INDUSTRIAL EFFICIENCY

OVERVIEW

U.S. manufacturing accounted for 11% of GDP in 2011,¹ employing close to 12 million workers.² Companies in the industrial sector spend $94 billion annually³ and consume 5.5 million GWh energy,⁴ which is 31% of total U.S. power usage.⁵ While domestic manufacturing is less energy-intensive than that of many other developed countries,⁶ it is still responsible for 1.5 gigatons of energy-related GHG emissions,⁷ which is more than a quarter of total U.S. emissions. Simple efficiency upgrades in the industrial sector could curb total U.S. emissions by nearly 10%.⁸ And cutting industrial energy use by 10% could save companies a combined $10 billion in expenses,⁹ making American products more competitive overseas.

ANALYSIS

There are already a lot of options for industrial companies to improve their energy efficiency. But long payback periods on efficiency investments,¹⁰ information barriers, and the absence of a clear competitive advantage¹¹ discourage their implementation. Small to mid-sized manufacturers, which account for 90% of the U.S. production industry,¹² rarely have the staff or resources to spend time comprehensively analyzing their energy use,¹³ nor do they have the baseline data necessary to make informed decisions.¹⁴ Instead, companies generally have to rely on individual suppliers’ data when making equipment purchasing decisions, which may not be easily comparable between supplier options.¹⁵

While other PowerBook Components cover industry-specific improvements, many processes use similar equipment and can benefit from similar efficiency upgrades. Most industrial processes involve equipment such as motors, compressors, or transformers, and high-efficiency options are often available.¹⁶ Sensors, smart equipment, and optimizing electricity use could lead to energy savings of 15% to 20%.¹⁷ Facility energy managers, usually found only at larger manufacturing facilities,¹⁸ can often identify ways to reduce energy usage at any type of industrial facility.¹⁹

IMPLEMENTATION

To get over the obstacles facing efficiency in the industrial sector, a combination of policy approaches is required.

Prioritize Federal Procurement from Efficient Suppliers

To create a market pull, all federal contracts should require that government suppliers either pursue the U.S. Council for Energy-Efficient Manufacturing’s Superior Energy Performance Certification²⁰ or become part of DOE’s Better Plants program.²¹ Participation in these programs requires companies to benchmark their energy use and make improvements over several years of up to 25% of initial energy use. As the largest consumer in the U.S.,²² the federal government has a significant ability to impact energy efficiency implementation.

Federal Energy Manager Support for Small-to-Mid-Sized Manufacturers

To avoid unfairly penalizing small and medium-sized manufacturers through efficiency procurement policies, the Department of Energy and Department of Commerce should ensure that the manufacturing extension program²³ and Industrial Assessment Center program²⁴ are properly prepared to help manufacturers become compliant. These existing programs currently provide technical advice.

Create an Industrial Equipment Standard Program

DOE and EPA should work with the National Electrical Manufacturers Association (NEMA) and other interested parties to create a broad program similar to the NEMA premium standard for motors and transformers.²⁵ In the consumer sector, the Energy Star program helps consumers make smart purchasing decisions through education and standardized data.²⁶ In the industrial sector, no similar federal program exists for equipment. Standardizing the testing protocols and making comparison between products easier could even allow for the creation of a rebate program, similar to that proposed in the bipartisan Energy Savings and Industrial Competitiveness Act of 2011,²⁷ or help utilities offer easy-to-understand rebates for curbing demand.