Cda Esm Waste Oil Disposal Applications

Riskope International SA www.riskope.com Case postale No 28 +39-347-7007’420 1055 Froideville, Suisse +41-79-621’8795 How to get the most out of (Vegetable) Waste Oil for your Small or Medium Business: CDA-ESM can help you to select the best option By C. Oboni and F. Oboni, Oboni Riskope Associates Inc. www.riskope.com Introduction Reportedly, some fast food chains started (2007) to use their waste cooking oil to make biodiesel. In one example encompassing 1200 restaurants, the entire corporate truck fleet of 155 vehicles was converted to biodiesel, which means 6.1 million liters of waste oil put to use on the roads. Other sources reveal that McDonald's trucks in Austria have been using biodiesel "for a few years." http://green.autoblog.com/2007/07/02/mcdonaldswillmakebiodieselfromitsownwastegrease fortru/ Biofuels summary: The most known form of biofuels is called Biodiesel (BD in Europe, B in the USA). Pure vegetal BD bear the index 100 (BD100), whereas mixes with oil derived diesel bear an index related to the ratio of vegetal product: thus BD20 means a diesel cut at 20% with vegetal oils. These products have international specs (ISO 14214, ASTM D 6751, DIN in Germany). Biodiesel is ten times less toxic, than kitchen salt. It is a better solvent than normal diesel and as a result it can damage some joints and pipes in older (before '92) standard diesel engines, but can also “cleanup” residues, scaling etc. in engines. Biodiesel is not explosive, biodegradable and normally has lower emissions than standard diesel. Biodiesel reduces net emissions of Carbon Oxyde (CO) by 50% and Carbon Dyoxyde (CO2) by 78.45%, because the emitted carbon is the one resent in the vegetal, and not one “trapped” underground and brought to the surface. Biodiesel is practically exempt of aromatic hydrocarbons, thus emissions of benzopyrens are reduced to a maximum of 71%; it does not emit Sulfur, as it does not contain any: it reduces fine dusts to a maximum of 65%. However, biodiesel produces more Nitrogen Oxydes (NOx) than oil derived diesel, a problem that can be solved by inserting, for example, catalyzers in the exhausts of diesel engines. Waste vegetal oils can be valued as fuel, whereas they do represent a cost if disposed of. Thus they overcome difficulties linked to taking away normal agricultural land use to supply the fuel industry, which can generate spikes in food prices, as we have seen in the last years. Therefore Waste vegetal oils constitute a sustainable resource. In order to show how Comparative Decision AnalysisEconomic Safety Margin (CDAESM) can help in the selection of the best Vegetal Waste Oil management alternative, we will consider as an

example a restaurant, i.e. a commercial kitchen (for example an ”average sized” fast food restaurant, of roughly 150m2, or less than 500m3 construction volume) or any equivalent Medium Sized Business (MSB). The MSB's Management wants to find a better way to deal with their waste frying oils, but also wants to avoid the implementation of the filtering station necessary for an automotive use of its waste oils1. Furthermore, the MSB does not have enough vehicles to make the fleet conversion economically feasible/reasonable. Management is also fully aware that, reportedly, some large chains like Burger King and McDonald’s would like to utilize frying oil to heat water, but has heard they don’t have the space for a redundant system and fastfood restaurant personnel may not have the time nor the ability to operate a more complex burner system. However, Management has recently learned that there are offtheshelf solution with burners capable of burning waste oils that are simple to use, can even accommodate several fuels, and, with some restrictions, can be inserted in existing furnaces, thus avoiding expensive replacements. Management has therefore to decide whether they want to maintain the status quo, i.e. the presently active waste fryingoil management/disposal or to switch to a new installation which would include a burner capable of using those waste oils to generate useful heat. The new installation should not be redundant (no need for extra room) with the present one, and should either use the existing furnace with a new burner, or replace the old system with a brand new one. This paper shows how to set up the data necessary for the alternative selection using an innovative alternative evaluation methodology called CDA/ESM (Comparative Decision Analysis/Economic Safety Margin) (C.+F. Oboni, 2009). CDA/ESM brings to MSBs the opportunity to apply Risk Based Decision Making to the alternative selection process and to explore how two code compliant and perfectly legitimate alternatives may differ on the long term, not only in their costs, but also in their risk profile (upside and downside risks, i.e. opportunities and failures). CDA/ESM eliminates the pitfalls of NPV (see below) and has been used at preliminary design level (Oboni and Oboni 2007, 2008; Oboni 19992000, 2005) to support decisions in many industries/situations by comparing alternatives in financial terms, including: a) life’s cycle economic balance encompassing internal and external risks and b) project implementation and demobilization costs and risks. CDA/ESM has been successfully applied to date to industrial alternatives such as: rope v.s. road transportation, surface v.s. underground solutions, environmental rehabilitation projects, water treatments alternatives, transportation networks and go/nogo decisions. CDA/ESM is particularly useful when comparing long term projects, as its “risks included” cumulative cost evaluation eliminates the “zeroing effect” and the “rosy scenario syndrome” linked to NPV (See Web Pages in References). It has already been shown in many instances that attempts to tweak the NPV to include risks are generally misleading (C.+F. Oboni, 2009). 1Vegetable oils have to be treated, reducing their viscosity, in order to be used in modern diesel engines without damage. Old diesel engines worked with more viscous fuels and thus would still run undamaged with untreated vegetal oils.

Description of the Case Study The Medium Sized Business (MSB) under consideration has to dispose of appx. 5,000 liters of waste vegetal (frying) oil per year. The MSB could be a commercial kitchen (for example an ”average sized” fast food restaurant, of roughly 150m2, or less than 500m3 construction volume). The MSB's Management is examining various alternatives to its waste oil management, such as: 1) Maintaining the status quo (disposal and using mineral oils/gas to provide heat and hot water). 2) Replacing the furnace/boiler with a new model allowing to burn the vegetal waste oil. 3) Replacing only the burner with a new one capable of burning vegetal oils. Of course in case of the last two alternatives' selection the new burner will have to be compliant with environmental protection regulations, using vegetal waste oils. Alternatives 2,3 would allow the MSB to stop the long term contract they have with a waste oil disposal company and reduce/eliminate their use of mineral oil/gas. The selected time horizon for the analysis is twenty years. The Status Quo alternative (1) encompasses a contractual arrangement with a company that picks up and legally disposes the waste for the MSB for a given lump sum annual fee. The contract foresees penalties if the volume is larger/smaller than ±5% than the contractual value. There is also an exit fee if the contract is stopped by the MSB before its term. Burning waste oil on site (2,3) will generate heat that can be used for sanitary/process water and heat. In this case MSB will have to pay the early stop penalty. Of course, each one of the paths, including Status Quo, has its own risks that should be considered in the decision making process/ alternatives' evaluation. Classic decision making In a case like the one under consideration, the MSB's Management would likely make the decision based on “guts feelings”, or, at best, use the Net Present Value (NPV) to compare alternatives. NPV is a very widely used evaluation technique which uses a number of assumptions, including a major one on the financial discount rate, to define a number, the NPV, which represents the amount of money one would have to put in the bank to obtain the same final result (gain or loss) than one's project, at the end of its life. NPV, by its own nature, underestimates anything that happens far away in the future to cover a large expense twenty years from now, one could invest a small amount and let it grow, so the NPV of that future expense is minuscule compared to expenses that will happen at the beginning of the project's life (Answers Corporation. 2009. http://www.answers.com/topic/net presentvalue#Common_pitfalls) . There is one additional major problem with NPV: in its classic implementation people insert yearly expenses, yearly income, and NO risks! Thus the alternative displaying the best NPV may turn out to be a ruinous one on real life!

Risk Based Decision Making: preparing the data for CDA/ESM Before being able to evaluate alternatives with CDA/ESM, thus avoiding the NPV pitfalls (see above), we need to perform a hazard identification on the three alternatives, and evaluate the probability (likelihood) of occurrence of each hazard, together with the cost of consequence of an occurrence of that hazard, thus leading to a summarized risk evaluation. The tables below summarize the data for each alternative. The column “Cost of consequence” defines, when needed, several magnitude scenarios. For example the first line of Alternative 1 displays the maintenance/replacement of the traditional burner: Scenario (1) depicts the “normal wear and tear” covered by the “normal maintenance” costs (which will be inserted in the analysis not as a single value, but as a average, minmax cost range), whereas scenario (2) depicts the possible need for full replacement (which will again be inserted as a minmax range and an average cost). In the “Likelihood” column, each scenario and cost of consequence will be paired with a probability/likelihood which will be determined quantitatively using for example the technique described in http://foboni.wordpress.com/2009/11/04/easywaytodefiningprobabilityofafirein aresidentialareaofvancouver/ Alternative 1: Status Quo Element/Hazard Cost of consequence Likelihood Burner to maintain/replace with 1)Yearly maintenance costs 1) almost certain, yearly standard one if need be range 2) Replacement cost 2) depends on the present state Furnace replacement Replacement costs Depends on the present state Fuel costs variations Could go up: Decreasing likelihoods: 1) 50% (average, minmax) 1) 2) 100% (average, minmax) 2) 3) 300% (average, minmax) 3) Penalties if variaton of volume Based on contract Based on business volumes to dispose forecast Escalation of price to dispose Use various scenarios Based on scenarios Etc. Running costs to be inserted in the analysis of Alternative 1 will of course be the “usual” cost of fuel, and “usual” cost of disposal. In Alternatives 2,3, there will be no “usual” cost of fuel unless future legislation would forbid the use of waste oils completely (there are scenarios for legislative changes that would enforce the implementation of catalytic converters or pretreatment of the waste oil). Also, in alternative 2,3 the possible need to install an additional tank to allow feeding the system with an “emergency” fuel, in case the business would not be selfsufficient have been taken into consideration.

Alternative 2: Furnace and Burner Replacement Element/Hazard Cost of consequence Likelihood Furnace and Burner Average, minmax estimates Certainty: it will be done if Implementation alternative is selected! Penalty for stopping the See contract Certainty: it will be done if disposal contract alternative is selected! New burner maintenance 1)Yearly maintenance costs 1) almost certain, yearly range 2) Replacement cost 2) extremely unlikely Implementation of special Average, minmax estimates Based on business volumes fixture (additional outside tank) including possible cost of the forecast to cope with possible deficit of “emergency” fuel waste oil Overcosts in case future laws Scenario: Likelihood: prohibit waste oil burning as 1) preliminary treatment will require discussion with foreseen today 2) need a catalytic converter local authorities to allow 3) requires switching to other determination of likelihood fuel (NB: this is a catastrophic scenario, as it means reverting to a waste oil disposal through a company, buying fuel etc.) Furnace replacement Replacement costs Extremely low (new furnace) Alternative 3: Burner Replacement (implemented in old furnace) Element/Hazard Cost of consequence Likelihood New burner implementation Average, minmax estimates Certainty: it will be done if alternative is selected! Penalty for stopping the See contract Certainty: it will be done if disposal contract alternative is selected! New burner maintenance 1)Yearly maintenance costs 1) almost certain, yearly range 2) Replacement cost 2) extremely unlikely Implementation of special Average, minmax estimates Based on business volumes fixture (additional outside tank) including possible cost of the forecast to cope with possible deficit of “emergency” fuel waste oil Overcosts in case future laws Scenario: Likelihood: prohibit waste oil burning as 1) preliminary treatment will require discussion with foreseen today 2) need a catalityc converter local authorities to allow 3) requires switching to other determination of likelihood fuel (NB: this is a catastrophic scenario, as it means reverting to a

waste oil disposal through a company, buying fuel etc.) Furnace replacement Replacement costs Depends on the present state Etc. CDA/ESM Analysis Once all the data for the three alternatives are ready, the CDAESM application can be launched. The result will be a detailed year by year evaluation of the performances of each alternative, including their specific risks, leading to a sensible comparison thus enabling a rational and a sustainable Risk Based Decision Making. Conclusions The aim of this paper is to show how innovative evaluations techniques can be used by small and medium sized business to select among alternatives. Thanks to CDAESM the power of Risk Based Decision Making is now available to small and medium sized businesses. References F. Oboni. 19992000. Risk/Crisis Management Systems Design, University of British Columbia F. Oboni. 2005. Do Risk Assessments Really Add Value To Projects?. CIM, Ottawa F. Oboni and C. Oboni. 2007. “Improving Sustainability through Reasonable Risk and Crisis Management”. ISBN 9780978446208 F. Oboni and C. Oboni. 2008. Oboni, Risk and Decision Making. www.edumine.com C. Oboni, F. Oboni, 2009, Stop Procrastinating! NPV is Dead: Use Risk as a Key Decision Parameter, CLRA Meeting, Quebec City. APPENDIX This Appendix is based on recent research from one of the leading technical universities of Italy (Zecchinato, L., Utilizzo di olii vegetali a scopo energetico, Politecnico di Torino, Facoltà di Ingegneria Chimica, 32008). The research report states that “for the tests we have used a burner ARCO BR5, a low pressure burner built to burn Naphta, Fuel, Vegetal Oils, or Wasted Oils (mineral or vegetal), pure or in mixes, as needed (www.arcobruciatori.it ). The burner works under the principle of low pressure and emulsioning, i.e. by mixing a part of the primary combustion air with the fuel. Thanks to this principle, with a good airfuel mixing already in the compressor and with the spraying through a specially made nozzle, the burner produces very low emissions with any of the tested fuels, in compliance with the Italian and most emission codes.” The figure below summarizes the reasearch results for combustion tests of Refined R or Unrefined

Canola oil in a ARCO BR5 burner, with various levels of preheating (55 0C, or 90 0C). In addition, the same plot depicts the results of tests performed on a modified ARCO BR5, to cope with countepressures ranging from 0mb to 3.35mb, burning waste frying oil F. Le prove sono state effettuate da noi e la contropressioni di 3.5 viene vinta anche dal non modificato BR5 It can be seen from the plots (CO, NOx expressed in ppm as a function of the excess air applied to each text) that the burner is perfectly capable of burning waste frying oils, with low emissions even with fairly high counter pressures common to modern furnaces. Canola OIl Combustion Tests (R=refined, F=Fried), ARCO Burner BR5 For F tests, burner is modified to be used with counterpressures at marked values 2117 1000 966 810793 781 1158 CO55 861 912 CO90 713 678 658492 CO90R 600 F CO counterpressure=0 391 332 420 F CO counterpressure=0.851.3 PPM (CO, NOx) F CO counterpressure=2.53.35 302 286 NO x 55 NO x 90 NO x 90R NO x counterpressure=0 NO x counterpressure=0.851.3 NO x counterpressure=2.53.35 64 65 59 62 53 53 56 52 36 33 42 40 36 3534 28 29 20 0 0.5 1 1.5 2 2.5 Excess Air Index

Cda Esm Waste Oil Disposal Applications

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