, carbon dioxide constitutes a predominant portion of greenhouse gases (GHGs), leading to the use of the term “carbon” interchangeably with these gases in climate-related discussions. The carbon market has emerged as a pivotal mechanism for emission regulation, allowing industries that struggle to meet emission reduction targets to acquire credits from those who have successfully curbed their emissions below stipulated levels. Thermoeconomics serves as a tool for analyzing multiproduct systems prevalent in diverse sectors, including sugarcane and alcohol mills, paper and pulp industries, steel mills, and cogeneration plants. These systems necessitate frameworks for equitable cost/emission allocation. This study is motivated by the need to expand the scope of thermoeconomic modeling to encompass expenses or revenues linked with the carbon market. By utilizing a cogeneration system as a representative case, this research aims to demonstrate how such modeling can facilitate the allocation of carbon market costs to final products. Moreover, it underscores the adaptability of this approach for internalizing other pertinent costs, encompassing expenses associated with environmental control devices, licenses, and permits. Although certain exergy disaggregation models depict an environmental component within diagrams, which is integral for addressing environmental burdens, even models without explicit environmental devices can effectively internalize carbon credits and allocate them to final products. The integration of carbon credits within thermoeconomic modeling introduces the capability to assess both the financial and environmental implications of emissions. This integration further incentivizes the reduction in GHGs and supports optimization endeavors concerning system design and operation. In summary, this study delves into the incorporation of carbon market dynamics into thermoeconomic modeling. It demonstrates the potential to allocate carbon-related costs, facilitates comprehensive cost analysis, encourages emission reduction, and provides a platform for enhancing system efficiency across industrial sectors.