AUSTRALIAN MANUFACTURING GAS EFFICIENCY GUIDE Acknowledgments
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AUSTRALIAN MANUFACTURING GAS EFFICIENCY GUIDE Acknowledgments The Clean Energy Finance Corporation (CEFC) gratefully acknowledges the contributions of the following organisations • Alan Pears • Mars Australia • BlueScope Australia and New Zealand • Spirax Sarco • CSR Limited Disclaimer This report has been prepared and issued for CEFC for public dissemination and is provided solely for information purposes. This report (or the information, opinions or conclusions set out or referred to in this report (‘Information’) must not be used for any other purpose. This report and the Information is not intended to constitute financial, tax, legal, regulatory or other professional advice or recommendations of any kind and should not be used as a substitute for consultation with financial, tax, legal, regulatory or other professional advisors. 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The details of the relevant licence conditions are available on the Creative Commons website as is the full legal code for the CC BY ND 4.0 International licence (see https://creativecommons.org/licenses/by-nc-nd/4.0/legalcode). © Clean Energy Finance Corporation 2018 AUSTRALIAN MANUFACTURING GAS EFFICIENCY GUIDE Contents Our commitment to manufacturing 3 Australian manufacturing 4 Getting control of the energy challenge 6 About this guide 9 Identifying gas efficiency opportunities 10 Best practice energy efficiency 12 Where to act: Steam systems 13 Where to act: Hot water 16 Where to act: Process heating 17 Where to act: Multiple technology applications 19 Where to act: Fuel switching 24 How to assess energy intensity 26 Essential skills for energy efficiency projects 28 Financing gas efficiency and fuel switching projects 30 Case studies 34 Glossary 36 PAGE 1 PAGE 2 AUSTRALIAN MANUFACTURING GAS EFFICIENCY GUIDE Our commitment to manufacturing The Australian Industry Group, the Clean with market reforms and the Australian or shifting from gas to lower intensity Energy Finance Corporation and the Domestic Gas Security Mechanism. The energy sources, this guide is aimed Energy Efficiency Council are pleased to extreme prices of 2017 – including some at providing useful insights into present a new resource for gas-intensive industrial offers above $20 per gigajoule technologies and equipment that can manufacturers: Australian Manufacturing – have thankfully abated. But prices make long-term differences. Gas Efficiency Guide. remain two to three times their historic average. It is unlikely they will ever Furthermore, the benefits of gas All our organisations have a strong return to the low levels on which industry efficiency can go well beyond cost and commitment to helping Australia’s used to rely, given the transformation emissions savings; they include reducing energy intensive manufacturing of the gas market by export demand, maintenance costs, improving the life industry reduce operating costs and international price pressure and rising expectancy of equipment, reducing carbon emissions. This guide will assist production costs. water consumption and improving the sector to remain cost competitive in site conditions. a global economy that is moving High gas prices could be a persistent fast towards lower emissions and challenge to industry. However, recent The opportunities are significant, cleaner energy. analysis has revealed an untapped however determining whether an opportunity to reduce industry approach will work for an individual Australia’s manufacturing sector has reliance on gas by at least 25 per cent business involves disciplined research confounded doubters in recent years in Australia, resulting in estimated and measurement to identify the by expanding strongly. The sector has emissions savings in the region of opportunities that are affordable the potential for even greater growth and feasible. 10Mt CO2e. amidst a new industrial revolution that is transforming industry yet again. This guide examines the energy needs This guide is intended to help with the However, energy costs loom as one of a wide range of manufacturers, from identification of possible initiatives at of the most significant headwinds to food processors to building materials the earliest stages of planning, before seizing this opportunity. producers and identifies areas of moving on to project-specific advice opportunity in terms of performance, from industry specialists. We hope it Recent high gas prices and unfavourable cost and paybacks. provides inspiration to those in the contracting conditions have put pressure sector who have been meaning to on tight operating margins for many Whether it is through maintenance take the first steps to achieving better manufacturers. Industry has been at improvement, replacing old equipment, gas efficiency, but weren’t sure the forefront of efforts to ease prices smart redesigns of industrial processes where to start. Ian Learmonth Luke Menzel Innes Willox CEO, Clean Energy Finance Corporation CEO, Energy Efficiency Council CEO, Australian Industry Group PAGE 3 AUSTRALIAN MANUFACTURING GAS EFFICIENCY GUIDE Australian Manufacturing TAKING CONTROL OF THE ENERGY CHALLENGE LESS GAS AUSTRALIAN WHERE TO ACT MORE BENEFITS INDUSTRY SIGNIFICANT OPPORTUNITIES PROVEN LESS TECHNOLOGIES GAS $100B 900K HOT 81 25% GDP JOBS STEAM WATER YEAR CARBON PAYBACK SAVINGS 5 10Mt NATIONAL ENERGY PROCESS FUEL FOOTPRINT INTENSIVE HEATING SWITCHING PAGE 4 PAGE 5 Taking control of the 1 energy challenge PAGE 6 AUSTRALIAN MANUFACTURING GAS EFFICIENCY GUIDE The Australian manufacturing industry includes businesses engaged in the physical or chemical transformation of materials into new products1. Manufacturing is vital to the Australian economy, contributing around $100 billion (6.2 per cent) to Gross Domestic Product annually and supporting nearly 900,000 jobs, or 7.4 per cent of total employment.2 Australia’s manufacturers are the most Market Operator (AEMO) data, the represent an estimated emissions 3 energy intensive in the OECD and Australian Competition and Consumer reduction of 10 MtCO2e/year based on are also large users of natural gas. In Commission (ACCC) expects WA to be current levels. 2014-15 Australian manufacturing was well supplied with gas in the short to responsible for around 40 per cent of medium term8. These big improvements can be total natural gas consumption4. achieved through: With little prospect of major new This reliance on gas has been driven sources of supply in the southern • Equipment maintenance by twin forces. Historically, eastern states in the near-term9, future prices improvements Australia has benefitted from lower will almost certainly continue to be • Operational optimisation gas prices more than most other areas influenced by international LNG prices10 of the developed world because of and domestic demand. In this context, • Replacement of old equipment with the relatively plentiful availability of Australia’s manufacturers must anticipate more efficient, newer equipment low cost, conventional gas supplies. and adapt to prices much higher than • Smart redesign to improve industrial At the same time our geographical the historical average, as well as the processes isolation has meant there has been a potential for increasing • Fuel shifting from gas to solar lack of competition for Australian gas price volatility. thermal, solar PV, bioenergy and low from international customers, limiting emissions electricity. demand-driven price increases. These factors mean it is increasingly important that manufacturers move Every manufacturing operation is However, the east coast gas market now to unlock significant untapped different, and manufacturers need the is