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Why doesn't industry try energy efficiency?

The article below is very interesting for its implications to the promotion of pollution prevention and cleaner production.  Energy efficiency has been vigorously promoted for thirty years now, and still industry is largely not paying much attention to the topic.  This despite the absence of other factors that confound adoption of P2/CP, for example energy efficiency has no association with regulatory agencies like EPA, there is no legal liability for wasting energy (tho you could get into trouble with excess air emissions); the argument has always been about cost cost cost, without "sustainability" and "saving the earth" being thrown in, and really extensive efforts by utilities and others to promote energy conservation.  There is a LOT more financial assistance and technical assistance for energy efficiency than for P2/CP.  And still industries and residents don't pay much attention.
I think that advocates of P2/CP need to take a very long hard look at the failures and successes of energy efficiency promotion in order to guide future promotion of P2/CP.  And there may be some unpleasant conclusions about how successful we are going to be promoting P2/CP.  Keep in mind that most countries spend lots more on EE promotion than on P2/CP promotion.  In USA, in 1998 the leading utilities alone spent over $1 billion on various kinds of demand side management to promote efficiency.  The US Dept of Energy spends hundreds of millions more promoting it.  Budgets for P2/CP promotion are not even remotely comparable.  At the least, we can learn from the EE successes that do exist.  Perhaps future conferences on P2/CP and industrial sustainability can bring in energy efficiency promotion experts to learn how they do it.  In fact, perhaps all P2/CP promoters and philosophers should be tasked with explaining why they think P2/CP can succeed as a movement, when energy efficiency has not succeeded significantly so far.  While this may be an overstatement, I think any analysis of sustainability ought to start with analysis of successes and failures of energy efficiency promotion, the "older brother" to P2/CP and sustainable development concepts in general.
Burt Hamner
Copyright 2000 The Times-Picayune Publishing Company
The Times-Picayune (New Orleans)
December 28, 2000 Thursday
LENGTH: 905 words
HEADLINE: Industry slow to see light;Power use cuts into bottom line
BYLINE: By Newhouse News Service
Smart homeowners respond to high heating bills by turning down their thermostats and stuffing towels under drafty doors.

But that savvy has been slow to come to factories, which eat energy the way athletes gulp Gatorade. Despite sizable energy bills -- typically equal to at least 2 percent of operating costs per plant -- many manufacturers are doing little to curb energy use, analysts and industrial engineers said.

The chemicals industry alone uses about 7 percent of total energy consumed annually in the United States. More than two thirds of all energy that industrial companies consume is used to provide heat and power for production lines, according to the U.S. Department of Energy.

So why isn't energy a priority now?

Companies say they already took steps to curtail energy use after the fuel shortages of the late 1970s and early 1980s and that long-term contracts have shielded them, to a degree, from the latest energy crunch. Some companies say they have more pressing issues, such as rising raw-materials costs and weak foreign currency.

Those explanations don't completely satisfy Michael Muller, who heads the Industrial Productivity and Energy Assessment office at Rutgers University in Piscataway, N.J. He blames a combination of ego and, perhaps, ignorance of the amount of money that could be saved.

For example, proper placement of lights at an Ohio plastics company saved it $40,000 annually by reducing the number of lights needed and boosting productivity. Federally financed industrial assessments, which aim to reduce energy use and waste, average about $55,000 in annual savings for manufacturers.

"Most small companies want to be large. If they can increase sales and revenue, they'll do it," Muller said. "If I'm an energy manager and go to the big shots to talk about upgrading pumping systems, they think they can spend the capital a different way.

"A lot of energy managers have a drawer full of great projects waiting for either an economic downturn or a significant increase in energy prices."

That's because the fuel factor rarely sells on its own, according to Anna Shipley, a researcher for the American Council for an Energy Efficient Economy in Washington.

"In order for energy-efficient equipment to be adopted, there has to be another benefit," such as productivity gains or compliance with federal environmental rules, Shipley said.

J. Kelly Kissock, who teaches mechanical and aerospace engineering at the University of Dayton in Ohio, said most energy-efficient measures actually do triple duty. The university and 29 others, including Rutgers, receive annual grants from the U.S. Department of Energy to perform energy assessments at small to midsize manufacturers looking to cut costs.

"How we use energy has the greatest impact on environmental pollution," said Kissock, who heads the University of Dayton's Industrial Assessment Center. "Companies that are profitable are running very clean, have no waste."

Dow Chemical Co. provides some proof. Through upgrades at a Texas chemical plant and the start-up of its own generation facility at a plant in the Netherlands, the company has increased its energy efficiency by 3.5 percent since 1990.

Energy cutbacks are part of a larger program that includes productivity improvements, price hikes for products and pollution controls. The combination has insulated the Midland, Mich., company from financial losses plaguing competitors. It managed a slight increase in third-quarter income ($328 million; earnings per share were flat at 48 cents), despite spending $600 million more on energy and feedstocks vs. the same period last year.

Such results "demonstrate Dow's inherent strengths in the face of surging raw materials and energy costs," Chief Financial Officer J. Pedro Reinhard told analysts in late October. Such measures also can demonstrate that executives are serious about improving profits, some analysts said.

"If you're using less energy, you're spending less money," said Marc Brammer, an analyst for Innovest Strategic Value Advisors.

Though high energy costs may prod manufacturers who have been slow to replace inefficient electric motors or failing furnaces, an economic downturn could prove to be the cattle call.

That's because as raw materials and energy costs rise -- and orders stall -- manufacturers may find themselves forced to cut costs further to preserve profits.

"Companies don't have many alternatives: Cut back, don't produce the product or accept it," said T. Crawford Honeycutt, an economist for the Energy Department's Energy Information Administration. "They are clearly economizing so that energy will have an even smaller impact."

Among the measures manufacturers favor: individual power generators, which can reduce a factory's dependence on the national power grid, and interruptable electricity contracts through which companies agree to have their power interrupted by their utility on extremely hot days in exchange for lower electric rates year-round.

Muller expects manufacturers to increasingly take notice of energy costs. With double-digit increases in natural gas expected to last through spring, when electric rates may take the lead, what was an insignificant cost for companies may take on more meaning.

"If you're in a highly competitive industry," he said, "2 or 3 percent can be the difference between survival or not."
Burton Hamner
Seattle, WA