Efficient Enterprises Series: Industrial Energy Efficiency: Driver of Economic Growth
Capitol Hill Briefing Summary
On Tuesday, October 19, the Alliance hosted Industrial Energy Efficiency: Driver of Economic Growth, in the Capitol Building. This briefing, moderated by the Alliance’s Industrial Program Manager, Robert Lung, explored the productivity impacts of energy efficiency and their ability to underpin economic growth for U.S. industry.
Subject experts included John “Skip” Laitner of the American Council for an Energy Efficient Economy (ACEEE), Fred Schoeneborn from FCS Consulting Services Inc., and David Kincaid of the International Trade Association of the U.S. Department of Commerce. Each panelist shared viewpoints coupling industrial energy efficiency with increased productivity and economic growth.
Laitner opened the discussion by highlighting an undervaluation of industrial energy efficiency as a growth resource. Laitner pointed out that while energy efficiency projects typically are evaluated by energy cost savings, co-benefits from such projects often are understated. According to Mr. Laitner’s analysis, the United States’ economy operates at 13 percent efficiency—leaving 87 percent of diverse efficiency opportunities. Limiting this high level of inefficiency, which is projected to increase by 0.6 percent annually, requires greater investment in the development and application of efficient technologies and effective energy management.
Significant non-energy benefits can result from improving industrial energy efficiency. Better productivity, quality, consistency and reduced scrap may represent easily quantifiable co-benefits of a successful energy efficiency project. Laitner states that “we should make integrating the non-energy benefits with the anticipated energy savings an imperative” in developing more accurate models to assess the impacts of energy efficiency improvement projects.
For a clearer picture of energy efficiency opportunities at a given facility, plant staff or management must first commission energy efficiency assessments from independent experts. Independent assessments not only uncover existing inefficiencies, but they also can shed light on associated non-energy benefits. Fred Schoeneborn—former 30-year Global Energy Manager of Exxon-Mobil—offered strong anecdotal evidence of such less “tangible” non-energy benefits. Reduced environmental impact, strengthened neighborhood-firm relations, best practices sharing among company plants, as well as overall process improvement were all offered as additional, “unanticipated” co-benefits of industrial energy efficiency projects. “Assessments make energy projects work,” stated Mr. Schoeneborn.
Schoeneborn also emphasized the importance of leading with hard, fast numbers on costs and payback to company leaders. Selling energy projects to decision-makers is a critical barrier to comprehensive industrial efficiency advances. Schoeneborn underscored the importance of communicating value in units that resonate with company leadership. He offered one instance, when working on a project for Ford Motor Company, in which he was able to translate the resulting energy savings into the number of additional F-150 trucks the plant could make. “I think I was the only guy to ever convert Btu’s to F-150s,” joked Schoeneborn.
Benefits from improved energy efficiency not only improve plants and bring firms profits, but also have international implications for the U.S. manufacturing base. David Kincaid, an International Trade Specialist with the Office of Energy and Environmental Industries within the International Trade Administration (ITA) at the U.S. Department of Commerce, sees both energy efficient manufacturers and manufacturers of energy efficiency products as keys to enhancing U.S. competitiveness within the global economy. Several challenges to this task include difficulties defining the energy efficiency market, to differentiate between energy efficient products and energy efficiency projects; updating the tariff system, to accurately code those products that are or are not energy efficient in order for the U.S. Customs agency to calculate the volume of energy efficient products being traded and to determine the end role of these products; and providing a level of policy certainty that industry needs to make large, long-term development strategies. To address this latter challenge, the Department of Commerce is charged by the Obama Administration, under the National Export Initiative passed earlier in 2010, to create a roadmap to double renewable energy and energy efficiency exports by 2015.
In addition to developing policy, the federal government offers several resources and programs that promote industrial energy efficiency. Under its Sustainable Manufacturing Initiative, the ITA’s Office to Save Energy and Environment has successfully organized several sustainable manufacturing events around the country, including Sustainable Manufacturing American Regional tours, or SMART tours. It also hosted a Forum on Energy Efficiency in Manufacturing in Toledo, Ohio, in 2009, and is working on a “Retooling” roadshow that will visit Industrial Midwest cities.
The work of the ITA’s Office of Energy and Environmental Industry is based on sharing information, which is a resource that can influence behavior and create understanding, especially about industrial energy efficiency. Without understanding the impact of both energy and non-energy benefits, the value of energy efficiency is understated, which results in low implementation of energy efficiency projects. By integrating non-energy benefits into the calculations of anticipated energy efficiency project results, industry may be more apt to take greater steps towards energy efficiency.
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