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Advancing Energy Productivity in American Manufacturing

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Advancing Energy Productivity in American Manufacturing Advancing Energy Productivity in American Manufacturing Alliance Commission on National Energy Efficiency Policy JANUARY 2013 PREAMBLE The Alliance Commission on National Energy Efficiency Policy (the Commission) was organized to study energy-efficiency policies, programs, and opportunities, and to make consensus recommendations on the next generation of domestic policies, programs, and practices to ensure that the U.S. can double its energy productivity (twice as much gross domestic product [GDP] from each unit of energy) from 2011 to 2030. The work of the Commission will include an assessment of the current state of energy efficiency in the U.S. economy; a review and assessment of the best local, state, and national practices; and the development of a set of recommendations on policies and programs for the next administration and the 113th Congress to achieve the stated goal of doubling U.S. energy productivity by 2030. This report, Energy Productivity in American Manufacturing, is one of seven research reports that assess the current state of efficiency within the economy and review the best local, state, and national practices. These assessments will be used to support and provide the technical basis for the Commission’s efforts to develop a set of recommendations for doubling the nation’s energy productivity. The other reports will address the following areas: history and business case of energy efficiency; transportation, land use and accessibility; residential and commercial buildings; power generation and smart grid; natural gas infrastructure; and, systems integration. To provide a comprehensive assessment to the Commission, the last report identified as “systems integration” will be a comprehensive analysis of the other research reports to identify common areas of consideration and areas of interdependency. It will also identify opportunities for the various sectors of the economy to work together. RESEARCH TEAM Our sincere thanks and appreciation go to the Advancing Energy Productivity in American Manufacturing Research Team: Christopher Cavanagh, National Grid US James Cross, National Grid US Michael Eckhart, Citigroup Ronald Edelstein, Gas Technology Institute R. Neal Elliott,American Council for an Energy-Efficient Economy Adam Muellerweiss, Dow Chemical Company Ethan Rogers, American Council for an Energy-Efficient Economy Kenneth Shiver, Southern Company Rodney Sobin, Alliance to Save Energy Pradeep Vitta,Southern Company Steven Wilson, Southern Company Alliance Commission on National Energy Efficiency Policy Advancing Energy Productivity in American Manufacturing 2 TABLE OF CONTENTS INTRODUCTION..................................................................................................................................................................................... 4 BACKGROUND AND CONTEXT ........................................................................................................................................................... 5 Industrial Energy Consumption .................................................................................................................................................... 5 Projections for Future Energy Use ................................................................................................................................................ 6 INVESTMENT ..................................................................................................................................................................................... 11 Rates of Return and Investment Priority .................................................................................................................................... 11 Energy is Just One Factor ........................................................................................................................................................... 12 Policy Influences ......................................................................................................................................................................... 13 TECHNOLOGY .................................................................................................................................................................................... 15 Potential and Opportunity ......................................................................................................................................................... 15 Innovation, Commercialization and Product Lifecycle ...............................................................................................................17 Case Studies ............................................................................................................................................................................... 19 Delta Faucet Co. Reduces Energy and Chemical Use for Degreasing ................................................................................19 Mesabi Nugget, LLC Commercializes New Iron Production Process .................................................................................19 Microchannel Reactor for Onsite Hydrogen Peroxide Production ....................................................................................19 Aspen Aerogels Thermal Insulation Technology Applicable to Broad Range of Industries ...............................................19 Scope and Targets for Manufacturing Energy Productivity ........................................................................................................20 Research and Development ....................................................................................................................................................... 21 HUMAN BEHAVIOR ........................................................................................................................................................................... 23 Motivation and Management ....................................................................................................................................................... 23 Knowledge, Skills, and Training ..................................................................................................................................................... 26 Perceptions of Risks and Benefits ................................................................................................................................................. 26 Case Study .................................................................................................................................................................................... 27 Alabama Power and Georgia Power Technology Application Centers .......................................................................................27 GOVERNMENT AND GOVERNANCE ................................................................................................................................................ 28 Tax Policies and Depreciation Rules .............................................................................................................................................. 28 Promoting Energy Management Systems (EnMS) and Continuous Improvement .......................................................................28 Technology Development and Diffusion ....................................................................................................................................... 29 Aligning Utility Incentives with Industrial Energy Efficiency .........................................................................................................30 Environmental Regulations and Policies ....................................................................................................................................... 31 CONCLUSION ..................................................................................................................................................................................... 33 Appendix A: List of Acronyms .............................................................................................................................................................. 35 Appendix B: List of Figures .................................................................................................................................................................. 36 Bibliography ......................................................................................................................................................................................... 37 Alliance Commission on National Energy Efficiency Policy Advancing Energy Productivity in American Manufacturing 3 INTRODUCTION This paper was prepared for the Alliance to Save Energy’s Commission on National Energy Efficiency Policy (ACNEEP) to describe industrial energy productivity trends, projections, opportunities, and barriers. Focusing on manufacturing, it discusses industrial energy efficiency investments, technologies, human behavior aspects, and government and governance issues to help ACNEEP explore energy productivity policy options. The goals of enhanced energy productivity (that is, better performance outcomes for a given input of energy, or reducing energy use for a given amount of output) are aligned with the goals of industrial economic productivity. In this sector, perhaps more than others, the search for cost-effective ways to increase energy productivity meshes with the individual interests
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