Industrial Energy Efficiency

August 1993

OTA-E-560

NTIS order #PB93-218931

GPO stock #052-003-01336-3
Recommended Citation:

U.S. Congress, Office of Technology Assessment, Industrial Energy Efficiency,

OTA-E-560 (Washington, DC: U.S. Government Printing Office, August 1993).
T

Foreword

his report was prepared as part of the ongoing OTA assessment, U.S. Energy

Efficiency: Past Trends and Future Opportunities, carried out in response to

requests from the Senate Committees on Governmental Affairs and on Energy and

Natural Resources; the House Committee on Energy and Commerce; and endorsed

by the Subcommittee on Environment, Energy, and Natural Resources of the House

Committee on Government Operations and by the chairman of the Subcommittee on

Environment of the House Committee on Science, Space, and Technology. Other reports

in this assessment examine energy use in the Federal Government, residential and

commercial buildings, transportation, and the role of utilities in energy efficiency.

This report focuses on energy use in industry, and how government policy can affect

it. Trends and patterns in industrial energy use are reviewed, energy-efficient industrial

equipment and practices are described, and the factors that influence corporate investment

in efficient technologies are explored. Lastly, past Federal efforts to improve industrial

energy efficiency are reviewed, and policy options for encouraging the further development

and adoption of efficient industrial technologies are discussed.

OTA benefited greatly from the substantial assistance received from many organizations and individuals in the course of this study. Members of the advisory panel provided

helpful guidance and advice. Reviewers of the draft report contributed greatly to its

accuracy and completeness. OTA and the project staff sincerely appreciate their time and

effort.

Roger C. Herdman, Director

. . .

Ill
Preject Staff

Peter D. Blair

Assistant Director, OTA

(beginning February 1993)

Energy, Materials, and International

Security Division

Energy and Materials

Program Manager

Lionel S. Johns

Assistant Director, OTA

(until February 1993)

Energy, Materials, and International

Security Division

John E. Newman

Project Director

ADMINISTRATIVE

Lillian Chapman

Office Administrator

Linda Long

Administrative Secretary

Tina Aikens

Secretary

i v
James F. Gibbons, Chairman

Dean, Stanford University

Terman Engineering Center

Dale Compton

School of Industrial Engineering

Purdue University

Mark Cooper

Consumers Federation of America

Robert deHaan

Armana Refrigeration, Inc.

retired

Daniel A. Dreyfus

Gas Research Institute

Clark W. Gellings

Electric Power Research Institute

David B. Goldstein

Natural Resources Defense Council

Advisory Panel

Cheryl Barrington

Regulatory Assistance Project

formerly Commissioner,

Maine Public Utilities Commission

Kenneth Hickman

Applied Systems Division

The York International Corporation

Edward Mclnerney

GE Appliances Division

General Electric Company

Alan Miller

Center for Global Change

University of Maryland-College Park

Gary Nakarado

Commissioner, Public Utility

Commission of Colorado

John W. Rowe

New England Electric System

Maxine L. Savitz

Garrett Ceramic Components

Garrett Processing Company

Sherwood H. Smith, Jr.

Carolina Power and Light Company

Richard Tracey

Ryland Homes

B.C. Waycaster

Hydrocarbons and Energy

Department

Dow Chemical

Irvin L. White

Battelle, Pacific Northwest

Laboratories

Mason Willrich

Pacific Gas and Electric

Enterprises

James L. Wolf

The Alliance to Save Energy

Eric R. Zausner

Strategic Performance Management
Reviewers

Rob Atkinson

U.S. Congress

Office of Technology Assessment

Samuel Baldwin

U.S. Congress

Office of Technology Assessment

Paul Cicio

Dow Chemical Company

Dwight French

Energy Information Administration

U.S. Department of Energy

Kenneth Friedman

U.S. Department of Energy

Robert Friedman

U.S. Congress

Office of Technology Assessment

Gordon H. Fry

Aluminum Association

Howard Geller Michael E. Samsa

American Council for an Gas Research Institute

Energy-Efficient Economy

Bruce A. Steiner

Russell O. Jones American Iron and Steel Institute

American Petroleum Institute

W. Ross Stevens Ill

Alan F. Kessler E.I. du Pent de Nemours & Co.

Armana Refrigeration, Inc.

Frederick E. Mangelsdorf

Texaco, Inc.

Barry Meyer

Aluminum Association

James E. Reed

Energetic, Inc.

Robert A. Roland

Chemical Manufacturers Association

Marc Ross

University of Michigan

v i
contents

1 Introduction and Policy 1

Findings 3

Policy Context 10

Policy Options 23

2 Industrial Energy Consumption 35

Overall Energy Consumption 35

Energy Sources 37

Industries and Their Energy Use 43

Energy Intensity 53

Outlook 56

3 Improved Technologies and Practice 65

Generic Improvements 67

Process Industries 81

Materials Production 97

4 Energy in the Corporate Context 117

Investment in Efficiency 117

Industrial Companies and Utilities 125

Appendix A: Funding of DOE, Office of

Industrial Technologies Research

and Development Program 133

INDEX 137
Introduction

and

Policy

E

nergy is an integral component of a modern economy. It

is an essential ingredient in nearly all goods and

services, but its use exacts heavy financial, environmental, and security costs. A key method of reducing

energy’s costs while retaining its benefits is to use it more

efficiently.

Industry is a very large consumer of energy. U.S. manufacturing plants, mines, farms, and construction firms currently

consume about 25 quads (quadrillion British thermal units or

Btu) of energy each year, about 30 percent of the Nation’s total

consumption of energy. Industry thus has a major role in making

the United States more energy efficient.

Industrial energy use and the opportunities for improving its

energy efficiency depend on many technical, economic, institutional, and political factors. Many such factors have changed

since the 1970s, when most Federal energy policy was formulated.

●

●

●

●

●

Industrial energy intensity (box l-A) has declined over the

last two decades (figure l-l) as a result of improvements in

energy efficiency and shifts in industrial structure.

Industry’s petroleum consumption has fallen from its peaks

of the late 1970s.

Prices of petroleum, natural gas, and electricity have

declined, when adjusted for inflation, after nearly a decade

of increases.

Utilities have assumed a new role in promoting energy

conservation.

Energy policy has been extended beyond the traditional

issues of availability and price to include environmental

quality and industrial competitiveness.

1
2 Industrial Energy Efficiency

Box l-A–Energy Efficiency and Intensity

Efficiency and intensity are terms used to compare energy consumption and product output. Efficiency is a

term that is sometimes ambiguous, because it has one meaning in engineering contexts and another in economic

contexts. In this report, the terms efficiency and energy efficiency are used to denote the engineering sense of

the word, while economlc efficiency is used when the economic sense is implied.

Engineering efficiency is the amount of useful work output that a process or a piece of equipment performs

with a unit of energy input. It is expressed in units of physical output per unit of energy, or as a percentage of the

input energy that is converted into useful output. Engineering efficiency is used to emphasize the engineering

performance of equipment and processes. A machine or a process is more energy efficient than another if it uses

less energy while yielding the same output. For example, a distillation column that requires 40,000 Btu to process

a barrel of crude oil is more technically efficient than one that requires 60,000 Btu per barrel. A motor that converts

90 percent of the electricity input to mechanical energy output is more technically efficient than one that converts

80 percent.

Economic efficiency highlights the cost performance of equipment and processes. A machine or a process

is more economically efficient than another if it is less costly and/or yields greater benefits. In the example above,

the 40,000 Btu/barrel distillation column is more efficient than the 60,000 Btu/barrel column only if it processes the

oil at a lower cost.

Energy intensity focuses on the energy use of entire industries or countries. It is expressed in units of energy

per unit of physical or monetary output. It encompasses the effects of both engineering efficiency and indus

structure. Industrial structure refers to the mix of plants and facilities in the industry or country, and manifests itself

in the mix of raw materials, intermediate products, and finished goods that are produced. A country can lower its

energy intensity by installing more energy efficient equipment and processes and/or shifting its industrial base

away from heavy, processing industries toward light, fabricating ones. Processing raw materials, such as steel and

petrochemicals production, generally requires much more energy per unit of output than does fabricating finished

goods, such as computer and automobile manufacture.

SOURCE: Office of Technology Assessment, 1993.

. Environmental regulations have become in- offers policy options for encouraging their use.

creasingly stringent. Among the questions explored are:

. Market-based policy instruments have at- ●

tracted increased attention as potential mechanisms for mitigating pollution and influencing energy use.

●

The Energy Policy Act, signed into law in

October 1992, begins to bring Federal energy

policy into line with these changed conditions. .

The law’s effects on industrial energy use,

however, are expected to be small.

This report focuses on the prospects for further

How does industry use energy? What have

been the trends in energy use? What is the

outlook for future energy use? (chapter 2)

What technologies are available to improve

industrial energy efficiency? How much

energy can they save? (chapter 3)

How do corporations view energy? What are

their incentives and disincentives for using

more efficient technologies? (chapter 4)

improving industrial energy efficiency in this new The remainder of this chapter summarizes the

environment. It assesses available technologies key policy findings of the report and discusses

for improving energy efficiency, discusses why policies Congress might wish to consider in order

these technologies are not more widely used, and to further enhance industrial energy efficiency.
Consumption,

Chapter I—Introduction and policy |3

and Energy Intensity, 1960-90

-1

1960 65 70 75 80 85 90

In 1980, industrial energy use was 25.4 quads, gross product originating (output) was $896 billion, and energy intensity was 28,300

Btu/$ output. Energy consumption includes coal, natural gas, petroleum, wood, and electricity used for heat, power, electricity

generation, and feedstock purposes; and excludes waste, geothermal, wind, photovoltaic, and solar thermal energy and electricity y

generation, transmission, and distribution losses. Gross product originating (output) data presented in the graph and used in

intensity calculations are in constant dollars.

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates 7960-1990, Report

No. DOE/ElA-021 4(90), May 1992; and Annua l Energy Review 7991, Report No. DOE/EIA-0384(91 ), June 1992. Robert P. Parker, U.S. Department

of Commerce, Bureau of Economic Analysis (BEA), “Gross Product by Industry, 1977-90,” Survey of Current Business, May 1993; and BEA,

“National Income and Product Accounts database.”

FINDINGS

I Technical Potential for Saving Energy

1. Industry is a large energy consumer, and

efficiency improvements have yielded large

energy savings in the past.

In 1990, U.S. manufacturing plants, mines,

farms, and construction firms consumed 25.0

quads of fuels and electricity. This accounted for

28 percent of the Nation’s total use of fossil fuels,

31 percent of its renewable energy use, and 35

percent of its electricity use (figures 1-2 and

1-3).

However, improvements in industrial processes and shifts away from the manufacture of

energy-intensive products have kept consumption

10 percent below its 1973 peak, even though the

value of industrial output has grown 30 percent

since then.l The energy intensity of industrial

production has dropped almost one-third from

pre-1974 levels, reducing total U.S. energy consumption by about 11 percent. 2 Efficiency gains

accounted for between one-half and two-thirds of

the energy savings.3

1 Industrial output is measured as gross product originating (GPO), often referred to as value added. The change in GPO is calculated in

inflation-adjusted (real) terms.

2 Industry’s energy use in 1990 was about 10 quads less than it would have been had the intensity reductions not occurred.

3 U.S. Congress, Office of Technology Assessment, Energy Use and the U.S. Economy, OTA-BP-E-57 (Washington,DC: U.S. Government

Printing Office, June 1990). J.L. Preston, R.K. Adler, and M.A. Schippcr, U.S. Department of Energy, Energy Information Administration

‘‘Energy Efficiency in the Manufacturing Sector, ’ Monthly Energy Review, December 1992. G. Boyd, J.F, McDonald, M. Ross, and D.A.

Hanson “Separating the Changing Composition of U.S. Manufacturing Production From Energy Efficiency Improvements: A Divisia Index

Approach, "The Energy Journal, vol. 8, No. 2, pp. 77-96, 1987. C. Doblin, “Declining Energy Intensity in the U.S. Manufacturing Sector, ”

The Energy Journal, vol. 9, No. 2, pp. 109-135, 1988. R. Marlay, “Trends in Industrial Use of Energy, “ Science, vol. 226, pp. 1277-1283,

1984.
4 I Industrial Energy Efficiency

Fossil fuel use

Total: 72.0 quads

Figure 1-2—Energy Consumption by Sector, 1990

Renewable fuel use Electricity use

Total: 6.5 quads \ Total: 9.3 quads

0.9 Q 2.1 Q

2.7 trillion kWh

35%

3.2 Q

5.9 Q

_ Industr y ~ Electric utilities

~ Commercial _ Transportation

m Residential

Arrows indicate fossil fuel and renewable energy sources used to generate electricity. In addition, 6.2 quads of nuclear energy was

used to generate electricity. If the energy inputs to electricity generation are allocated to the sectors using the electricity: the

industrial sector consumes 32.3 quads of energy (accounting for 38 percent of total U.S. energy use); the residential sector

consumes 16.9 quads (20 percent); the commercial sector consumes 13.1 quads (16 percent); and the transportation sector

consumes 22.3 quads (26 percent).

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates 1960-1990, Report

No. DOE/ElA-0214(90), May 1992; and Annual Energy Outlook 1993, Report No. DOE/EIA-0383(93), January 1993.

2. Many opportunities for further increasing

industry’s energy efficiency exist, and

implementation of them would save substantial amounts of energy.

Chapter 3 describes many technologies and

operating practices that could further improve the

energy efficiency of industrial production. These

range from generic technologies such as highefficiency motors, cogeneration units, and computerized process controls to industry -specific

technologies such as improved alkylation catalysts for petroleum refining, continuous digesters

for pulp and papermaking, and ladle metallurgy

for steelmaking. Efficiency gains during the late

1970s and early 1980s were achieved by installing improved technologies and instituting better

operating practices in new and existing plants,

and by closing inefficient facilities. As a result,

the easiest and most cost-effective conservation

measures, such as improved housekeeping, already have been implemented in most plants.

Implementation of the efficiency measures

listed in chapter 3 would clearly yield large

energy savings, but estimating how large is

difficult. One technique for estimating potential

energy savings is to compare the current stock of

equipment and processes with the most modem,

most efficient technologies available. Chapter 3

estimates that if all petroleum refining, pulp and

paper, steel, aluminum, cement, and glass plants
were state-of-the-art facilities, they would use 12

to 38 percent less energy than they do today.4 The

energy savings would represent about 10 percent

of total industrial energy use at current production

levels. Estimates derived by this method are very

rough because they are based on a great amount

of technical data that is difficult to obtain and

keep up-to-date. Moreover, they do not address

the economic viability of making every plant

state-of-the-art.

Comparing the energy intensity of U.S. industry with its counterparts in other industrialized

countries is an often used, but misleading, method

for calculating potential energy savings. U.S.

industry is more energy-intensive than most other

industrialized countries, but this intensity gap is

a poor representation of the ground U.S. industry

could gain by implementing additional costeffective, energy-saving technologies. Disparities

in energy efficiency account for only apart of the

intensity gap. The remainder is caused by differences in countries’ industrial makeup and factor

price levels (box l-B).

3. The cost-effectiveness of energy efficient

technologies is the key to their implementation.

The improved technologies and operating practices listed in chapter 3 enhance energy efficiency

only if they are implemented, and they will

usually be implemented only if they are costeffective.5 A technology or practice is costeffective if its benefits outweigh its costs, Typical

benefits include labor productivity, energy efficiency, and product quality enhancements. Costs

include the initial capital outlays, costs of capital,

and hidden costs, such as operator retraining and

process adjustments and downtime during installation and startup. The costs and benefits depend

on the performance, reliability, serviceability of

Chapter I–Introduction and Policy |5

Figure l-3-industrial Energy Consumption

by Fuel, 1990

Total: 25.0 quads

Petroleum

8.5 Q; 340/0

1.6109 bbl

Purchased

electricity

3.2 Q; 13%

950109 kWh

Coal

2.8 Q; 11 0/0

120106 t o n

Natural g

8.5 Q; 34

8.21012 ables

2.1 Q; 80/0

a Natural gas includes lease and plant fuel, but excludes agricultural

uses.

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates 1960-

1990, Report No. DOE/EIA-0214(90), May 1992; and Annual Energy

Outlook 1993, Report No. DOE/EIA-0383(93), January 1993.

the equipment and processes, and the prices of the

energy, raw materials, labor, and capital.

The amount of cost-effective energy savings

potential is difficult to assess, because the costs

and benefits of technologies and processes are

subject to many uncertainties and are often highly

site-specific. Some analysts argue that industrial

energy efficiency can be improved greatly because, in their view, many cost-effective improvements have not been implemented. In other

words, energy efficiency can increase faster than

it does in the normal course of business (Finding

4). Other analysts argue that the potential to

improve energy efficiency is relatively small.

This viewpoint has its roots in neoclassical

economics theory that holds that industry irnple4 The estimated efficiency gains from using state-of-the-art technologies are: 33 percent for petroleum refining; 17 to 32 percent for pulp

and paper production; 34 to 38 percent for steel production; 16 percent for aluminum production 25 percent for cement production and 12

to 31 percent for glass production (see table 3-2). Purchased electricity was accounted for at its primary energy rate of 10,500 Btu/kWh.

5 Technologies and practices that are not cost-effective are sometimes implemented because of legal requirements or political pressure from

the community or stockholders.
6 I Industrial Energy Efficiency

Box I-B-international Comparisons of Energy Intensity

Industry is more energy intensive in the United States than in most other industrialized countries, but this does

not provide direct evidence of inefficiency. The disparities in energy intensity among the countries are the result

of differences in industrial structure, relative factor input prices, as well as energy efficiency.

The higher aggregate intensity of U.S. industry is partly a result of its larger proportion of heavy,

energy-intensive sectors such as petroleum refining, chemicals, pulp and paper, steel, and aluminum. Such

structural considerations also are valid in industry-specific comparisons. For example, Japanese pulp and paper

manufacturers use less energy than U.S. companies to produce a ton of paper, in part because Japan imports,

rather than produces, a greater portion of its pulp.

U.S. industry is also more energy-intensive because the prices it pays for energy generally are among the

lowest in the industrialized world. Energy prices are linked to efficiency and industrial structure. Low prices increase

energy intensity by: 1) acting as a disincentive to save, and 2) attracting energy-intensive industries.

The extent to which differences in structure, prices, and efficiency each explain the higher U.S. energy

intensity holds important policy implications.

. Industrial structure differences do not represent an energy problem.

. Factor price differences indicate the potential energy savings from using taxes and other price-related

measures to adjust the costs of energy, labor, and capital. These savings would result from both

improvements in efficiency and shifts in industrial structure.

. Energy efficiency differences not caused by prices reveal the energy savings that would result if U.S. firms

made as great a use of cost-effective, energy-saving technologies as do other countries.

Unfortunately, data is inadequate to quantify the effects of countries’ industrial structures, factor prices, and

efficiency on their energy intensity. international comparisons, therefore, cannot currently be used to estimate how

much energy can be saved through improved efficiency. Disparities in energy intensity do little more than suggest

the existence of energy-saving opportunities.

ments nearly all cost-effective measures, and that slower than if current policies, practices, and

any projects not undertaken must therefore not be

cost-effective.

This disagreement raises several considerations: For whom are the actions cost-effective, the

corporate energy user or society as a whole? Are

industrial decisions always financially rational?

These matters are addressed in the Issues section

of this chapter.

OTA believes that there exist technologies and

practices that would boost efficiency and be

cost-effective for corporate energy users to implement. In other words, industrial energy efficiency

can be improved. If these cost-effective measures

were implemented, annual growth in industrial

energy use could be 0.3 to 0.6 percentage points

trends continued.

4. Industry will likely become more energy

efficient on its own, with or without new

policy intervention.

In the normal course of business, industry

replaces worn out or obsolete equipment, processes, and operating procedures with new ones.

The new technologies and methods are usually

more energy efficient, though sometimes changes

in raw materials quality, environmental regulations, or other factors cause them to be less so. In

general, however, equipment turnover and modernization tends to increase energy efficiency.

Continuing efficiency improvements, coupled

with higher growth of light industry relative to
Chapter 1–Introduction and Policy |7

heavy industry, are expected to decrease the

energy intensity of industry in coming decades.

Efficiency will probably, however, increase at a

slower rate than observed in the early 1980s,

because many improvements have already been

implemented. For these reasons, industrial energy

intensity use is likely to decline about 1.2 percent

annually over the next 40 years absent major

changes in the energy prices and public policy.6

By comparison, intensity fell at a 3.7 percent

annual rate from 1974 to 1986.

I Corporate Mechanisms for Saving Energy

5. Corporate concern about energy efficiency,

though prominent in a few energyintensive industries, is minimal in most

businesses.

Energy is a fairly small proportion of production costs in most industries, and so historically

has played only a modest role in corporate

decisionmaking. Energy accounts for 3 percent of

total production costs for industry as a whole, and

for 5 percent or less of production costs for 86

percent of industrial output.7 Corporate concern

about energy manifests itself when energy price

increases or supply limitations are expected, but

lies dormant in periods when prices and supplies

are stable. Today’s relatively low energy prices

and stable supplies breed a general lack of

corporate attention to energy. Corporate managements are typically less concerned about energyfocused projects than with “line-of-business”

items, such as capacity adequacy, operational

reliability and flexibility, product development

and improvement, cost reduction, labor quality,

supply reliability, regulatory compliance, and

image enhancement. These nonenergy factors

more directly affect corporations’ primary goals

of profitability, market share, stock price, and

management stability.

Energy plays a substantially larger role in the

corporate decisions of energy-intensive industries

like petroleum refining, petrochemicals, pulp and

paper, steel, and aluminum. These industries use

large amounts of energy, both as fuel and

feedstock. They are very sensitive to, and are

constantly concerned with, increasing their energy efficiency, ensuring low energy prices, and

minimizing their burden of complying with environmental regulations associated with energy use.

6. Indusrial energy use is diverse, and numerous changes are needed to yield large

energy reductions.

Industry’s use of energy is heterogeneous.

There are thousands of industrial processes, each

depending upon a different amount and mix of

energy for a variety of services (e.g., motor drive,

process heat, steam and electricity generation,

electrolysis, and product feedstocks). Moreover,

industries vary greatly in their overall level of

energy use, because of differences in industry

scale and energy intensity. Four industries are

particularly large energy users: petroleum refining, chemicals, primary metals-mainly steel and

aluminum, and pulp and paper. They account for

68 percent of total industrial energy use and 78

percent of manufacturing energy use (figure 1-4).

The methods available for raising energy

efficiency are as varied as the ways industry uses

energy, but can be grouped into four categories:

. Operational changes—maintenance, housekeeping, and accounting;

—

6 Based on the reference case scenarios in U.S. Department of Energy, Energy Information Administration, Energy Consumption and

Conservation Potential: Supporting Analysis for the National Energy Strategy, Report No. SR/NES 9002, December 1990; and Alliance to

Save Energy, American Council for an Energy-Efficient Economy, Natural Resources Defense Council, and Union of Concerned Scientists

in consultation with the Tellus Institute, America's Energy Choices: Investing in a Strong Economy and a Clean Environment: Technical

Appendixes (Cambridge, MA: Union of Concerned Scientists, 1992). These studies are discussed in chapter 2.

7 U.S. Department of Commerce, Bureau of the Census, 1990 Annual Survey of Manufactures: Statistics for Industry Groups and Industries,

Report No. M90(AS)-1, March 1992; 1987 Census ofAgriculture: Uni[edStates Summary and State Data, Report No. AC87-A-5 1, November

1989; 1987 Census of Mineral Industries: General Summary, Report No. MIC87-S- 1, March 1991; 1987 Census of Construction Industn”es:

United Srafes Summary, Report No. CC87-I-28, March 1990.
8 | Industrial Energy Efficiency

Figure l-4—industrial Energy Consumption by

Industry Sector, 1988

Total: 24.2 quads

Petroleum refining

6.4 Q; 26% Nonmanufacturinga

paper

2.4 Q; 1 0%

a Nonmanufacturing includes natural gas used as lease and plant fuel,

but excludes agricultural uses of natural gas.

SOURCES: U.S. Department of Energy, Energy Information Administration, Manufacturing Energy Consumption Survey, Consumption of

Energy 7988, Report No. DOE/EIA-0512(88), May 1991; and State

Energy Data Report, Consumption Estimates 1960-1990, Report No.

DOE/EIA-0214(90), May 1992.

●

●

●

Equipment changes-equipment improvement, equipment sizing, fuel switching, and

energy management systems;

Process refinements and changes-equipment integration, general automation, cogeneration, quality control, waste minimization and utilization, recycling, raw materials substitution; and

Product shifts-product demand, domestic

production and trade, product refinement,

materials substitution, product quality and

performance.

The reasons for these changes may or may not be

related to energy, but energy use is affected

nonetheless.

There is no single technology that can conserve

large amounts of energy in all industries. A few

technologies and practices (e.g., high-efficiency

motors, steam and electricity cogeneration, process integration, recycling, and energy management systems) can improve energy efficiency to

some extent on a broad basis, but most are ap-.

plicable to a narrow range of industrial facilities.

7. Many projects undertaken primarily for

nonenergy reasons produce energy efficiency gains as a secondary consequence.

Modern equipment and processes tend to be

more energy-efficient than older ones. Likewise,

well-maintained machines are more efficient than

those that have been kept up poorly. Therefore,

projects that involve equipment turnover, maintenance, or adjustment often increase energy efficiency. Even projects undertaken to improve

nonenergy characteristics such as production

costs, product quality, and environmental compliance often have the side benefit of increasing

energy efficiency.

Potentially, the greatest increase in energy

efficiency may not be the result of direct efforts to

reduce energy consumption but of indirectly

pursuing other economic goals. This feature compensates, to some extent, for the generally low

corporate concern for energy issues (Finding 5).

8. General capital investment plays a central

role in improving energy efficiency.

Energy efficiency can still be improved

through greater attention to housekeeping and

maintenance, but most of the gains that come

from these management practices have already

been realized. The key, therefore, to substantial

increases in energy efficiency is investment in

plants and equipment. Large efficiency increases

come from major investments in new plants and

processes. Smaller gains are obtained from retrofitting and optimizing existing facilities.

General capital investment is perhaps the most

important route to increased energy efficiency,

given the low corporate concern about energy

(Finding 5) and the secondary efficiency gains

yielded by nonenergy investments (Finding 7). In

addition to yielding its own energy efficiency

benefits, investment in plant and equipment can

be a springboard for adopting other more energyfocused measures. Energy projects can be more

cost-effective when coupled with larger projects,

because the marginal costs of the extra effort are

small. The Office of Technology Assessment

(OTA) identified the importance of investment in
Chapter I–Introduction and Policy | 9

Industrial Energy Use (1983 ).8 That study examined energy use in the pulp and paper, petroleum

refining, chemicals, and steel industries, It concluded that substantial gains in energy efficiency

from technical innovation were possible, and that

economic growth and the promotion of general

corporate investment were the most effective

ways of realizing those gains. This conclusion is

still valid.

9 Policy Considerations for Saving Energy

9. The ability of electric utilities to influence

industrial energy efficiency has been increasing.

Industry is using an increasing amount of

electricity, both in absolute terms and relative to

other fuels (figure 1-5). Use of electric technologies is expected to continue growing at the

expense of fossil-fired technologies because of air

quality concerns. Existing environmental regulation, such as the Clean Air Act, will continue to

push industrial processes toward decreased dependence on fossil fuel. This trend gives electric

utilities and State regulators increasing influence

over the energy efficiency of industrial energy

users. It also reduces the pool of technologies that

would be responsive to fossil fuel and clean air

policies. In other words, the potential direct

policy influence over industrial energy use is

gradually shifting from the Federal level to the

State level, where utilities are regulated.

10. Energy policy is increasingly addressing

multiple objectives: energy security, environmental quality, and industrial competitiveness.

Industrial energy use is a mature policy area.

There have been policy initiatives in place since

the late 1970s. In the early years, the driving force

behind policy was market security, keeping

energy available and inexpensive. Increasingly,

the policy emphasis is shifting toward environFigure 1-5--Industrial Energy Consumption

by Fuel, 1960-90

10

2

I

0 1

1960 65 70 75 80 85 90

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates

1960-1990, Report No, DO13EIA-0214(90), May 1992; and Annual

Energy Review 7991, Report No. DOE/EIA-0384(91 ), June 1992. U.S.

Department of Commerce, Office of Business Analysis, “National

Energy Accounts database.”

mental quality and industrial competitiveness.

This trend is likely to intensify as concerns about

carbon emissions from fossil fuel use grow and

global trading and investment increase. These

additional policy objectives raise the policy

weight of energy issues. They draw greater

attention to, and demand greater action from,

energy policy. However, they also place extra

constraints on policy, because they narrow the

range of viable technical options. Furthermore,

the multiple objectives require enhanced coordination among many Federal and State programs.

Energy efficiency can play a central role in this

policy environment. Its strength lies in the links

it forges between security, environmental, and

competitiveness objectives. The links arise because energy efficient technologies and processes

not only use less energy than standard technologies, but also often have lower costs and pollute

less.

8 U.S. Congress, Office of Technology Assessment, Industrial Energy Use, OTA-E-198 (Washington, DC: U.S. Government Printing

Office, June 1983).
10 | Industrial Energy Efficiency

POLICY CONTEXT

I Technical and Economic Trends

Since the oil embargoes of the early 1970s,

U.S. industrial energy use has evolved considerably. Fuel preferences have shifted, energy prices

have risen and then fallen, and energy intensity

has declined.

FUEL USE

Fossil fuels, especially petroleum, were the

focus of much energy policy concern in the 1970s.

Industrial consumption of fossil fuels has generally declined in the last two decades, though

natural gas and petroleum still remain the two

largest energy sources (figure 1-5). Petroleum use

increased until 1979 and then declined until 1983.

It has been rising in recent years, mostly because

of its increased use as a feedstock. Overall

industrial petroleum consumption, however, remains lower than in the 1970s by several measures: in total barrels used, as a percentage of total

industrial energy use, and as a share of total U.S.

petroleum use.9 Natural gas use declined in most

years until 1986 and has been increasing since.

Coal consumption fell steadily until the mid1980s and has been fairly level since. Electricity

use rose steadily until 1979, fluctuated until 1988,

and has been rising since. It is now a larger source

of industrial energy use than coal. Wood, waste

energy, and alcohol fuels use rose steadily until

1985 and have been fairly level since. Biofuels are

still, however, much less used than traditional

fuels. 9

PRICES AND SUPPLIES

Energy prices and supply availability were also

of great policy concern during this period. Prices

rose throughout much of the 1970s, reaching

historic high levels in the late 1970s and early

1980s (figure 1-6). They then declined during the

mid-1980s, offsetting much of the rise in the

previous decade. From 1982 to 1990, prices fell

47 percent for oil, 43 percent for natural gas, 38

percent for coal, and 29 percent for electricity.l0

The 1991 Persian Gulf War prompted forecasters

to reexamine energy price projections, especially

those for oil. Many forecasters, though, continue

to predict modest increases in energy prices.

Energy supplies were generally stable throughout most of the 1980s. Markets remained calm

except for a brief period during the 1991 Gulf

war.

9 In 1990, industrial consumption of petroleum was approximately 8.5 quads, representing 33.9 percent of total industrial energy use and

25.3 percent of U.S. petroleum use. In 1979, the peak year for industrial consumptionof use, consumption was approximately 10.8 quads,

representing 39.5 percent of total industrial energy use and 29.0 percent of U.S. petroleum use.

10 N references t. pfice Changm in this report are calculated in inflation-adjusted (real) t~s.
Chapter I–Introduction and Policy |11

ENERGY INTENSITY

Prior to the early 1970s, the energy intensity of

industrial production remained relatively steady

(figure l-l). Growth in energy use was directly

coupled with economic growth. From 1974 to

1985, energy intensity declined by 30 percent and

the old relationship between industrial energy

consumption and economic growth was broken.

This “delinking” of energy use and growth was

the result of: 1) improvements in energy efficiency, and 2) shifts in industrial structure caused

by technical and economic changes.

Energy efficiency increases came from general

housekeeping, regular maintenance, energy management systems, equipment changes, and process refinements and changes. These operational

changes were frost prompted by high energy

prices and supply instabilities, but were continued

because of environmental mandates and costcompetitiveness challenges.

Shifts in industrial structure have changed the

market basket of goods and services produced in

the United States. For example, the production of

steel and petrochemicals has declined relative to

that of computers and financial services. The

transition has been the result of changing product

demand patterns, changing production networks,

and the increasing globalization of business.11 It

has had a significant effect on industrial energy

intensity, because industry’s component sectors

vary in their energy intensity by about a factor of

200.

Studies have shown that roughly one-third to

one-half of the decline in manufacturings energy

intensity between the mid-1970s and mid-1980s

can be attributed to a shift in the mix of output,

with ‘‘smokestack’ industries declining and

lighter manufacturing industries gaining.l2 The

remaining portion of the intensity decline can be

attributed to energy efficiency improvements.

Since 1986, the decreases in U.S. energy

intensity have virtually stopped. This suggests

that energy consumption has once again become

directly coupled with industrial output, albeit at a

lower level than existed before 1974. The pool of

potential efficiency-enhancing measures has decreased, because many improvements have already been implemented.

Nevertheless, the frontier of energy efficiency

can still be advanced, despite the low and

generally stable energy prices. Past improvements have “primed the pump” for further

technological innovation. Considerable future

gains in efficiency are possible with existing

technology, and more substantial gains are likely

with technologies currently under development.

Q Institutional Trends

Utilities are playing an increasing role in

energy conservation because of the growing need

for effective load management.13 Electric utilities

have used load control measures for more than 50

years, but interest in these measures increased

significantly during the turbulent energy markets

of the 1970s and 1980s. Rising construction costs,

troublesome nuclear programs, cost disallowances, wholesale rate hikes, and new environmental requirements have prompted many utilities and commissions to employ integrated resource planning (IRP) methods and demand-side

management (DSM) programs. Using DSM techniques, such as customer education, alternative

pricing, and equipment rebates, utilities encourage their customers to conserve energy and shift

11 OTA tis analyzed tie SmICrUIal changes in the U.S. economy and their implications for energy use in: Energy Use in the U.S. Economy,

op. cit., footnote 3 and U.S. Congress, Office of lkchnology Assessment, Technology and rhe Amen”can Economic Transifi”on.” Choices for

the Future, OTA-TET-283 (Washingto~ DC: U.S. Government Printing Office, May 1988).

12 Supra footnote 3.

13 ne ~]e of electric utility programs is covered in U.S. Congress, Office of lkchnology Assessment, Energy Use: Ckllenges and

Opportunitiesfor Electric U[ilities, OTA-E-561 (Washington DC: U.S. Gov emment Printing Office, in press).
12 | Industrial Energy Efficiency

usage to off-peak periods.14 These efforts help

utilities manage their load and reduces the need

for new generating capacity. Energy efficiency

advocates hold that these strategies are often

cheaper for rate payers, and better for the environment and society, than building new power plants.

Some industrial companies worry that DSM

programs are costlier than the energy they save,

and will thus lead to higher electricity rates.

Public utilities are well-positioned to promote

the adoption of more energy efficient technologies. Their integrated operations, technical expertise, established ties to customers, and familiarity

with customer energy use equip them with the

technical skill, marketing tools, and information

to identify opportunities to save energy. Their

special status as regulated public utilities offers

access to capital, a relatively secure cash flow,

and a concomitant responsibility to provide

cost-effective and reliable service to their customers. This status also makes them attractive targets

for policy initiatives in pursuing energy efficiency. 15

~ Political Trends

Energy policy concerns have expanded beyond

the traditional issues of prices and availability to

include issues of environmental consequences

and industrial competitiveness. Acid rain, nuclear

waste, carbon dioxide (C02) emissions, and other

local and global environmental topics have supplanted security, in many instances, as the central

issue in energy policy. Energy efficiency is an

important policy option in this new multiobjective environment. Energy efficient technologies and processes use less energy, have lower

costs, and often pollute less than standard technologies; furthering the three objectives of energy

security, environmental quality, and industrial

competitiveness.

A related development is the growing interest

in using market mechanisms and other alternative

approaches to deal with environmental problems.

As U.S. environmental compliance costs have

risen, Congress has come under increasing pressure to move away from traditional regulatory

programs to newer and more economically efficient approaches. Alternatives to, or augmentation of, traditional command and control policy

instruments can take many forms. These include

‘‘market-based’ or economic approaches, such

as marketable pollution permits or emissions fees.

Information programs are another set of alternatives. Even among what is traditionally termed

“command and control, ” there is a wide variety

of alternative approaches, including technologybased standards, design standards, end-of-pipe

performance-based standards, and use restrictions. Implementation of these sorts of approaches

to environmental problems would have direct and

indirect impacts on industrial energy use.l6

I Stakeholders and Interested Parties

Many individuals and organizations are interested in the issue of industrial energy use and

efficiency. First and foremost are the industrial

companies themselves. Their profitability depends in large part on keeping production costs

low, which means being efficient with respect to

energy and all other factor inputs. Attention to

energy efficiency varies depending on company

size and nature of business. Companies in the

process industries and the materials-production

sector, where energy is a large cost factor, pay

close attention to their energy situation. Large

companies in these industries often conduct

in-house research and development to come up

14 EIK~c power Rese~ch bsti~te, Demand Side Management, Volume 5: Industrial Markets and Programs, EPRI WM-3597(pdo

Alto, CA: Electric Power Reseamh Institute, March 1988).

15 Ow, Energy use: challenges and Opportunities for Elecm”c utilities, Op. Cit., foo~ote 13.

16 OW is ass~sing the dfedivt?ness Of CO remand-and-control regulations and the appropriateness of alternative policy instruments for

handling various pollution problems in its study entitled New Approaches to Environmental Regulation.
Chapter I–Introduction and Policy |13

with processes that are more efficient than their

rivals. In less energy-intensive industries, concern about energy use is generally low.

Companies have numerous trade associations

that provide them with technical support and

represent their interests to the government and the

public. Trade associations representing energyintensive industries actively monitor energy policy developments. Among these are: the American Iron and Steel Institute, the Aluminum

Association Inc., the Chemical Manufacturers

Association, the American Petroleum Institute,

the American Paper Institute Inc., and the Primary

Glass Manufacturers Council. There is also a

group, the Electricity Consumers Resource Council (ELCON), that focuses specifically on the

energy interests of large industrial electricity

users. ELCON works to curb electricity rate

increases for industrial companies. It conducts

research on actions affecting electricity rates and

promotes its findings to suppliers, regulators, and

State and Federal Government bodies. Energyintensive companies and energy-producing companies are also represented by Global Climate

Coalition. This association of business trade

associations and private companies was formed to

coordinate the active involvement of U.S. business in the scientific and policy debates concerning global climate change issues.

Electric and gas utilities, and the organizations

associated with them, play a large role in industrial energy use. Utilities supply a large portion of

the energy used by industry. In addition, many of

them actively promote energy conservation. Public utility commissions (PUCs) set energy price

rates and establish the incentives that encourage

or discourage utilities’ DSM efforts. Another

group, interveners, represents the interests of

particular groups at PUC ratemaking hearings.

Among them are those who act on behalf of

industrial energy users. There are others that

represent environmental constituencies.

Utilities have two research organizations to

assist them with their programs, the Electric

Power Research Institute (EPRI) and the Gas

Research Institute (GRI). These organizations

conduct research into new or improved technologies that enhance the energy efficiency, costeffectiveness, product quality, and environmental

cleanliness of industrial processes. EPRI, which

budgeted $9.2 million for industrial research in

1993, has programs researching technologies to

enhance the productivity, product quality, and

waste and water treatment characteristics of

materials production and fabrication industries,

process industries, and municipal services.17 GRI,

which budgeted $21.1 million for industrial

research in 1993, has efforts aimed at industrial

combustion technologies; processing equipment

for the metals, glass, brick, cement, ceramics, and

advanced materials industries; and sensor and

control systems for industrial processes.18 These

organizations also assist their member utilities

with design and implementation of DSM programs.

Environmental advocates are also involved.

Among those who focus on energy use and its

implications for the environment and the economy are: the Alliance to Save Energy (ASE), the

American Council for an Energy-Efficient Economy (ACEEE), the Rocky Mountain Institute

(RMI), and the Natural Resources Defense Council (NRDC). These organizations conduct research, disseminate information, and promote

policies to encourage the use of energy efficient

equipment and processes.

The Federal Government has several programs

to improve the energy efficiency of the Nation’s

industrial sector. The lead agency in this effort is

the U.S. Department of Energy (DOE), in particular the Office of Industrial Technologies of the

Office of the Assistant Secretary for Energy

17 E]w~c pOWfl RMCw~h 1~~ti~l~, R~~~arCh, DeJ)elopmen~, and Delil~eq plan 199.? -1997, J~u~1%)3.

18 (ja ReScwc. Imtl~te, ~j)93.]9f+-j ReSearch ad Development p[an and 1993 Research and Development program, April 1992.
14 I Industrial Energy Efficiency

Efficiency and Renewable Energy .19 The Office of

Industrial Technologies admini “sters dyrtd sters an auditing

program for small-and medium-sized manufacturers,

and sponsors cost-shared research at university

and government laboratories into technologies

that are energy-efficient, fuel-flexible, wasteminimizing, and waste-utilizing. DOE’s Energy

Information Admin“ istration (EIA) has responsibility for gathering and analyzing data on industrial energy consumption. DOE and the U.S.

Environmental Protection Agency (EPA) cosponsor a program to demonstrate energy efficient

technologies to potential industrial users. EPA

also runs a program that publicly recognizes

companies that install energy efficient lighting in

their offices and plants. The Bonneville Power

Administration (BPA), a Federal powermarketing authority, has a program to improve the

electricity efficiency of aluminum producers in its

service area in the Pacific Northwest.

Many States also have programs to provide

technical assistance to companies. There are

information programs to help industrial companies keep abreast of developments in energy

efficiency and pollution prevention technologies.

In addition, some States have agencies that

research and develop energy efficient equipment

and processes. These agencies are typically funded

by utilities or State revenues or both, and they

work closely with utilities, regulators, and State

officials to target research areas most relevant to

the State’s needs.

~ Current Federal Policy

Many Federal energy initiatives of the late

1970s dealt with industrial energy use. Among

them were:

. the Energy Policy and Conservation Act

(EPCA), Public Law 94-163;

. the National Energy Conservation Policy

Act (NECPA), Public Law 95-619;

. the Public Utility Regulatory Policies Act of

1978 (PURPA), Public Law 95-617;

● the Energy Tax Act of 1978, Public Law

95-618; and

. the Powerplant and Industrial Fuel Use Act

of 1978, Public Law 95-620.

These policies focused on mitigating the economic and strategic effects of the oil shocks.

Some programs-like energy-auditing, nonutility

power generation rules, and conservation research efforts—still exist. Others, such as energy

conservation targets, investment tax credits, and

boiler-fuel restrictions, have been discontinued.

Between 1979 and 1992, there were few new

policy initiatives specifically addressing industrial energy use. Two laws from this period, the

Steel and Aluminum Energy Conservation and

Technology Competitiveness Act of 1988, Public

Law 100-680, and the Department of Energy

Metal Casting Competitiveness Research Act of

1990, Public Law 101-425, sought to enhance the

competitiveness of specific industries by focusing on Federal energy research, development, and

demonstration (RD&D) efforts.

The next major energy law that contained

industrial initiatives was the Energy Policy Act of

1992 (EPACT), Public Law 102-486. Among this

legislation’s provisions that focus on industrial

energy use are those for: motor standards, trade

association-based targeting, utility planning and

conservation, and greenhouse-gas emissions tracking (box l-C). It is estimated that the industrial

energy savings from this law will be about 0.25

quads per year by 2000 and 0.77 quads per year

by 2010.20

19 me off:ce of Ener= Efficiency and Renewable Energy was renamed from the OffIce of Conservation and Renewable ~ergy iD WIY

1993.

Zo Based on es~tes from H. Geller, S. Nadel, and M. Hopkins, Energy Savings Estimutes From the Energy Eficiency provisions in the

Energy Policy Act of 1992 (Washington DC: American Council for an Energy Efficient-Economy and Alliance to Save Energy, November

1992).
Chapter I–Introduction and Policy | 15

Box I-C-Industrial Energy Use Provisions of the Energy Policy Act of 1992

Technology research, development, demonstration, and commercial application (Sections 2101,2103,

2105,2106,2107,2108, 2201, and 2202)

The Department of Energy is directed to conduct a 5-year program of cost-shared RD&D and commercial

application activities that: 1) accelerate development of technologies that will increase energy efficiency and

improve productivity, 2) increase the use of renewable energy, and 3) reduce environmental impacts in the

industrial sector. Such activities may be carried out for any industrial technology, but pulp and paper production

processes, electric drives, and pollution-prevention technologies and processes are specified outright. Funding

is extended for existing programs in the steel, aluminum, and metal-casting industries. in addition, DOE is

authorized to undertake joint ventures to encourage the commercialization of technologies developed under its

RD&D and commercial application programs. DOE is also directed to conduct a 5-year program including field

demonstrations to foster the commercialization of advanced manufacturing technologies and techniques for

processing, synthesizing, fabricating, and manufacturing advanced materials. The goal of these programs is to

generally improve economic growth, competitiveness, and energy efficiency.

Motor standards, testing, and labeling programs (Section 122)

Minimum energy-efficiency standards and testing procedures are specified for motors sold in the United

States after October 1997. The standards and tests apply to general purpose motors from 1 to 200 horsepower.

Depending on motor size, the standards are 1 to 6 percentage points higher than the average efficiency of standard

motors and roughly equivalent to the least efficient models of high-efficiency motors. DOE is charged with

prescribing labeiing rules that indicate the efficiency of motors on their permanent nameplates and in marketing

materials, such as equipment catalogs.

Reporting, voluntary targeting, and public recognition (Sections 171 and 131)

The frequency of DOE’s data collection on industrial energy use (the Manufacturing Energy Consumption

Survey) is raised from a triennial basis to at least once every 2 years. Collection of data on nonpurchased energy

sources such as solar, wind, biomass, geothermal, waste byproducts, and cogeneration is to be improved. Also,

the surveys are to be expanded in order to improve the evaluation of the effectiveness of energy efficiency policies

and programs. The expanded surveys are to include questions regarding participation in government and

utility-conservation programs and the use of energy efficiency and load-management programs.

DOE is authorized to make grants of up to $250,000 to industrial associations for support of workshops,

training seminars, handbooks, newsletters, databases, or other such activities to improve industrial energy

efficiency. To be eligible for these grants, an industry association must establish a voluntary energy-efficiency

improvement target program. DOE is instructed to establish an awards program to recognize those industry

associations or individual companies that have significantly improved their energy efficiency. DOE must report to

Congress regarding the costs and benefits of establishing mandatory reporting and voluntary targets for

energy-intensive industries.

Utility efforts that encourage industrial efficiency (Sections 132 and 1912)

DOE is authorized to make grants to States for promoting the use of energy efficient technologies in industry,

training individuals in conducting process-oriented industrial assessments, and assisting utilities in developing,

testing, and evaluating industrial energy-efficiency technologies and programs. To be eligible for such grants,

States must have considered implementing Federal standards with respect to integrated resources planning (IRP)

and demand-side management (DSM). in addition, the States must encourage utilities to provide companies with

process-oriented assessments and with financial incentives for implementing energy efficiency improvements.

The assessments are to be used to identify opportunities in industry for improving energy efficiency, reducing

(Continued on next page)
16 I Industrial Energy Efficiency

Box I-C-Industrial Energy Use Provisions of the Energy Policy Act of 1992-(Continued)

environmental impact, increasing competitiveness, enhancing product quality, and using renewable energy

sources in production processes and in lighting, heating, ventilation, air conditioning, and associated building

services. The Internal Revenue Code is amended to exclude from gross income 40 to 65 percent of the value of

subsidies provided by utilities to industrial customers for the purchase or installation of energy-conservation

measures.

Auditing and insulation (Section 133)

DOE is to establish voluntary guidelines for the conduct of energy efficiency audits and the installation of

insulation in industrial facilities.

Electricity transmission access (Sections 721 and 722)

The Federal Energy Regulatory Commission is authorized to order utilities to wheel wholesale power for

electricity generators when it is in the public interest. Wholesale wheeling is the activity of moving electric power

from a generator to a utility via the transmission system of another utility. Access to transmission services allows

cogenerating facilities to sell their power outside of their utilities’ service area. This makes cogeneration more

attractive, because the excess power can be sold to utilities offering higher prices than those of the local utility.

Greenhouse policy planning (Sections 1604 and 1605)

DOE must report to Congress on alternative policy mechanisms for reducing the generation of greenhouse

gases. Among the mechanisms to be considered are Federal standards for energy efficiency for industrial

processes. The policy assessment must include a short-run and long-run analysis of the social, economic, energy,

environmental, competitive, labor, and agricultural costs and benefits of such policies. DOE must also develop a

voluntary reporting system to track greenhouse-gas emissions and their reductions. Reported reductions could

potentially be credited against any future mandated cuts.

SOURCE: Energy Policy Act of 1992, U.S. Houea of Representatives, Conference Report to aooompany H.R. 776 Report 102-101S, Oct.

5, 1992.

Most programs that focus on industrial energy gram is funded at $3.9 million (FY 1993).21 From

use are administered by DOE. Other agencies its initiation in 1976 until 1992, about 4,100

such as EPA are also involved, but to a lesser

extent.

ENERGY AUDITING AND TECHNICAL

ASSISTANCE

Energy audits conducted by outside experts are

a direct way of informing companies, especially

smaller ones, about energy-saving techniques.

The Federal Government provides free audits to

small and medium-sized companies through DOE’s

Energy Analysis and Diagnostic Centers (EADCS)

located at 25 universities. Faculty and students

perform energy audits and make energy-saving

recommendations to the manufacturers. The proenergy audits were performed in 37 States. These

audits have yielded energy savings of 77 trillion

Btu and cost savings of $419 million at a cumulative cost to the Federal Government of $18

million.

EPACT extends DOE’s role in auditing. The

act requires the agency to establish voluntary

guidelines for the conduct of energy efficiency

audits and the installation of insulation in industrial facilities.

The Federal Government also offer companies

technical assistance through the seven National

Institute of Standards and Technology (NIST)

Manufacturing Technology Centers (MTCs). These

z] U.S. Dep~ent of Energy, Congressional Budget Request, FY ]994, VOIU?W 4, AP~ 1%3.
Chapter I–Introduction and Policy |17

centers work directly with small fins, both

on-site and in central demonstration facilities, to

help improve their competitiveness through use

of advanced technologies and techniques. Other

Federal technology extension services and information programs include: the National Appropriate Technology Assistance Service in DOE; the

Extension Service in the Department of Agriculture; and various pollution-prevention hotlines,

databases, and publications in EPA.

REPORTING AND TARGETING

Energy-use reporting and targeting programs

encourage energy efficiency by giving it a higher

profile in industrial firms. A program in which

large energy-intensive manufacturers reported

their annual energy use to the government and

agreed to voluntarily improve their energy efficiency to specified targets was established by

EPCA in 1975 and expanded by NECPA in

1978. 22 Companies reported the energy data to

their trade associations, which compiled it and

then sent it on to the government. The program

was begun in 1977 and eliminated in 1986.23 The

program’s data-collection effort was reestablished

in the form of the Manufacturing Energy Consumption Survey (MECS). Since 1985, MECS

data has been collected every 3 years. Unlike the

earlier program, companies report the data directly to DOE.

EPACT raises the frequency of MECS to at

least once every 2 years. It also expands the scope

of data collection in order to improve coverage of

renewable fuels and to enable better evaluation of

energy efficiency policies and programs. The act

authorizes grants to be made to industrial associations that establish voluntary energy-efficiency

improvement target programs for their members.

The grants are for support of workshops, training

seminars, handbooks, newsletters, databases, or

other such activities to improve industrial energy

efficiency. The act also requires DOE to develop

a voluntary reporting system to track greenhousegas emissions and their reductions. Reported

reductions could potentially be credited against

any future mandated cuts.

PUBLIC RECOGNITION

EPA’s Green Lights program, begun in January

1991, enlists major corporations to install more

energy efficient lighting in their facilities in

exchange for technical assistance and public

recognition. Program participants voluntarily agree

to retrofit lighting in at least 90 percent of the total

square footage of their U.S. facilities within 5

years of signing the Green Lights agreement.

Retrofits are required only in cases where they

will be cost-effective and will not compromise

lighting quality. As of September 1992, over 500

companies had enrolled in the program.

EPACT instructs DOE, as part of its industry

association grants program, to establish an awards

program to recognize those industry associations

or individual companies that have significantly

improved their energy efficiency.

EQUIPMENT STANDARDS, TESTING, AND

LABELING

In 1978, NECPA instructed DOE to report to

Congress on the practicability and effects of

minimum energy efficiency standards for electric

motors. Early drafts, written during the Carter

administration, showed that motor efficiency

standards were likely to be beneficial. The final

report, written during the Reagan administration,

concluded that the potential benefits would be

small and did not recommend standards. EPACT

mandates minimum efficiency standards for gen22A similar program had been developed in 1974 by the U.S. Department of Commerce. It was a voluntary program that encouraged

manufacturers to: obtain the commitment of top management to energy conservatio~ undertake a thorough energy audit; develop voluntary

conservation goals and programs designed to meet then and conduct energy awareness earnpaigns aimed at employees, suppliers, customers,

and the community at large.

z~ Two trade ass~iations, the American Paper Institute and the Chemical Manufacturers Association, have COnthIWd COkCthIg the energy

data for their own purpostx.
—

18 I Industrial Energy Efficiency

eral purpose motors sold in the United States after

October 1997.

TECHNOLOGY RESEARCH, DEVELOPMENT, AND

DEMONSTRATION

Industrial energy efficiency can be improved

by implementing current state-of-the-art technologies, but continuous advancement requires a

constant flow of new and improved technologies.

Many organizations, including technology-using

companies, equipment suppliers, utility groups,

and government and academic laboratories conduct RD&D to advance production technologies

and processes.

The Federal Government’s principal RD&D

directed at the energy use of industrial technologies is administered by the DOE Office of

Industrial Technologies. The stated mission of the

effort is to: 1) increase energy end-use efficiency,

promote renewable-energy use in industrial applications, and improve industrial productivity; 2)

reduce industrial and municipal waste-stream

volume and the associated environmental impact;

and 3) identify, support, and transfer the results of

its research. Potential projects are identified in

collaboration with private industry, and selected

for funding based on their ability to improve

energy efficiency and fuel flexibility in industry.

Priority is given to technologies not being aggressively pursued by the private sector. The research

is carried out under contract with university and

government laboratories, or cost-shared contracts

with private industry. DOE has a technologytransfer role, but much of the information dissemination and technology promotion is actually left

to the organizations that perform the research.

In FY 1993, DOE’s industrial RD&D program

was appropriated at$112.8 million for work in the

areas of industrial waste, municipal solid waste,

Tapping from pilot-scale research smelter near

Pittsburgh. The direct steelmaking program is funded

by the American Iron and Steel Institute and the U.S.

Department of Energy,

cogeneration, materials processing, separation

techniques, sensors and controls, bioprocessing,

enabling materials, improved combustion efficiency, and process heating and cooling (see

appendix A for details) .24 A funding increase of

22 percent has been requested for FY 1994. Part

of the program, the $17.9 million (FY 1993)

“Metals Initiative” directed at technologies for

the steel, aluminum, and metals-casting industries, was explicitly mandated by Congress.25

DOE estimates that its research efforts in industrial technologies result in energy savings of 80

trillion Btu per year; competitiveness benefits of

8,300 person-years of increased employment and

$540 million of increased capital productivity;

and pollutant emissions reductions of 6 million

tons of particulate, 32 million tons of sulfur

W u.S. D~~ent of Energy, op. Cit., footnote 21.

25 ~e~ Prowm ~e mandatti by the “Joint Resolution making further continuing appropriations for the f~cal year 1986’ (Public IAW

99-190), the Steel and Alumin um Energy Conservation and ‘lkchnology Competitiveness Act of 1988 (Public Law 1(M-680), the Department

of Energy Metal Casting Competitiveness Research Act of 1990 (Public Law 101425), and the Department of the Interior and Related Agencies

&)prO@itiOnS A@ 1991 (Public hW 101-512).

26 U.S. D~~ent of Energy, OffIce of Industrial lkchnologies, Swnmury of Program Impacts, December 1992.
—

Chapter I–Introduction and Policy 119

dioxide, 17 million tons of nitrogen oxides, and 7

billion tons of carbon dioxide (1991).26

From FY 1976 through 1992, DOE spent $854

million (current dollars) for industrial RD&D.

The Department estimates that the cumulative

energy savings of more than 35 completed

industrial projects have been approximately 419

trillion Btu, representing a net production cost

savings for industry of $1.15 billion (current

dollars). DOE expects these projects to save

almost 1.1 quads of energy annually by 2010, The

more successful industrial energy-saving technologies have been: coal-fired steam turbine cogeneration units, improved diesel engines, boiler

workshops, irrigation systems, coil-coating ovens,

computer-controlled ovens, high-temperature ceramic recuperators, and slow-speed diesel cogeneration units.27

EPACT specifically extends DOE’s industrial

RD&D responsibilities to pulp and paper production processes, electric drives, pollutionprevention technologies and processes, advanced

manufacturing, and advanced materials. It also

authorizes DOE to undertake joint ventures to

help commercialize the technologies that it has

supported.

Another federally-funded technology demonstration effort is the National Industrial Competitiveness through efficiency: Energy, Environment, and Economics (NICE3

) program. This

grant program, administered by DOE and EPA,

supports new technologies that can significantly

reduce high-volume wastes, conserve energy, and

improve cost-competitiveness in industry. It is

designed to demonstrate the new processes and

equipment, identify barriers to industrial pollutionprevention techniques, and develop and implement strategies to overcome these barriers. The

costs of the demonstration projects are shared by

industry, States, and the NICE3 office. NICE3 was

funded at $1.4 million in FY 1992 by DOE and

EPA.

EPA requested funding in 1993 to establish a

pollution-prevention demonstration program

called Waste Reduction Innovative Technology

Evaluation (WRITE) .28 These demonstration projects will be carried out to encourage the transfer

of technical information among industries.

NONUTILITY POWER GENERATION

Cogeneration, the simultaneous production of

both electricity and steam, usually consumes less

fuel than would be needed to produce both

separately. Many companies that produce and use

steam find it profitable to cogenerate and to sell

any unneeded power. PURPA, enacted in 1978,

encourages cogeneration by mandating that utilities purchase the excess electricity at rates set by

the avoided cost of procuring additional power.

Prior to PURPA, companies that sold cogenerated

electricity to another user were subject to burdensome public utility regulations.

EPACT further encourages cogeneration by

increasing electricity transmission access. This

will enable cogenerators to sell their power to

utilities offering prices higher than those of the

local utility.

UTILITY EFFORTS ENCOURAGING INDUSTRIAL

ENERGY EFFICIENCY

EPACT authorizes grants to be made to States

that encourage their utilities to adopt Federal

standards regarding IRP and DSM. The utilities

must provide companies with process-oriented

assessments and with financial incentives for

implementing energy efficiency improvements.

The Federal grants are for promoting the use of

energy efficient technologies in industry, training

individuals in conducting process-oriented industrial assessments, and assisting utilities in develZI Ibid.

28 U.S. Envfimen@ ~tec[lon Agency, Fiscal year ]993 Justification of Appropriation EstiIwItes for Com?ru”tfee ofl Appropn”ations,

Report No. PM-225, 1992.
20 | Industrial Energy Efficiency

oping, testing, and evaluating industrial energyefficiency technologies and programs.

The act also allows industrial customers to

exclude part of the value of utility-provided,

energy conservation subsidies from their gross

income for tax purposes. This make the subsidies

more powerful motivating tools, because companies can retain their full benefit.

H Goals

Energy issues have matured significantly during the last two decades. Early on, the goal of U.S.

energy policy was confined to market security—

keeping energy available and inexpensive. Policy

dealt primarily with foreign petroleum dependence and regulation of the electricity and natural

gas markets. Later, energy policy came to encompass two additional goals, environmental quality

and economic competitiveness. Current and future energy policy interests include slowing the

increase of oil imports, holding down energy

costs, improving the international competitiveness of U.S. goods and services, and addressing

environmental concerns of acid rain, urban ozone,

and global warming.

Many studies by OTA and others have identified energy efficiency as a critical cornerstone to

an energy policy framework that addresses these

various issues. Even though this central role for

energy conservation and efficiency has been

identified, most of the Federal Government’s

energy efforts have focused on improving energy

supplies. Only about 7 percent of DOE’s nondefense appropriations are channeled toward conservation and efficiency activities.29

Energy efficiency can be raised through policies that prompt industry to conserve fossil fuels

and electricity, to cogenerate electricity, and to

reuse products and recycle materials. These same

policies, plus those that induce industry to change

the types of energy it uses (i.e., shifts among fossil

fuels and from fossil fuels to electricity or

renewable), can be used to reduce C02 emissions. In some instances, the policies can meet the

objectives of economic vitality, environmental

quality, and national security simultaneously. In

other cases, proposals may -pursue conflicting

goals. For example, increased reliance on coal

could reduce oil import dependence, but exacerbate problems of air pollution and global climate

change. It is necessary, therefore, to be clear about

the role energy policy is to play in meeting these

goals.

MARKET SECURITY

U.S. dependence on foreign supplies of petroleum has been a national security concern for

decades. Curtailing industrial use of petroleum

through conservation, fuel switching, and recycling are several means to enhance energy security.

Industry uses petroleum for two principal

purposes, as a fuel for process heat and steam

generation, and as a feedstock for petrochemicals,

lubricants, solvents, waxes, and asphalt. Roughly

the same amount of petroleum is used for each of

these two purposes, but feedstock consumption

appears to be growing, while fuel use seems to be

remaining fairly steady. Reduction of fuel use is

amenable to conservation and fuel-switching

efforts. Feedstock use reduction, which is much

less tractable by these strategies, is best approached through recycling of motor oil, plastics,

and other petroleum-based products and through

research to find suitable nonpetroleum substitutes.

ENVIRONMENTAL QUALITY

Air, land, and water degradation occurs at

various points in the energy cycle. First, there are

the problems associated with producing and

transporting energy, and disposing of nonfuel

energy products. Among the concerns are: oil

spills; nuclear accidents; natural gas explosions;

harmful electromagnetic fields; and land, river,

W B-on~ 1977 to 1991 data cornpil~ by the Congressional Research Service. F. J. Sissine, Congressional Research Service, LhrarY

of Congress, Energy Conservation: Technical Eficiency and Program Electiveness, CRS Issue Brief IB85 130, Oct. 28, 1992.
Chapter I–Introduction and Policy | 21

and wildlife disturbances. Second, there are the

air quality problems associated with the burning

of fossil fuels. Here the concerns are acid rain,

urban ozone, and C02 emissions. 30 Conservation,

recycling, and fuel switching can play important

roles in reducing both types of adverse environmental effects.

Energy conservation is the most straightforward of the strategies. It can alleviate environmental problems at all points in the energy cycle.

Recycling can be used to mitigate problems with

the disposal of nonfuel energy products. Fuel

switching involves the most tradeoffs. In the area

of energy production and transport, fuel switching

merely substitutes one environmental problem for

another. In the area of air quality, the goal of a

fuel-switching strategy would be to shift from the

dirtier, carbon-intensive fuels (e.g., coal and

petroleum) toward the less intensive, cleaner

energy sources (e.g., natural gas and renewable).

One type of energy switching, electrification,

requires special attention. Electricity is always

cleaner than other energy forms at the point where

it is used. However, it may or may not be cleaner

from a wider perspective, because of inefficiencies involved in fossil fuel-based electricity

generation.

ECONOMIC COMPETITIVENESS

U.S. industrial competitiveness depends on

domestic companies holding down their production costs and improving the quality of their

products. Energy efficiency improvements and

energy price modifications can help boost competitiveness by reducing costs.

Companies can lower their costs by using

efficient equipment, processes, and practices to

conserve energy. In some cases, efficient technologies can have additional benefits, such as lower

labor or environmental costs or better product

quality.

Businesses can also reduce their costs by

seeking out low-priced sources of energy. However, from a public policy perspective, enhancing

industrial competitiveness by lowering or raising

energy prices is particularly tricky. On the one

hand, low energy prices translate directly into low

energy costs. This helps competitiveness in the

short term. On the other hand, high energy prices

act indirectly to hold energy costs down by

encouraging conservation and energy efficiency.

This can advance competitiveness in the long run,

if the costs can be successfully held in check

through efficiency gains. High energy prices also

further other goals of energy security and environmental quality.

MULTIPLE OBJECTIVES

Having multiple goals

aspect of energy policy.

is itself an important

Linking the goals of

energy security, environmental quality, and economic competitiveness gives great weight to

energy policy in general and efficiency programs

in particular. This positive characteristic is diminished somewhat, though, by the additional policy

problems and constraints that come with multiple

objectives. Program formulation is more challenging, because more criteria must be met.

Program evaluation is more difficult, because

there is no single measure of success. Moreover,

the need for program coordination becomes vital.

There must be good coordination among all of the

programs and all of the decisionmakers in the

relevant policy areas. This requires resolution of

jurisdictional issues among congressional committees on energy, commerce, science, technology, environment, and finance. It also requires

coordination and cooperation among executive

agencies such as DOE, EPA, and the U.S.

Department of Commerce. Without proper attention, these coordination challenges engender inaction.
22 | Industrial Energy Efficiency

1 Issues

Industrial energy efficiency is enhanced by any

cost-effective action, regardless of purpose, that

reduces energy use per unit of output. The degree

to which various policy options foster such

actions in an equitable and effective manner turns

on several fundamental controversial issues. For

whom should the actions be cost-effective, the

corporate energy user or society as a whole? Are

there industrial inefficiencies that need to be

corrected? Are industrial decisions always financially rational? What effects do energy prices

have on efficiency?

COST-EFFECTIVE FOR WHOM?

The cost-effectiveness of a potential efficiency

measure depends on which costs and benefits are

considered. From the corporate perspective, the

only relevant costs and benefits are those borne by

the energy user. The costs include the expenditures for equipment, engineering, and installation

as well as charges for production downtime. The

benefits include the energy cost savings, plus any

other net benefits, such as enhanced labor productivity, environmental compliance, or product

quality, that accrue to the firm. These are the

traditional accounting costs and benefits that

directly affect the fro’s bottom line. Basing

policy on this narrow view of cost-effectiveness

directly addresses the goal of economic competitiveness.

From a societal viewpoint, there is a wider

range of relevant costs and benefits. All monetary, health, and ecological costs and benefits

accrued to society are pertinent. Certain societal

benefits, such as reduced local air pollution,

diminished global warming, and avoided military

conflicts over oil supplies, are very controversial.

They are external to the markets and are very

difficult to quantify. Moreover, they accrue to

society at large, not to the particular party

implementing the efficiency measure. This wider

definition of cost-effectiveness is the more important measure for policy aimed at energy security

and environmental quality. ,

Energy efficiency measures generally appear

more cost-effective from the societal perspective

than from the corporate view. This happens

because more benefits are accounted for in the

societal perspective. Consequently, environmental

advocates and others taking the societal view are

usually more optimistic than those with the

corporate view about the potential energy savings

that can be cost-effectively achieved.

This report adopts the traditional, more widely

accepted, corporate perspective of costeffectiveness. This view is chosen not to dismiss

the value of societal costs and benefits but to

examine where traditional market forces lead.

IS INDUSTRY ALREADY ECONOMICALLY

EFFICIENT?

Analysts dispute the existence of significant

cost-effective energy savings in industry. Some

argue that companies minimize their costs by

undertaking all cost-effective improvements and

are, therefore, already as efficient as the market

demands. A corollary is that all managers make

rational, cost-minimizing, decisions. In this view,

unimplemented energy savings must by definition not be cost-effective. Analysts that find

industry already economically efficient believe

that additional energy savings will be expensive

and harmful to competitiveness.

The counterargument is that companies do not

minimize their total costs in practice and are,

therefore, not economically efficient. Many costeffective energy savings are not pursued because

of lack of information on relevant technologies,

capital constraints caused by budgeting methods,

inattention to energy issues, and general aversion

to change. This behavior ultimately arises from

disparate goals of management and stockholders,

managers’ personalities as they relate to external

competitive pressures, managerial inertia, and

organizational entropy. Analysts that take this

view are generally more optimistic about the level

of cost-effective energy savings that can be

achieved.
Chapter I–Introduction and Policy |23

WHAT ROLE DO ENERGY PRICES PLAY?

The influence of energy prices on industrial

energy use is another disputed topic. Macroeconomic theory holds that prices should have a strong

effect on energy use. Increases in energy prices

lead to improved energy efficiency, because they

raise the cost-effectiveness of implementing energysaving technologies and processes. Price rises

also lead companies to look for alternative energy

sources through least-cost supply procurement,

fuel switching, and cogeneration. In extreme

cases, they may prompt companies to migrate to

regions where prices are lower. These effects are

more pronounced for the more energy-intensive

companies and industries.

Several studies have examined the extent to

which price effects are reflected in historical

energy-use patterns. Typically, they compare the

energy-intensity trends of the oil embargo period

from 1973 to the early 1980s with those of earlier

periods. Differences in the trends can be attributed to some degree to the high prices that existed

during the oil embargo period. The data presented

in figure 1-1 show that overall energy intensity

declined more quickly during the high-price

period than it did in earlier periods. This data is

not conclusive, however, because it includes the

effects of both efficiency improvements and

structural changes. Analysts who have examined

the efficiency and structural components of the

energy intensity trends in this period disagree

about the influence of the oil embargo period,

Some have shown that efficiency (real-energy

intensity) improved faster after the 1974 oil

embargo than before it.31 Others have suggested

that efficiency improved steadily from 1958 to

1985, and that the energy shocks of the 1970s did

not significantly accelerate the improvement.32

The disparity appears to stem in large part from

differences in the measures of industrial output

that are used in the calculations.

Understanding the relationship between energy

prices and industrial energy use is very important

for assessing the effects of price-related policy

initiatives. It holds the key to estimating how

various energy and carbon-tax proposals would

affect industry’s energy use and carbon emissions.

POLICY OPTIONS

 Strategies

Crafting policies to enhance energy efficiency

is more challenging for industry than for other

sectors of the economy. The greater difficulty

arises from the diversity of industrial energy

use—there are thousands of industrial processes

each having unique energy characteristics-and

from the interconnections between energy and

production costs, product quality, environmental

compliance, and other sensitive business factors.

Several points are clear, however. First, energy

efficiency is best promoted through policies that:

1) increase investment in industrial plants, and 2)

focus that investment in a manner that encourages

adoption of efficient technologies and production

methods. Second, the energy conservation and

efficiency activities and investments should be

consistent with sound business strategy. Energy

taxes or mandated investments that are too costly

can put domestic companies at a competitive

disadvantage, unless the costs are offset by import

tariffs, export subsidies, or commensurate cost

increases for foreign firms. Third, the relevant

technical objectives for policy include: increasing

the use of energy-conserving equipment, processes, and practices; spreading the practice of

electricity cogeneration; expanding the reuse of

products and recycling of materials; and decreasing the carbon-intensity of the industrial energy

mix through fuel switching or electrification.

31 ~. Boyd et d., Op. Cit., foo~ote 3“

32 R. B, How@ $ ‘Enern USe ~ us. Manufac~ring: me Impacts of tie Energy Shocks on Sectol-al @@u~ Industry StruCture, and Energy

Intensity,” The Journal of Energy and Development, vol. 14, No. 2, pp. 175-190, 1991.
24 | Industrial Energy Efficiency

The first major objective-increasing investment in industrial plants-depends on a healthy

business and financial climate. The business

environment must include both economic growth

and competition to compel investment. Without

market growth, corporations have neither the

resources nor the incentive to invest. Without

competition, companies are under little pressure

to invest, If companies’ profits are secure, there is

little need for them to invest in plants and

equipment. Competition that is vigorous but fair

signals to companies that being profitable depends on being efficient. The financial environment must include low capital costs and a

long-term outlook, both of which depend on

interest rates and tax codes, to encourage investment in industrial plants. In the United States,

high capital costs and stock-market pressures

favor short-term profits over long-term investment. OTA examined how macroeconomic policies affect the business and financial climate in an

earlier report.33

The second major objective for improved

energy use is that efficient technologies and

production methods are implemented when investment occurs. Efficient technologies that are

both cost-effective and reliable must exist and be

available at the time of investment. Also, they

must be given adequate consideration in investment decisions. Investments can be focused to

advance the various technical objectives—

conservation, cogeneration, recycling, and energy

shifting-through financial incentives, regulations, information programs, and technology

RD&D (table l-l).

These policy options vary widely in their

energy savings and their costs to the government,

businesses, and consumers. To illustrate the range

of effects, the specific options are grouped into

three distinct levels, in order of increasing Federal

involvement and energy savings. The basic level

includes relatively low-cost, simple policy options that require little or no new legislation or

change from present practice. If Congress determines that changes are needed to effect improvements in energy efficiency, then the basic level

could be considered as a first step. The moderate

level includes several options that are more

ambitious and in many cases would require

modifying existing legislation and increasing

Federal spending. The aggressive level includes

options that are quite ambitious, would require

new legislation, or would require an increased

Federal role in energy regulation; the options on

this level would require additional funding.

1 Information Programs

The general lack of concern afforded energy in

many corporations is a major barrier to investment in energy efficiency improvements. This

problem can be addressed through policies that

raise the profile of energy efficiency as a national

and corporate goal. The Federal Government

could assist by providing technical assistance,

supporting education and advertising programs,

and establishing equipment-labeling requirements.

TECHNICAL ASSISTANCE

Many companies, especially smaller ones, are

unaware of many of the ways they could improve

their energy efficiency. Energy audits and training programs can help companies recognize

opportunities for improving their energy efficiency. Many utilities provide audits to companies in their service territories. In addition, the

Federal Government currently provides low-cost

33 U.S. Congess, OfflW of Twhnology Assessment, Making Things Better: Competing in hfanujircrunng, OTA-IT’E-443 (waShingtO% m:

U.S. Government Printing OffIce, March 1990). Among the options suggested by this report to improve the f~cial environment were:

decreasing the Federal budget deficic granting inducements for increased personal and business savings; extending tax inducements (credits

and accelerated depreciation) for technology development and capital investment; providing incentives for investors to hold investments longer;

and increasing the stability and predictability of the fucial and political environment.
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26 I Industrial Energy Efficiency

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Chapter l–Introduction and Policy 127

audits to small and medium-sized companies.

This program is small, but very cost-effective.

The government could enhance these efforts by

opening additional Energy Analysis and Diagnostic Centers and Manufacturing Technology Centers, and by developing training and certification

programs for energy managers and auditors.

Many energy utilities have instituted IRP and

DSM programs. These programs raise energy

awareness and assist in identifying and funding

energy-saving investments. However, relatively

few of these programs are aimed at industrial

consumers. The Federal Government, in providing technical assistance to utilities, could expand

its efforts in the area of industry program design

and monitoring.

EDUCATION AND ADVERTISING

The Federal Government could raise energy

awareness by providing information on energy

efficient technologies through technical literature, workshops, and meetings. EPA could continue to expand its voluntary energy-conservation

programs (e.g., Green Lights) to include more

types of equipment. The government could also

actively recognize companies and industries that

have made large energy efficiency gains; for

example, those that have met or surpassed their

voluntary efficiency targets or have kept their

conservation commitments to EPA.

EQUIPMENT LABELING

Product labeling makes information about

equipment-performance characteristics, such as

energy consumption and operating costs, easily

available. Labels assist equipment purchasers in

making informed decisions, while increasing the

attention paid to energy use. Labels are especially

useful for small items, which are often purchased

without much study. EPACT contains provisions

for labeling electric motors. Congress could

request DOE to examine the effectiveness of

labeling other generic equipment such as pumps,

fans, compressors, and small boilers.

H Financial Incentives

Financial measures can be used to alter investment patterns in order to promote the various

technical objectives. These policy instruments

include loan assistance, revisions to the income

tax code, and taxation of energy consumption or

CO2 emissions.

LOAN ASSISTANCE

In many companies, lack of funds constrains

investment. A loan pool with funds earmarked for

energy-saving projects could be used to increase

efficiency investment. The pool could be financed from a combination of Federal, State, and

utility sources. lending could occur under a

variety of terms. Interest terms could be set at

market, or perhaps below-market, rates, To ensure good faith, companies could be required to

put up matching finds or agree to undertake a

minimum investment in efficiency.

INVESTOR INCOME TAX PROVISIONS

Investment funds could also come from private

sources by making dividends earned on bonds

floated for energy efficiency projects tax-free.

This would increase the pool of low-cost capital

available for these projects. Such funds might be

used to assist companies that have limited access

to capital or have little use for tax credits because

of profitability problems.

ENERGY AND CARBON TAXES

Energy prices, despite their disputed effects on

energy efficiency trends, can be an important

factor in investment decisions. They are a major

influence on energy-focused investments and a

lesser factor in general investment projects. By

increasing energy prices, energy or carbon taxes

raise the attention paid to energy use and spur

implementation of energy-saving technologies

and processes by increasing their cost-effec-
28 I Industrial Energy Efficiency

tiveness. 34 They also lead companies to look for

alternative energy sources such as cogeneration,

fuel switching, and least-cost supply procurement.

The energy effects, however, have been secondary to the issues of revenue generation and burden

equitability in the public debate about such taxes.

Several different energy and carbon taxes have

been proposed. Some are broad-based taxes,

which would be levied on the Btu value, sales

value, or carbon content of all energy sources.35

Others are more fuel-specific taxes. These include

taxes on gasoline and tariffs that establish a price

floor on oil imports, meant to address issues of

petroleum use, production, and importation. President Clinton’s Btu tax proposal and foreign

energy taxes and prices are discussed in box l-D.

The various energy and carbon taxes would

affect the fuels used by industry in different ways.

The Btu tax and carbon taxes would (if assessed

at the same rate on all fuels) fall heaviest on coal,

because its price per Btu and per carbon content

is the lowest. Natural gas would be favored over

residual oil under a carbon tax, while the opposite

would be true under a Btu tax. A sales (ad

valorem) tax would affect all fuels equally. It

should be noted that applying energy and carbon

taxes to petroleum-based feedstock materials

would do little to reduce CO2 emissions at

industrial production facilities. Such materials are

not burned at these sites. They are, however,

sometimes burned as post consumer waste at

incinerators. Taxes on virgin feedstocks would

encourage plastics recycling, rather than burning,

thus reducing CO2 emissions.

The Congressional Budget Office (CBO) has

estimated that a tax of $100 per ton of carbon

would reduce overall energy consumption in the

industrial and commercial sectors by 6 to 8

percent below current levels by 2000.36 However,

the costs could be quite high, both to companies

and to the economy as a whole. CBO estimated

that the tax would lower the annual gross national

product (GNP) by about 0.5 to 2.0 percent ($40 to

$130 billion) below what it would be otherwise

by the end of the frost decade, and that the effects

could be 5 percent or more in the frost few years

of a suddenly instituted tax.

The costs would depend on revenue disposition

as well as the tax rate. DOE estimated that a $1 per

million Btu tax instituted in 1991 would decrease

GNP in 2000 by 0.7 percent ($39 billion) if the

revenues were used for deficit reduction.37 The

GNP decrease was estimated to be 0.6 percent

($35 billion) if the revenues were offset by a

reduction in payroll taxes and the deficit was not

reduced, the deficit neutral case.38 A study by the

American Council for an Energy-Efficient Economy (ACEEE) estimates that with an energy tax

that generates $25 to $30 billion in Federal

revenues, total U.S. energy expenditures could

decrease over the coming decade if 15 percent of

M ~er~ p~ce con~o~ we ~other policy tool that can be used to encourage conservation and fuel switching. They have been employed

during inflatiomuy periods, but are rarely considered today.

35 me ~v~owen~ ~tent of cw~n ~es wo~d & to ~ Coz emissio~, but tie w wo~d prob~ly be levied on fiels at the pokt of

purchase for convenience reasons, This is justified because nearly all of the carbon in fossil fuels is emitted into the atmosphere when the fuels

are burned. There are no viable C02 scrubbers or other carbon fining technologies to prevent release into the atmosphere. The higher carbon

fuels, such as coal, would be taxed heavier than the lower carbon fuels, such as natural gas.

36 us. coWess, conflasio~ Budget ~lce, carbon charges as a Response co GIo~l Waw”ng: The Effects Of Tm’ng Fossil Fuels

(Washington DC: U.S. Government Printing Oft3ce, August 1990).

37 u.S. Dq~ent of Energy, fierg ~o~tion A*~tiou Stiies of Energy Trees, SR/Eh4EIJ@l-02, 1991.

38 DOE m~e s~w est~es for a $45/ton c~n ~, w~ch wo~d gene~te rou@y the s~e Federal revmues as a $1/million Btu W.

The carbon tax was estimated to decrease GNP by 0.8 percent ($43 billion) in the deficit reduction case and by 0.7 percent ($38 billion) in the

deficit neutral case.
.—

Chapter I–Introduction and Policy | 29

Box l-D—Energy Taxes

Clinton Btu Tax Proposal

In February 1993, President Clinton announced plans for instituting an energy tax as part of his economic

revitalization program, A Vision of Change for America. The proposed energy tax would be levied at the rate of

$0.599 per million Btu for petroleum products and at $0.257 per million Btu for most other fuels. Electricity

generated from nuclear and hydro sources would be taxed at their input Btu rates, Energy materials used as

feedstocks would be exempted from the tax. The tax would be phased in over 3 years and would be indexed to

inflation beginning in the fourth year.

The following table shows the proposed assessment rates for various fuels. The actual price increases

caused by these taxes would depend on their energy supply and demand effects in addition to their assessed

rates.

industrial

Ciinton Percent of prices

Fuel proposal ($) price 1991 ($)

Natural gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.27/mcf 10.3% $2.63/mcf

Light fuel oil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .08/gallon 11.4 .70/gallon

Heavy fuel oil. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .09/gallon 30.0 .30/gallon

Coal (steam). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.66/ton 16.9 33.51/ton

Electricity (fossil or hydro). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .003/kwh 6.1 .049/kwh

Electricity (nuclear). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .004/lM/h 8.2 .049/kwh

Foreign Taxes

The overall rate of current energy taxation in the United States is difficult to determine because energy is taxed

differently in each State. However, energy taxes are probably lower in the United States than in other industrialized

nations. Regardless of the actual rates, U.S. energy taxes are not great enough to raise industrial energy prices

above those of other highly industrialized countries. On average, U.S. industry pays lower energy prices than its

major foreign competitors, except in t he case of natural gas and electricity in Canada. Complete data on industrial

energy prices in developing countries, some of which are major competitors in energy-intensive industries, are not

available to make a similar comparison for all U.S. competitors.

United United

States Japan Germany France Kingdom Canada

Tax (1991)

Natural gas ($/m@... . . . . . . . . . NA .32 .56 0 0 0

Light fuel oil ($/gallon). . . . . . . . . . 0 .03 .16 NA .09 0

Heavy fuel oil ($/gallon). . . . . . . . 0 .02 .06 .08 .06 0

Coal (steam) ($/ton). . . . . . . . . . . . NA 1.84 0 0 0 NA

Electricity ($/kWh). . . . . . . . . . . . . NA .008 .007 0 0 NA

Price (including tax) 1991

Natural gas ($/mcf).. . . . . . . . . . . 2.63 11.04 5.23 3.94 4.19 2.26

Light fuel oil ($/gallon). . . . . . . . . . .70 1.02 1.02 NA .84 .72

Heavy fuel oil ($/gallon). . . . . . . . .30 .86 .49 .41 .44 .37

Coal (steam) ($/ton) . . . . . . ......33 .51 63.29 165.49 91.84 69.82 54.92

Coal (metallurgical) ($/ton). . ....48.83 56.10 56.45 58.32 NA 51.60

Electricity ($/kWh). . . . . . . . . . . . . .049 .136 .088 .054 .071 .039

NOTE: Coal prices for Canada are for 1989.

SOURCES: Office of the President, A Vsion of Change for America (Washington, DC: 1993). International Energy Agency, Energy Prices

and Taxes, Third Quarter 1992.
30 | Industrial Energy Efficiency

the energy tax revenues were recycled into energy

efficiency programs.39

Energy-intensive industries would be hit particularly hard by the levying of energy or carbon

taxes. In these industries, energy prices play a

large role in the competitiveness among nations.

Taxes could damage these industries’ competitiveness and could lead to migration of production facilities to offshore regions where energy

prices are low. This could be countered by border

adjustments, such as duties on imports containing

large amounts of embedded fossil energy (with

offsets for any nonrefunded energy taxes paid in

the exporting country) and rebates for exports of

such products.

Most economists prefer taxes over other policy

tools as the means for encouraging greater energy

efficiency. Taxes send clear economic signals and

allow varied technical approaches to achieving

goals. Moreover, they can be rationalized as the

transference of some of energy’s external costs

from society as a whole to energy users themselves.

CORPORATE INCOME TAX PROVISIONS

The corporate income tax code can be used to

make energy-conserving investments appear more

cost-effective to corporate decisionmakers. Granting tax credits, accelerated depreciation, or other

tax-reducing devices to energy efficiency expenditures would increase the financial attractiveness

of these investments. The benefits of such tax

provisions would have to be weighed against the

lost revenues to the Treasury.

From 1978 until 1985, a 10 percent tax credit

was in effect for investments in: 1) specified

equipment, such as boilers that use coal or

alternative fuels; 2) heat conservation equipment;

and 3) recycling equipment.40 These tax credits

have been found by OTA and other researchers to

have little effect on corporate investment decisions.41 Credits were taken for eligible projects,

but they rarely caused a company to implement

one technology rather than another. They did little

to shift companies’ perceptions of the costeffectiveness of various technologies. These credits have also been criticized for specifying technologies, thus discouraging the use of new

technologies and concepts.

If tax credits were tried again, the rates would

have to be considerably higher and the list of

eligible conservation technologies would have to

be greatly expanded in order to significantly alter

investment patterns. Credits could also be applied

to process-oriented RD&D expenditures. It is

important to recognize, however, that credits can

influence companies’ investment only in profitable years. They do little in unprofitable years

when no taxes are paid.

Accelerated depreciation schedules can also be

used to facilitate investments that improve energy

efficiency. Shortening the depreciation period for

conservation investments could improve their

cost-effectiveness.

I Regulations

Regulations are the most direct method of

changing industrial behavior. Among the most

39 H. Geller, J. DeCicco, and S. Ntiel, Structuring anl?nergy Tizx So Thaf Energy Biils Do Notlncreuse (Washington, ~: beric~Comcil

for an Energy-Efficient Economy, 1991).

@ The MX credits Wae ewted as part of the Energy ‘lhx Act of 1978, Public Law 95-618 and expanded by the Crude oil Windfdl ~ofim

Tax Ac4 Public Law 96-223. The eligible heat conservation equipment (specially defined energy property) included recuperators, heat wheels,

regenerators, heat exchangers, waste heat boilers, heat pipes, automatic energy-control systems, turbulators, preheater, combustible

gas-recovery systems, economizers, and modifications to alumina electrolytic cells. In additioq the law denied tax credits for the installation

of oil- and gas-fwed boilers and granted rapid depreciation allowances for their early retirement. Proposals were made, but never enacted, to

extend the credits to industrial insulation industrial heat pumps; moditlcations to burners, combustion systems, or process furnaces; batch

operations conversion equipment; product separation and dewatering equipment; and fluid-bed driers and calciners.

41 om, op. cit., foo~ote 8. Alliance to Save Energy, Industn”al Investment in Energy Eficiency: Opportunities, Management practices,

and Tu Incentives, July 1983.
Chapter I–Introduction and Policy 131

viable regulatory options for influencing industry’s use of energy are equipment efficiency

standards, pollution permits, reporting and targeting requirements, and utility oversight.

EFFICIENCY STANDARDS

Efficiency standards can be used to raise the

average energy efficiency of certain types of

industrial equipment. Excluding substandard equipment from the market limits purchasing options to

higher efficiency equipment. Thus, average energy efficiency rises in the normal course of

equipment turnover. Because higher efficiency

equipment is costlier than standard equipment,

efficiency standards exact an initial financial

penalty on equipment buyers. However, this

initial penalty is usually more than offset by the

cost savings over the life of the equipment.

Furthermore, efficiency standards act to lower the

purchase prices of higher efficiency equipment by

increasing the size of its markets.

Standards make sense only for new or replacement equipment, not for existing equipment.

Upgrading all existing equipment to meet standards would be extremely expensive and difficult

to manage.

Further, most industrial equipment is not amenable to standards, because of the diversity in the

types of equipment and the operating environments. There are, however, some generic types of

equipment that are amenable to standards. EPACT

contains provisions for standards on new electric

motors. Congress might request DOE to examine

the practicality and effectiveness of efficiency

standards for other generic equipment, such as

pumps, fans, compressors, boilers, cogenerators,

and rewound motors.42

UTILITY OVERSIGHT

Utilities, through their DSM efforts, can be a

great source of information and funding for

energy efficient technologies. Currently, most

DSM programs are operated by electric utilities.

Under EPACT, the Federal Government can offer

financial incentives to States to pressure their

PUCs and utilities to more aggressively pursue

DSM. Further incentives or technical assistance

could be provided to expand the DSM efforts of

natural gas utilities.

REPORTING AND TARGETING

Requiring companies to periodically report on

their energy consumption draws their attention to

the importance of energy efficiency. The reporting also provides government with data that it

needs to plan its various industrial energy programs. Setting energy efficiency targets for industries adds still more pressure for improvement.

EPACT specified that DOE’s current reporting

program, the Manufacturing Energy Consumption Survey, be conducted at least every 2 years.

The act also provided incentives for voluntary

targeting programs to be established within trade

associations. If the targeting programs do not gain

wide acceptance, then Congress might consider

establishing a government-based program in which

the targeting would be mandatory.

ENVIRONMENTAL PERMITS

Companies could be required to obtain permits

for their CO2 emissions. Limiting the number of

available permits, perhaps to a set percentage of

1990 emissions, would encourage conservation

and fuel switching. Under this system, companies

would be free to choose the most cost-effective

strategy for curtailing their C02 emissions. They

could implement energy efficient technologies,

fuel switching, or possibly some other emissionscutting technique. Making the permits marketable

would further enhance companies’ options. Firms

could trade their unused carbon permits to other

42 DOE s~died pmp stantids in tie late 1970s. It did not recommend them, but a revisit of the issue may be h Orda.
. - —. . .

32 I Industrial Energy Efficiency

firms whose emissions exceed permit levels,

thereby creating a market for carbon emissions.43

EPACT calls for DOE to establish a voluntary

reporting system to track greenhouse-gas emissions. This emissions baseline will help make

permit allocations more equitable. Basing allocations on a long period of prior emissions reduces

the disincentives for companies to make emissions cuts before the program begins.

Marketable permits are the basis of the U.S.

regulatory approach for phasing out emissions of

chlorofluorocarbon compounds (CFCs) and for

reducing sulfur dioxide emissions to control acid

rain. Marketable carbon permits are likely to be

more difficult to implement than permits for

CFCs or sulfur dioxide; nevertheless, such a

system may still be less intrusive to firms than

mandated emissions standards or technology

standards. Use of marketable permits would

entail a great amount of data collection and

monitoring of industrial plants.

Other environmental policies that target air and

water emissions, recycling, and hazardous and

nonhazardous waste disposal also affect industrial energy use. Environmental directives are a

very powerful tool in this regard, because energyconsuming technologies and processes tend to be

major sources of pollution.

The cost to industry of environmental regulation is a major policy consideration in this area. If

the costs are too onerous, industrial competitiveness can be severely impaired.

~ Research, Development, and

Demonstration

Continuous improvement in energy efficiency

requires a constant flow of advanced, commercially available technologies, which in turn requires a sustained RD&D effort. The Federal

Government already supports this effort through

the industrial energy conservation and efficiency

RD&D program at DOE. Greater gains could be

achieved by expanding the program and increasing the efforts to understand and overcome

technology implementation hurdles. DOE’s RD&D

efforts should continue to stress technologies that

achieve multiple goals. Technologies and processes that combine energy efficiency with more

prominent corporate goals (e.g., product quality,

labor productivity, or environmental compliance)

generally have greater cost-effectiveness and are

more likely to be adopted in industrial facilities.

I Product Reuse and Materials Recycling

Product reuse and materials recycling have

received considerable attention because of their

role in reducing the need for additional landfills.

A less publicized benefit is that reuse and

44 For energy - recycling conserve energy.

intensive products, reusing them (e.g., refilling

beverage bottles and copier cartridges) or producing them from recycled materials (e.g., reprocessed steel, aluminum, plastics, and paper) U S Ually consumes less energy than producing them

from virgin materials. There are many options for

policies that would increase product reuse and

materials recycling. The following options are

mentioned for illustrative purposes:

. Resource subsidies, such as mineral depletion allowances and U.S. Forest Service

below-cost timber sales, currently favor the

use of virgin materials. These subsidies

could be reduced or eliminated to promote

the use of recycled materials. To ensure fair

trade, goods containing virgin materials

4J U.S. Conwss, Office of lkchnology Assessmen~ Changing by Degrees, Steps to Reduce Greenhouse Gases, OTA-O-48Z W~WOIL

DC: U.S. Government Printing OffIce, February 1991).

44 o~ ~~ ~omidered ~ese i~sue~ at le@ ~ o~er repo~. U.S. Congress, offIce of TixhIIoIogy Assessment, Green Product.t by Design:

Choicesfor a Cleaner Environment, OTA-E-541 (Washington DC: U.S. Government Printing Office, October 1992); Managing Industrial

Solid Wastes From Manufacturing, Mining, Oil and Gas Production, and Utility Coal Combustion-Background Paper, OTA-BP-O-82

(February 1992); Facing America’s Trash: What Next for Municipal Solid Waste? OTA-O-424 (October 1989); and Materials and Energy

From Municipal Waste, OTA-M-93 (July 1979).
would need to be subject to duties when

imported and granted rebates when exported.

. Grants and technical assistance could be

offered to help States and municipalities

establish recycling programs.

. Government procurement programs could

promote product reuse and materials recycling. By requiring a minimum recycled and

recyclable content in certain of the products

it buys, the government could foster the

markets for recycled materials.

. Grants and technical assistance could be

given for the development and implementation of a plastics identification system that

would facilitate plastics recycling,

Chapter I–Introduction and Policy 133

. Funding could be given for RD&D efforts to

improve the viability of scrap-processing

equipment and the quality of recycled materials.

● A FederaI deposit-refund system for beverage containers, automobiles, and other recyclable products could be established.

. Manufacturers, wholesalers, and retailers

could be required to collect and recycle the

packaging used to deliver their products to

market. The program could be extended to

require that businesses collect and recycle

their own products when discarded. A model

for this might be Germany’s nationwide

packaging take-back program.
Industrial

Energy

Consumption 2

I

ndustry is a diverse sector encompassing about half a

million manufacturing, mining, agriculture, fishing, and

forestry establishments and a like number of construction

sites.l These many facilities, ranging from small diecasting

shops, to family farms, to steel mills, to appliance manufacturers,

and to semiconductor producers, vary greatly in their activities,

size, and technological sophistication.

Energy use in industry is likewise heterogeneous. Each facility

uses a different mix of fuels for a variety of purposes in

converting raw materials into salable products. Industries vary

greatly in their overall level of energy use, because of differences

in their output and energy intensity (energy use per unit of output).

This chapter illustrates some of the broader trends and patterns

in industrial energy use, while seeking to retain a flavor of the

underlying complexity. Industry past and present energy

situations are reviewed and estimates of the near-term future are

presented. Except where noted, all energy consumption statistics

are given in end-use terms (box 2-A).

OVERALL ENERGY CONSUMPTION

In 1990, U.S. industry consumed 25.0 quadrillion Btu (quads)

of fuel and electricity.2 This accounted for 27 percent of the

Nation’s total use of fossil fuels, 32 percent of its renewable

energy use, and 35 percent of its electricity use (figure 1-2). An

additional 7.2 quads were consumed in generating and delivering

the electricity that industry used. Industry’s overall share of total

U.S. energy consumption depends how electricity generation,

transmission, and distribution losses are handled. Industry

accounts for 30 percent of U.S. energy use—if the losses are

1 In the United States, oil and gas processing facilities are generally classified as

part of the industrial sector, but utility-run electricity generation, tmnsmission, and

distribution facilities are part of the utility sector.

2 Quad stands for 1 quadrillion (1015) British thermal units (Btu). 1 quad= 1.05

exajoules (EJ).

35
36 | Industrial Energy Efficiency

Box 2-A—Energy Consumption Categories

Industrial energy use is measured in many ways. The following categories are the most important.

. End-use energy or direct energy—A measurement basis in which the energy content of fuels

and electricity is calculated at their point of use. The end-use energy content of 1 kWh of electricity

is 3,412 Btu.

. Primary energy-A measurement basis in which the energy content of fuels and electricity is calculated

at the place of generation. The primary energy content of 1 kWh of electricity is about 10,500 Btu.

. Energy for heat, power, and electricity generation-Energy consumed in direct process uses (e.g.,

motor drive, process heating, cooling and refrigeration, and electrochemical processes), direct nonprocess

uses (e.g., heating, ventilation, air conditioning, lighting, office equipment, on-site transportation, and

conventional electricity generation), and indirect uses (e.g., boilers and cogenerators).

● Energy feedstocks-Energy products used as raw materials for nonenergy products (e.g., coke in

steelmaking and petroleum in petrochemical, asphalt, wax, lubricant, and solvent production). W used

either as a source of fiber in paper products or as the basis of furniture or lumber products meets the

definition of an energy feedstock, but is not counted as such because data on its energy content are not

available. In addition, petroleum that is refined into energy products (such as gasoline and other fuels) is

a major energy input that does not qualify as feedstock. These wood and petroleum uses can be described

as nonfeedstock energy material inputs.

. Energy byproducts-Byproducts of energy feedstocks and nonfeedstock energy material inputs that are

used for heat, power, and electricity generation. These include: blast furnace gas and coke oven gas at

steel mills; wood chips, wood waste, and pulping liquor at paper mills; and still gas and petroleum coke

at petroleum refineries.

. Purchased energy-The portion of energy used for heat, power, and electricity generation and feedstocks

that is produced off-site.

. Cogeneration-Cogeneration refers to the combined production of steam and electricity from the same

fuel source. Typical fuels are natural gas, biomass, and various byproduct fuels, but coal and oil can be

used as well. Care must be taken to avoid double counting the fuels consumed and the electricity

generated.

The particular measure which is most important depends on the issues being examined. For example, carbon

dioxide (CO2) emissions are tied to the fuels, both purchased and byproduct, that are burned at the plant and the

electric utility. Feedstocks and other energy material inputs have little affect on C02 emissions. Energy security

is sensitive to imported energy, whether used for heat, power, and electricity generation or for feedstocks.

Competitiveness is dependent on purchased energy and byproduct energy. In general, use of purchased energy

hurts competitiveness and use of byproduct energy helps.

Unfortunately, data for the various measures are collected with varying frequency. Consistent data are

therefore not always available for all periods. Except where noted, all energy consumption statistics in this study

are given in end-use terms.

SOURCE: Offiea of Technology Assessment, 1993.

allocated to the electric utility sector, 38 percent— sumption of traditional energy sources fluctuated

if the losses are allocated to the sectors using the from 26.1 quads in 1973 to about the same level

electricity, and 39 percent-if the losses are in 1979, fell to 19.6 quads in 1983, and then rose

disregarded altogether. to 23.0 in 1990.3 Industry’s relative share of U.S.

Industrial energy use has risen since 1983, but energy use has generally declined in the last three

remains below its 1973 peak (figure 2-l). Con- decades. In 1960, the industrial sector accounted

3 Traditional energy sources include coal, natural gas, petroleum and electricity used for heat power, electricity generatio~ and feedstock

purposes; and excludes wood, waste, geothermal, wind, photovoltaic, and solar thermal energy. The 1990 figures in this paragraph differ slightly

from those in the previous one, because renewable are included in the earlier figures and excluded in these.
Chapter 2–industrial Energy Consumption | 37

Figure 2-1—U.S. Energy Consumption

by Sector, 1960-90

90

80

70

z

n

~ 60

g

~ 50

z

E 40

:

,: 30

u

20 “

10

0

1960 65 70 75 80 85 90

SOURCE: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates 196(%1990,

Report No. DOE/EIA-0214(90), May 1992.

for 46 percent of all energy consumed in the

United States for end-use purposes. By 1980,

industry’s share of energy use had fallen to 41

percent, and by 1990 it had slipped to 38 percent.4

ENERGY SOURCES

Industry uses a wide array of energy sources,

especially compared with the residential, commercial, transportation, and electric utility sectors. It consumes natural gas, petroleum, electricity, coal, and renewable, as well as many

derivatives of these fuels. The petroleum products

are particularly varied. They include distillate

fuel oil, residual fuel oil, gasoline, liquefied

petroleum gases (LPG), still gas, petroleum coke,

asphalt, road oil, and lubricants.5 Two major

types of coal are used, steam and metallurgical.

Steam coal is used in boilers, and metallurgical

coal is used to make coke for iron production.

Gases from blast furnaces, byproducts of the

coke, are used for their heating value. Wood and

byproducts of pulping, such as black liquor, are

also used as energy sources.

The two largest sources of industrial energy are

natural gas and petroleum products (figure 2-2).

They account for nearly 70 percent of industrial

energy use. Electricity is the third largest energy

source in terms of end-use energy content, but is

largest when generation, transmission, and distribution losses are included. Electricity also acFigure 2-2—industrial Energy Consumption

by Fuel, 1990

Total: 25.0 quads

Petroleum b

8.5 Q; 34%

1.6109 bbl

Purchased

electricity

3.2 Q; 13%

950109 kWh

1 Coalc

r 2.8 Q; 11 Yo

~ 120106 ton

a Natural gas includes lease and plant fuel, but excludes agricultural

uses.

b petroleum: distillate fuel oil 1.2 Q; residual fuel oil 0.4 Q; gasoline

0.2 Q; LPG 1.6 Q; asphalt and road oil 1.2 Q; lubricants 0.4 Q;

petrochemical feedstocks (including still gas and naptha) 1.1 Q;other

(including petroleum coke) 2.5 Q.

c Coal: steam coal 1.7 Q, and metallurgical coal 1.0 Q.

NOTE: Industry’s use of energy for feedstock and other nonfuel

purposes accounts for about 48 percent of its petroleum use, 38 percent

of its coal use, 8 percent of its natural gas use, and 23 percent of its total

energy use.

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates 1960-1990,

Report No. DOE/EIA-021 4(90), May 1992 and Annual Energy Outlook

7993, Report No. DOE/EIA-0383(93), January 1993,

4 These percentages correspond to the case of disregarding electricity losses that was discussed the previous pamgraph.

5 LPGs are efi~e, ethylene, propane, propylene, normal butane, butylene, and isobutane produced at petroleum refineries or natur~ gas

processing plants. Still gas (also called refinery gas) is a byproduct gas produced during distillation, cracking, reforming, and other processes

at petroleum refineries. Petroleum coke is a carbon residue produced during the cracking process at petroleum refineries. Catalyst petroleum

coke, produced by burning off the carbon residue deposited on the catalyst, is used as a refinery fuel. Marketable petroleum coke, produced

in delayed or fluid cokers, is a relatively pure form of carbon that can be sold as is or further purified by ca.lcining.
38 | Industrial Energy Efficiency

Figure 2-3-industrial Energy Expenditures

by Fuel, 1990

Total: $106 billion

Natural hased

$19.1 b; tricity

b; 41%

Petrol

a petroleum: distillate fuel oil $6.7 b; residual fuel oil $1.1 b; gasoline

$1.7 b; LPG $8.5 b; asphalt and road oil $3.5 b; lubricants $8.0 b;

other $9.6 b.

b Coal:steam coal $2.8 b, and metallurgical coal $1.9 b.

SOURCE: U.S. Department of Energy, Energy Information Administration, State Energy Price and Expenditure Report 7990, Report No.

DOE/EIA-0376(90), September 1992.

counts for the largest share of industrial energy

expenditures (figure 2-3).

The mix of industrial energy sources has

shifted during the last three decades (figure 2-4).

Natural gas and petroleum have alternated as the

most used industrial energy source. Natural gas

was the largest energy source until the mid- 1970s.

Use of natural gas began declining in 1974,

because of supply curtailments and price rises.

Several years later petroleum became the largest

energy source. The decline in petroleum use from

1980 until 1983, and the faster growth in natural

gas use in the late 1980s, led to natural gas and

petroleum consumption being nearly equivalent

in 1990. There were large shifts in the use of the

various petroleum products during these 30 years.

Consumption declined for residual fuel oil and

gasoline, and increased for LPG, asphalt and road

oil, distillate fuel oil, and other petroleum products.6 Coal was the third most used energy source

until 1982 when it was overtaken by electricity.

Electricity and wood consumption rose steadily

during the three decades.

I Prices

Energy prices are an important factor in the

overall energy consumption of industry and in the

mix of fuels it uses. High prices encourage energy

conservation and also shifts to the use of relatively inexpensive fuels. Likewise, low energy

prices discourage corporate attention to energy

efficiency and conservation.

Energy prices vary across the sectors (table

2-l). Industry pays less for energy than the

residential, commercial, and transportation sectors, but more than the electric utility sector.

Industry and utilities pay lower prices because

they can purchase bulk supplies. In 1990, industry

paid 37 to 48 percent less for natural gas and 34

to 39 percent less for electricity than the residenFigure 2-4—industrial Energy Consumption

by Fuel, 1960-90

1960 65 70 75 80 85 90

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates 1960-1990,

Report No. DOE/EIA-0214(90), May 1992 and Annual Energy Review

1991, Report No. DOE/EIA-0384(91), June 1992. US. Department of

Commerce, Office of Business Analysis, “National Energy Accounts

database.”

s From 1960 to 1990, consumption declined for residual fuel oil (74 percent) and gasoline (52 pereent), and increased for LPG (229 percent),

asphalt and road oil (59 percent), distillate fuel oil (16 percent), and other petroleum products (132 pereent).
. .

Chapter 2-industrial Energy Consumption | 39

Table 2-1—Sectoral Energy Prices, 1990

Electric

industry Residential Commercial Transportation utilities Measurement

Electricty . . . . . . . . . . . . . . . $0.047 $0.078 $0.072 $0.081 – $/kWh

Natural gas. . . . . . . . . . . . . . 3.03 5.80 4.83 — 2.40 $/thousand cf

Petroleum

Distillate fuel oil . . . . . . . . . 0.79 1.11 0.85 1.17 — $/lgallon

Residual fuel oil . . . . . . . . . 0.46 — 0.51 0,45 — $/gallon

LPG . . . . . . . . . . . . . . . . . . . 0.46 0.94 0.74 0,73 — $/gallon

Coal

Steam . . . . . . . . . . . . . . . . . 36.60 69.87 37.02 — 30.35 $/short ton

Metallurgical, . . . . . . . . . . . 47.97 — — — — $/short ton

Electricity . . . . . . . . . . . . . . . 13.92 22.96 21.20 23.64 — $/million Btu

Natural gas. . . . . . . . . . . . . . 2.94 5.63 4.69 — 2.32 $/million Btu

Petroleum

Distillate fuel oil . . . . . . . . . 5.68 8.01 6.10 8.46 — $/million Btu

Residual fuel oil . . . . . . . . . 3.10 — 3.43 2.98 — $/million Btu

LPG . . . . . . . . . . . . . . . . . . . 5.40 10.94 8.61 8.46 — $/million Btu

Coal

Steam . . . . . . . . . . . . . . . . . 1.63 3.02 1,60 — 1.45 $/million Btu

Metallurgical. . . . . . . . . . . . 1,79 — — — — $/million Btu

NOTE: The weighted average industrial price for steam and metallurgical coal was $40.71 per short ton or $1.69 per million Btu.

SOURCE: U.S. Department of Energy, Energy Information Administration, State Energy Price and Expenditure Report 7990, Report No.

DOE/EIA-0376(90), September 1992.

tial and commercial sectors. It paid about 27

percent more for natural gas and 12 percent more

for coal than electric utilities.

Industrial energy prices were stable until the

1974 oil shock and then rose until the early -1980s

(figure 2-5). Since then fuel oil prices have fallen

sharply, natural gas prices have declined moderately, and electricity and coal prices have remained stable. In real terms, prices after 1973

quadrupled for distillate fuel oil and natural gas,

tripled for residual fuel oil, and doubled for

electricity and coal. By the late 1980s, real prices

had fallen from their peaks, but were still higher

than their 1973 levels.

H Electrification

Use of electricity grew faster than other energy

sources during 1960 to 1990. This occurred

despite electricity being several times more expensive per Btu than other energy sources. The

growth is the result of electricity’s superior

quality, flexibility, and environmental cleanliness

at the point of use. Electricity is a higher quality

source of energy than others, because a greater

portion of its energy content can be converted into

useful work during any given task. It is flexible in

the sense that it can be used for heating, cooling,

electrolytic, and motive purposes. Electricity

performs tasks in industrial facilities in an environmentally clean manner. The environmental

problems associated with electricity use occur at

the generation and transmission stages, not at the

end-use stage.

Electricity is used not as a simple substitute for

other fuels, but to perform functions that require

electricity or where the efficiency of electricity is

higher than that of competing fuels. This illustrates that though different forms of energy can be

discussed in terms of a common unit, such as

Btus, their utility for specific uses varies.
40 I Industrial Energy Efficiency

Figure 2-5-industrial Energy Prices,

0

/’-’ \

Distillate fuel oil

/

1960 65 70 75 80 85 90 1960 65 70 75 80 85 90

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Price and Expenditure Report 1990, Report No.

DOE/EIA-0376(90), September 1992 and Annual Energy Review 1991, Report No. DOE/EIA-0384(91 ), June 1992. U.S. Department of Commerce

Office of Business Analysis, “National Energy Accounts database.”

1 Fuel Switching Potential

Many industrial processes have the capability

of using multiple energy sources. This provides

flexibility to react to short-term price and availability conditions and also leverage to secure

favorable fuel contracts with utilities.

The U.S. Department of Energy (DOE) surveys

manufacturing establishments’ short-term capability of switching energy sources.7 The survey

measures the potential for substituting one energy

source for another within 30 days with no

significant modifications to the fuel-consuming

equipment and with production kept constant,

The 1988 survey shows that manufacturers could

have replaced about 42 percent of fuel oil and

LPG use with nonpetroleum alternatives such as

natural gas and coal (table 2-2). However, this

substitution would have reduced manufacturers’

total petroleum use by only about 5 percent. The

overall substitution potential for petroleum is

low, because most petroleum is used in feedstocks or in refinery operations, and only a

relatively small amount is used as a fuel by

choice. Backup fuels could have substituted for

39 percent of natural gas, 29 percent of coal and

coke, and 2 percent of electricity. The greatest

substitution potential occurs among the fossil

fuels. Natural gas is the principle substitute for

fuel oils and coal and coke. Fuel oils and LPG are

the principal substitutes for natural gas.

The discretionary consumption range of an

energy source gives an indication of its flexibility

(figure 2-6).8 Natural gas has the greatest flexibility in terms of Btu, and the fuel oils are the most

flexible in percentage terms. In 1988, manufacturers were operating near the minimum consumption level for fuel oils and near the maximum level

for natural gas.

I Cogeneration

Cogeneration is the combined production of

heat (usually steam) and electricity from the same

7 U.S. Department of Energy, Energy Information Administration, Manufacturing Fuel-Switching Capability 1988, Report No.

DOE/EL4-0515(88), September 1991.

8 Discretionary consumption is the sum of the potential increase and the potential decrease in the use of an energy source. Put another way,

it is the difference between the potential maximum and minimum consumption of an energy source.
Chapter 2-industrial Energy Consumption 141

Table 2-2—FueI Switching Potential, 1988 (trillion Btu)

Petroleum. Natural gas Coal and coke Electricity

Actual consumption. . . . . . . . . . . . . . . . . . . . . . 888 5,306 1,980 2,485

Switching away from fuel

Potential decrease . . . . . . . . . . . . . . . . . . . . . .

Alternative fuels

Natural gas . . . . . . . . . . . . . . . ... , . . . , . . .

Purchased electricity . . . . . . . . . . . . . . . . . .

Coal and coke . . . . . . . . . . . . . . . . . . . . . . .

Distillate fuel oil . . . . . . . . . . . . . . . . . . . . . . .

Residual fuel oil . . . . . . . . . . . . . . . . . . . . . .

LPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other nonpetroleum fuels . . . . . . . . . . . . . .

374

314

19

24

—

—

21

2,072

—

90

111

916

811

691

61

568 38

371 29

39 —

— 4

172 11

240 16

20 8

35 2

Switching toward fuel

Potential increase . . . . . . . . . . . . . . . . . ... , . . NA 667 138 144

a Petroleum includes distillate fuel oil, residual fuel oil, and LpG.

NOTE: Data are for the manufacturing sector only. Agriculturel forestry, fishing, mining, and construction are not included. Actual consumption is

energy for heat, power, and electricity generation. Electricity consumption is off-site produced energy. Sum of alternative fuels does not equal

potential decrease, because of redundancies.

SOURCE: U.S. Department of Energy, Energy Information Administration, Manufacturing Fuel-Switching Capability 7988, Report No. DOE/EIA0515(88), September 1991.

energy source, Conventionally, separate processes are used to produce steam and generate

electricity. Both processes generate excess heat.

Combining the two processes makes use of the

excess heat and greatly increases overall fuel

efficiency. Cogeneration is economic mostly in

applications where heat of low-to-moderate temperature is needed on a regular basis, but is used

in many high temperature applications as well. In

1988, about 12 percent of manufacturers’ electricity demand was met through cogeneration. Paper,

chemicals, petroleum, steel, and food companies

are the principle cogenerators.

Cogeneration is a special kind of fuel switching. It gives manufacturers the ability to switch

between electricity purchased from a utility and

that produced on-site. This provides manufacturers with an additional method of responding to

changing electricity and fossil fuel prices and

availability. It can also increase companies’

bargaining power with their utilities. The threat of

Figure 2-6--Manufacturers’ Discretionary

Energy Consumption Ranges Resulting

From Fuel-Switching Capability, 1988

I Consumption range

 Natural Elec- Coal Resid. Distillate LPG

gas tricity and fuel fuel

coke oil oil

SOURCE: U.S. Department of Energy, Energy Information Administration, Manufacturing Fuel-Switching Capability 7988, Report No. DOHEIA0515(88), September 1991.
42 | Industrial Energy Efficiency

Table 2-3—Energy Consumption by Functional Uses, Industry, and Energy Source, 1985 (trillion Btu)

Direct

process Machine Space Cogeneratad

Steam heat drive Electrolytic heat Feedstocks Miscellaneous electric Total

Petroleum refining a. . .....1,100

Chemicals . .............1,300

Pulp and paper . .........1,700

Food . . . . . . . . . . . . . . . . . . 400

Primary metals . . . . . . . . . . 400

Ceramics and glass . . . . . . <50

Metals fabrication . . . . . . . . 200

Nonmetals fabrication ., . . 300

Miscellaneous . . . . . . . . . . . 100

Total . ...............5,500

1,300

500

200

400

900

700

400

200

100

4,600

200

600

400

200

200

100

400

200

100

2,400

— <50

<50

<50

<50

<50

<50

100

<50

<50

300

— <50 <50 2,600

100 3,700

100 2,200

<50 900

<50 2,900

<50 900

<50 1,200

<50 800

<50 300

200 15,500

100 1,300 <50

<50

<50

100

<50

100

<50

<50

300

— —

300 1,000

. —

.

—

400 2,300

Electricity . . . . . . . . . . . . . . — — 1,700

Natural gas . ............1,600 2,800 300

Fuel oil . . . . . . . . . . . . . . . . 900 200 100

Coal and coke . .........1,000 300 100

LPG . . . . . . . . . . . . . . . . . . . — — —

Other gas . . . . . . . . . . . . . . 700 1,200 200

Biomass . . . . . . . . . . . . . . . 1,300 — 100

Total . ...............5,50 0 4,600 2,400

400

<50

<50

<50

—

100

200

100

<50

—

500

<50

1,000

700

—

300 200 2,200

5,400

1,300

2,400

700

2,100

1,400

15,500

— —

—

—

—

—

—

—

—

—

400

—

300

—

2,300

—

300 200

a petroleum refining does not include feectstocks and raw materials inputs for the production of nonenergy products such as asphalt, waxes,

lubricants, and solvents.

NOTE: Data are very rough estimates and cover the manufacturing sector only (agriculture, forestry, fishing, mining, and construction are not

included). Figures may not add to totals because of rounding.

SOURCE: Office of Technology Assessment estimate, based on Industrial Sector Technology Use Model (ISTUM1).

installing cogeneration capacity can pressure

utilities into giving more favorable terms in

power contracts. In addition, cogeneration is a

way of recouping the value from combustible

byproducts of production processes, such as wood

chips, black liquor, and blast furnace gas.

I Functional Use

Industry uses energy for a variety of purposes.

Steam production via conventional boilers and

cogenerators is the largest use (table 2-3). It is

fueled in most industries by fossil fuels, primarily

natural gas. The principal fuels for steam production in the pulp and paper industry are wood and

black liquor; in the steel industry, blast furnace

gas. Direct process heat is the second largest

energy use. About two-thirds of process heat is

fueled by natural gas. It is the most diverse of the

functional use categories. It includes the heating

of fluids and the heating, treating, melting, curing,

forming, bonding, drying, calcining, firing, agglomeration, and smelting of various materials.9

It is carried out in many different types of

equipment including furnaces, ovens, driers, kilns,

and process vessels.

Electric motor drive, which includes motors

and the corresponding pumps, fans, compressors,

and materials processing and handling is the next

largest category. A small amount of shaft power,

mostly in oil and gas drilling facilities and

chemical plants, is provided by reciprocating

engines or steam turbines fueled by natural gas

and LPG. The next largest energy use is feedstocks, primarily natural gas in the chemicals

9 fioCe~~ h~~f@ categories &m from Gas Res~ch ~titute, I~ustrial Namral GUS Markts: Facts, Fallacies and Forecasts,

GRI-88/0316 (Chicago, IL: Gas Research Institute, March 1989).
Chapter 2-industrial Energy Consumption | 43

Figure 2-7—industrial Energy Intensity and Value of Shipments, 1988 and 1985

1,000,000

100,000

10.000

1,000

 Leather

‘Pulp and mlsc.paper ‘ .

‘Textiles . ‘ . ‘ .

Rubber ~ . ‘ ■ Food 

■ Fabricated metals

■ Agriculture construc . Furniture

Electrical equipment

.*A - d ,Ind’1 machinery . -Tobacco ■ *l ■ *P ■ 1

J

10 100 1,000

Shipments ($billlon)

KEY: Several data points lie slightly below the 1,000 Btu/$ shipments energy intensity axis. ● A is Apparel at 830 Btu/$; ● 1 is Instruments at 990 Btul$;

● P is Printing at 810 Btu/$; *T is Transportation Equipment at 990 Btu/$.

NOTE: Diagonal lines represent levels of total energy use, rising from bottom to top and left to right. For any industry, the closest line shows the

approximate amount of energy the industry consumed. For example, the petroleum refining industry consumed approximately 6 quads of energy.

Industries that lie high and far to the right of the graph are larger overall energy consumers than those that lie close to origin.

Data for manufacturing industries are 1988 and for nonmanufacturing industries 1985. Intensities are based on energy consumption for heat,

power, electricity generation, nonfuel uses, and oil and gas lease and plant fuel.

SOURCES: Manufacturlng: U.S. Department of Energy, Energy Information Administration, Manufacturing Energy Consumption Survey (MECS),

Consumption of Energy 1988, Report No. DOE/EIA-0512(88), May 1991 and U.S. Department of Commerce, Bureau of the Census, 1988 Annual

Survey of Manufactures, Statistics for Industry Groups and Industries, Report No. M88(AS)-1, October 1990. Nonmanufacturlng: U.S. Department

of Commerce, Office of Business Analysis, “National Energy Accounts database.” and Bureau of Labor Statistics, “Output and employment

database. ”

industry and coal in the steel industry. The

remaining functional uses, electrolytic, space

heat, and miscellaneous, are relatively small.

INDUSTRIES AND THEIR ENERGY USE

Energy consumption varies greatly among

industries, because of differences in industry

output and energy intensity (figure 2-7). Energy

intensity differs among industries by a factor of

200. For example, nitrogen fertilizers require

160,000 Btu per dollar of product shipped and

printing requires 810 Btu per dollar of product

shipped. Industries such as petroleum refining,

steel, organic chemicals, and paper use large

quantities of energy because their energy intensity and their output are both high. Other less
44 | Industrial Energy Efficiency

Figure 2-8—Energy Purchases and Their Share of Production Costs, 1990 and 1987

Industrial gases

Alkalies and chlorine

Cement

Aluminum

Ntirogenous fertilizer

Metal mining

Nonmetal mining

Paperboard mills

Ind’l. inorganlc chemicals

Paper malls

Steel

Pulp

Glass

Ind’l. organic chemicals

Agriculture

Misc. ceramics

Coal mining

Plastics and resins

Oil and gas extraction

Misc. primary metals

Misc. chemical products

Textiles

Asphalt and misc. petroleum

Rubber

Industry average

Construct Ion

Petroleum refining

Lumber

Fabricated metals

Misc. paper products

Food

Electrical equipment

Furniture

Instruments

Printing

Machinery

Tobacco

Leather

Apparel

Transportation equipment

E2

I I I I I I I I I 50 40 30 20 10 0 2 4 6 8 10

Energy cost share (percent) Energy purchases ($ billion)

NOTE: Data for manufacturing industries are 1990andfornonmanufacturing industries 1987. Costs of purchased energy include: electricity and fuels

consumed for heat, power, and electricity generation. Production costs include: purchased energy; materials, goods, parts, containers, scrap, and

supplies for production, repair, or maintenance; contract work (except in the construction industries); bought and resold products; and Iabor (including

wages, nonwage benefits, and social security and other legally required payments).

SOURCES: U.S. Department of Commerce, Bureau of the Census, 1990 Annual Survey of Manufactures: Statistics for Industry Groups and

Industries, Report No. M90(AS)-1, March 1992; 1987 Census of Agriculture: United States Summary and State Data, Report No. AC87-A-51,

November 1989; 1987 Census of Mineral Industries: General Summary, Report No. MIC87-S-1, March 1991; 1987 Census of Constriction

Industries: United States Summary, Report No. CC87-I-28, March 1990.

energy-intensive industries, such as oil and gas industries, energy represents only a small portion

extraction, food, and construction consume large of production costs. Energy accounts for 5 percent

amounts of energy because of their large output. or less of production costs for 86 percent of

Energy costs, in terms of overall expenditures industrial output. The industry average for energy

and share of production costs, are also vastly as a share of production costs is 3.0 percent. Some

different among industries (figure 2-8). For most industries have much higher energy costs though.
Chapter 2-industrial Energy Consumption | 45

Producers of industrial gases, lime, alkalies and

chlorine, cement, aluminum, and nitrogenous

fertilizers have energy costs that exceed 20

percent of production costs.10

The largest energy users are industries, such as

petroleum refining, chemicals, primary metals,

pulp and paper, food, and ceramics and glass, that

chemically or physically transform matter (figure

2-9 and table 2-4). These industries account for 74

percent of total industrial energy use. The fabricating and assembly industries (e.g., automotive

manufacture, textiles, and metal fabricators) consume relatively little energy. However, they are

comparatively large electricity users, because of

the relative prominence of motor-driven devices,

lighting, and ventilation. Nonmanufacturing establishments engaged in agriculture, fishing, forestry, mining, and construction account for the

remaining 15 percent of industrial energy consumption.

The following discussion of energy consumption patterns is organized according to groups of

industries that share similar energy use characteristics. The categories are: process industries,

materials production, metals fabrication, nonmetals fabrication, and nonmanufacturing.11

I Process Industries

The process industries group encompasses:

petroleum refining (SIC 29), chemicals (SIC 28),

pulp and paper (SIC 26), food (SIC 20), textiles

(SIC 22), and tobacco (SIC 21). It is the largest

industrial energy consuming sector, using 14.4

quads in 1988. These industries convert raw

materials into finished products primarily by

chemical, rather than physical, means. Heat is an

integral part of the processes. Steam provides

much of this heat, and in addition, serves as a

Figure 2-9—industrial Energy Consumption

by Industry Sector, 1988

Total: 24.2 quads

Petroleum refining

/ >

N o n

:;:% ;

r

’

n g a

6.4 Q; 26%

Other

Chemi

manufacturing

2.6 Q; 11 0/0

4.4 Q;

eramlcs and glass

d 1.0 Q; 4%

P 4%

paper

2.4 Q; 1 OO/o

a Nonmanufacturing includes natural gas used as lease and plant fuel,

but excludes agricultural uses of natural gas.

b Other manufacturing: metals fabrication 1.4 Q, nonmetals fabrication

0.9 Q, and miscellaneous 0.3 Q.

SOURCES: U.S. Department of Energy, Energy Information Administration, Manufacturing Energy Consumption Survey (MECS), Consumption of Energy 1988, Report No. DOE/EIA-051 2(88), May 1991

and State Energy Data Report, Consumption Estimates 1960-1990,

Report No. DOE/ElA-0214(90), May 1992.

pressure agent. Steam production consumes about

half of the energy used by these industries,

varying from 77 percent in pulp and paper

production to 35 percent in petroleum refining.

Because of this heavy use of steam, cogeneration

is particularly attractive in this sector, An additional 25 percent of the energy used in these

industries is for direct process heating purposes

such as fluid heating and materials drying. Motor

drive and chemical feedstocks account for 15 and

13 percent of consumption, respectively .12

Natural gas is the largest source of energy to

this sector, accounting for 26 percent of energy

consumption. Noncommercial fuels, such as proclo U S Dep~en[ of Commerce, Bureau of the Census, 1990 Annual Sur-veyofMarwfactures: Statisn”csforlndusq GrOUPS andIndusrn”es, . .

Report No. M!Xl(AS)-l, March 1992.

11 ~e~e~atego~e~~e&am from ~ ~onomy presented ~Elec~c Power Rese~h I~titute, E/ectrofechno/ogy R.#erence Guide, Revision

2, EPRI TR-101021 (Palo Alto, CA: Electric Power Research Institute, August 1992).

12 F1weS for functio~ uses of enerW me ~ugh estimates made by the Office of ~hology Assessment (OTA), based on data fk)m the

Industrial Sector Technology Use Model (ISTUM1).
46 | Industrial Energy Efficiency

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Chapter 2-industrial Energy Consumption | 47

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7- 0200. 0

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uj. o)mmcN

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2
48 | Industrial Energy Efficiency

ess waste gas, petroleum coke, and waste oils and

tars in the petroleum and chemical industries, and

pulping liquor and wood chips and bark in the

pulp and paper industry are also large sources of

energy. Combined, they account for 25 percent of

the sector’s energy consumption. Feedstocks for

the production of asphalt, waxes, lubricants,

solvents, and petrochemicals are the next largest

with 24 percent of consumption. The remainder is

accounted for by electricity (7 percent), LPG (7

percent), coal and coke (6 percent), fuel oil (4

percent), and miscellaneous energy (2 percent).

PETROLEUM REFINING

The petroleum refining industry is the largest

energy consuming industry. Most of the heat and

power needs are met with fuels, such as still gas,

catalyst petroleum coke, fuel oil, and LPG, that

are derived from the refining process itself.

Consumption of on-site generated fuels, notably

still gas and catalyst petroleum coke, has increased steadily during the last decade.13 In 1988,

these byproduct fuels met approximately twothirds of heat and power requirements. Purchased

energy made up the remaining one-third, and in

1990 accounted for about 2.6 percent of the

industry’s production costs.14

The industry’s energy consumption and intensity declined quickly in the 1970s and more

gradually in the 1980s (figure 2-10a). From 1974

to 1988, energy consumption fell by 30 percent

and energy intensity fell by 45 percent.

CHEMICALS

The chemical industry, the second largest

energy consuming industry, is a diverse set of

establishments that produce organic and inorganic chemicals, plastics, synthetic rubber, soaps,,

paints, industrial gases, fertilizers, pesticides,

pharmaceuticals, and miscellaneous other products. Natural gas is the principal fuel in most

chemical production processes, but electricity

plays a large role in the production of nitrogenous

fertilizers, chloralkalies, and industrial gases,

which are produced electrolytically. Large quantities of natural gas, LPG, and still gas from

petroleum refineries are used as feedstocks.

Natural gas (methane) is used as a feedstock in the

production of ammonia (a major component of

fertilizers), hydrogen, methanol, and carbon black.l5

LPG and still gas are used in the production of

many petrochemicals including ethylene, propylene, vinyl chloride, and styrene.

The industry’s energy consumption and intensity declined fairly steadily in the 1970s and

1980s (figure 2-10b). From 1974 to 1988, energy

consumption fell by 13 percent and energy

intensity fell by 31 percent. The central role

played by natural gas for heat, power, and

feedstocks in many chemical processes inhibited

switching to alternate fuels during the gas supply

curtailments and price rises during the 1970s.

PULP AND PAPER

The pulp and paper industry is the fourth

largest energy consuming industry. In 1989,

about 56 percent of the industry’s energy demands were met by self-generated and residue

fuels such as spent pulping liquor, hogged fuel,

and bark. The proportion has risen since 1972,

when self-generated and residue fuels met 40

IS Energetic, he., IndusrV profiles: petroleum, prepared for U.S. Department of Energy, OffIce of Industrial ~c~ologies, Report No.

DE-AC01-87CE40762, December 1990.

14 IJ.S. Department of commerce, Bureau of the Census, op. cit., footnote 10.

15 Es~tes Ofthe ~omt of na~~ ~m used ~ f~dstoc~ VW widely. ME shows co~~ption at 5~ trillion Btu k 1988 ad 490 trillion

Btu in 1985. U.S. Department of Energy, Energy Information Administration, Manufacturing Energy Consumption Survey (A4ECS),

Consumption ofEnergy, 1988 Report No. DOE/EIA-05 12(88), May 1991 and 1985 Report No. DOE/EIA-05 12(85), November 1988. The Gas

Research Institute (GRI) shows the consumption in 1985 to be 643 trillion Btu, used to produce ammonia (368 trillion Btu), hydrogen (199),

methanol (55), and carbon black (21). Gas Research Institute, Industn”alNatural Gas A4arkets:Facts, Fallacies andForecasts, op. cit., footnote

9.
Chapter 2-industrial Energy Consumption 149

percent of the industry’s energy needs. 16 The pulp

and paper industry is the leading cogenerator of

electric power. About 40 percent of the industry’s

electricity demand is met with cogenerated fuel.17

In 1990, purchased energy represented 5.8 percent of the industry’s production costs.18

Unlike other sectors, the pulp and paper

industry’s energy consumption rose in the 1980s,

because of growth in output. However, the

industry’s energy intensity continued its gradual

decline in this period (figure 2-1Oc). From 1974

to 1988, energy consumption rose by 6 percent

and energy intensity fell by 19 percent.

FOOD

The food and beverage processing industry, the

fifth largest industrial energy consumer, includes

facilities that produce meat, dairy, fruit, vegetable, grain, bakery, sugar, confectionery, fat, oil,

and beverage products. Among the largest energy

consumers are wet corn millers, beet sugar

producers, and malt beverage brewers. The food

industry uses energy primarily for separations

processes. The use of boiling to concentrate food

products from liquid streams is a particularly

energy intensive process. 19 The principal fuels

used in the food industry are natural gas for steam

production and direct heating, electricity for

motor drive, and coal for steam production.

Self-generated electricity accounted for 7.5 percent of electricity demand in 1988.20 Most of the

cogenerating capacity is located at cane and beet

sugar processors, wet corn millers, and malt

beverages brewers.

In the 1970s and 1980s, the industry’s energy

consumption remained fairly steady and its intensity declined (figure 2-10d). From 1974 to 1988,

energy intensity fell by 24 percent.

I Materials Production

The materials production group includes: steel

(SIC 331), aluminum (SIC 3334), other primary

metals (balance of SIC 33), cement (SIC 324),

glass (SIC 321-323), and other ceramic products

(SIC 325-329). It is the second largest industrial

energy consuming sector, using 3.8 quads in

1988. The materials production industries are

simpler than the process industries, particularly

chemicals, in the sense that there are fewer

processes and products. Also, the products tend to

be low-value-added, commodity materials. Materials production is characterized by heavy use of

direct process heat for activities such as metals

heating, treating, melting, and smelting, ore

agglomeration, lime and cement calcining, clay

and brick firing, and glass melting, curing, and

forming. Direct process heating consumes 42

percent of the energy used by this group. Most of

the remaining energy is used for feedstocks (27

percent), steam production (10 percent), motor

drive (9 percent), and electrolytic processing (8

percent) .21

Coal and coke are the largest sources of energy

in the materials production sector, accounting for

47 percent of the consumption in the sector

overall and roughly 70 percent in the steel and

hydraulic cement industries. Natural gas is next

largest energy source with 32 percent of consumption. The remainder is accounted for by

electricity (16 percent), petroleum (3 percent),

and miscellaneous energy (2 percent).

lb s~tistics from the American Paper Institute, Inc.

IT u.S. Dep~ent of Ener~, 1988 MECS, op. cit., foo~ote 15.

18 U.S. D~~ent of Commerce, Bureau of the Census, op. cit., footnote 10.

19 D~lslo~ ~y5i5 Cowrationof V1r@% Energy consumption Paflerns in the ~anufacfuring Sector, prepared for U.S. Department of

Energy, Energy Information Adrninistratiou Oct. 15, 1990.

20 U.S. ~~ent of Ener~, 1988 MECS, op.cit., foo~ote 15.

21 Om, op. cit., footnote 12.
50 | Industrial Energy Efficiency

Figure 2-l&Energy Consumption and Energy Intensity of Industry Sectors, 1974-88

2-10a. Petroleum refining 2-10b. Chemicals

160

140

140

120 . - .

\

\

.

.

\

80

60

40

20

0

80

60

40

Consumption Consumption

I

20

0 1 1 1 1 1

1974 76 78 80 82 84 86 88 1974 76 78 80 82 84 86 88

2-10d. Food

’

20 

~ - — — T

2-1Oc. Pulp and paper

1. . .

.

.

.

100

~ 8 0

Consumption

Intensity

&

% 60

G

~ 40 —

. Consumption

I 00 ‘ - -

~// ’

.

- - - -

.

---- -

80 /

Intensity

60

-

x

:

—

40 ●

20 I 20

o

1974 76 78 80 82 84 86 88 1974 76 78 80 82 84 86 88

2-10e. Primary metals 2-10f. Ceramics and glass

140

120

100

80

60

40

20

0

140

120

Intensitv

- -

- -

Consumption

- - -

‘2- . . / ” d’ - - -

.

100 so - - -

80

60 consumption~

40

20

0

1974 76 78 80 82 84 86 88 1974 76 78 80 82 84 86 88
Chapter 2-industrial Energy Consumption | 51

Energy Consumption and Energy

2-10g. Metals fabrication

140 ‘—

r

120 : - ‘ >

Intensity of Industry Sectors, 1974-88-( Continued)

.

Consumption

100

6

0

~ 80 .

/7 . - - - -

,

E 6 0 lntensitv

x I

,

I

20 I

o I

1974 76 78 80 82 84 86 88

2-10i. Nonmanufacturing

120-- —- - - –- -- ‘- ——- --- — ‘1

Intensity

.

~ 8 0

/

Consumption

II

~ 60 I

I I

20 I

o

1974 76 78 80 82 84

PRIMARY METALS PRODUCTION

The steel industry dominates energy use in the

primary metals group. Its principal energy source

is coal, which is used to produce coke. Coke

serves as both a fuel and feedstock in ironmaking

processes. Its fuel function is to melt the iron ore

pellets, and its feedstock role is to reduce iron

oxide to pig iron. Coal and coke account for 69

percent of energy use in the steel industry.

2-10h. Nonmetals fabrication

140 —– ——

} .

0

I

1974 76 78 80 82 84 86 88

NOTE: Consumption and intensity data are based on offsite-produced

energy used for heat and power.

SOURCES: U.S. Department of Commerce, Bureau of Labor Statistics,

“Output and Employment database.” Manufacturing sectors: U.S.

Department of Energy, Energy Information Administration, Derived

Annual Estimates of Manufacturing Energy Consumption, 1974-1988,

Report No. DOE/EIA-0555(92)/3, August 1992. Nonmanufacturing

sector: U.S. Department of Commerce, Office of Business Analysis,

“National Energy Accounts database.”

Electricity accounts for 7 percent of the industry’s

energy consumption, Electricity use has remained

relatively steady over the last two decades, but its

share of total energy consumption has grown

because of increasing use of electric steelmaking

processes. 22 Recently though, electric Steelmaking has not been growing. It has accounted for a

steady 36 to 38 percent of U.S. raw steel

production since 1986.23

Aluminum production is centered around the

Hall-Heroult electrolytic reduction process. Aluminum facilities thus consume large amounts of

electricity and are often the largest customers of

their local utilities. Electricity accounted for 87

percent of the aluminum industry’s energy use in

1988, and 26 percent of its production costs in

1990.24 Aluminum is the largest electricity consuming industry.

22 )71ecrnc1~ ~et 5.1 ~eme.t of tie ~dus@’s hmt ~d power n~ds in 1970 ~d 9.4 percent in 1985, U.S. D~tient of commerce, OffIce

of Business Analysis, “Natioml Energy Accounts database.”

z~ ~eticm Iron ~d Steel Institute, Anrrtud Statistical Report, 1991 (W~h@to~ ~: 1992)

2.4 us. ~p~ent of ~rn, 1988 MECS, Op, cit., fm~ote 15 ~ U.S. ~p~~nt of comme~, Bureau of&z CeIISUS, op. cit., footnote 10.
52 I Industrial Energy Efficiency

The other metals category include primary

copper, lead, and zinc producers, ferrous and

nonferrous foundries, and nonferrous rolling and

forging mills. Natural gas is the principal fuel in

this group overall. However, lead production uses

mostly coal, and zinc production, which is an

electrolytic process, uses mainly electricity.

The primary metals industry’s energy consumption declined sharply between 1979 and

1982, and has remained fairly steady in subsequent years (figure 2-1Oe). The industry’s energy

intensity declined gradually over this same period. From 1974 to 1988, energy consumption fell

by 32 percent and energy intensity fell by 3

percent.

CERAMICS AND GLASS

Nonmetals companies, which include cement,

glass, brick, tile, refractories, pottery, concrete,

gypsum, and plaster, and cut stone producers,

comprise the sixth largest industrial energy consuming group. For these industries as a group,

natural gas—used to fire furnaces and kilns-is

the principal fuel. However, the cement industry,

the largest energy consumer of the group, primarily uses coal to fire its kilns. In the 1960s, cement

producers used nearly as much natural gas as coal.

After the frost oil crisis, the industry began

phasing natural gas out. Gypsum producers also

use mostly coal, and ready-mix concrete producers use mostly fuel oils in their processes.

The industry’s energy consumption and intensity declined fairly steadily in the 1970s and

1980s (figure 2-10f). From 1974 to 1988, energy

consumption fell by 28 percent and energy

intensity fell by 32 percent.

H Metals Fabrication

The metals fabrication group includes: transportation equipment (SIC 37), fabricated metals

(SIC 34), machinery (SIC 35), electrical equipment (SIC 36), instruments (SIC 38), and miscellaneous manufacturing (SIC 39). This group used

1.4 quads of energy in 1988. These industries

generally engage in physical conversion of materials (e.g., cutting, forming, assembly) and are

thus heavily reliant on motor-drive systems.

Motor drive accounts for 31 percent of the group’s

energy consumption. Heat treating, drying, bonding, and other direct process heating operations

associated with metals fabrication account for 32

percent of the energy used. The remaining energy

is used primarily for steam production (19 percent) and space conditioning, lighting, and office

equipment (10 percent).25

Natural gas is the largest source of energy in the

metals fabrication sector, accounting for 45 percent of energy consumption. Electricity is the

next largest energy source with 38 percent of

consumption. The remainder is accounted for by

coal (8 percent), petroleum (3 percent), and

miscellaneous energy (3 percent).26

The industry’s energy consumption and intensity declined fairly steadily from the mid-1970s

until the mid-1980s (figure 2-10g). In subsequent

years, energy consumption rose and energy intensity remained even. From 1974 to 1988, energy

consumption fell by 13 percent and energy

intensity fell by 43 percent.

~ Nonmetals Fabrication

The nonmetals fabrication group includes:

lumber and wood (SIC 24), rubber and plastics

(SIC 30), printing and publishing (SIC 27),

furniture (SIC 25), apparel (SIC 23), and leather

(SIC 31). This group is the smallest industrial

energy consuming sector, using 0.9 quads of

energy in 1988. The lumber and wood industry

dominates energy use in the group. Like the

metals fabrication group, the industries of this

sector are heavily reliant on motor drive. Motordrive accounts for 29 percent of the energy used

by this group. These industries also use large

25 Om, op. cit., footnote 12.

26 U.S. DW~ent of Energy, 1988 MECS, op.cit., footnote 15.
Chapter 2-industrial Energy Consumption | 53

amounts of heat, provided by both steam and

direct process means. The lumber, wood, rubber,

plastics, and leather industries use primarily

steam heat. The printing, publishing, furniture,

and apparel industries rely more heavily on direct

process heat. Of the energy consumed by the

overall group, steam accounts for 40 percent, and

direct process heating accounts for 23 percent.

The remaining energy is used primarily for space

conditioning, lighting, and office equipment (5

percent) .27

Wood chips and bark are the largest sources of

energy in the nonmetals fabrication sector, accounting for 30 percent of energy consumption.

They are used primarily in the lumber and wood

industry, but also in the furniture industry.

Electricity is the second largest energy source,

accounting for 29 percent of consumption, followed by natural gas at 27 percent. The remainder

is accounted for by petroleum (7 percent), coal

(2 percent), and miscellaneous energy (4 percent) .28

The industry’s energy consumption and intensity declined fairly steadily from the mid-1970s

until the mid- 1980s (figure 2-10h). In subsequent

years, energy consumption rose and energy intensity remained even. From 1974 to 1988, energy

consumption fell by 10 percent and energy

intensity fell by 38 percent.

I Nonmanufacturing

The nonmanufacturing group includes: agriculture, forestry, and fishing (SIC 1,2,7,8,9), coal

mining (SIC 12), metal mining (SIC 10), nonmetal mining (SIC 14), oil and gas extraction

(SIC 13), and construction (SIC 15-17). Natural

gas is the largest source of energy in the nonmanufacturing sector, accounting for 44 percent of

energy consumption. It is used primarily as lease

and plant fuel in oil and gas extraction. Asphalt,

road tar, and road oil are the next largest energy

sources with 18 percent of consumption. The

remainder is accounted for by electricity (13

percent), fuel oil (13 percent), crude oil (6

percent), LPG (3 percent), and coal (3 percent) .29

The nonmanufacturing sector’s energy consumption and intensity declined gradually steadily after the late 1970s (figure 2-10i). From 1978

to 1985, energy consumption fell by 14 percent

and energy intensity fell by 23 percent.

ENERGY INTENSITY

Industrial energy use dampened in the last two

decades, but the value of industrial output generally increased. As a result, industry’s dependence

on energy—as measured by its energy intensity—

declined.30

Energy intensity is the amount of energy used

to produce a unit of output. Usually, it is measured

in Btu of energy per dollar of output or value

added (contribution to gross domestic product) .31

From the 1960s until the first oil shock in 1974,

industrial energy intensity remained relatively

steady at 19,000 to 21,000 Btu per dollar of

industrial output (constant 1990 $) (figure 2-1 1).

Growth in energy use was directly coupled with

growth in industrial output. From 1974 until

1986, efficiency improvements and sectoral structure changes caused industrial energy intensity to

decrease by a third. Since 1986, energy intensity

has remained between 13,000 and 14,000 Btu per

dollar output (1990 $), suggesting that energy

consumption has once again become directly

coupled with industrial output, albeit at a lower

level.

27 OTA, op. cit., footnote 12.

28 U.S. Dep~ment of Energy, 1988 MECS, op.cit., footnote 15.

29 u.S. Dep~ent of Commerce, op.cit., footnote 22.

so Enerm ~teml~ m~md in B~ of energy consumption per constant dollw of ~dus~~ output.

31 For Some homogeneous ~dusrnes, hte~i~CaDbe measured in Btu per physical unit Of input or ou~ut. For ex~ple, Pe~oleum ‘frog

intensity is measured in Btu per bamel of crude oil input, and steel industry intensity is measured in Btu per ton of ftished steel output.
54 | Industrial Energy Efficiency

Figure 2-ll—lndustrial Output, Energy Consumption, and Energy Intensity, 1960-90

130-

120-

Energy Intensity , ‘ - - ‘ - - . .

-11 0 ----’---.-” -

.

- -

8

~ 100-

com

: 90 Energy use

! 80

.

.

70 ,

------ -

60 I I I 1 I I

1960 65 70 75 8 0 85 90

NOTE: In 1980, industrial energy use was 25.4 quads, gross product originating (output) was $896 billion, and energy intensity was 28,300 Btu/$

output. Energy consumption includes coal, natural gas, petroleum, wood, and electricity used for heat, power, electricity generation, and feedstock

purposes; and excludes waste, geothermal, wind, photovoltaic, and solar thermal energy and electricity generation, transmission, and distribution

losses. Gross product originating (output) data presented in the figure and used in intensity calculations are in constant dollars.

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Report, Consumption Estimates 1%0-1990, Report

No. DOE/EIA-021 4(90), May 1992 and Annual Energy Review 1991, Report No. DOE/EIA-0384(91 ), June 1992. Robert P. Parker, U.S. Department

of Commerce, Bureau of Economic Analysis (BEA), “Gross Product by Industry, 1977-90,” Survey of Current Business, May 1993 and BEA,

“National Income and Product Accounts database.”

Figure 2-12—lndustrial Energy Intensity

by Fuel 1960-90

‘

4 

~ - - – ~

L u I

G

f 1 2 - Natural gas

\

Coal I

.—- U-1

5 4

z.—

$ 2

a)

h

Wood

0 “ , 1 I 1 1 1 1 I I 1 I 1 I I I

1960 65 70 75 80 85 90

NOTE: Gross product originating (output) data presented in the figure

and used in intensity calculations are in constant dollars.

SOURCES: U.S. Department of Energy, Energy Information Administration, State Energy Data Repot-t, Consumption Estimates 1960-1990,

Report No. DOE/EIA-0214(90), May 1992 and Annual Energy Review

1991, Report No. DOE/EIA-0364(91), June 1992. Robert P. Parker,

U.S. Department of Commerce, Bureau of Economic Analysis (BEA),

“Gross Product by Industry, 1977-90,” Survey of Current Business,

May 1993 and BEA, “National Income and Product Accounts database.”

The intensity of natural gas use increased until

1971, and then over the next 15 years fell by about

50 percent (figure 2-12). Shortages of natural gas

contributed to the decline. In recent years, natural

gas intensity has been rising again. Petroleum

intensity has fallen 35 percent since 1979. Coal

intensity has fallen steadily since 1960, but the

rate of decline slowed in the mid- 1980s. Electricity intensity increased from 1958 to 1970 and then

leveled out, partly because of increases in its

price. In 1983, the intensity of electricity use

surpassed that of coal use.

M Efficiency and Structure

Energy intensity is dependent on energy efficiency and industrial structure. A decline in

intensity may be the result of: 1) improved

industrial processes and practices and/or 2) decreased production of energy-intensive products.

For example, all of the following activities would

decrease energy intensity:

. Investment by steelmakers in modern, efficient equipment;
Chapter 2-industrial Energy Consumption | 55

●

●

●

The

Shifts in the economy, away from steelmaking toward computer manufacturing;

Changes in steel product lines, away from

low-value steels toward thinner, stronger,

higher-value steels; and

Modifications in steel facilities, away from

cokemaking toward coke importation.

last example does not actually lower the

energy intensity of steelmaking, but transfers the

intensity to coke exporters.

Industries differ in energy intensity by a factor

of 200 (figure 2-8), so a shift in output mix can

have a significant effect on the energy intensity of

the sector as a whole. Studies have shown that

roughly one-half to two-thirds of the decline in

manufacturing’s energy intensity between the

mid-1970s and mid-1980s can be attributed to

energy efficiency improvements. The remaining

portion of the decline can be attributed to a shift

in the mix of output, with ‘‘smokestack’ industries declining relative to lighter manufacturing

industries .32

Industrial energy intensity has fallen only

slightly since the mid-1980s. Between 1985 and

1988, the energy intensity of the manufacturing

sector declined by 5 percent. However, most of

the decline was caused by structural shifts.

Energy efficiency improvements for the manufacturing sector as a whole were negligible during

this period.33

1 International Comparisons

Industry tends to be more energy intensive in

the United States than in other industrialized

countries (figure 2-13). This is not, however,

direct evidence of inefficiency in U.S. industry.

The differences in energy intensity result from

variations in industrial structure, relative factor

input prices, and technological efficiency.

The structural differences are evident at several

levels. First, the United States has a high proportion of heavy, energy-intensive industries such as

petroleum refining, chemicals, steel, and paper.

Second, even within industries, the United States

tends to encompass more of the energy-intensive

processing stages. For example, the U.S. paper

industry uses almost twice as much energy per

dollar of output than does the Japanese paper

industry. This disparity occurs partly because

Japanese papermakers import much of their pulp,

whereas U.S. papermakers produce most of their

pulp themselves.

The relatively low price of energy in the United

States is another factor encouraging the high

energy intensity of U.S. industry. U.S. energy

prices are generally among the lowest in the

industrialized world (table 2-5). The low prices

not only discourage the adoption of more energy

efficient technologies and processes, but also

encourage energy-intensive industries to locate in

the United States.

Just as the aggregate intensity figures should

not be taken as evidence of U.S. inefficiency, the

structure and price arguments should not be

construed as evidence that the United States is

energy efficient. Comparing the industrial efficiencies of different countries is very complex

because of the many business environment characteristics that define the efficient level of energy

32 C. Dobti, “Dectig Ener~ Intensity in the U.S. Manufacturing S=tor, “ The Energy Journal, vol. 9, No. 2, pp. 109-135, 1988. U.S.

manufacturing sector, 1974-1980. Annual reduction in primary energy intensity caused by structure shifts (1.1 percent) and technology

improvements (1.1 percent).

R. Marlay, “Trends in Industrial Use of Energy,” Science, vol. 226, pp. 1277-1283, 1984. U.S. mining and manufacturing sectors,

1973-1982. Annual avoided growth in energy use caused by slower economic growth (1.4 percent), structure shifts (1.0 percent) and technology

improvements (1.2 percent).

U.S. Congress, Oftlce of Technology Assessment, Energy Use and the U.S. Economy, OTA-BP-E-57 (Washingto4 DC: U.S. Government

Printing Ot%ce, June 1990). Entire U.S. economy, 1972-1985. Avoided growth in primary energy use caused by structure shifts (9.5 quads)

and technology improvements (15.4 quads).

33 J. L. presto% R. K. Adler, and M. A. Schipper, U.S. Department of Energy, Energy Information Admhk@tiOL “Energy ~lciency ti

the Manufacturing Sector, ’ Monthly Energy Review, December 1992.
56 | Industrial Energy Efficiency

Figure 2-13-industrial Energy Intensity of Selected Countries by Industry Sector, 1988

120 

~ U s . ~ U.K .

g

= Japan ~ France

u

~ 90 U W . Germany

60

30

Total manufacturing Paper Chemicals Glass Steel Nonferrous metals

SOURCE: Data obtained from International Energy Studies Group at Lawrence Berkeley Laboratory, Berkeley California.

use. Proving that one country is more or less

efficient than another given their respective

business environments is extremely difficult.

Such proof would require comparisons of specific

processes and business conditions in different

countries. All that can be justifiably concluded

from current data is that, compared with other

industrialized nations, the United States is not as

energy inefficient as it first appears.

OUTLOOK

Forecasting industrial energy use and the

possible effects of adopting energy-efficient technologies is difficult for a variety of methodological reasons. Industrial processes are complicated,

and there are many efficient technologies to

consider. Also, few technologies are applicable to

all industries in all instances. Most have limited

applicability, for site-specific or process-specific

reasons. Moreover, efficiency is intimately tied

with process yields, which are themselves changing. Nevertheless, several recent studies have

forecasted industrial energy consumption under

various policy climates. Among them are:34

●

●

●

●

U.S. Department of Energy, Energy Information Administration, Energy Consumption and Conservation Potential: Supporting Analysis for the National Energy Strategy, December 1990;

U.S. Department of Energy, National Energy Strategy: Technical Annex 2, Integrated Analysis Supporting The National

Energy Strategy: Methodology, Assumptions and Results, 1991/1992;

Alliance to Save Energy, American Gas

Association, and Solar Energy Industries

Association, An Alternative Energy Future,

April 1992;

Alliance to Save Energy, American Council

for an Energy-Efficient Economy, Natural

Resources Defense Council, and Union of

Concerned Scientists in consultation with

34 o~er s~~es that have forecasted various aspects of industrial energy use include:

● Gas Research Institute, Industrial Natural Gas Markets: Facts, Fallacies and Forecasts, op. cit., footnote 9;

● Gas Reseach Institute, AnnuaZ Baseline Projection Data Book (Chicago, JL: Gas Research Institute, annual);

● Electric Power Research Institute, Eficient Electricity Use: Estimates of Maximum Energy Savings, EPRI CU-6746 (Palo Alto, CA:

Electric Power Research Institute, March 1990); and

● Oak Ridge National IAmratory, Energy Eficiency: How Far Can We Go? ORNL/1Wl-1 1441 (Sprin@eld, VA: National lkehnical

Information Service, January 1990).
Chapter 2–industrial Energy Consumption | 57

Table 2-5-international Industrial Energy Prices, 1991

United United

States Japan Germany France Kingdom Canada Measurement

Electricity . . . . . . . . . . . . . . $0.049 $0.136 $0.088 $0.054 $0.071 $0.039 $/kWh

Natural gas. . . . . . . . . . . . . 2.63 11.04 5.23 3.94 4.19 2.26 $/thousand cf

Petroleum

Light fuel oil . . . . . . . . . . . 0.70 1.02 1.02 NA 0.84 0.72 $/gallon

Heavy fuel oil . . . . . . . . . . 0.30 0.86 0.49 0.41 0.44 0.37 $/gallon

Coal

Steam . . . . . . . . . . . . . . . . 33.51 63.29 165.49 91.84 69.82 54.92a $/short ton

Metallurgical . . . . . . . . . . 48.83 56.10 56.45 58.32 NA 51.60a $/short ton

NOTE: Prices include taxes.

a Coal prices for Canada are for 1989.

SOURCE: Organization for Economic Cooperation and Development, International Energy Agency, Energy Prices and Taxes, Third Ouarter 1992.

●

the Tellus Institute, America’ s Energy Choices:

Investing in a Strong Economy and a Clean

Environment: Technical Appendixes, 1992;

and

U.S. Congress, Office of Technology Assessment, Changing by Degrees: Steps to

Reduce Greenhouse Gases, February 1991.

This section discusses the results of these studies.

~ Energy Consumption and Conservation

Potential: Supporting Analysis for the

National Energy Strategy

This study was prepared by the Energy Information Administration (EIA) of DOE. It includes

three forecasts: a Reference case, a High Conservation excursion, and a Very High Conservation

excursion. The Reference case represents a continuation of historical energy consuming an d

conservation patterns as related to energy prices

and the value of industrial sector output. The

35 Projected percent per year increases in energy prices are:

1988-2010 2010-2030

Natural gas. . . . . . . . . . . . . . . 3.7 1.1

Residual fuel oil. . . . . . . . . . . . 4.6 1.2

Distillate fuel oil. . . . . . . . . . . 3.0 0.9

LPG. . . . . . . . . . . . . . . . . . . . 1.9 0.9

Motor gasoline. . . . . . . . . . . . 1.9 0.6

Steam coal. . . . . . . . . . . . . . . . 0.9 1.5

Metallurgical coal. . . . . . . . . . . 0.8 1.6

Electricity, . . . . . . . . . . . . . . . 0.4 0.1

conservation excursions assume greater use of

cost-effective technology in new, replacement,

and retrofit markets.

The key assumptions in the forecasts are

industrial output, energy prices, and energy intensity. All three cases embody the same growth

rates for industrial output and the same projections for energy prices. Gross national product

(GNP) is forecasted to grow in real terms, 2.5

percent per year during 1988 to 2000,2.3 percent

during 2000 to 2010, and 1.8 percent during 2010

to 2030. Growth in output varies by industry,

ranging from 0.2 percent per year for petroleum

refining to 3.7 percent for metal durables (table

2-6). Prices for petroleum and natural gas are

assumed to increase rapidly until 2010, and then

slow somewhat during 2010 to 2030. For electricity and coal, prices are expected to increase

slowly until 2010, and after that, grow faster for

coal and remain almost constant for electricity .35

330-074 0 - 93 - 3 : QL 3
58 I Industrial Energy Efficiency

Table 2-6—Forecasts of Industrial Growth Rates (percent per year)

U.S. Department of Energy

Energy information Administration Americans Energy Choices

1988-2010 2010-2030 1988-2010 2010-2030

Petroleum refining . . . . . . . . . . . . . . . . . . 0.2 0.0 -0.6 -0.3

Chemicals . . . . . . . . . . . . . . . . . . . . . . . . 3.0 1.9 0.8 0.8

Primary metals. . . . . . . . . . . . . . . . . . . . 1.3 0.4 -0.6 -0.3

Pulp and paper . . . . . . . . . . . . . . . . . . . . 2.4 1.6 0.6 0.3

Ceramics and glass . . . . . . . . . . . . . . . . 1.9 1.9 -0.5 -0.3

Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 1.9 0.3 0.3

Metal durables. . . . . . . . . . . . . . . . . . . . . 3.7 2.2 2.6 1.4

Other manufacturing . . . . . . . . . . . . . . . . 2.3 1.4 1.2 0.8

Total manufacturing . . . . . . . . . . . . . . . . 2.8 1.9. 1.6 1.0

Nonmanufacturing. . . . . . . . . . . . . . . . . . 1.5 1.8 1.5 1.8

Total industry . . . . . . . . . . . . . . . . . . . . . 2.5 1.8 1.6 1.2

NOTE:These growth rates are assumed to prevail in all scenarios of their respective studies, except that the petroleum refining industry activity differs

in each scenario in the America’s Energy Choices study, because oil consumption differs (the rates shown are for the reference case only).

SOURCE: U.S. Department of Energy, Energy Information Administration, Energy Consumption and Conservation Potential.’ Supporting Analysis

for the National Energy Strategy, Report No. SR/NES/90-02, December 1990. Alliance to Save Energy, American Council for an Energy-Efficient

Economy, Natural Resources Defense Council, and Union of Concerned Scientists in consultation with the Tellus Institute, America’s Energy

Choices: Investing in a Strong Economy and a Clean Environment: Tehnical Appendixes (Cambridge, MA: Union of Concerned Scientists, 1992).

Energy intensity is the main factor that varies

in the three forecasts. In the Reference case,

intensity is assumed to decline between 0.7 and

2.0 percent per year in the various industries

during 1990 to 2010 (table 2-7). The chemicals

industry is expected to have the largest decline in

intensity and the petroleum industry is expected

to have the smallest. In the High Conservation

excursion, intensity is assumed to decline an

average of 0.5 percentage points per year faster

than the Reference case. In the Very High

Conservation excursion, intensity is assumed to

decline 0.25 percentage points per year faster than

in the High Conservation case in every industry.

Industrial energy consumption is forecasted to

grow to 30.7 quads by 2010 and 36.5 quads by

2030 in the Reference case (figure 2-14). This

represents an average growth rate of 0.9 percent

per year. The fuel intensity declines and electricity intensity increases throughout the forecast

period. In the High Conservation excursion, 2010

and 2030 energy consumption levels are projected to be 7 to 10 percent lower than in the

Reference case. In the Very High Conservation

excursion, consumption levels are additional 4 to

7 percent lower.

H National Energy Strategy, First Edition

1991/1992

This DOE report projects that under the current

policy environment, industrial energy use will

grow to levels slightly higher than those in the

previous report (31.1 quads in 2010 and 38.0

quads in 2030). With the full implementation of

the National Energy Strategy (NES), consumption levels are projected to be 5 to 11 percent

lower than the Base case in 2010 and 2030.36

36 DC)E published its National Energy Strategy (NES) in February 1991 to lay ‘‘the foundation for a more efficient, less vulnerable, and

environmentally sustainable energy future. ’ For the industrial sector, the NES proposed to: 1) increase industrial process efficiency research

and development (R&D), 2) increase industrial waste minimization R&D, 3) reform waste regulations, and 4) expand and develop energy

auditing capabilities.
Chapter 2-industrial Energy Consumption 159

Table 2-7—Forecasts of Rates of Energy Intensity Decline (percent per year)

U.S. Department of Energy

Energy information Administration America’s Energy Choices

High Very high Climate

Reference conservation conservation Reference Market Environmental stabilization

case excursion excursion case case case case

Petroleum refining . . . . . 0.7

Chemicals . . . . . . . . . . . 2.0

Primary metals . . . . . . . 1.0

Pulp and paper . . . . . . . 1.1

Ceramics and glass. . . . 1.4

Food . . . . . . . . . . . . . . . . 0.8

Metal durables . . . . . . . . 0.8

Other manufacturing . . . 0.8

Agriculture . . . . . . . . . . . 0.8

Mining . . . . . . . . . . . . . . . 0.8

Construction . . . . . . . . . 0.8

Feedstocks . . . . . . . . . . 1.4

0.9

2.0

2.0

2.1

1.9

1.6

1.4

1.6

1.3

1.3

1.3

1.4

1.2

2.3

2.3

2.4

2.2

1.9

1.7

1.9

1.6

1.6

1.6

1.6

0.2

1.8

1.0

1.2

1.3

0.8

0.2

0.1

0.9

0.2

0.8

0

1.3

2.4

2.1

1.7

2.2

1.9

1.6

1.4

1.6

1.4

1.5

0

1.3

2.9

3.1

2.0

3.3

4.3

2.7

1.4

2.1

1.8

2.0

0

2.2

2.3

3.7

2.1

3.6

4.5

2.8

1.4

2.5

1.8

2.4

0

SOURCE: U.S. Department of Energy, Energy Information Administration, Energy Consumption and Conservation Potential: Supporting Analysis

for the National Energy Strategy, Report No. SR/NES/90-02, December 1990. Alliance to Save Energy, American Council for an Energy-Efficient

Economy, Natural Resources Defense Council, and Union of Concerned Scientists in consultation with the Tellus Institute, America’s Energy

Choices: Investing in a Strong Economy and a Clean Environment: Technical Appendixes (Cambridge, MA: Union of Concerned Scientists, 1992).

I An Alternative Energy Future

This study was written by the Alliance to Save

Energy, the American Gas Association, and the

Solar Energy Industries Association. It examines

a free market approach to energy use with an

emphasis on efficiency and clean fuels in legislation, regulation, and research and development

(R&D) programs. New government intervention

in the energy marketplace and significant new

policy initiatives are specifically excluded. The

Alternative Energy Future assumes:

●

●

●

Continued improvement in efficiency of

deployed energy technologies, resulting from

competitive forces as well as from reallocated R&D to natural gas, renewable, and

efficiency technologies;

Continued vigorous expansion of utility

Integrated Resource Plans (IRPs) and passage of the IRP portion of National Energy

Strategy legislation; and

Elimination of State and Federal legislative

and regulatory biases that discourage energy

efficiency and encourage the use of carbonintensive fossil fuels (e.g., mandatory scrubber requirements).

In the Base case, energy consumption grows at

0.5 percent per year and reaches 27.3 quads in

2010, about 11 percent lower than the EIA

Reference case levels. Renewable, electricity,

and natural gas use increase, and coal and

petroleum use decrease. The efficiencies of conventional applications rise, but are offset to some

extent by increasing use of cogeneration and

independent power plants. Energy intensity declines at 1.4 percent per year, from about 14,800

Btu per dollar of industrial output in 1990 to

11,200 Btu per dollar of output in 2010 (with

output measured in constant 1990 dollars).

In the Alternative Energy Future, energy consumption grows at a slower rate, 0.3 percent per

year, and reaches a level that is 5 percent lower

than the Base case. There is greater use of

renewable such as waste byproducts and solar

power. Efficiency increases result from improved

process controls, increased capture of waste heat,

improvements in production techniques, and other

conservation measures. Energy intensity falls at

an average rate of 1.6 percent per year to reach

10,800 Btu per dollar of output in 2010. The

efficiency gains in the Alternative Energy Future
60 I Industrial Energy Efficiency

Figure 2-14-Projections of Industrial Energy Consumption and Energy Intensity, 2010 and 2030

Energy consumption, 2010

160 T--—-–—

 14 0 I

120

100

80

60

40

20

1990

0

DOE

EIA

DOE Alternative Energy America’s Energy OTA

NES Future Choices 2015

Energy intensity, 2010

— 100 1990

al

xl m

DOE Alternate Energy America’s Energy

Choices

DOE OTA

EIA NES Future 2015

are somewhat greater than in the Base case, but Industrial production levels are the same in all

are less than those achieved in the early 1980s. four scenarios, except in the case of petroleum

refining. The factors varied in the scenarios are

energy intensity, cogeneration, and fuel switch- fl America’s Energy Choices: Investing in a

Strong Economy and a Clean Environment

This study was prepared by the Alliance to

Save Energy, the American Council for an

Energy-Efficient Economy, the Natural Resources

Defense Council, and the Union of Concerned

Scientists in consultation with the Tellus Institute. It examines scenarios that are generally more

proactive and interventionist than the other studies. Four policy scenarios are outlined: a Reference case, a Market case, an Environmental case,

and a Climate Stabilization case.

ing.

The overall GNP growth is the same as in the

EIA projections.37 However, this study incorporates: 1) a larger shift from the manufacturing

sector toward the service sector and 2) greater

movement from energy-intensive basic industries

toward less intensive fabricating and assembly

industries (table 2-6). Annual growth in total

industrial output is 0.9 percentage points lower

during 1988 to 2010 than in the EIA study. The

annual growth rates among the various manufacJY me enerm price assumptions are also very similar to those k the EIA s~dy.
Chapter 2–industrial Energy Consumption 161

r — .

Figure 2-14—(Continued)

Energy consumption, 2030

r--l - —

990

DOE

EIA

—

a)

%

m

DOE Alternative Energy

NES Future

America’s Energy OTA

Choices 2015

NOTE: The first year for the America’s Energy Choices projection was 1988. The first year for the OTA projection was 1987. For this figure, the first

year energy consumption and intensity data of these two studies were interpolated to 1990. The projections on the left cover 1990 to 2010, except

that the OTA study covers 1990 to 2015. The projections on the right cover 1990 to 2030.

KEY: Labels within bar refer to different policy cases or scenarios presented in the studies.

SOURCE: DOE EIA: U.S. Department of Energy, Energy Information Administration, Energy Consumption and Conservation Potential.’ Supporting

Analysis for the National Energy Strategy, Report No. SR/NES/90-02, December 1990. DOE NES: U.S. Department of Energy, National Energy

Strategy: Technical Annex 2, Integrated Analysis Supporting The National Energy Strategy: Methodology, Assumptions and Results, Report No.

DOE/S-0086P, 1991/1992. Alternative Energy Future: Alliance to Save Energy, American Gas Association, and Solar Energy Industries

Association, An Alternative Energy future, April 1992. America’s Energy Choices: Alliance to Save Energy, American Council for an

Energy-Efficient Economy, Natural Resources Defense Council, and Union of Concerned Scientists in consultation with the Tellus Institute,

America's Energy Choices: Investing in a Strong Economy and a Clean Environment: Tehnical Appendixes (Cambridge, MA: Union of Concerned

Scientists, 1992). OTA 2015: U.S. Congress, Office of Technology Assessment, Changing by Degrees: Steps to Reduce Greenhouse Gases,

OTA-O-482 (Washington, DC: U.S. Government Printing Office, February 1991).

turing industries are 0.8 to 2.4 percentage points to 2010 (table 2-7). In general, this case embodies

lower than the corresponding EIA rates. In the less technological change than the EIA Reference

2010 to 2030 period, the discrepancies between case, as reflected by the generally lower rates of

the studies are smaller, but still considerable. energy intensity decline. In 2010 to 2030, the

The Reference case reflects current policies, reduction in intensity becomes faster in the

practices, and trends. Energy intensity is assumed chemicals and metal durables industries and

to decline among the various industries at rates slower in the paper, nonmetals production, agribetween 0.2 and 1.8 percent per year during 1990 culture, and construction industries. Of particular
62 | Industrial Energy Efficiency

note in this period are the intensity increases in

the petroleum refining and the ‘‘other’ manufacturing industries.

Energy consumption in the Reference case is

forecasted to grow slightly and then return to 25.1

quads in 2010, about 18 percent lower than the

EIA Reference case level. Afterwards, consumption grows at 0.4 percent per year and reaches 27.3

quads in 2030, which is 25 percent below the EIA

projection.

The other three scenarios are designed to

deliver the same level and quality of energy

services as the Reference case, but to do so at

lower cost and with less environmental damage.

They incorporate greater end-use energy efficiency, efficient new power supplies, infrastructure changes, and renewable energy investments.

The Market case makes use of cost-effective

energy-efficiency and renewable energy technologies, assuming moderate market penetration

rates, with no accounting for environmental or

security costs beyond those embodied in current

trends and policies (e.g., the Clean Air Act). It

assumes minimization of the costs of energy

services to consumers. In most industries, the

rates of energy intensity reduction are similar in

magnitude to the EIA’s Very High Conservation

excursion (table 2-7).

The Environmental case employs additional

energy-efficiency and renewable energy resources

to the extent justified by the environmental and

security costs of fossil fuels. It also incorporates

adoption of externality values in energy pricing.

The Climate Stabilization case assumes compliance with carbon dioxide (CO2) emissions

targets consistent with an effective international

program to limit global warming (a 25-percent

reduction in U.S. CO2Z emissions by 2005 and at

least a 50 percent reduction by 2030).

Energy consumption levels in Market, Environment, and Climate Stabilization cases are

projected to fall throughout the forecast period. In

the Market case, energy use is 12 percent lower

than in the Reference case in 2010 and 21 percent

lower in 2030. Consumption levels in the Environment and Climate Stabilization cases are both

about 20 percent below the Reference case in

2010 and 29 percent lower in 2030.

R Changing by Degrees: Steps to Reduce

Greenhouse Gases38

The Office of Technology Assessment developed an energy technology model to track the

effects of various technical options to reduce C02

emissions. Three scenarios were run with the

model—Base case, Moderate, and Tough—

corresponding to different levels of commitment

to emissions reduction.

In the Base case or ‘‘business-as-usual” scenario, no new policies are adopted, and industrial

production is projected to increase 2.7 percent per

year. 39 The Moderate scenario assumes product

and process changes that reduce the energy

intensity of the four biggest energy-using industries (paper, chemicals, petroleum refining, and

primary metals) by 1.2 to 1.8 percent per year.

The scenario also includes motor and lighting

conservation measures and increased use of

cogeneration.

The Tough case assumes that equipment stocks

(e.g., boilers, motors, etc.) are replaced 5 years

sooner than they normally would be. In addition,

the energy intensities of the four largest industrial

energy users decline between 2.3 and 4.3 percent

per year (equivalent to the rate of decline experienced during 1980 to 1985). Other industries are

assumed to experience an additional energy

intensity reduction of 0.5 percent per year compared to the Base case. Cogeneration is assumed

to provide 61 gigawatts in 2015 and meet 90

percent of new industrial steam demand. New,

more efficient cogeneration technologies, such as

38 me fiWeS ~ ~S diSCuSSi~~ differ from tie hose in o~gin~ text, ~cause a different energy accounting SyStem iS used. ~SO, nOte that

the final forecast year (2015) differs from the other studies.

39 Based on tie Gm Re~e~~h Imtl~te, Ann~u/ Baseline projection Book (~cago, IL: Gas Research Institute, 1988).
Chapter 2–industrial Energy Consumption | 63

intercooled steam-injected gas turbines (ISTIG),

are assumed to account for about half of the new

gas-fired cogeneration after 2005.

In the Base case, energy use is projected to

increase 29 percent from 1990 to 2015. Application of technologies that are currently available

and cost-effective on a life-cycle basis (the

Moderate scenario) result in energy consumption

levels in 2015 that are still about 16 percent above

1990 levels. Only in the Tough scenario, where

technologies are employed that are either currently expensive or not expected to be commercially available in the next decade, does energy

consumption drop below the 1990 level by 2015.

In all three scenarios energy use grows at a slower

rate than industrial production, so industrial

energy intensity falls by between 37 percent

(Base case) and 54 percent (Tough case) from

1990 to 2015,

I Summary

Energy consumption in 2010 varies from O to

29 percent above 1990 levels in the studies’

Base/Reference cases (figure 2-14). The least

vigorous policy scenarios in each study reduce

consumption by 5 to 12 percent from their

respective Base/Reference cases. The more ambitious policy scenarios achieve energy reductions

of 10 to 26 percent below the Base/Reference

cases. In 2030, the Base/Reference levels vary

from 9 to 55 percent above 1990 levels, and the

policy cases reduce consumption by 10 to 31

percent.

The differences in Base/Reference case energy

consumption projections among these studies

result primarily Ii-em dissimilar assumptions about

industrial output. Industrial growth rates vary

among the studies from 1.6 to 2.9 percent per year

during 1990 to 2010, with slightly lower overall

growth rates during 1990 to 2030. The energy

intensity assumptions vary much less among the

studies. Energy intensities are assumed to decline

at 1.4 to 1.5 percent per year during 1990 to 2010

(except in the OTA study, which projects intensity to decrease at 1.8 percent per year) and at 1.2

to 1.3 percent per year during 1990 to 2030. The

studies vary, however, in how they achieve these

intensity reductions. For example, the EIA study

relies more heavily on efficiency improvements

and the America’s Energy Choices study relies

more on shifts in industrial structure.

The studies generally kept industry output

growth rates and industrial structure constant

among their scenarios. Therefore, differing assumptions about efficiency and conservation

efforts are reflected mostly in the policy cases.
of: 1)

T

energy

Improved

Technologies

and

Practice 3

here are many energy efficient technologies and practices—both currently available and under development—

that could save energy if adopted by industry. Energy

efficiency can be improved through cost-effective use

general housekeeping and maintenance programs, 2)

management and accounting systems, 3) improved

equipment and procedures for existing production methods, 4)

new and better production methods, and 5) product changes

(table 3-1). Most of the equipment and process enhancements are

specific to particular industries, but several (e.g., heat recovery

technologies, high-efficiency motors and variable-speed drives,

sensors and controls, and cogeneration) have applications in

many industries. These generic technologies are particularly

attractive targets for government policies.

The costs and benefits of energy efficiency improvements vary

widely. Minor operational changes, such as housekeeping and

maintenance, are typically the cheapest, easiest to implement,

and least risky, and usually, though not always, yield the smallest

energy and cost savings. Production equipment changes and

energy conservation add-on technologies involve larger investments, typically $100,000 to tens of millions of dollars, and may

or may not be justified by reduced energy costs alone. Major

process changes often require building a new facility, at costs

typically exceeding $100 million, and are usually justified only

by strategic, market development concerns. Energy savings are

rarely sufficient to justify investments of this magnitude.

Potentially, the greatest increases in efficiency will come not

from direct efforts to reduce energy consumption but from

pursuing other economic goals like improved product quality,

lower capital and operating costs, or specialized product markets.

Many projects undertaken for

efficiency gains as a secondary

nonenergy reasons yield energy

consequence. For example, glass

65
66 | Industrial Energy Efficiency

Table 3-l—Technologies and Practices Affecting Industrial Energy Intensity

Categories Examples

Housekeeping Piping system insulation; steam leak repairs.

Maintenance Equipment tune up to keep it operating near design efficiency.

Energy management and accounting systems Energy use monitoring and control equipment.

Equipment changes

Equipment improvement Use of high-efficiency motors; use of adjustable-speed drives.

Equipment sizing Use of smaller, less energy-consuming equipment.

Fuel switching Use of gas vs. coal boilers; use of steam vs. electric drives.

Process refinements

Equipment integration Use of heat exchangers; use of PINCH techniques at plant design

and retrofit stages.

Cogeneration Balanced steam and electricity demands.

Yield improvement and quality control Reduced scrap and rejects.

Waste minimization improved process control or process innovation.

Recycling Use of scrap in the paper, steel, and aluminum industries.

Raw materials substitution Use of higher sulfur feedstocks in the petroleum industry.

Computerized controls and sensors improved product yield, quality, and rests.

Process change

Same categories as for Thin slab casting of steel.

equipment changes and Use of direct steel making techniques.

process refinements (above);

extent of the changes and the

technological and economic risks

are greater.

Product shifts

Amenity demand Shifts away from defense activities.

Product demand Expansion of electronics in personal and business communications.

Domestic production/trade Use of domestic steel vs. imported steel.

Product refinement Use of unleaded gasoline.

Materials substitution Use of plastics and aluminum for steel in automobiles.

Product quality and performance Use of thinner and higher quality steel.

SOURCE: Office of Technology Assessment, 1993.

producers adopted the energy-saving float proc- quality or specialized markets can diminish

ess primarily for the production flexibility that it energy efficiency. Such is the case in petroleum

offered.1 Steelmaker have installed continuous refining where several factors have combined to

casters more for the improved product yield than increase

the energy savings. Metal stamping plants have product

implemented new techniques for cushioning presses capacity

not for the 10 percent energy savings, but for the quality;

more consistent products and lower maintenance products

costs. 2 Sometimes, however, pursuing improved relative to heavier products (residual oil); and 4)

the energy requirements per unit of

in recent years: 1) the reduction in

utilization; 2) the decline in crude oil

3) the increasing demand for lighter

(gasoline and liquefied petroleum gases)

1 Henry C. Kelly, Peter D. Blair, and John H. Gibbons, “Energy Use and Productivity: Current Trends and Policy Implications, ” Annuul

Review of Energy, vol. 14, pp. 321-352, 1989.

2 Marc Ross, “Improving the Energy Efficiency of Electricity Use in Manufacturing, “ Science, vol. 244, pp. 311-317, Apr. 21, 1989.
the requirements for enhanced products such as

reformulated gasoline.

At any given time, the mix of technologies used

by industry ranges from outdated to state-of-theart. Energy efficiency improves as older facilities

are replaced with state-of-the-art ones.3 In the

petroleum refining, chemical, pulp and paper,

steel, aluminum, cement, and glass industries,

most state-of-the-art technologies use 12 to 38

percent less energy than the mix of processes

currently used (table 3-2).4 This comparison does

not imply that these industries would find it

economical to bring all their existing plants to

state-of-the-art levels at once, but instead shows

the energy savings that can be expected as plants

are modernized. Energy efficiency also improves

as advanced technologies are developed to become the state-of-the-art of tomorrow.5 Advanced

technologies, not yet commercialized, could possibly reduce energy use in the various processes

by an additional 9 to 35 percent.

GENERIC IMPROVEMENTS

1 Housekeeping, Maintenance, and

Accounting6

The first step in improving energy efficiency in

industry is good housekeeping. Among the activities in this area are:

Chapter 3-improved Technologies and Practice | 67

●

●

●

●

●

●

carrying out inspections to encourage conservation;

instituting training programs on operating

energy-intensive equipment;

scheduling energy-intensive activities;

turning off equipment when not in use;

installing and using energy monitoring equipment;

wrapping tanks and pipes with insulation; and

repairing leaks.

Housekeeping can often save surprisingly large

amounts of energy, particularly in older plants.

Indeed these activities have been credited with

significant portions of the efficiency gains achieved

in the 1970s and 1980s.7 Many manufacturers had

housekeeping programs years ago, but have

slacked off recently, because they believe ‘‘it

doesn’t pay” and they cannot afford the staff to

do the work.

Achieving substantial savings from housekeeping requires a well-qualified staff for carrying out energy conservation activities and top

management leadership and support. Employee

participation in energy conservation has proved

successful at some manufacturing plants. This

method can include systematic solicitation of

employee suggestions for technical changes (e.g.,

using quality circles).8

Equipment maintenance is another important

measure for improving efficiency. Equipment

operates most efficiently when operating near

s Throughout this chapter, state-of-the-art manufacturing technologies refer to the best available technologies with demonstrated technical

feasibility in actual production environments, such as in a commercial or large-scale plant. Some of these technologies that are at an early stage

of commercialization may require additional development efforts to become suitable for widespread industry adoption.

4 The ethylene process, which is nearly at state-of-the-art levels now, is excluded from this comparison range. Note that the energy figures

in table 3-2 and in the industry specitlc portions of this chapter are calculated with purchased electricity valued at the primary rate of 10,500

Btu/kWh, because of how the figures were reported in the original sources.

5 Throughout this chapter, advanced manufacturing technologies refer to those technologies that are under development or have been

seriously considered in concept and are expected to have an impact on the industry over the next 10 to 25 years.

6 Marc Ross, ‘Energy Use in Manufacturing, ’ contractor report prepared for the U.S. Congress, OffIce of ‘lkchnology Assessrr,en6 October

1988.

7 U.S. Congress, Office of Technology Assessment, Industrial Energy Use, OTA-E-198 (Washington, DC: U.S. Government Printing

Office, June 1983). Marbek Resource Consultants, Energy Demand in Canada, 1973-1987: A Retrospective Analysis (prepared for Energy,

Mines, and Resources, Ottaw& Canada: August 1989).

8 General employee participation in efforts to enhance product quality and productivity can also contribute to improved energy efficiency.
68 | Industrial Energy Efficiency

Table 3-2—Energy Use by Major Energy Consuming Industrial Processesa

State-of-the-art Advanced

Process Current b (Year) (2010) (2010)

Petroleum refining. . . . . . . . . . . . . . . 602

Miscellaneous chemicals

Sulfuric acidc . ................-1,860

Nitrogen and oxygend. . . . . . . . . . . 3,730

Ethylene. . . . . . . . . . . . . . . . . . . . . . 58.2

Pulp and papere

Chemical process (kraft). . . . . . . . . 39.4

Mechanical (stone groundwood). . 35.1

Semichemical. . . . . . . . . . . . . . . . . 36.6

Thermomechanical. . . . . . . . . . . . . 40.9

Chemimechanical (nonsulfur). . . . —

Biological. . . . . . . . . . . . . . . . . . . . . —

Repulping recycled paper. . . . . . . 23.8

Steel f

Basic oxygen process. . . . . . . . . . . 26.0

Electric process (scrap-based). . . 15.4

Direct steelmaking. . . . . . . . . . . . . . —

Aluminum

Alumina and aluminum production. 196

Aluminum smelting only. . . . . . . . . 160

Cement ’J. . . . . . . . . . . . . . . . . . . . . . . 5,070

Glass

Flat glass. . . . . . . . . . . . . . . . . . . . . 15,0

Container glass. . . . . . . . . . . . . . . . 15.6

Pressed and blown glass, . . . . . . . 27.4

Fibrous glass. . . . . . . . . . . . . . . . . . 24.5

(1989)

(1988)

(1985)

(1988)

(1985)

(1983)

(1980)

(1988)

(1985)

405

-2,120

3,150

57.4

26.7

29.0

26.5

31.9

—

—

18.5

16.1

10.2

—

162

135

3,780

10.3

12.1

22.8

21.6

363

-3,230

2,820

52.4

20.0

—

20.5

28.2

13.9

23.2

14.8

—

8.8

14.0

137

110

3,110

6.9

8.9

15.2

14.0

thousand Btu/barrel of crude oil

thousand Btu/ton of sulfuric acid

thousand Btu/ton of oxygen and nitrogen

million Btu/ton of ethylene

million Btu/ton of paper

million Btu/ton of finished steel

million Btu/ton of aluminum

thousand Btu/ton of cement

million Btu/ton of glass

a This table is a summary of detailed data presented in tables 3-4, 3-6, 3-7, 3-10, 3-12, 3-14, and 3-16.

b Average of currently implemented technologies.

C figures for sulfu~c *M are negative because the pr~~tion process is exothermi~it produces more energy than it consumes.

d Assumes production of 58 percent nitrogen and 42 percent oxygen.

e Mix of paper pr~Kts is 8 percent newsprint, so percent printing and writing paper, 4 percent idu.strial paper, 7 percent tiSSIJe paper, 49 perCWlt

paperboard, and 2 percent construction paper.

f Steel figur~ em~~: 65 percent continuous -sting ad 35 percent ingot casting in the Current Case; 95 percent continuous Casting and 5 perCf$llt

ingot casting in the state of the art case; and 68 percent strip casting, 27 percent continuous casting, and 5 percent ingot casting in the advanced

case, Mix of steel products is 21 percent hot rolled sheet and strip, 38 percent cold rolled sheet and strip, 9 percent heavy plate, 7 percent shapes

and rails, and 25 percent bars and wire rods.

9 Cement produced from domestic clinker.

NOTE: The energy values in this table-and in tables 3+, 3-6,3-7, 3-10,3-12,3-14, and 3-16-are unlike most others in this report in that they

account for purchased electricity at 10,500 Btu/kWh. This inconsistency arises because of how the figures were reported in the original sources. That

is generation and transmission losses are included.

SOURCE: Compiled from sources in tables 3-4, 3-6, 3-7,3-10, 3-12, 3-14, and 3-16.

design specifications. Poorly maintained equip- to wear. One study of 84 large pumping systems,

ment deviates from these specifications, and primarily in pulp and paper mills in Sweden and

suffers large efficiency losses. For example, many Finland, found that wear alone had reduced

pumps and fans are poorly maintained, and average pump efficiencies by 14 percentage

efficiencies can decrease markedly over time due points compared with their original performance.9

g EriC D. ~Son md LMS J. NilSSo~ “Electricity Use and Efficiency in Pumping and Air Handling system,” paper presented at the

American Society of Heating Refrigeration and Air Conditioning Engineers Annual Meeting, Indianapolis, IN, June 1991.
Chapter &lmproved Technologies and Practice 169

General maintenance is needed to keep equipment

and processes operating at specifications.

Accounting systems can also be used to help

motivate energy conservation activities. In many

plants, energy costs are charged to overhead

accounts not to the individual departments using

the energy. This gives department managers little

incentive to search for energy savings. Efficiency

improvements can be encouraged with accounting

systems that more accurately allocate energy

costs within plants.

1 Energy Management Systems10

Leaving on electrical equipment between production shifts and when production is below

capacity is common practice in industry. While it

is sometimes more energy efficient to leave

equipment on rather than shut it down and start it

up again, turning equipment off or down usually

saves energy. Energy management systems can

be used to systematically turn off or turn down

process equipment, lights, and fans. Microprocessors are connected to major energy distribution

lines and/or equipment to record energy use and

control the equipment. Such systems have not yet

been installed in most factories.

Full scale energy management systems can be

expensive initially, because of the costly installation of wiring and switching devices required. In

some cases, auxiliary equipment may also be

needed. For example, turning off sections of a

compressed air system that are not in use requires

satellite compressors to serve equipment that

needs air around the clock, and/or check values

and controls to isolate sections of the system. The

typical cost of an energy management system in

an automobile plant with a load of 100 million

kWh per year is about $750,000, with energy

savings of about 10 percent.11 Exact costs and

savings are, of course, site specific.

~ Motor Drive12

Motor drive, the largest functional use of

electricity in industry, accounts for about twothirds of the sector’s electricity use. Motors are

used to drive a variety of applications, including:

● pumps, fans, and compressors used in fluid

processing, heating, ventilation, and air conditioning (41 percent of electricity used for

motor drive in manufacturing firms);

. materials processing equipment used for

crushing, grinding, cutting, mixing, and

forming (32 percent); and

. materials handling machinery such as

cranes, conveyors, elevators, and robotics

(27 percent) .13

Efficiency improvements on the order of 30

percent are possible in these applications through

the use of: l)high efficiency motors; 2) adjustable

speed-drives; 3) power conditioning; 4) better

pumps, fans, compressors, and other drive equipment; and 5) better system design.

MOTORS

Standard motors, when well maintained and

operated near their design points, convert electricity input into mechanical output with average

technical efficiencies of 77 to 94 percent depend10 Marc Ross, “Energy Use in Manufacturing,” op. cit., footnote 6.

11 Marc Ross, “Improving the Energy Efficiency of Electricity Use in Manufacturing,” op. cit., footnote 2.

12 Dmm from U.S. Congess, Office of Technology Assessment, Fueling Development: Energy Technologies for Developing Counm”es,

OTA-E-516 (Washington, DC: U.S. Government Printing Office, April 1992). Principal sources for the original were: Samuel F. Baldw@

‘‘Energy-Efficient Electric Motor Drive Systems,’ Thomas B. Johansso@ Birgit Bodhmd, and Robert H. Williams (eds.), Elecm”city: Eficient

End-Use and New Generation Technologies, and Their Planning Implications (Lund, Sweden: Lund University Press, 1989), pp. 21-58;

Samuel F. Baldwin+ “The Materials Revolution and Energy Efficient Electric Motor Drive Systems, “ Annual Review of Energy, vol. 13, 1988,

pp. 67-94; and Samuel F. Baldwin, “Energy-Efficient EIwtric Motor Drive Systems, ” Princeton University, Center for Energy and

Environmental Studies, Working Papers No. 91,92,93, and 94, February 1988.

13 EleCtiC power Research Lnstitute, EZectric Motors and Dn”ves: Markets, Trends, and Applications, Report No. TR-KXM23 (p~o Alto,

CA: Electric Power Research Institute, June 1992).
Figure 3-l—Efficiency, Cost, and Cost Savings of

200

150

100

50

Average capital cost - - -

0 I 7 0

1 10 100 250

Motor size (horsepower)

— High efficiency Rewind

Standard

High Efficiency, Standard, and Rewound Motors

1 10 100

Motor size (horsepower)

This figure shows that for all sizes of motors, high efficiency models have a higher capital cost than standard models. The additional

capital cost generally decreases as motor size increases. Costs are given per horsepower of motor capacity. Large motors cost

more in total, but less per unit capacity. Annual cost savings are calculated based on a cost of electricity y of $.047/kWh, and a duty

cycle of 5,000 hours per year with a load factor varying from 50 percent for the smallest motor sizes to 90 percent for the largest

sizes.

SOURCE: OTA based on data from Steven Nadel, Michael Shepard, Steve Greenberg, Gail Katz, and Anibal T. de Almeida, Energy-EtWent Motor

Systems: A Handbook on Tehnology, Program, and Policy Opportunities (Washington, DC: American Council for an Energy-Efficient Economy,

1991),

ing on their size (figure 3-1),14 High efficiency

motors operate at 84 to 96 percent technical

efficiency.

High efficiency motors use improved design

and better quality materials to decrease electrical

(resistance), magnetic (core), mechanical (windage and friction), and stray losses. Electrical

losses, caused by electrical resistance in wires,

can be reduced by using lower-resistance materials (e.g., copper instead of aluminum) for stators

and rotors. Magnetic losses can be reduced by

using larger cross-sections of iron in the stators

and rotors, thinner laminations, and improved

magnetic materials. Mechanical losses can be

decreased by using improved bearings and fan

design. Stray losses can be reduced by optimal

design and careful manufacturing.l5 Further improvements may result from advances such as

high-performance permanent magnet motors.

Though high efficiency motors typically cost

30 percent more than standard motors, the decreased electricity usage can offset the higher

capital costs in a short time. An industrial motor

can use electricity worth about four times its

capital cost annually.l6 Changing to high efficiency models yields larger efficiency improve14 me efficiencies of particular brands of motors vary from these averages by several percentage Points.

15 Steven Nade], Michael Shepard, Steve Greenberg, Gad Katz, and Anibal T. de Ahneida, Energy -Efi”cient Motor Systems: A Hatibook

on Technology, Programs, and Policy Opportunities (Washingto% DC: American Council for an Energy-Efficient Economy, 1991).

16 Owm~g5,~h/vat 70 ~Eent load, a 90 percent efticient motor annually consumes 2,900 kwh/hp. At W.047/kwh ~s costs $136~P.

In comparison, motors cost roughly $34/hp. Note that the unit kilowatt (kW) is used to refer to input power, while the unit horsepower @p)

is used to refer to output power. One horsepower is equal to 0.7457 kW.
Chapter 3-improved Technologies and Practice 171

ments and percentage cost savings in the small

motor sizes, but greater absolute cost savings in

the large sizes.

For motors larger than 5 horsepower (hp), high

or premium efficiency models accounted for

approximately 10 percent of sales in 1985. This

market penetration is expected to increase dramatically with the institution of the motor standards set forth in the Energy Policy Act of 1992.17

Larger motors are often rewound, not replaced,

when they malfunction. Rewinding is initially

less expensive than purchasing a new motor, but

ultimately costs more because of degraded efficiency. The efficiency of a rewound motor is

typically about 2 percentage points below that of

a new standard motor (figure 3-1). Work is

needed to find methods of reducing core damage

caused by the high temperatures that arise during

motor rewinding.

POWER CONDITIONING

Motors and other electric devices operate most

efficiently when the power they receive is the

proper voltage, phase balanced, and distortionfree. However, these conditions may not always

be met, because of imperfections in the power

supply. Power may arrive from the grid in less

than perfect condition, or it can become distorted

by malfunctioning or poorly arranged equipment

within industrial plants. Facilities can keep their

power in good condition by repairing faulty

end-use equipment or by installing specialized

power-conditioning equipment to improve the

power factor, reduce line voltage fluctuations,

balance three-phase power, and control line

harmonics.l8 These tuneups can offer small, but

cost-effective gains in energy efficiency, equipment performance, process control, and reduced

downtime.

DRIVE CONTROL: ADJUSTABLE-SPEED DRIVES

In many motor drive applications, control of

motor speed, startup, and torque (rotational force)

is needed to match the drive power with the load.

“Motor speed control offers the single largest

opportunity for energy-savings in drivepower

systems. ’ 19

Drive speed can be easily controlled using

direct current (DC) motors, but most industrial

processes use fixed-speed alternating current

(AC) motors because of their increased reliability

and lower costs, In fluid flow applications,

motors—and associated fans, pumps, and compressors—are run at constant speed and the flow

is controlled with mechanical devices such as

inlet vains, outlet dampers, and throttling valves.

This is analogous to driving a car with the gas

pedal floored, and controlling the speed with the

brake. In other applications, such as mills and

conveyors, various mechanical, electromechanical, and hydraulic methods are used to control the

motors’ speed. Most of these control techniques

are plagued with problems, including high cost,

low efficiency, or poor reliability .20 Industrial and

commercial pumps, fans, and compressors, for

example, have estimated average losses of 20 to

25 percent or more due to throttling or other

inefficient control strategies.

Recent advances in power electronics have led

to a new form of motor control, electronic

adjustable-speed drives (ASDS).21 These devices

can precisely control the speed of AC motors,

17 me Energy policy Act of 1992 is discussed in chpter 1.

18 Nadel et al., op. cit., footnote 15; and William J. McDonald ~d Hertm N. Hickok, ‘‘Energy Imsses in Electrical Power Systems, ’ IEEE

Transactions Industrial Applications, vol. IA-21, No. 4, pp. 803-819, 1985.

19 Nadel et al., op. Cit., fOOtIIOte 15.

20 Ibid.

21 me elWUonicASD is tie most impo~tnewmotor conbol technology, but not the otdy one. Other mehds of ~n~ol include s~uencing

controls for pumps and fans, lead-lag control systems for compressors, feedback control systems that regulate rather than bypass flow, and

power factor controllers that can reduce energy use of small motors in grinders, drills, and other equipment that idle with zero load much of

the time. Nadel et al., op. cit., foomote 15.
72 I Industrial Energy Efficiency

thus eliminating the need for DC motors and

wasteful mechanical control mechanisms. ASDs

are not needed for constant-speed full load

applications, so no savings are realized in these

cases.

In addition to enhancing efficiency, ASDs

reduce the wear on equipment and improve the

operating performance of motor drive processes.

They reduce equipment wear and extend equipment life by:

. avoiding the back pressures generated by

conventional systems;

● permitting constant lubrication of bearings;

● allowing operation at reduced speeds; and

● permitting slow, controlled startups and

shutdowns to reduce electrical and mechanical stresses on motor drive equipment.

They improve performance by:

●

●

●

●

●

controlling manufacturing equipment and

processes better than conventional systems

can;

isolating the motor from the power line,

which can reduce problems caused by varying or unbalanced line voltage;

providing a “ride through’ capability if

there is a power failure for a few cycles;

permitting operation at higher speeds than

the 60-Hz line frequency allows; and

being easier than conventional control devices to retrofit to existing equipment.

ASDs are not without drawbacks. In particular,

they can distort the shape of the normal voltage

waveform in the power grid. The harmonic

distortion can reduce the efficiency of motors and

transformers, can also interfere with computers

and communications equipment. Techniques are

available to control this problem, and further

work to lower the costs of control is ongoing.

With proper design upfront-as opposed to onsite

remediation after installation-harmonic control

is relatively low cost and straightforward.

ASDs currently cost about $90 to 360per hp for

motors larger than 10 hp, and can result in energy

savings of 15 to 40 percent in many cases.22 The

capital costs of ASDs have declined some 7 to 12

percent in real terms over the past 4 years.23 Costs

are likely to continue declining slowly as ASD

technology and manufacturing processes improve, and as greater economies of scale are

achieved.

The industrywide electricity savings possible

by the use of ASDs are not yet well understood.

Total savings will depend on a variety of factors,

including the rates of cost reduction and market

penetration of ASDs, and the types of part- or

variable-loads driven. Further, the individual

savings achieved may depend on the development

of new engineering design rules that fully exploit

the opportunities presented by ASDs.

ASSOCIATED EQUIPMENT

The energy efficiency of motor driven systems

can often be improved by using better designed

and better built pumps, fans, compressors, pipes,

ducts, fittings, and materials processing and

handling equipment. Pumps and fans, the most

common motor driven equipment, can be made

more efficient by reducing internal friction

through smoother and more carefully contoured

internal surfaces, tighter tolerances, and higher

quality bearings. Further efficiency gains are

often possible by operating pumps at higher

speeds. Friction and the corresponding energy

losses can be reduced in piping and systems by

using smoother or larger diameter conduits and by

careful choice and spacing of the fittings.

MOTOR SYSTEMS DESIGN

Motors and their power conditioning apparatus

drive, control devices, and associated equipment

form large and complex systems. Better design of

these systems can be the source of significant

energy savings.

22 N~el et al., op. cit., footnote 15.

23 Eric D. bon and Las J. Nilsso~ op. cit., footnote 9.
—

Chapter 3-improved Technologies and Practice 173

Component oversizing is a common problem

among motor drive systems. Larger than needed

equipment is often used to ensure that systems

can meet the demands placed on them at every

stage of the process. For example, motors are

oversized: to handle starting electrical, mechanical, and thermal stresses, particularly with highinertia loads; to provide a safety margin for the

worst-case load over their lifetimes; and occasionally to handle plant expansion or be widely

interchangeable within a plant. Motors and other

components may be also oversized partly to

compensate for difficulties in accurately predicting system flow rates and friction factors in

advance, and to allow for the effect of the buildup

of deposits on duct and pipe walls over time. The

increased energy and capital costs of the larger

equipment are perceived to be less than the risk of

equipment failure. In manufacturing, for example, average electricity costs in the United States

are equivalent to just 1.6 percent of total production costs;24 the cost of motor failure and unplanned shutdown of the entire process line can be

a much more severe penalty .25

The inefficiencies of equipment oversizing are

compounded because of the interconnectedness

of motor drive systems. When each successive

element of a system is sized to handle the load

presented by the previous component plus a

safety margin, oversizing can quickly become

excessive. The losses of the entire system can be

great (figure 3-2).

The reasons for equipment oversizing are often

codified into standard engineering design rules,

such as manufacturing safety margins. The flexibility of ASDs may allow some relaxation of the

design rules that lead to extreme oversizing,

potentially reducing both energy use and capital

investment.

I Steam Production and Cogeneration

Steam is used throughout industry to heat

fluids and materials, and in some processes to

modify the pressure characteristics of fluids and

gases. Smaller quantities of steam are used to heat

plant buildings. Steam is typically generated in

boilers, some of which are linked to turbine and

generator sets in order to cogenerate electricity.

The electricity is used within the plant or sold

onto the grid. In 1985, industry consumed 7.1

quads of energy to generate steam and electricity

(70 billion kWh).26 In that year, the nearly 37,000

industrial boilers had a combined capacity of 1.5

trillion Btu/h steam. The largest steam producers

and electricity cogenerators are the process industries (i.e., pulp and paper, chemicals, petroleum

refining, and food) and primary metals producers.

They account for 79 percent of industrial boiler

capacity and 94 percent of industrial cogeneration

of electricity (figure 3-3).

Industry uses a variety of fuels to boil water

into steam. The most heavily used are combustible process wastes and byproducts such as wood

wastes and black liquor in pulpmaking, still gases

in petroleum refining, coke oven and blast furnace

gases in steelmaking, and various wastes in beer

brewing and sugar processing. Process wastes and

petroleum byproducts account for 42 percent of

fuel use in steam production and cogeneration,

but are the primary fuels in only 12 percent of the

population of industrial boilers. They are used

only in a few large industries where their value as

fuel exceeds that of their reuse as process

materials or feedstocks. Natural gas is the most

24 U.S. Dep~ent~f c~mmer~~, B~rea~ of tie Census, 1990 Ann~i Su~eyof Manufacmres :Statisticsfor[ndustry Groups andIndusm”es,

Report No. M90(AS)-1, March 1992.

25 AD. LIMe, ~c., Energy E’”ciencj, ~~ E/ecm”c Motors, U,S. Dep~ent of Commerce, ~SpB-259 129 (Springfield, VA: National

lkchnical Information Service, 1976).

26 Except where not~, ~1 fiwe~ in this section pe~ng t. fiel use, boflm mpaci~, ad cogenemtion capacity are based on 1985 data

from Gas Research Institute, Industrial Natural Gas Markets: Facts, Fallacies and Forecasts (Chicago, IL: Gas Research Institute, March

1989).
Figure 3-2—Energy Losses in Hypothetical Standard and Efficient Electric Motor-Driven Pumping Systems

Equipment efficiencies “ - 7

Standard Efficient

Standard Efficient

ASD NA 95

Motor 90 93

Shaft coupling 98 98

Pump 75 80

Throttle valve 66 100 7 “ “

-

Piping system 35 56

39%

15%

Power ASD Motor Shaft Pump Throttle Pipinq Power

input coupling valve system remaining

Stage of a hypothetical pumping system

KEY: ASD - adjustable speed drive.

This figure shows the useful energy remaining at each stage of the pumping systems. The efficiency profiles are those of

hypothetical pumping systems, and do not represent industrywide averages. The energy losses that occur in the generation,

transmission, and distribution of electricity are not included.

SOURCE: Adapted from Samuel F. Baldwin, “Energy-Efficient Electric Motor Drive Systems,”Thomas B. Johansson, Birgit Bodlund, and Robert

H. Williams (eds.), Electricity:Eflicient End-Use and New Generation Technologies Their Planning Implications (Lund, Sweden: University Press,

1989), pp. 21-58.

used commercial fuel for steam production and

cogeneration. It is also the fuel used in the largest

number of boilers. Smaller amounts of coal and

fuel oils are also used to produce steam (figure

3-4).

Many industrial facilities installed dual- and

multi-fuel steam systems after the oil shocks of

the 1970s. Approximately 50 percent of boilers

are now capable of using more than one fuel.

Dual- and multi-fuel systems are a major source

of industry’s fuel switching capabilities. They

provide flexibility to react to market conditions

and leverage to obtain favorable fuel contracts

with utilities.

BOILERS AND STEAM TURBINES

Steam is produced in four basic equipment

configurations: 1) steam-only boilers, 2) steam

turbine cogeneration sets, 3) combustion turbine

cogeneration sets, and 4) combined-cycle cogeneration sets.27 The first two configurations incorporate boilers. Large boilers (50 million Btu/h or

larger) are based on water tube technology and

used to satisfy plants’ basic requirements for

process and power steam. Smaller boilers are predominantly fire tube units used for space heating

and for backup or smaller process requirements.28

In a steam-only setup, the steam is piped

directly from the boiler to its point of use.

Steam-only boilers accounted for 60 percent of

the total fuel used for industrial steam and

electricity production in 1985. In a steam turbine

cogeneration system, steam from the boiler is

expanded in a steam turbine that turns a generator

to produce electricity. Topping cycle cogenera27 Diesel ~n~e~ cm d~o & ~~~ ~ Cogeneration systems, gener~y h appficatio~ 30 kw or srnder. They culTerldy aCCOUnt fOr 1eSS Ihilll

1 percent of industrial cogeneration capacity.

28 RCG~agla, B~lly, ~c,, co~u~tion system Technology O&Application Assessment: I&ustrial Boiler Combustion Systems ((%kXigO,

IL: Gas Research Institute, October 1988).
Chapter 3-improved Technologies and Practice 175

Other

Figure 3-3—Electricity Cogeneration in

Manufacturing industries, 1988

Total: 102 billion kWh

Petroleum re

11%

Primary metals

60/0

Food

4%

 manufacturi

60/0

Pulp and paper

40%

SOURCE: U.S. Department of Energy, Energy Information Administration, Manufacturing Energy Consumption Survey (MECS), Consumption of Energy 1988, Report No. DOE/EIA-0512(88), May 1991.

tion systems, the most widely used configurations, run the steam first through the generator

and then to the process (figure 3-5). Bottoming

cycle systems run the steam through the generator

after it has been used in the process. In 1985,

steam turbine systems accounted for 35 percent of

fuel use for industrial steam production and

cogeneration and 68 percent of the 18,700 MW of

installed cogeneration capacity.

COMBUSTION TURBINES AND

COMBINED CYCLE SYSTEMS

Combustion turbine and combined cycle cogeneration systems, which are fueled primarily by

natural gas, rely on heat recovery units rather than

boilers to produce steam. In a combustion turbine

system, gas is burned in a turbine to turn an

electricity generator and the exhaust gases are run

through a heat recovery unit to generate steam

(figure 3-5). In a combined cycle system, which

is a hybrid of the combustion turbine and steam

topping technologies, steam produced in combustion cogeneration is run through a steam topping

turbine to produce additional electricity before it

is piped to the process stream. Combustion

turbine and combined cycle systems tend to be

used where the ratio of electricity generated to

steam produced is relatively high. In 1985, these

systems accounted for 5 percent of fuel use for

industrial steam production and cogeneration and

32 percent of the installed cogeneration capacity.

Their share of cogeneration capacity grew from

about 15 percent in 1980, because over 60 percent

of the 6,700 MW of capacity added during 1980

to 1985 was combustion turbine or combined

cycle.

COGENERATION

The principal technical advantage of cogeneration systems is their efficiency of fuel use. In

producing both electrical and thermal energy

together, cogeneration systems consume less fuel

than is required to produce both forms of energy

Figure 3-4-Fuel Use in Steam Raising

and Cogeneration, 1985

Total: 7.1 quads

 Coal and coke

15%

fuel oil

7%

wastes

Petroleum byproducts 270/.

159’0

NOTE: Petroleum byproducts are principally still gases.

SOURCE: Gas Research Institute, Industrial Natural Gas Markets:

facts, Fallacies and Forecasts (Chicago, IL: Gas Research Institute,

March 1989).
76 | Industrial Energy Efficiency

Figure 3-5-Flowchart of Steam Turbine and Combustion Turbine Cogeneration Systems

Steam turbine, topping cycle

Low-pressure steam

Fuel

I

I

Boiler Condensate

Combustion turbine with a heat recovery steam unit

i \

SOURCE: Energetic, Inc., Industry Profiles; Steam Generation and Cogeneration, prepared for U.S. Department of Energy, Office of Industrial

Technologies, Report No. DE-ACO1-87CE40762, December 1990. Original cited source is SFA Pacific, Inc.

separately, though more than is needed to produce

either form alone.29

Cogeneration and other onsite electricity generation technologies have been used in industry

since before the turn of the century. They were

originally used to counter the expense, unreliability, and unavailability of electricity provided by

utilities. When utility service improved, electricity purchases from utilities grew faster than onsite

generation. As a result, onsite generation declined

in importance.

Cogeneration capacity has grown rapidly since

1980, because of the incentives established by the

Public Utility Regulatory Policies Act (PURPA)

and the reversal in the long-term decline in real

electricity prices. In fact, cogeneration has been

the fastest growing industrial application for heat

and power. Cogeneration capacity in the manu29 us. conw~~, office of ~c~olom Asses~ent, I~ust~al ad Comrcial C!ogeneration, OTA-E-192 (Washington, ~: U.S.

Government Printing OffIce, February 1983).
Chapter 3-lmproved Technologies and Practice | 77

Table 3-3-Characteristics of State-of-the-Art Cogeneration Systems

Steam to

Typical Simple cycle electricity Overall system

unit size heat rate ratio efficiency

Technology (MW) (Btu/kWh) (lb/kWh) (percent)

Steam topping turbine

Backpressure only. . . . . . . . . . 0.5-60 14,000-40,000 10-30 75-85

Condensing with extraction. . . . 10-100 10,000-40,000 0-30 70-80

Combustion turbine. . . . . . . . . . . . 0.5-100 10,000-15,000 2.5-10 65-75

Diesel engine. . . . . . . . . . . . . . . . . 0.1-30 8,500-11,500 1-3 75-85

SOURCE: Energetic, Inc., Industry Profiles: Steam Generation and Cogeneration, prepared for the U.S.

Department of Energy, Office of Industrial Technologies, Report No. DE-ACO1-87CE40762, December 1990.

facturing industries grew from 12,000 MW in

1980, to 18,700 MW in 1985, to about 25,000

MW by the end of 1989.30 In these industries,

electricity cogeneration rose from 68 to 102

billion kwh during 1980 to 1988. In 1988,

cogeneration accounted for about 12 percent of

manufacturers’ electricity needs.31

PURPA made electricity sales onto the grid

were more lucrative than they had been before.

This increased the popularity of combustion turbine and combined cycle cogeneration technologies,

because they produce greater amounts of electricity per unit of steam than steam turbine systems.

ENERGY EFFICIENCY

The energy efficiency of thermal systems can

be improved by: developing and implementing

better steam production and cogeneration technologies; properly maintaining steam distribution

systems; increasing the use of wastes and byproducts as fuels; and increasing the effectiveness of

steam and other thermal processes. Uncertainties

regarding the emissions requirements of steam

generation systems and the relative economics of

purchased vs. self-generated electricity will play

large roles in the choice of new technologies.

Use of more efficient boilers, economizers, and

other heat recovery systems improves the energy

efficiency of steam production and cogeneration

systems. 32 State-of-the-art cogeneration systems

have efficiencies ranging from 65 to 85 percent

(table 3-3). Those systems that produce large

amounts of steam relative to electricity generally

have the higher efficiencies, while those that

produce greater proportions of electricity have

lower efficiencies. Advances in combustion turbine technologies (e.g., steam injection) and

combined cycle systems may be able to raise the

efficiencies of the more electricity-focused systems to levels comparable to those that emphasize

steam.

Energy losses can also be reduced with proper

attention to steam distribution systems. This

includes maintenance of steam traps and in30 FiWe~ fOr 19go ~d 1985 Me from Gas Rese~ch ktitute, op. cit., footnote 26. Figure for 1989 iS hm fitigetics, ~c., I~~tuProfiles:

Steam Generation and Cogenerarion, prepared for U.S. Department of Energy, Office of Industrial Technologies, Report No.

DE-AC01-87CE40762, December 1990.

31 me 1988 ~lec~clty profile of ~~ac~en w~: 728 billion km of pmc~ed e]ec~ci(y; 102 biwon kw of cogenerated eketricity;

10 billion kwh of electricity produced by onsite generators fueled with combustibles such as diesel and fuel oil; 3 billion kwh of electricity

produced onsite from renewable sources, primarily low head hydropower; 817 billion kwh of electricity consumed; and 24 billion kWh of

electricity sold. U.S. Department of Energy, Energy Information Adminis@ation, Manufacturing Energy Consumption Survey, Consumption

of Energy 1988, DOE~IA-05 12(88), May 1991.

32 ~onomlzem preheat ~ller feedwater using heat absorbed from the combustion products aft~ they ~ve passed ~ough the

steam-generating and super-heating sections of the boiler.
.—

78 | Industrial Energy Efficiency

creased insulation of steam carrying pipes. According to insulation manufacturers, there are

29,000 miles of uninsulated steam pipes in U.S.

factories. 33

Technologies, such as fluidized-bed reactors,

that can increase the potential use of low-value or

previously unusable process wastes and byproducts as fuels also enhance efficiency. Fluidized

beds facilitate greater use of solid and other

nonstandard fuels, reducing the need for premium

fuels while decreasing waste management problems. 34 Though more fluidized-bed units are

being used, industry still generally views these

systems as cost-prohibitive relative to conventional boiler systems.35

Steam is not always the most efficient method,

from a thermal standpoint, of delivering heat to a

process stream. There are trends toward less use

of steam and greater use of direct heat or vapor

recompression in manufacturing processes.

I Process Controls and Sensors36

Computerized process controls and sensors are

used to improve the performance of individual

pieces of equipment or entire processes. Examples

●

●

●

of such devices are:

burner controls that vary the air-to-fuel ratios

in combustion systems;

motor controls that adapt motors’ speeds to

their loads;

process controls that sense characteristics

such as temperature, chemical composition,

and flow rate and immediately optimize

them to maintain product quality, minimize

waste, or vary other process parameters; and

energy management control systems (discussed above).

Almost any process can be made more energy

efficient by measuring and optimizing parameters

at each point of the process. The primary advantages of process controls though, are productivity

and product quality, not energy efficiency.

The importance of process controls is increasing as microelectronics technology improves.

While industry has made a start in applying some

automatic controls (i.e., first generation burner

controls and process controls), opportunities remain for further applications. Improved sensors

have the potential for r-educing energy use in

individual industries by 5 to 20 percent, with

overall savings for the entire industrial sector of

10 percent.37

I Heat Recovery and Process lntegration38

Waste heat arises whenever fuel is burned or

process materials are cooled. Capturing the waste

heat and applying it to other processes has

enormous potential for saving energy in industry.

Recovered waste heat is commonly used in

producing steam, preheating materials (such as

water destined for a boiler or a product stream

destined for a heater or furnace), and preheating

of fuel or air destined for combustion. Industry

has implemented a great deal of waste heat

recovery since the oil shocks of the 1970s.

33 Cited ~ ~~ce t. save Energy, hneric~ COunCil for an Energy-Efficient Economy, Natural Resources Defense CO~Cil, ~d UniOn

of Concerned Scientists in consultation with tbe lkllus Institute, Amen”ca’s Energy Choices: Investing in a Strong Economy and a Clean

Environment: Technical Appendixes, 1992.

34 Ener~CtiCs, ~c., ~dus~ Profies: Steam Generation and Cogeneratio% op. cit.. foo~ote 30.

35 RCG~agler, Bailly, Inc., op. cit., fOOtiOte 28.

36 U.S. ConWe~~, Offlce of ~~olon Assessment, Energy Technology Choices: shaping OUrFUtUre, ()’M-13-493 (Washington, DC: U.S.

Government Printing Office, July 1991) and Changing by flegrees: Steps to Reduce Greenhouse Gases, OTA-O-482 (Washington DC: U.S.

Government Printing Office, February 1991).

37 us D~~ent of ~erg, Offlce of ~dus~~ fio~~, Research and Development in Sensor Technology, Report No.

DOE/NBM-7012450, April 1987.

38 us. con~e~s, Offlce of Wctiology Assessment, Energy ~echno~ogy Choices: shaping Our Future, op. cit., footnote 36.
Chapter 3-improved Technologies and Practice | 79

The two principal traditional approaches to

heat recovery are: 1) transferring heat from

high-temperature waste heat sources to more

useful media such as steam, and 2) raising the

temperature of low-temperature streams so they

can be useful as heat sources. Heat exchangers are

used for the former approach and vapor recompression and heat pumps are used for the latter.

Process integration is another method of preventing waste heat losses. This technique involves designing processes so that the number of

heating and cooling steps are minimized and that

heat sources are in close proximity to processes

where the heat can be used. ‘‘PINCH’ analysis is

a systematic design methodology that can be used

to further process integration, in either existing or

greenfield plants. It helps identify the optimum

process configuration for low energy use as well

as low capital and operating costs. PINCH also

helps reduce pollutant emissions and increase

production capacity.

I Catalysts39

Catalysts are used in many industries to facilitate chemical reactions. The petroleum refining

and chemicals industries rely heavily on catalysts

to perform a variety of functions, including

raising gasoline octane levels, removing impurities, and converting low-grade hydrocarbons to

higher value products. Improved catalysts can

increase chemical reaction rates and lower operating temperatures and pressures, thereby reducing

heating and compression requirements and improving energy efficiency.

The discovery and use of new synthetic zeolites

as catalysts have contributed to energy efficiency

gains in both the petroleum refining and chemicals industries. Considerable effort has been spent

to identify and develop unique zeolites for use in

synfuels production, petrochemical manufacture,

and nitrogen oxide (NO=) abatement.40 In the pulp

and paper industry, catalytic reactions can be used

to recover organic acids from waste streams.

Typically, the wastes are dumped because there is

no method for extracting the acids unless the

streams are first concentrated. A catalytic process

can convert the organic acids to hydrocarbons,

which can be easily separated from water.41

I Separation 42

Physically separating two or more components

in a mixture is one of the most energy-intensive

processes in the industrial sector. Separations

account for about 20 percent of industrial energy

use.

Distillation, the most common method of

separating liquids, is particularly energyintensive. However, distillation retrofit projects

offer significant potential for energy savings. For

example, a small increase in the number of trays

in a distillation column can reduce energy use.

Also, improvements in distillation control technologies result in lower energy consumption as

well enhanced product quality. It is estimated that

improvements in the distillation process can

reduce energy consumption by 10 percent.43

Alternative approaches to conventional distillation include vacuum distillation, freeze crystallization, solvent (liquid-liquid) extraction, membrane techniques, pressure swing adsorption, and

mercury or asbestos diaphragm electrolytic processes. The increased cost-effectiveness of turbocompressors and advances in vacuum pumps

and cryogenic technology have vastly increased

the relative attractiveness of both vacuum distillation and freeze crystallization. Crystallization is

39 Ibid.

40 O* Wdge Natlo~l ~~ratow, Energ~, Technology R&D: What Cou/d Make u D/fierence? VO], 2, Pm 1, ‘‘End-Use Ttxblo]o~, ”

ORNL-654411 V2/Pl, December 1989.

41 Ibid.

42 us, con~e~~, Offlm of Tec~o]ogy Assessment, E~erg}, Technology choices,. Shaping Our Future, Op. cit., fOOtIIOte 36.

.

43 O* ~~ge NatioMl ~~ratow, Energy Technology R&D: what Cou[d Make a Difference? Op. cit., fOOfllOte 40.
. .

80 I Industrial Energy Efficiency

Figure 3-6-Energy Use in the Production of Virgin

Glass Steel Plastic Aluminum

bottle can bottlea

can

a Theoretical value, plastic bottles are not now made of recycled

material.

SOURCE: Marc H. Ross and Daniel Steinmeyer, “Energy for Industry,”

Scientific American, vol. 263, No. 3, September 1990, pp. 89-98.

often a more energy efficient separation technique than evaporative (distillation) processes,

because freezing requires less energy (about 150

Btu/lb of water) than boiling (about 1,000 Btu/lb

of water).

One of the most promising alternative separation methods is solvent extraction. This technology uses specialized solvents to selectively dissolve components of liquid-liquid mixtures. Its

use in the chemicals industry is growing. In 1984,

the Office of Technology Assessment (OTA)

noted that the use of solvent extraction in a

synthetic fiber plant saved an estimated 40,000

barrels of oil equivalent annually.44

Membrane separations are based upon the

principle that components in gaseous or liquid

mixtures permeate membranes at different rates

because of their molecular characteristics. One of

the major advantages of membrane separation

systems is that they can improve product quality.

Gas separation is perhaps the largest growth

market for membrane technology, but there are

many other potential applications in the chemicals and food and beverage processing industries.

I Materials Use: Yield Improvements (Waste

Reduction) and Recycling (Waste Use)

Improved use of process materials holds large

potential for energy savings. Rejected (offspecification) products require nearly as much

energy and materials to produce as do salable

products. Process yield improvements result in

less waste generation and save the energy embodied in the rejected products. They also result in

large cost savings and extend production capacity. Continuous casting in the steel industry is an

example of a yield-improving technology that

saves large amounts of energy. Computer control

and sensors (see discussion above) are an integral

part of most yield-improving technologies.

Recycling scrap, whether from downstream

fabricators or postconsumer wastes, results in

energy savings in most industries. In aluminum

production, 5 percent as much energy is required

to melt scrap as to smelt the same amount of

molten metal from ore. Smaller, yet significant,

energy savings are possible for other materials

(figure 3-6).

Reuse of process wastes and byproducts for

their materials or energy value saves energy and

reduces disposal treatment costs. Use of traditionally discarded wastes, such as organic byproduct

gases, organics in waste streams, water, and steam

& us, CoWe~~, OffIce of ~c~olou Assessment US, vulnerabili~ to an Oil Import Cutiailment: The Oil Replacement Capability,

OTA-E-243 (Washington DC: U.S Government Printing Office, September 1984).
condensate,

nities.

PROCESS

offers many energy-saving opportuINDUSTRIES

— —

Chapter 3-Improved Technologies and Practice 181

1 Petroleum Refining45

Petroleum refineries process the various hydrocarbon compounds in crude oil into fuels and

other useful products. The hydrocarbons are first

separated from one another, then converted and

reorganized into more valuable forms, and finally

blended into products. Along the way, contaminants such as sulfur and heavy metals are

removed and beneficial compounds such as

detergents are added. Four major types of processes are used in petroleum refining: separation,

conversion, reorganization, and finishing.

Typical refinery products, from lightest to

heaviest, include: liquefied petroleum gases (LPG);

gasoline and aviation jet fuel; petroleum solvents;

kerosene; heating oil and diesel fuel (the middle

distillates); residual fuel oil; petroleum coke; and

asphalts (bitumens).46 Depending on their geographical location, customer demand, and seasonal needs, refiners can substantially alter their

product slate. In winter, for example, less gasoline

and more heating oil are produced.

Petrochemicals, such as ethanol, styrene, ethyl

chloride, butadiene, and methanol, are also often

produced at refineries. These intermediates are

used as feedstocks in the manufacture of plastics,

synthetic rubbers, synthetic fibers, and other

products. There are many advantages to producing these chemical building blocks at refineries,

and the oil industry has undertaken their manufacture on a large scale.

Most of the energy consumed in petroleum

refining comes from the petroleum itself. A rule

of thumb is that it takes one barrel of oil to refine

ten. Refinery gas accounts for nearly half of the

energy used, Petroleum coke, residual fuel oil,

and LPG are also commonly used. Natural gas,

accounting for 20 percent of energy use, is the

most heavily used purchased fuel.

On average, about 600,000 Btu are used to

process a barrel of oil into its various products

(based on 1989 data) .47 The most energyintensive steps are the reorganization and distillation (separation) processes. Widespread adoption

of state-of-the-art technologies can reduce energy

consumption by about one-third (tables 3-4 and

3-5).48 The biggest improvements are in the early

stages of refining, the separation, coking, and

visbreaking steps. Advanced technologies, not

yet commercialized, could possibly reduce energy use an additional 10 percent.49 Most of these

potential gains come from general conservation

measures such as alternate-fuel fluidized-bed

boilers, improved combustion processes, and

low-grade waste heat recovery, and from improvements in the akylation process.

The greatest single loss of energy in a refinery

occurs during the final cooling of process streams.

Where feasible, the low-level heat is transferred

to other process streams, thus reducing the energy

needed for cooling. The opportunities for recovering significant amounts of low-level heat are

much greater in new facilities, designed to

optimize heat recovery, than in existing plants. In

4S ~ ‘pcmole~ prmess~g, ’ 1‘~ac~g,” “Hydrocmcking,” and “Reforming processes, “ McGraw-Hill Encyclopedia on Science and

Technology (New Yorh NY: McGraw-Hill, 1987). “Petrolem” The Academic American Encyclopedia, Online Edition (Danbury, CT:

Grolier Electronic Publishing, 1991). Energetic, Inc., Industry Profi”les: Petroleum, prepared for U.S. Department of Energy, Oftlce of

Industrial Twhnologies, Report No. DE-ACO1-87CE40762, December 1990.

46 Llquefled ~~oleum gases (LPG) are ethane, propane, butane, and vtiOUS otier mtu~ gas and Pemoleum Products.

47 Energetic, Inc., In&s(~ profiles: petroleul?l, Op. cit., footnote 45.

48 Supr% foomote 3.

49 Supr% foomote 5.
Table 3-4-Energy Use by Petroleum Refining Technologies

Process mix Energy use

(bbls of process stream per bbl of crude oil) (thousand Btu per bbl of process stream)

Current State-of-the-art Advanced CurrentState-of-the-art Advanced

Process (1989) (2010) (2010) (1989) (2010) (2010)

Separation

Atmospheric distillation. . . . . . . 1.00

Vacuum distillation. . . . . . . . . . 0.44

Conversion

Delayed coking/visbreakingc. . 0.12

Catalytic cracking. . . . . . . . . . . 0.35

Catalytic hydrocracking. . . . . . 0.07

Reorganization

Catalytic reforming. . . . . . . . . . 0.24

Alkylation. . . . . . . . . . . . . . . . . . 0.06

Isomerization. . . . . . . . . . . . . . . 0,03

Hydrogen production. . . . . . . . 0.16

Finishing

Catalytic hydrotreating. . . . . . . 0.57

Not accounted fore. . . . . . . . . . . . . 1.00

Genera/ corrservatione. . . . . . . . . 1.00

Total. . . . . . . . . . . . . . . . . . . . . . . . 1.00

1.00

0.44

0.13

0.35

0.08

0.24

0.06

0.03

0.16

0,58

1.00

1.00

1.00

0.44

0.13

0.35

0.08

0.24

0.06

0,03

0.16

0.58

—

1.00

1.00

99

96

134

129

223

349

627

154

323

180

104

.

602

38

58

58

123

202

349

561

154

323

177

—

405

84b

35

71b

90

201

349

313

154

323

180b

—

-54

363

a Average of current implemented technologies.

b Most improvements from advanc~ technologies are inciuded in the General ~nservation cate90rY.

c Energy use values are averages for coking operations.

d Units for production are billion cubic feet, and for energy use are thousand Btu per thousand cubic feet of hydrqen.

e BMs are barrels of crude oil.

NOTE: Purchased electricity is counted at 10,500 Btu per kWh; generation and transmission losses are included. Estimated losses in 1989 were

approximately 44.0 thousand Btu per barrel of crude oil.

SOURCE: Energetics Inc., Industry Profiles: Petroleum, prepared for the U.S. Department of Energy. Office of Industrial Technologies, Report No.

DE-AC01-87CE40762, December1990,

. .

general, improved heat exchange can reduce

refinery energy use by about 9 percent. 50

Process heaters and steam boilers also offer

opportunities for reducing energy use. The options

include: using stack gas analyzers and combustion

control instrumentation to improve combustion;

using air preheater to reduce stack gas temperatures and heat incoming combustion air; and

installing convection sections at the heater outlets

to heat incoming feed or to generate steam.

Continued improvements in computer control

systems and sensors offer energy-savings beneso R.O. Pelharn and R.D. Moriarity, “Survey Plants for Energy Savings, ” Hydrocarbon Process, vol. 64, No. 7, pp. 5 1-56; reported in Oak

Ridge National Laboratory, Energy Technology R&D: What Could Make a Dl#erence? op. cit., footnote 40.

51 OA Ridge Natio~ ~~rato~, Energy Technology R&D: What Could Make a Difference? Op. Cit., fOOtnOte 40.
Chapter 3-improved Technologies and Practice 183

Table 3-5-Major Energy Saving Features of Improved Petroleum Refining

Process State-of-t he-art Advanced

Separation

Atmospheric distillation

Vacuum distillation

Conversion

Delayed coking/visbreaking

Catalytic cracking

Catalytic hydrocracking

Reorganization

Alkylation

Finishing

Catalytic hydrotreating

General conservation

Reflux-overhead vapor recompression (20)

Staged crude preheat (13)

Air preheater (12)

Intermediate reboilers and condensers (7)

Split tower operation (5)

Improved fractionation (4)

Improved instrumentation and control (1)

Two-stage condensation (<O.5)

Mechanical vacuum pumps (35)

Improved fractionation (3)

Fluid coking to gasification (FLEXICOKING)

(57)

Mechanical vacuum pumps (19)

Turbine power recovery train (6)

Hydraulic turbine power recovery (21 )

Improved catalysts (66)

Hydraulic turbine power recovery (3)

Operating modification (lower pressure, less

recycle) (1)

Advanced vapor recompression (15)

Advanced control strategies for thermal efficiency (5)

Dry vacuum column operation (33)

fluid atmospheric resid process (ART) (28)

fluid-bed vacuum resid process (ART) (102)

Soaker visbreaking (60)

HDH hydrocracking (reduced hydrogen and

severity) (27)

FCC/improved catalysts and process (39)

New catalysts (low temperature and pressure)

(22)

Polymerization processes (31 4)

Alternate-fuel fluidized-bed boilers (25)

Improved combustion processes (17)

Low-grade waste heat recovery (13)

NOTE: Figures in parentheses are estimates of energy savings, in thousand Btu/barrel of the particular process steam. In general conservation, the

energy savings are in thousands of Btu/barrel of crude oil.

SOURCE: Energetic, Inc., Industry Profiles.’ Petroleum, prepared for the U.S. Department of Energy, Office of Industrial Technologies, Report No.

DE-AC01-87CE40762, December 1990.

It operates on the principle that the various

hydrocarbons boil at different temperatures. When

the heated crude oil is fed into a distillation

column (tower), the lighter hydrocarbons (fractions) vaporize and rise. As they ascend the

fractions decrease in temperature and condense

into liquids. They then flow downward into hotter

sections of the column and are revaporized. This

process continues until the various fractions have

achieved the appropriate degrees of purity. They

are then tapped at various positions along the

tower. The lighter fractions are tapped off from

the top of the tower; heavier fractions are tapped

from lower on the tower.

The initial processing of crude oil is done in

atmospheric distillation columns. Temperatures

within the columns gradually rise to about 640 ‘F.

Large amounts of steam (about 1 to 2 lb/gal of oil)

are added to reduce the boiling temperatures by

partial pressure effects. Light end fractions, such
84 | Industrial Energy Efficiency

as propane and butane, come off the top and are

sent to the gas fractionation plant. Napthas,

kerosene, heating oil, diesel fuel, and heavy gas

oil are tapped successively lower on the column

and are sent to various conversion and finishing

processes. The heavier, high-boiling-point, bottomof-the-barrel products are sent to a vacuum

distillation unit for further separation.

Light end products are separated from one

another in a series of gas fractionation columns.

In a fractionation column, the gases are brought

into countercurrent contact with condensate. With

proper adjustment of the condensate and gas flow

rates, the more volatile hydrocarbons are concentrated into the gas and the less volatile ones are

concentrated into the condensate. Placed in a

series, fractionating columns can be used to

separate the light ends into fuel gases, propylene,

propane, butylenes, iso-butane, and n-butanes.

Heavy constituents are not removed in the

atmospheric distillation step, because of their

high boiling points and their temperature sensitivity. They are distilled in vacuum distillation

columns. The partial vacuum lowers their boiling

points to a range where distillation can occur

without excessive thermal decomposition.

Separation accounts for 23 percent of the

energy used in refining. State-of-the-art technologies such as vapor recompression, staged crude

preheating, air preheater, and intermediate reboilers and condensers can reduce energy use at

this stage by about 55 percent.

CONVERSION: CRACKING

Cracking is used to convert heavier, lower

value hydrocarbons into lighter, higher value

ones. This is accomplished by breaking apart the

chains of hydrocarbon molecules to decrease their

size and by adding hydrogen to raise their

hydrogen-to-carbon ratio. Cracking is carried out

by catalytic, hydrocracking, and thermal methods.

Catalytic cracking is used to convert intermediateand high-boiling point distillates into gasoline. It

is used to shift refinery output to meet changes in

market demand, because of its flexibility in

converting a wide variety of fractions. Feed oil

and a powdered catalyst are pumped together into

a fluidized-bed reactor, which is coupled to a

catalyst regenerator. The hydrocarbon molecules

are broken by carbonium ions formed on the

catalyst (typically silica-alumina zeolite) during

various reactions occurring at 850 to l,025°F.

During cracking, coke is deposited on the catalyst. When the catalyst is regenerated, the coke is

burned to provide the heat for the cracking

reaction.

Hydrocracking is used to convert highly aromatic fractions, which severely degrade the catalysts used in catalytic processes, into high-octane

gasoline and aviation jet fuel. The feed oils are

pumped along with hydrogen through a twostage, freed-bed catalytic unit operating at high

pressure (1,000 to 2,500 psig) and moderate

temperature (500 to 750 F). Two main reactions

occur in a hydrocracking unit, the addition of

hydrogen to the molecules and the subsequent

conversion of the fractions into the product

fuels.

Thermal cracking methods are used to convert

low-grade residual oils. These fractions cannot be

converted by catalytic methods, because they

subject catalysts to excessive coke buildup and

contamination by inorganic components. The

fluid coking, delayed coking, and visbreaking

processes used on the low-grade residuum coming from the vacuum distillation step are based on

the thermal cracking mechanism. Petroleum fractions are pumped through steel tubes coiled

within a furnace. The 850 to 1,1OOOF temperatures

cause thermal decomposition of the hydrocarbons

to take place. The heat breaks the carbon-tocarbon bonds in the molecules by a flee-radical

mechanism.

Conversion accounts for 13 percent of the

energy used in refining. Use of state-of-the-art

technologies such as fluid coking to gastification,

mechanical vacuum pumps, and hydraulic turbine

power recovery can reduce conversion energy by

about 16 percent.
REORGANIZATION: REFORMING

Reforming, an extension of the cracking process, is used to raise the octane number of gasoline.

Octane ratings are enhanced by reorganizing

hydrocarbon molecules, principally by changing

their structure but also by increasing their volatility (decreasing their size).52 Reforming can be

accomplished by thermal methods, but catalytic

techniques have made them obsolete. Catalytic

reforming is usually conducted by heating the

feed (naptha) to 840 to 965°F in a furnace and then

passing it over hydrogen-dehydrogenation catalysts, in the presence of hydrogen, in a fixed-bed

reactor.53 Moving-bed and fluidized-bed reactors

can also be used. The resulting product (reformate) is stabilized (light end fractions are removed) and used directly as gasoline or as a

blending stock for aviation jet fuel.

The main reaction is dehydrogenation, so

hydrogen is produced in large quantities, The

hydrogen is recycled through the reactor to

provide the atmosphere necessary for the chemical reactions and to protect the catalyst from

carbon buildup. Excess hydrogen is vented and

used as a reactant in hydrocracking, hydrotreating, and chemical (e.g., ammonia) manufacturing, or as a fuel.

Reorganization accounts for 29 percent of

the energy used in refining. These processes have

relatively low production levels, but are the most

intense energy users in the refinery, averaging

about 380,000 Btu per barrel of product.54

Little improvement in energy efficiency can

be expected from using state-of-the-art technologies. The development and use of advanced

polymerization processes, though, could possibly cut energy use in

half,

FINISHING: TREATING

the alkylation process by

Treating processes are used to remove detrimental components from petroleum fractions.

Hydrotreating is the most widely used finishing

process. It is a catalytic process that can be used

to remove impurities (e.g., sulfur, nitrogen and

oxygen), to stabilize products, correct color and

odor problems, and improve other product deficiencies. Other finishing processes, such as solvent extraction, solvent dewaxing, acid treatment,

and clay treatment are used to a lesser extent to

perform selected finishing functions.

Finishing accounts for 17 percent of the energy

used in refining. Use of state-of-the-art or advanced technologies are expected to yield little

improvement in the efficiency of these processes.

ENERGY EFFICIENCY55

Environmental concerns about automobile

emissions (carbon monoxide and nitrogen oxide)

will increasingly govern the characteristics of

refined products and refinery operations. Motor

fuels must meet both high octane and high

environmental quality standards. To meet these

standards, refiners are making greater use of

hydrocracking and reforming processes. Use of

alkylation and isomerization processes is also

increasing. The increased operating severity (increases in processing temperature, pressures, and

feedstock rates) in these energy-intensive processes will continue to exert upward pressure on

energy consumption in refineries. Advanced tech52 ~ges ~ the molwula s~c~re include the conversion of n-paraffins to isopamffins, olefins, and ~matics, ~d of naph~enes to

aromatics. The mosl important chemical reorganization reactions that occur reforming are dehydrogenatio~ hydrogenation+ aromatization

cyclizatiom isomerizatiow polymerization and alkylation.

53 me compo~ltion of a refo~g cat~yst is dictated by the feed and the desfied product, ~ical catiysts are molybdena-ahmlim,

chromia-aluminii, d platinum on an alumina or silica-alumina base.

M ~ he case of hy~ogen production, 323,(X30 Btus per thousand cubic feet of hydrogen.

5S Energetic, Inc., [ndust~ Profiies: peWOleU??l, Op. cit., f“o~ote 45.
.—

86 | Industrial Energy Efficiency

nologies to increase octane and concurrently

reduce processing energy are needed.56

1 Chemicals

The chemical industry encompasses over 12,000

plants producing more than 50,000 chemicals and

formulations. 57 Among the products are organic

and inorganic chemicals, plastics, synthetic rubber, soaps, paints, industrial gases, fertilizers,

pesticides, and pharmaceuticals. There are chemical plants throughout the United States, but the

highest concentration is located near the supplies

of energy and feedstocks—the oil and gas producing regions in Texas, Louisiana, and Oklahoma.

Chemical producers are the second largest

energy-consuming industry. Natural gas is the

principal fuel in most chemical production processes, but electricity plays a large role in the

production of those agricultural chemicals, chloralkalies, and industrial gases that are produced

electrolytically. Large quantities of natural gas

and LPG are used as feedstocks. Natural gas

(methane) is used as a feedstock in the production

of ammonia (a major component of fertilizers),

hydrogen, methanol, and carbon black. LPG are

used in the production of many petrochemicals

including ethylene, propylene, vinyl chloride, and

styrene. Feedstocks account for about 34 percent

of the chemical industry’s energy use.58

Steam, used for process heating and pressurization purposes, consumes about 35 percent of the

energy used in the chemicals industry. Because of

this heavy use of steam, cogeneration is particularly attractive in this sector. An additional 13

percent of energy is used for direct process

heating purposes such as fluid heating. Except in

the industrial gases and chloralkalies industries,

electricity use in chemicals production is dominated by pump, fan, compressor, and related

mechanical drive needs. Materials movement is

also a large use. Motor drive functions account for

16 percent of energy consumption.59

Chemical production is highly energy intensive because of the number and complexity of the

process stages involved. Six of the most energy

intensive processes are described in box 3-A. In

1988, the industry consumed about 11,600 Btu

per dollar of product shipped, which was approximately double that of the manufacturing sector as

a whole.60 The high-volume, low-value bulk

chemicals such as sulfuric acid, industrial gases,

and ethylene are especially energy intensive to

produce.

The chemical industry is composed of a very

diverse group of industries. Each has its own

particular energy needs and problems. Several of

the larger chemical industries are profiled below

to illustrate the many different issues and problems that are faced.

SULFURIC ACID61

Sulfuric acid is the most produced chemical in

terms of tonnage. An inorganic chemical, it is

used as a processing agent in industries such as

phosphate fertilizer production, petroleum refining, chemicals production, and ore processing.

Sulfuric acid (H2SO4) produced by the

contact process. Sulfur is burned in air to produce

56 ~temtively, pe~olem refiner

ies’ energy consumption could be reduced through the adoption of automobile engine twkologies tit

have less strict fuel requirements.

57 us. Dep~ent of Commerce, htemational Trade Administration U.S. Industrial Outlook 1991 (Washingto% DC: U.S. @vemment

Printing Office, January 1991).

5S Office of WchOIOn Assessment estimates, based on data from the Industrial Sector lkchnology Use Model (KHIJMl}, see tible 2-3.

59 Ibid.

60 U.S. Dep~ent of Energy, Manufacturing Energy Consumption Survey, Consumption of Energy 2988, op. cit., footnote 31.

61 Energetic, ~c., ]~usq profi/es: chemicals, prepmed for the U.S. Department of Energy, Offke of ~dus~~ ~c~ologies~ Repofl No.

DE-AC01-87CE40762, December 1990.
Box 3-A–Energy-lntensive Processes in Chemical Manufacturing

. Electrolytic processes in which electricity is used in direct chemical conversion.

. Fuel-heated reaction processes which require some type of heat to force a chemical reaction to take

place. Energy sources include steam (except for high-temperature reactions), natural gas, residual fuel oil,

distillate fuel oil, and even fluidized-bed coal combustion. Where precise temperature regulation is

required, natural gas and distillate fuel oil are used.

● Distillation processes which involve evaporation and condensation to physically separate end products

from feedstocks and/or byproducts.

● Refrigeration processes which involve compression and expansion of a refrigerant, such as ammonia or

a fluorocarbon, to cool feedstocks or products below ambient temperatures.

● Evaporation processes which use passive-evaporation to cool feedstocks or products. in general, the

evaporated water is lost to the atmosphere, and the heat energy is unrecoverable.

● Machine driven processes which are used to pump, compress, or move feedstock and end product

materials. Machine drive arises from electric motors, steam turbines, or gas turbines. A subcategory of

machine drive processes-mixing and blending (especially in polymerization processes)--can be very

energy intensive due to the high viscosity of the materials.

SOURCE: U.S. Congress, Office of Technology Assessment, Industrial Energy Use, OTA-E-198 (Washington, DC: U.S. Government

Printing Office, June 1983) adapted from Robert Ayres, Final Report on Energy Consumption by Industrial Chemicals Industry, DOE

contract No. DE-ACO1-79CS40151, Oct. 7, 19S1.

sulfur dioxide (SO2), then catalytically oxidized steam for dilution water, using waste heat recovto SO3, and finally absorbed in aqueous acid to

form H2SO4. To meet SO2 emissions regulations,

most new plants use a double absorption process.

Each of the three steps are exothermic, so modem

acid plants are net energy producers. Most of the

heat is recovered as steam and used in adjacent

phosphoric acid plants. Small amounts of steam

are also used for sulfur storage and melting. In

some plants, the steam is run through steam

turbine cogeneration units to produce electricity.

The largest internal energy consumer in a sulfuric

acid plant is the main blower (driven by steam

turbine or electric motor) used to move the gases

through the operation.

Great efforts have been made to maximize

energy production from sulfuric acid production.

The work has primarily centered on using waste

heat to generate steam at higher pressure for use

in cogeneration equipment. Additional energy

can be produced by substituting low pressure

ered from acid coolers (currently lost to cooling

water), and using improved catalysts allowing

lower “light-off’ temperatures and/or less dilution air.

Maximum energy efficiency corresponds to

maximum electricity cogeneration. The profitability of this endeavor is affected greatly by local

conditions, i.e., electricity price rates, proximity

to steam users, and utility capacity profiles.

Currently, a typical double absorption process

without extensive heat recovery can produce 14

percent more energy than the average technology

being used (1988 data) (table 3-6). An advanced

plant using the features described above with

maximum electricity output to the grid could

possibly produce 73 percent more energy than the

current average technology. These efficiencies

have been achieved at the pilot scale, but not yet

demonstrated on a commercial scale.
Table 3-6-Energy Use by Selected Chemical Production Technologies

Energy use

(thousand Btu/ton of end product)

Current State-of-the-art Advanced

Process (2010) (2010)

Sulfuric acid (1988)b

Energy consumption. . . . . . . . . . . . . . . . . . . . 232 — —

Export steam. . . . . . . . . . . . . . . . . . . . . ., , . . -2,093 — —

Total (net energy production). . . . . . . . . . . -1,861 -2,117 -3,226

Nitrogen and oxygen production (1985)c

Separation, ... , . . . . . . . . . , ... , . . . . . . . . . . 540 351 244

Compression (80 percent of production). . . . 409 409 409

Liquefaction (20 percent of production), . . . . 1,720 1,720 1,720

Electricity losses. . . . . . . . . . . . . . . . . . . . . . . 2,517 2,124 1,902

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,728 3,146 2,818

Ethylene (1988)

Feedstock energy.. . . . . . . . . . . . . . . . . . . . . . 53,600 53,600 49,000

Process energy... . . . . . . . . . . . . . . . . . . . . . . 4,600 3,800 3,400

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,200 57,400 52,400

aAverage of currently implemented tehnologies.

bFigures for Sulfuricaid are negative because the production process is exothermic--it produces more energy

than it consumes.

cAssumes production of 58 percent nitrogen and 42 percent oxygen.

NOTE: Purchased electricity is counted at 10,500 Btu/kWh; generation and transmission losses are included.

Estimated losses were approximately 117 thousand Btu/ton of sulfuric acid (1988) and 2.5 million Btu/ton of

oxygen and nitrogen (1985).

SOURCE: Energetic Inc., Industry Profiles: Chemicals, prepared for the U.S. Department of Energy, Office

of Industrial Technologies, Report No. DE-ACO1-87CE40762, December 1990. Some data modified by the

Office of Technology Assessment.

NITROGEN AND OXYGEN62

Nitrogen and oxygen, the second and third

highest tonnage chemicals, are used for a variety

of purposes in industrial processes. Nitrogen is

used variously as a purge gas (to prevent oxidation), pneumatic fluid, and cryogenic medium in

the chemical, metals, food, and electronics industries. Oxygen is used as an oxidizing agent in

steelmaking, nonferrous metals production, chemical and petrochemical production, and wastewater treatment. Transportation of these industrial gases is costly, so dedicated plants are

commonly built right beside major consumers.

Most nitrogen and oxygen is produced by the

cryogenic distillation process. It is the most

economical process for high-volume, high-purity

production. Other production methods are cryogenic distillation, pressure-swing adsorption (PSA),

membrane separation, and chemical-based processes.63

Cryogenic distillation-Air is first dried and

cleaned of impurities, then liquefied, and finally

separated into more the volatile nitrogen (boiling

point -320°F or 77.4°K) and the less volatile

oxygen (-297°F or 90.20K) in a rectifier. The

double column air separation system is capable of

providing both liquefied or gaseous oxygen and

nitrogen. However, liquid production is kept to a

minimum, because withdrawing the products in

liquid form requires about three times as much

power as comparable gaseous production and also

reduces the rated capacity of the equipment.

62 Ibid.

63 Elec~c ~ss~iation of water for hydrogen and oxygen production has very little Commercial tipOtiCe.
Chapter 3-improved Technologies and Practice | 89

Cryogenic distillation is a very energyintensive activity. A great amount of electricity is

used to drive the feed air compressor. On average,

the industry uses about 15.7 kWper ton of oxygen

produced each day (table 3-6). The energy consumption is broken up into three processes:

separation, compression, and liquefaction. State-ofthe-art and advanced technologies affect primarily the separation stage. A state-of-the-art plant

uses 16 percent less energy than the average

current technology. The remaining inefficiencies

in these modem processes arise principally from

non-idealities in the refrigeration process, thermal inefficiencies in heat exchangers, and losses

of refrigeration through heat leaks. An advanced

plant could possibly use 24 percent less energy

than the current average.

Pressure swing adsorption--Air is separated

by preferentially adsorbing either nitrogen or

oxygen onto physical absorbents or molecular

sieves. Older PSA units produced gas with

purities in the 90 to 95 percent range and

increased purity could only be realized by decreasing product output. New advances in absorbent materials now permit purities approaching

that of cryogenic units. PSA is more efficient than

cryogenic distillation, but is presently only economical for smaller, lower purity production

applications.

Membrane separation-Air is separated

through the differential diffusion of its constituent gases through a semipermeable membrane.

Energy consumption is lower than in cryogenic

distillation, but the economics depend primarily

upon the cost and development of suitable membrane materials. Membranes are used mostly in

small-scale separation units.

Chemical separation—The Moltex process

produces 99.8 percent pure oxygen via a reversible chemical reaction of oxygen with molten

alkali nitrates and nitrites. Though the chemical

process uses 40 percent less energy than cryogenic distillation, its economics are only marginally better. Significant displacement of the mature

cryogenic technology has yet to occur.

ETHYLENE64

Ethylene is the highest tonnage organic chemical produced in the United States. It is used

principally as a building block for polymers

(principally polyethylene) and other industrial

chemicals, including ethylene dichloride, ethylbenzene, and ethylene oxide.

Production of ethylene occurs in four sections:

1) thermal cracking, 2) gas compression and

treatment, 3) product separation, and 4) refrigeration. Thermal cracking of hydrocarbons in the

presence of steam is the most widely used

process. Cracking is done at about 2,900 F and 30

psia pressure, followed by rapid quenching to

below l,760°F. Ethylene is recovered by low

temperature fractionation at 500 to 550 psia and

purified at about -85°F to remove hydrogen,

methane, and ethane.65

About 90 percent of the energy used in the

production of ethylene is consumed as feedstock.

The common feedstocks are ethane and propane

(from natural gas processing plants) and refinery

gas, naptha, and heavy gas oil (from petroleum

refineries). Use of heavier, oil-based feedstocks is

increasing. Most new plants are designed to crack

naptha or heavy gas oil and are flexible enough to

crack either, depending on price and supply.

The main source of processing energy is the

fuel used in cracking furnaces, principally to

supply heat for the endothermic cracking reaction.

Fuel use increases sharply with heavier feedstocks, although much of this energy is ultimately

recovered from the flue gases and hot products.

On average, current plants consume about

29,100 Btu/lb of ethylene (26,800 feedstock and

2,300 processing energy) (table 3-6). State-of-theart technologies such as PINCH-optimized refrigeration and heat integration systems can save

~ Energetic, Inc., Industry Profiles: Chemicals, op. cit., fOOmOte 61.

65 “Ethylene,” McGraw-Hill Encyclopedia on Science and Technology (New York NY: McGraw-Hill, 1987).

330-074 0- 93 - 4 : QL 3
gies. There remain, however, large opportunities

for new cogeneration capacity.

An ethylene glycol production plant. Glycol is used for

making polyester fibers, photo film, and plastic bottles.

about 17 percent of processing energy. Advanced

technologies embodying even more heat integration and optimization and other improvements

might yield another 9 percent improvement in

processing energy and similar percentage improvements in feedstock energy.

EFFICIENCY66

In the 1980s, the chemical industry restructured itself by closing inefficient and obsolete

plants, streamlining production processes, reorganizing corporate activities, and placing more

emphasis on specialty chemicals with high profit

margins. As a result, the chemical industry

currently uses relatively state-of-the-art technolo-

 Pulp and Pape67

Paper mills process cellulose fibers, primarily

from wood, into writing paper, newsprint, magazine stock, paperboard, cardboard, sanitary tissues, and various other decorative and structural

papers. The wood is first ground and pulped to

separate the fibers from each other and suspend

them in water. Later, the pulp is filtered onto wire

screens, dried, and formed into paper. Along the

way, the fibers may be beaten for strength,

bleached for whiteness, or sized to improve their

writing characteristics. There are five principle

process steps in paper production: 1) wood

preparation, 2) pulping, 3) bleaching, 4) chemical

recovery, and 5) papermaking.

Wood fiber is the predominant ingredient in

paper. However, trees cut specifically for paper

manufacture provide only slightly more than half

of the fiber used. The remaining fiber is secondary

material obtained by recycling used newsprint,

spent packaging, and other waste paper. The

waste residues of lumber operations and wood

chips from saw mills provide additional material.68

On average, about 35 million Btu are used to

produce a ton of paper (based on 1988 data).69 The

most energy-intensive steps are the papermaking,

pulping, and chemical recovery steps. Widespread adoption of state-of-the-art technologies

can reduce energy consumption by an estimated

29 percent (tables 3-7 and 3-8) from current

66 Decision Analysis Corpration of Virginia, Energy Consumption Patterns in the Manufacturing Sector, prepared for the U.S. Department

of Energy, Energy Information Adrninistration Oct. 15, 1990.

67 “Paper,” McGraw-Hill Encyclopedia on Science and Technology (New York, NY: McGraw-Hill, 1987). “Paper,” The Academ”c

American Encyclopedia, Online Edition (I@bury, CT: Grolier Electronic Publishing, 1991). A. Elaahi and H.E. Lowit4 Energetic, Inc., The

U.S. Pulp and Paper Indusny: An Energy Perspective, prepared for U.S. Department of Energy, Office of Industrial Programs, Report No.

DOEW0183GT57 (Springfield, VA: National lkchnical Information Service, April 1988). Energetic, Inc., lndusv Profiles: Paper,

prepared for the U.S. Department of Energy, OffIce of Industrial ‘lkchnologies, Report No. DE-ACO1-87CE40762, December 1990.

68 Fi~m cm ~so come from non~ood sowms, inclu~: esp~o gr~s, bagasse (tie pl~t residue left after the juice h been extracted

from sugarcane), cereal and flax straws, reeds, cotton and linen rags, waste cotton from cotton mills, and various other plant sources. The choice

of materials depends on the intended end use of the paper. The Acaderm”c Amerz”can Encyclopedia, Online Edition, ibid.

69 Energetic, Inc., Industry Proj71es: Paper, Op. cit., foo~ote 67.
Chapter 3-improved Technologies and Practice | 91

Table 3-7—Energy Use by Pulp and Paper Production Technologies

Energy use

Process mix (million Btu/ton of product)

State-of- State-ofCurrent the-art Advanced Current the-art Advanced

Process (1988) (2010) (2010) Measure (1988) (2010) (2010) Product

Wodpreparation. . . . . . . . . . . . . . . . 0.71

Pulping

Chemical: kraft. . . . . . . . . . . . . . . . 55.3

Chemical: sulfite. . . . . . . . . . . . . . 1.8

Chemical: otherb . . . . . . . . . . . . . 1.6

Semichemical: neutral sulfite. . . . 5.0

Mechanical: stone groundwood. . 2.0

Mechanical: refiner mechanicalc

. . 2.0

Ther momechanical. . . . . . . . . . . . 2.8

Chemimechanical. . . . . . . . . . . . . —

OPCO process. . . . . . . . . . . . . —

Non-sulfur process. . . . . . . . . . —

Biological. . . . . . . . . . . . . . . . . . . . —

Alcohol. . . . . . . . . . . . . . . . . . . . . . —

Waste paper. . . . . . . . . . . . . . . . . . 19.6

Market pulp drying. . . . . . . . . . . . . 9.9

Subtotal. . . . . . . . . . . . . . . . . . . 1.11

Bleaching. . . . . . . . . . . . . . . . . . . . . . 0.3

Chemical recovery

Kraft. . . . . . . . . . . . . . . . . . . . . . . . 55.3

Sulfite. . . . . . . . . . . . . . . . . . . . . . . 1.8

Semichemical. . . . . . . . . . . . . . . . 5.0

Subtotal. . . . . . . . . . . . . . . . . . . 0.62

Papermaking

Newsprint. . . . . . . . . . . . . . . . . . . . 7.6

Printing and writing paper. . . . . . . 27.8

Industrial paper. . . . . . . . . . . . . . . 6.4

Tissue paper. . . . . . . . . . . . . . . . . 7.0

Paperboard. . . . . . . . . . . . . . . . . . . 37.5

Recycled paperboard. . . . . . . . . . 11.2

Construction paper. . . . . . . . . . . . 2.4

Subtotal. . . . . . . . . . . . . . . . . . . 1.00

Auxiliary equipment

Lighting, space heating,

and power plant. . . . . . . . . . . . . 1.00

Total. . . . . . . . . . . . . . . . . . . . . . . . . . 1.00

0.71

55.2

2.1

1.5

5.0

2.1

—

5.0

—

—

—

—

—

20.4

8.7

1.13

0.3

55.2

2.1

5.0

0.62

8.0

30.1

4.0

7.3

37.6

11.3

1.7

1.00

1.00

1.00

a Average of Currentjy im~emented technologies.

b Chemical processes for dissolving pulps and alpha Pu@.

0.71 tons of wood per ton of 0.5

pulp

42.5

1.4

1.4

2.1

—

—

5.0

—

—

10.6

5.7

2.1

20.4

8.7

1.13

0.3

%pulp produced 8.3

% pulp produced 8.6

% pulp produced 16.0

% pulp produced 9.8

% pulp produced 14.5

% pulp produced 18.6

% pulp produced 19.7

% pulp produced —

% pulp produced —

% pulp produced —

% pulp produced —

% pulp produced —

% pulp produced 4.3

% pulp produced 4.2

tons of pulp per ton of 7.9

paper

fraction of pulp bleached 7,5

42.5 % pulp produced 10.1

1.4 % pulp produced 7.5

2.1 % pulp produced 6.0

0.46 fraction of pulp with 9.7

a chemical recovery

stage

8.0

30.1

4.0

7.3

37.6

11.3

1.7

1.00

% paper produced

% paper produced

% paper produced

% paper produced

% paper produced

% paper produced

%. paper produced

ton of paper

8.2

13.8

14,1

11.2

13.6

13.6

12.7

13.1

1.00 ton of paper 2.9

1.00 ton of paper 34.5

0.4

4.9

6.3

8.8

7.2

13.2

—

15.8

14.5

—

—

—

—

4.0

4.0

5.5

5.6

6.4

4.8

3.8

6.1

5.5

9.3

9.5

8.3

9.2

9.2

8.6

8.9

2.7

24.6

0.4

4.4

5.7

7.9

6.5

—

—

15.8

—

12.6

3.2

11.4

2.2

4.0

1.3

4.9

4.5

4.2

3.1

2.5

4.1

3.7

5.6

5.7

8.3

5.5

5.5

5.1

5.6

2.7

18.0

wood

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Pulp

Paper

Paper

Paper

Paper

Paper

Paper

Paper

Paper

Paper

Paper

c For state-of-the-art, refiner mechanical pulping is assumed to be replaced by thermomechanical pulping with heat recovery.

NOTE: Purchased electricity is counted at 10,500 Btu/kWh; generation and transmission losses are included. Estimated losses in 1988 were

approximately 4.3 million Btu per ton of paper.

SOURCES: A. Elaahi and Howard E. Lowittj Energetic, Inc., The U.S. Pulp and Paper Industry: An Energy Perspective, prepared for the U.S.

Department of Energy, Office of Industrial Programs, Report No. DOE/RUO1830-T57 (Springfield, VA: National Technical Information Service, April

1988). Energetic Inc., Industry Profdes; Paper, prepared for the U.S. Department of Energy, Office of Industrial Technologies, Report No.

DE-AC01-87CE40762, December 1990.
Table 3-8-Major Energy Saving Features of Improved Pulp and Paper Production

Process State-of-the-art Advanced

Pu/ping

Chemical

Mechanical

Bleaching

Chemical recovery

Papermaking

Forming

Pressing

Drying

Auxiliary processes

and process control

Continuous digesters for large units. (S)

Displacement heating for small units. (S)

Thermomechanical pulping with heat recovery.

(s)

Displacement bleaching. (S)

Oxygen bleaching in the first extraction stage.

(M)

Waste-heat recovery technologies in lime kiln,

including: chain systems to enhance heat

transfer; lime product coolers to preheat combustion air; and flash dryers to predry the lime

mud. (S)

Turbumix system, whereby lime mud is mixed in

the gas flow to create a fully turbulent flow. (S)

Tampella Recovery System. (M)

Multiple-effect falling-film evaporators for black

liquor evaporation and concentration. (M)

Vapor recompression evaporation of black liquor. (M)

Top-wire (hybrid) formers. (M)

Increased water removal through: extended nip

press; higher nip pressures; wider nips (longer

residence time); use of steam boxes in press

section; and upgrade of clothing and auxiliary

equipment. (M)

Hot pressing using one or more steam showers

to heat water in the sheet. (M)

Reduced air heating by using enclosed hoods

and countercurrent flow of air and product. (M)

Infrared moisture profiling. (M)

Use of boiler waste heat in bark dryers. (M)

Alcohol-based solvent pulping. (S)

Biological pulping in which enzymes cause

designation reactions to occur at ambient

temperatures. (M)

Non-sulfur chemimechanical pulping. (S)

OPCO pulping process (sodium sulfite-based).

(s)

Biobleaching in which biological enzymes replace bleaching chemicals. (S)

Freeze concentration of black liquor (presently

not economical). (S)

Black liquor gasification in a combined cycle

cogeneration system. (M)

Black liquor hydropyrolysis. (M)

Black liquor dry pyrolysis. (M)

NSP process, uses a cyclone gasifier to process solids prior to firing the pyrolysis gases

in a boiler. (M)

Displacement pressing. (M)

Impulse drying. (S)

Total mill automation and information system.

(M)

New sensors and expert systems.

KEY: (S) = significant savings, 50 to 100 percent of energy used in particular process; (M) = moderate savings, 25 to 50 percent of energy used in

particular process.

SOURCE: A. Elaahi and Howard E. Lowitt, Energetic, Inc., The U.S. Pulp and Paper Industry.’ An Energy Perspective, prepared for the U.S.

Department of Energy, Office of Industrial Programs, Report No.DO13RU01830-T57 (Springfield, VA: National Technical Information Service, April

1988).
Chapter 3-improved Technologies and Practice | 93

average practices. The potential reductions are

greatest for the papermaking stage. Advanced

technologies, not yet commercialized, could possibly reduce energy use an additional 27 percent.

WOOD PREPARATION

Paper production begins with wood preparation, which consists of removing the tree bark and

chipping the wood into small pieces. This process

requires comparatively little energy.

PULPING

Pulping breaks apart the fibers in the wood and

cleans them of unwanted wood residues. The

principal pulping methods use chemical techniques, mechanical techniques, or a combination

of the two. Chemical pulping techniques account

for 80 percent of U.S. production. Each pulping

method involves tradeoffs in terms of cost, yield,

and paper quality.

In chemical pulping, the wood chips or other

fibrous materials are cooked in an aqueous

solution at high temperature and pressure. Steam

provides the heat and pressure in the cooking

vessel (digester). The kraft process, the most

widely used pulping technique, uses a solution of

sodium hydroxide and sodium sulflde. The sulfite

process uses a sodium sulfite solution. Cooking

times may be as long as 12 hours. The cooked

pulp is then washed to remove the chemicals and

screened to separate out undigested wood knots

and other unwanted materials.

Chemical processes dissolve most of the lignin

(the “glue” that holds the fibers together), and

much of the hermicellulose, and leave the cellulose fibers relatively undamaged. The absence of

lignin and the relatively minor physical damage

done to the fibers results in strong, high-quality

paper that can be bleached to high brightness.

However, the yield is only 40 to 60 percent of the

dry weight of the wood, because the lignin and

other components are removed.

In mechanical pulping, the cellulose fibers are

torn apart by pressing logs against wet grindstones or by passing wood chips between counterrevolving grooved metal disks -(refiners). The

lignins and other residues are not removed, so the

yield may be nearly 95 percent of what was

originally in the tree. However, the fibers are

broken and damaged by the mechanical processes. The shorter, weaker fibers and the presence

of lignin makes this pulp appropriate for less

expensive grades of paper, such as newsprint.

Combining mechanical methods with chemical

and/or steam treatments produces pulps of varying yields and quality. In thermomechanical

pulping (TMP), wood chips are softened with

steam before they are refined. This produces

paper that is significantly stronger than that from

mechanical pulp, but still weaker than that from

chemical pulps, with only a small sacrifice in

yield. In chemical thermomechanical pulping, the

wood is treated with both chemicals and steam

before refining. This produces a still stronger

pulp. Lastly, semichemical pulping uses even

more chemicals, but not enough to render the

mechanical stage unnecessary.

Technologies that integrate fermentation into

the conventional pulping process can offer also

energy savings. They include biopulping using

enzymes derived from wood rot funguses, chemial pulping with fermentation and black liquor

phase separation, and ethanol organosolv pulping. Energy savings of 28 percent in the pulping

process using enzymes compared with mechanical techniques have been demonstrated in Sweden. 70 Currently, pulping cycles using these

techniques are too slow for commercial application. A substantial amount of research is still

needed for each of these processes.

Pulping accounts for 26 percent of the energy

used in pulp and paper production. State-of-theart technologies such as continuous digesters,

displacement heating, anthraquinone pulping,

and increased use of thermomechanical pulping

70 A. EIM ad I-r.E. Imvi~ op. cit., footnote 67.
with heat recovery and cogeneration can reduce

the energy use of this stage by about 26 percent

from current average practices. Advanced technologies could possibly reduce energy use an

additional 10 percent.

BLEACHING

Most pulps are relatively dark in color. Bleaching whitens the pulps for use in writing, printing,

and decorative papers. Various grades of paper

require different levels of treatment. Writing

paper requires a full bleaching; newsprint requires only a light treatment; and corrugated

cardboard generally needs no bleaching. The

process must be carefully controlled so that the

cellulose fibers are not weakened.

Bleaching brightens paper by altering and/or

removing the lignin, which causes the dark color

of pulp. Chemical pulps, which contain low

concentrations of lignin, are bleached by breaking

up the lignin and removing it. This is accomplished with alternating treatments of oxidizing

agents (chlorine, chlorine dioxide, hypochlorite,

hydrogen peroxide, and oxygen) and alkali solutions (sodium hydroxide). Sulfite pulps are generally lighter in color than kraft pulp and therefore

need less bleaching. They require no bleaching at

all when used in newsprint. High-yield, mechanical pulps are treated with hydrogen peroxide or

sodium hydrosulfite to reduce the light absorption

of lignin without dissolving it.

Bleaching uses about 7 percent of the energy

used in paper production. State-of-the-art technologies such as displacement bleaching can

reduce the energy use at this stage by about 30

percent from current average practices.

CHEMICAL RECOVERY

The kraft and sulfite processes use large

quantities of chemicals to separate the cellulose

fibers. Regenerating these chemicals for reuse is

important for economic and waste disposal reasons. When the chemicals are recovered, enough

energy is extracted from the wood byproducts to

make many paper mills self-sustaining with

respect to energy.

Chemical pulping processes produce waste

streams of black liquor, which contains spent

chemicals and wood residues. Black Liquor is

concentrated in evaporators and then burned in

boilers, many of which are connected to steam

turbine cogeneration systems. The wood residues

fuel the boiler and the spent process chemicals

remain behind as smelt at the bottom of the boiler

furnaces. This smelt is treated with lime to

convert the sodium carbonate back into sodium

hydroxide. The lime is then itself regenerated by

being burned in lime kilns. Sodium sulfide, the

other major chemical in the kraft process, is also

recovered from the smelt. The relatively small

quantities of chemicals lost during processing are

made up by adding sodium sulfate, which is either

purchased or recovered from the manufacture of

bleaching chemicals.

Chemical recovery accounts for 19 percent of

the energy used in paper production. State-of-theart technologies such as waste heat recovery units

and turbomix systems can reduce the energy use

of this stage by 37 percent from current average

practices. Advanced technologies could possibly

reduce energy use an additional one-third.

PAPERMAKING

The papermaking stage consists of stock preparation (beating), sheet forming, pressing, and

drying. Before the fibers are formed into sheets,

they go through a mechanical pounding and

squeezing process called beating to make them

more flexible, thereby increasing their matting, or

felting, capacity. Pigments or dyes are added to the

pulp at the beating stage, along with filler materials that help preserve the paper or give it a better

opacity and finish. Sizing materials may be added

to improve the “feel” and printability of paper.

Once prepared, the pulp is formed into paper

sheets. The fibers are deposited in a sheet on a

screen, drained and pressed to remove the bulk of

the water, and then dried. The two most common

papermaking machines in current use are the
Chapter 3-improved Technologies and Practice | 95

Fourdrinier and the cylinder machine. Both are

continuous processes. In the Fourdrinier, the

pulp-and-water mixture is dispersed at a controlled rate through a headbox onto a moving

wire-mesh screen. As the screen moves away

from the headbox, various suction devices drain

the water from the pulp, leaving a sheet of matted

pulp that still contains a high proportion of water.

The sheet then moves on to a woolen felt screen,

which takes it through a series of presses, where

more water is removed. Finally, the sheet passes

over a number of heated drums that evaporate the

remaining water. Many new papermaking machines incorporate two moving wire-mesh

screens between which the pulp is pumped, and

water is extracted from both sides. The ‘‘twinwire’ machine produces a paper that is practically identical on both sides, an important property for printing papers.

The cylinder machine differs from the Fourdrinier principally in the “wet end, ” or forming

operation. Instead of the moving wire screen, a

screen-covered rotary cylinder is half-submerged

in the pulp vat. As the cylinder rotates, a sheet of

matted pulp is formed on its exterior surface and

then picked up by a moving belt, where it is

treated to remove the remaining water, as in the

Fourdrinier process. A series of cylinders maybe

used, each one depositing an additional layer of

pulp on the belt, so that multilayer sheets are built

up to make thick papers and paperboard.

Upon leaving the paper-forming machine, the

dried paper is wound onto large reels, slit to the

required widths, cut into sheets, trimmed, and

then packaged. In some cases, the paper is

calendared or coated. It may also be converted

into bags, boxes, corrugated shipping paper, and

other products.

Papermaking is the largest energy consuming

process of the mill. It accounts for 38 percent of

the energy used in paper production. The most

energy-intensive activities are drying (65 percent

of papermaking energy use) and stock preparation

(30 percent).

Energy Use (million Btu per ton of paper)

Current

average State-of-the-art

Stock preparation. . . . . . . . 3,4 2.8

Sheet formation. . . . . . . . . 0.3 0.1

Pressing. . . . . . . . . . . . . . . 0.3 0.3

Drying. . . . . . . . . . . . . . . . . 7.4 4.4

State-of-the-art technologies such as top-wire

formers and improved mechanical and thermal

water removal techniques can reduce the energy

use of this stage by about 32 percent. Improved

presses (e.g., the extended nip press), used to

squeeze the water out of the paper before drying,

reduce energy use and also improve fiber-to-fiber

bonding, resulting in higher strength and higher

quality sheet. Advanced technologies, such as

impulse drying, could possibly reduce energy use

an additional 27 percent.

WASTE STREAM ENERGY

There is a great amount of energy embedded in

the waste products of the paper industry. Wood

wastes and residues supply the heat and electricity required for pulping, bleaching, drying, and

evaporating the spent black liquor. If the harvesting waste and the bark are also burned to produce

energy, and if water is conserved by countercurrent washing of the pulp, a bleached kraft pulp

mill can be self-sufficient in energy .71

The typical pulp and paper operation has three

principal waste streams that can provide energy:

hog fuel, black liquor, and forest residues. Hog

fuel is the bark, sawdust, and other scrap produced in reducing logs to feedstock for the

pulping process. Hog fuels can supply about 2.6

million Btu/ton of pulp produced. Black liquor,

from the chemical pulping process, an average

energy content of about 11.2 million Btu/ton of

pulp. Other residues are currently left in the forest

when harvesting the trees. A portion of these

71 “Paper,” McGraw-Hill Encyclopedia on Science and Technology, op. cit., footiot~ 67.
96 Industrial Energy Efficiency

A recovery boiler at a pulp and paper mill. Such a boiler can meet a significant portion of

a mill’s energy needs by burning waste from the pulping process.

forest residues might be collected. However, the

technical, economic, and environmental difficulties in using forest residues are significant. For

example, the long term effects on forest soils

would need to be examined closely. If fully

recovered, the estimated energy content of forest

residues would be about 21.5 million Btu/ton of

pulp. Combined, these energy resources could

provide 35.3 million Btu/ton of pulp.72

Most kraft pulp mills currently use their black

liquor for cogenerating steam and electricity

onsite. High-efficiency, steam-injected gas turbine or combined cycle technologies might be

able to generate as much as 4,000 kwh of

electricity per ton of pulp produced if all of the

hog fuel, black liquor, and recoverable forest

residues were used. Onsite electricity needs are

typically about 740 kWh/ton of paper, so there

would be a substantial amount of power that could

be sold to the grid.

RECYCLING

Waste paper recycling is growing and may be

a source of further energy savings. According to

the Environmental Protection Agency (EPA),

paper and paperboard recycling totaled 18.4

million tons in 1988, a recovery rate of 25.6

percent. This compares to a recovery rate of 16.7

percent in 19700

73

Recycling reduces the energy used in the paper

production process and also in the harvesting and

transport of the timber. However, these energy

savings are offset somewhat by the energy needed

to collect, transport, and de-ink the waste paper.

72 Wc D. ~son, ‘Rospwts forBio~s.G~~ler (As Tbrbine Cogeneration in the Forest Products Industry: A Scopitlg Study, ’ Mwton

University, Center for Energy and Environmental Studies Working Paper No. 113.

73 U.S. fivfimm~ ~t&tion AgeWy, c~racte~zation ~fMum”cipalSo]id Wrote in the UnitedStates: 1990 Uphte, EPAJ530-SW-W2,

June 1990, pp. ES-7, 11.
Table 3-9—Estimated Energy Used To Produce Virgin and Recycled Paper and Paperboard Products

(million Btu/ton produced)

From 100% virgin wood From mixed recycled paper

Minimum virgin Change due

fiber content to recycling

Product Energy use (percentage) Energy use (percentage)

Paper products

Newsprint. . . . . . . . . . . . . . ....44.33

Printing paper. . . . . . . . . . . . . . 67.72

Packaging paper. . . . . . . . . . . . 47.07

Tissue paper. . . . . . . . . . . . . . . 68.52

Paperboard products

Liner board. . . . . . . . . . . . . . . . . 14.46

Corrugated board. . . . . . . . . . . 37.22

Box board. . . . . . . . . . . . . . . . . . 25.97

Food service board. . . . . . . . . . 29.19

Other paper board. . . . . . . . . . . 17.65

Construction board. , . . . . . . . . 31.71

0

16

70

0

75

0

0

100

0

65

34.76

43.43

43.48

29.46

36.28

36.28

36.25

NA

36.32

32.24

-21.6

-35.9

-7.6

-57.0

+1 50.9

-2.5

+39.6

—

+1 05.8

+1.7

SOURCE: T. Gunn and B. Hannon, “’Energy Conservation and Recycling in the Paper Industry,” Resources and Energy 5:243-260, 1983.

Estimates of energy used to produce paper and

paperboard products from virgin wood and recycled paper are shown in table 3-9. Paper and

paperboard mills are the major consumers of

secondary fiber.

MATERIALS PRODUCTION

Steel products are produced from iron ore and

iron scrap using a variety of pyrometallurgical,

electrolytic, and mechanical processes. Integrated

mills rely mostly on ore-based processes, the

most common of which involves reducing pelletized iron ore into pig iron using coke (in a blast

furnace); refining the iron into steel (in a basic

oxygen furnace); and casting, forming, and treating the steel into sheet, bars, beams, and other

products. The major steps are: ore preparation,

cokemaking, ironmaking, steelmaking, primary

casting, secondary finishing, and heat treating.

Minimills usually produce steel from scrap, not

iron, in an electric arc furnace. This method is also

employed at some integrated mills. The process

does not include ore preparation, cokemaking,

and ironmaking, but does involve many of the

same casting and forming steps. Over the last

several decades, scrap-based steelmaking capacity has grown relative to ore-based capacity.

However, in recent years, the U.S. industry’s

production has been relatively stable at 63 percent

ore-based and 37 percent scrap-based.

The most energy-intensive steps are ironmaking and electric steelmaking. Reductions in energy intensity can result from shifts in the mix of

processes, improvements in the efficiency of the

processes, and improvements in yields. Currently, about 22 million Btu are used on average

to produce a ton of finished steel (based on 1990

and 1991 data) .74 Energetic and the International

74 The U.S. Std industry used 27.4 million tons of metallurgical coal (733 trillion Btu), 1.3 million tons Of steam cod (28 tillion B~), 5.2

million tons of purchased coke (127 trillion Btu), 35.2 billion kwh of electricity (370 trillion Btu based on a conversion factor of 10,500

Btu/kWh), 244 million gallons of fuel oil (35 trillion Btu), and 368 billion cubic feet of natural gas (380 trillion Btu) to produce 78.9 million

tons of steel products in 1991. The technology mix was 60.0 percent basic oxygen furnace (BOF), 38.4 percent electric arc firnace (EAF), and

the remainder open hearth furnace (OH). The American Iron and Steel Institute, Annual .$mtisfi”cal Report, (Washingto~ DC: 1991).
Iron and Steel Institute (IISI) have estimated the

energy intensity of state-of-the-art operations for

the major production methods:

Energy intensity

(million Btu per ton of Energetics75 IISI76

finished steel) estimate estimate

Basic oxygen furnace method (BOF) 16.1 19.077

Electric arc furnace method (EAF) 10.2 8.0

Average based on a 60:40 ratio

of BOF and EAF production 13.8 14.6

Details of the Energetic estimates are shown

in tables 3-10 and 3-11. Widespread adoption of

state-of-the-art technologies can reduce energy

consumption by about 34 to 38 percent from

current average practices. Advanced technologies, not yet commercialized, could possibly

reduce energy use an additional 13 percent.

ORE PREPARATION

Iron ore is prepared by being crushed and

ground and then agglomerated (via pelletizing or

sintering) into marble sized pieces that can be fed

into a blast furnace. Ore preparation uses about

0.7 million Btu/ton of pellets or sinter produced.

Use of state-of-the-art technologies, such as

organic or cold bonding for pelletizing, can

reduce energy use by about 18 percent from

current average practices. If direct ironmaking

and/or steelmaking, which are advanced technologies, become commercially available, the pelletizing and sintering operation may possibly not be

needed.

COKEMAKING

Coke is produced by heating high-grade (metallurgical) coal to temperatures of 1,650 to

2,0000F for 12 to 18 hours. This boils off volatile

compounds and leaves an 80 to 90 percent pure

carbon product. Traditionally the chemical reactions in the coke ovens were stopped by quenching the coke with water and venting the steam into

the atmosphere. A much more efficient technique

is dry coke quenching, in which a nonoxidizing

gas is circulated through the ovens to stop the

chemical reactions and, at the same time, capture

the heat from the coke to generate steam or

electric power. This process also improves coke

quality and reduces environmental emissions.78

The efficiency of converting coal to coke has

improved substantially in recent years. The average amount of energy used to produce a ton of

coke declined from 6.1 million Btu in 1980 to 3.5

million Btu by 1989.79 State-of-the-art technologies, such as dry quenching and oven-gas heat

recovery can lower this by about 14 percent. If

direct ironmaking and/or steelmaking are commercialized, the coking operation will no longer be

needed.

The high costs of environmental compliance

have made coke ovens expensive to operate. The

Clean Air Act of 1990 may force the closure of

many U.S. coke facilities. In the short term, this

will probably lead to greater importation of coke

and more scrap-based steelmaking. In the longer

term, coke may be rendered unnecessary by direct

ironmaking and/or direct steelmaking. Indeed, the

costs and environmental problems of cokemaking

are a major force behind the efforts to develop

direct ironmaking and steelmaking technologies.

75 ~ergetics, hc., In.dusrV Profi/es: steel, prepared for the U.S. Department of Energy, OffIce of ~dusti Whnologies, Remrt No.

DE-AC01-87CIM0762, December 1990.

76 ~temtion~ kon and steel Institute, Energy and the Steel Industry, Brussels, 1982.

77 ns is C=e A, Commemially proven technologies, rather than the IISI base case.

78 JoM~ p, r-r.icks, “The Search for a Cleaner Way to Make Steel, ’ The New York Times, Mar. 21, 1990, p, D7.

79 Energetic, Inc., In&m-y profiles: Steel, op. cit., fOOmOte 75.
.—

Chapter 3-improved Technologies and Practice | 99

Table 3-10--Energy Use by Steel Production Technologies

Energy use

Process mlx (million Btu/ton of product)

State-of- State-ofCurrent the-art Advanced Tons input per ton Current the-art Advanced

Process (1989) (2010) (2010) output or percent (1983) (2010) (2010) Product

Agglomeration

Pelletizing. . . . . . . . . . . . . . . . . . .

Sintering. . . . . . . . . . . . . . . . . . . .

Cokemaking. . . . . . . . . . . . . . . . . . .

Ironmaking. . . . . . . . . . . . . . . . . . . . .

Steelmaking

Basic oxygen furnace (BOF). . . .

Open hearth (OH). . . . . . . . . . . .

Electric arc furnace (EAF). . . . . .

Direct steelmaking. . . . . . . . . . . .

Raw steel production, subtotal

Ore/coke/iron/BOF route. . . . . . .

Ore/coke/iron/OH route. . . . . . . .

Scrap/electric furnace route. . . . .

Direct steelmaking route. . . . . . .

Average. . . . . . . . . . . . . . . . . . . . .

Primary casting

ingot casting. . . . . . . . . . . . . . . . .

Continuous casting. . . . . . . . . . . .

Strip casting. . . . . . . . . . . . . . . . .

Average. . . . . . . . . . . . . . . . . . . . .

Forming, finishing,

heat treating, and annealing

Sheet/strip: hot rolled. . . . . . . . . .

Sheet/strip: cold roiled. . . . . . . . .

Heavy plate. . . . . . . . . . . . . . . . .

Sheet/strip: hot rolled (strip cast).

Sheet/strip: cold rolled (strip cast).

Heavy plate (strip cast). . . . . . . .

Shapes and rails. . . . . . . . . . . . .

Bars/wire rods. . . . . . . . . . . . . . .

Average. . . . . . . . . . . . . . . . . . . . .

Unallocated energyc. . . . . . . . . . . . .

Total. . . . . . . . . . . . . . . . . . . . . . . . .

1.11

0.38

0.54

0.85

0.66

59.6

4.5

35.9—

—

—

1.00

35.1

64.8

0.91

21.1

37.9

9.0

—

—

—

6.7

25.3

0.91

1.11

0.38

0.54

0.85

—

62.0

—

38.0

—

—

—

—

—

1.00

5.0

95.0

—

0.94

21.1

37.9

9.0

—

—

—

6.7

25.3

0.94

—

—

1.11

0.38

0.54

0,85

—

31.0

—

38.0

31.0

—

—

—

—

1.00

5.0

27.0

68.0

0.94

—

—

—

21.1

37.9

9.0

6.7

25.3

0.94

—

—

Pellets/pig iron

Sinter/pig iron

Coke/pig iron

Pig iron/BOF steel

Pig iron/OH steel

percent

percent

percent

percent

—

—

—

—

Ton of raw steel

percent

percent

percent

Cast steel/raw steel

percent

percent

percent

percent

percent

percent

percent

percent

Finished steel/raw

steel

—

—

0.4

1.5

6.0

13.9

13.9

0.5

3.3

6.3

—

15.9

15.2

6.3

—

12.4

2.7

1.0

—

1.6

2.5

6.2

3.2

—

—

—

4.4

5.0

4.7

1.9

20.1

22.2

0.2

1.2

3.0

10,2

—

-0.1

—

5.0

.

10.5

—

5.0

—

8.4

0.7

0.2

.

0.3

1.5

3.8

2.4

—

—

—

1.9

2.7

2.8

1,8

13.1

13.9

0.2

1.2

3.0

10.2

—

-0.1

—

5.0

9.9

10.5

—

5.0

9.9

8.2

0.7

0.2

b

0.1

—

—

—

0.7

1.6

1.0

1.9

2.7

1.7

1.6

11.5

12.2

Pellets

Sinter

iron

Iron

BOF steel

OH steel

EAF steel

Direct steel

BOF steel

OH steel

EAF steel

Direct steel

Raw steel

Cast steel

Cast steel

Cast steel

Cast steel

Finished steel

Finished steel

Finished steel

Finished steel

Finished steel

finished steel

Finished steel

Finished steel

Finished steel

Raw steel

Raw steel

Finished steel

a Average of currently implemented technologies.

b All energy use for direct strip is charged. appropflate forming adfinishing pro~sses; hot and mid rolled sheet/strip and heavy plate.

c Includes galvanizing, electrolytic tinning, fuel-fired boiler operations, power generation services, and other miscellaneous services.

KEY: BOF - basic oxygen furnace; OH - open hearth furnace; EAF - electric arc furnace.

NOTE: Purchased electricity is cmunted at 10,500 BtuAWh; generation and transmission losses are included. Estimated losses in 1989 were approximately

3.0 million Btu/ton of raw steel.

SOURCES: Sayed A. Azimi and Howard E. Lowitt, Energetic, Inc., The U.S. Steel Musky: An Energy Perspective, prepared for the U.S. Department of

Energy, Office of Industrial Programs, Report No. DOE/RlJO1830-T55 (Springfield, VA: National Technical Information Service, January 1988). Energetic

Inc., lndust~ Profiles: Steel, prepared for the U.S. Department of Energy, Office of Industrial Technologies, Report No. DE-ACO1 -87CE40762, December

1990. F.T. Sparrow, Argonne National Laboratory, Energy and Materiak F/ows in the Iron and Stee/ Industry, Report No. ANIJCNSV-41 (Springfield, VA:

National Technical Information Service, June 1983). J.B. Darby, Jr. and R.M, Arons, Argonne National Laboratory, Gtergy and Materials Flows in the

Fabrication ofkon and Steel Semifinished Pro&cts, Report No. ANL/CNSV-8 (Springfield, VA: National Technical Information Service, August 1979). Some

data modified by the office of Technology Assessment.
100 | Industrial Energy Efficiency

Table 3-1 l—Major Energy Saving Features of Improved Steel Production

Process State-of-the-art Advanced

Agglomeration Stage discontinued, made obsolete by diPellitizing Peridur organic bonding process. (S) rect steelmaking.

Cold bonding processes. (S)

Sintering Combustion air preheat. (M)

Raw materials preheat. (M)

Steam or power generation using sinter

cooler offgases. (M)

Cokemaking

Ironmaking

Blast furnace

External desulfurization

Steelmaking

Open hearth (OH)

Basic oxygen furnace (BOF)

Electric arc furnace (EAF)

Secondary refining

Auxiliary processes

Dry quenching. (S)

Coke oven gas heat recovery. (S)

Top gas pressure recovery. (S)

Hot stove waste heat recovery. (M)

Wurth charging top; improves distribution

of ore, coke, and limestone.

Added process between the blast furnace

and the steelmaking stage. Decreases

coke consumption by reducing the sulfur

removal function of the blast furnace. (S)

Stage discontinued, made obsolete by direct steelmaking.

Stage discontinued, made obsolete by direct steelmaking.

Discontinued use of open hearth steel

furnace.

In-process control of temperature and car- Replacement of BOF steelmaking with dibon content. (S) rect steelmaking.

BOF offgas heat recovery. (M)

Combined top and bottom oxygen blowing.

(M)

Scrap preheating. (S)

Ultra high power transformers. (M)

Bottom tap furnaces. (M)

Water cooled furnace panels and top. (M)

Ladle metallurgy techniques, including: vacuum arc decarburization, argon stirring,

and injection systems for desulfurization.

(s)

Specialty and stainless steel processes,

including: electroslag remelting, argonoxygen decarburization, vacuum induction melting, electron beam melting, and

vacuum arc remelting. (S)

Ladle drying and preheating. (S)
Primary casting Greater use of continuous casting. Replacement of continuous casting by

direct thin strip casting for hot and

cold rolled sheet/strip and heavy plate

products; combines primary casting

and finishing and. forming stages.

Continuous casting

Ingot casting

Forming and finishing

Reheating

Modern casters. (S)

Slab heat recovery. (S)

Soaking pit utilization and pit vacant time.

(M)

Direct roiling of sheet/strip; eliminates need Replacement of continuous casting by

for reheat furnace. (S) direct thin strip casting for hot and

Reheat furnace waste heat recovery. (S) cold rolled sheet/strip and heavy plate

Reheat furnace insulation improvements. products; combines primary casting

(M) and finishing and forming stages.

Hot charging of products into reheat furnace. (M)

Pickling Insulated floats for steam savings. (M)

Annealing Continuous annealing. (S)

Batch annealing air preheat. (M)

Cold rolling Continuous cold rolling. (S)

General Computerized process control. Computerized process control.

Increased combustion efficiency. Increased combustion efficiency.

(5 percent improvement over current prac- (15 percent improvement over current

tice). practice).

KEY: (S) = significant savings, impact on total operation greater than 200,000 Btu/ton; (M) = moderate savings, impact on total operation less than

200,000 Btu/ton.

SOURCE: SayedA. Azimi and Howard E. Lowitt, Energetic, Inc., The U.S. Steel Industry:An Energy Perspective, prepared for the U.S. Department

of Energy, Office of Industrial Programs, Report No. DOE/Rl/O1830-T55 (Springfield, VA: National Technical Information Service, January 1988).

IRONMAKING chemically reduces, and melts the iron ore.81 The

Blast furnaces are the most common technol- limestone and dolomite combines with impurities

ogy used to convert iron ore into iron.80 Pelletized in the iron to form a slag that is removed at the end

or sintered ore are fed into the top of the blast of the process. The pig iron produced by blast

furnace together with coke and limestone and/or furnaces varies in composition depending on the

dolomite. Heated air (sometimes combined with ore and coke used, but typically consists of iron

natural gas or fuel oil) is blown into the blast (92 percent), carbon (4 percent), manganese (2

furnace from the bottom. The burning coke heats,

so M ~temtive t~~que is tie direct reducfion of iron ore to metallic iron using natural gas. Direct reduced tion (D~, also ~1~ sPonge

iron, is suitable for steelmaking using electric arc furnaces. This technology is used extensively in areas such as Venezuela, Mexico, and

Indonesia, where natural gas is abundant and inexpensive, but is relatively rare in the United States.

al me coke serves ~ree purposes in the ironmaking stage: as a reducing agent to convert the ore (iron oxide) fito pig ~o~ * fiel to heat

and melt the ore/iron; and to physically support the ore within the blast furnace. To meet these needs, coke must have a low impurity and ash

content and be physically strong. Coke is produced from a higher grade coal than is used for steam and electricity generation applications.
percent), silicon (1 percent), and small amounts of

other elements.

Ironmaking currently uses on average about

13.9 million Btu/ton of iron ore produced. It

accounts for about half of the energy used in an

average integrated mill, using the basic oxygen

steelmaking process. State-of-the-art technologies such as top gas pressure recovery and

external desulfurization can reduce the energy use

of this stage by 27 percent from current average

practices. Top gas pressure recovery turbines can

be used to generate 8 to 15 MW of power using

the pressure and heat from the blast furnace.

External desulfurization of pig iron is an added

process between the blast furnace and the steelmaking stage. It lowers coke consumption by

decreasing coke’s role in removing sulfur from

the melt in the blast furnace. If direct steelmaking

is commercialized, the ironmaking operation will

no longer be needed.

There are several direct ironmaking technologies under development that could decrease

energy consumption at this stage. One of the

primary goals of these development efforts is to

produce iron with coal, rather than with coke.82

By eliminating the coke ovens and agglomeration

facilities, mills based on these new technologies

would have substantially lower capital costs than

similarly-sized conventional plants. The U.S.

Department of Energy, as part of its Metals

Initiative, is conducting research into an advanced ironmaking technology that has such

benefits, plus it is tailored to domestic taconite

(iron ore) supplies. Among the new ironmaking

technologies are the plasmared, Korf Reduction,

plasmasmelt, inred, and elred processes. Energy

requirements for these systems range from about

11.4 million Btu/ton of hot metal for three-stage

systems to as much as 25.8 million Btu/ton for

single-stage systems. The low end of these energy

requirements is about 10-percent better than what

typical conventional blast furnaces achieve and

about 5 percent better than what the best cost

effective blast furnace technology available today

achieves. The high end of the direct ironmaking

energy requirements is however, much higher

than conventional best practice technologies achieve

today .83 The potential capital savings and other

advantages may push direct coal-based processes

into a dominant role in the steel industry of the

future.

STEELMAKING

Steelmaking refines the pig iron, scrap, or, in

some cases, direct reduced iron (DRI). The

purpose of the process is to remove most of the

impurities such as carbon, phosphorus, sulfur, and

silicon from the melt, and to add the necessary

alloying elements such as manganese, molybdenum, chromium, and nickel.

Two types of furnaces are commonly used to

produce steel: the basic oxygen furnace (BOF)

and the electric arc furnace (EAF).84 Basic

oxygen furnaces are used in plants that produce

finished steel from iron ore. The iron is refined

into steel by blowing oxygen into the furnace. The

oxygen reacts with the carbon in the iron melt to

produce carbon monoxide. The evolving gas

removes carbon from the melt and vigorously

boils the melt to accelerate other refining reactions. The oxygen also reacts with silicon and

various other elements in the melt to form a slag,

which is later separated from the steel.

The carbon-oxygen reaction is exothermic

(produces heat) and theoretically needs no external energy to run. To absorb excess heat produced

by the reaction, about 30 percent of the iron

charge to a BOF is scrap, which contains little

~z U.S. ConFess, C)ffke of lkchnolo~ Assessment, Fueling Development: Energy Technologies for Developing Countizes, op. cit.,

footnote 12<

63 R.B. s~~ and M.J. Corbe% “Coal-Ba~d Ironmaking, ” lronmuking and Steelmuking, vol. 14, No. 2, 1987, pp. 49-75.

84 A ~d tw~oloH, he ~pn h~ ~Ce, was made obsolete by hebasic oxygen me. The hi.st open hearth facility h ~ United

States was closed in 1991.
Chapter 3-Improved Technologies and Practice | 103

carbon to react with oxygen. In practice, BOFs

consume 0.5 million Btu/ton of raw steel produced. State-of-the-art BOFs equipped with inprocess control of temperature and carbon content, offgas heat recovery, and combined top and

bottom blowing generate about 0.1 million Btu of

excess energy for each ton of raw steel produced.

Electric arc furnaces are used primarily to

refine recycled steel scrap and to a lesser extent,

DRI. EAF-based processes are economic at smaller

scales than integrated processes using basic

oxygen furnaces, and are thus less capitalintensive. They are also less energy-intensive (if

the energy embodied in scrap is not included). All

minimills use EAFs, and some integrated producers augment their processes with EAFs. Until

recently, minimills were limited in the set of

products that they were capable of producing.

Now, with control of residual elements and use of

thin slab casting, minimills can produce nearly all

the products available from integrated mills.

EAFs use 6.3 million Btu, on average, to in the

produce of a ton of steel. State-of-the-art technologies such as scrap preheating, ultrahigh power

(UHP) transformers, bottom tap furnaces, and

water-cooled furnace panels and tops can reduce

energy use by 20 percent from current average

practices. The scrap would be preheated with

waste heat from the furnace. UHP transformers

would give furnaces shorter cycle times and

correspondingly better productivity, thus reducing energy use because of the shorter period at

high temperature.85

Secondary refining processes such as ladle

refining are important auxiliaries to steelmaking

furnaces. By carrying out part of the refining in

vessels other than the furnace, these processes

increase the productivity of the furnace and

shorten the period each ton of steel spends at the

very high temperatures.

Efforts are underway to develop an advanced

direct steelmaking process. Direct steelmaking

would replace the coke oven and blast furnace

steps with one continuous process. Another

advantage is that direct steelmaking can either use

iron ore or scrap. The key to the success of this

process is effectively transferring heat from

postcombustion to the bath. The Oak Ridge

National Laboratory (ORNL) estimates that direct steelmaking can reduce energy use by 20 to

30 percent and achieve production rates that are

two to three times higher than those of a blast

furnace.86

Another advanced technology that is under

development is the ore-to-powder steelmaking

process, which eliminates the ore melting process

with magnetic separation and chemical leaching.

ORNL estimates that this method may reduce

energy use by 40 percent and also decrease capital

costs. The need for highly-refined magnetic

separation may be a technical barrier to using this

method.87

After the steelmaking step, the ore-based and

scrap-based production routes converge, so this is

an appropriate juncture to compare the energy

intensities of these two basic production methods.

Up through the steelmaking stage, the ore-cokeblast furnace-BOF route uses on average 15.9

million Btu/ton of raw steel. The scrap-EAF route

uses on average 6.3 million Btu/ton, 60 percent

less than the ore-based method. About 60 percent

of U.S. steel is produced in BOFs and 36 percent

is produced in EAFs (1989), resulting in an

average of 12.4 million Btu of energy for each ton

of raw steel produced (up through the steelmaking

stage). State-of-the-art technologies are estimated

to be capable of using 10.5 million Btu/ton of raw

as Sven Eketorpe, “Electrotechnologies and Steelma.king,” Thomas B. JohanssorL Birgit Bodlund, and Robert H. Williams (A.),

Electricity: Eficient End-Use and New Generation Technologies and Their Planning Implications (Lund, Sweden: Lund University Press,

1989), pp. 261-296.

86 ow Ridge Natio~ ~~rato~, Energy Technology R&D: What Could Make a Difference? Op. cit., fOOmOte ~.

87 fiid,
A slab being torch cut after emerging from a

continuous slab caster.

steel in the ore-coke-blast furnace-BOF route and

5.0 million Btu/ton of raw steel in the scrap-EAF

route. The estimate for an advanced direct steelmaking process is 9.9 million Btu/ton. Direct

steelmaking may hold many cost and environmental advantages, but the energy consumption

advantages (compared with state-of-the-art conventional steelmaking processes) are not large.

PRIMARY FINISHING

Primary finishing includes the casting and

initial rolling of steel into slabs (for flat sheets)

and blooms and billets (for structural shapes and

bars). Ingot casting involves pouring the liquid

steel into molds to form ingots, which are later

stripped, reheated, and rolled. Continuous casting

pours the liquid steel directly into its semifinished

shape.

Continuous casting eliminates the need for the

stripper, reheating (soaking pit), and primary

rolling mill associated with ingot casting. Continuous casting reduces energy use by about 50

percent, as compared with ingot casting. Also,

continuous casting has a greater yield (95 percent)

than ingot casting (82 percent), so less scrap metal

must be returned to the steelmaking process in the

form of waste and unfilled ingot molds. In

addition, the product is often higher quality, and

there are reduced emissions problems.88 Because

of these advantages, continuous casting has

rapidly come to dominate the steel industry. In

1980, 20 percent of steel was continuously cast,

and in 1989, 65 percent was cast this way.

A major breakthough in continuous casting,

called thin slab casting, has been recently commercialized at the NUCOR, Inc. plant in Crawfordsville, Indiana.89 This innovative process has

the potential to reduce energy use and production

time considerably. For example, producing onetenth of an inch thick slabs can be done in only 3

hours with a thin slab caster, but may take as long

as a week with conventional procedures. Thin

slab casting is enabling minimills to Compete with

integrated mills for the first time in the high-value

sheet and strip product lines. The process could be

used in integrated mills and minimills throughout

the industry.

There are other advanced casting technologies

(at various stages of development) that offer even

greater potential capital and energy savings, and

productivity improvements. These include: thin

strip casting, net shape casting, and spray steel.

Primary finishing uses on average about 1.6

million Btu/ton of finished steel cast. State-of-the88 sayed A. H~d Howmd E. Lowitt, Energetic, I.Qc., The U.S. SteelIndustry:An Energy Perspective, prepared for the U.S. Dep~ent

of Energy, Office of Industrial Programs, Report No. DOE/RL/0183(LT55 (Springfield, VA: National ‘Ikchnical Information Service, January

1988).

89 JoMth~ p. WclCS, “-Steel FMter and Cheaper, The New York Times, Business lkchnology, Feb. 27, 1991, pp. D-6 ~d 7.
art modern casters with slab heat recovery can

reduce the energy use of this stage by an estimated

80 percent from current average practices.

FORMING AND HEAT TREATING

Forming, or secondary finishing, operations

transform the steel slabs, blooms, and billets into

their final shapes. Depending on the product, the

process may involve, reheating, hot rolling,

pickling, annealing, and cold rolling. Many of the

forming operations are very electricity-intensive.

Hot rolling, cold reduction, and finishing operations each consume about 125 kWh/ton. Hot

rolling thin cast strip to cold-rolled gages in an

inert atmosphere could eliminate a series of scale

removal, cleaning, and annealing steps and ultimately save 50 to 100 kWh/ton.w State-of-the-art

technologies include direct rolling of sheet and

strip, which eliminates need for reheat furnace,

reheat furnace waste heat recovery, and continuous cold rolling.

After forming, the steel is reheated and then

allowed to cool slowIy in order to relieve the

stresses built up within the steel by the rolling

processes, This improves the strength and ductility of the final product. Heat treatment has

experienced considerable efficiency gains in recent years. In the United States, energy consumption of heating and annealing furnaces dropped by

nearly one-third between 1980 and 1989.91

 Aluminum92

Aluminum is the second most widely used

metal after steel. Its light weight, corrosion

resistance, ease of recycling, and high electrical

and thermal conductivity make it useful in a

variety of applications in the container, packaging, transportation, building, and construction

markets.

Aluminum can be recovered from many minerals (e.g., clays, anorthosite, nepheline syenite, and

alunite), but is produced most economically from

bauxite, an impure form of alumina (Al2O3). TO

extract the aluminum, the bauxite ore is refined

into alumina and then smelted into aluminum.

Electric power accounts for about 26 percent of

the aluminum industry’s production costs, other

energy sources account for an additional 1 percent

(based on 1990 data) .93 As a consequence,

aluminum production capacity is located in areas

of abundant, inexpensive electricity. In the United

States, smelter capacity is located roughly onethird in the Pacific Northwest, one-third in the

Ohio Valley, and the rest in the Carolinas, New

York, and Texas. Because of rising electricity

prices, very little aluminum smelting capacity has

been built in the United States in the recent past

and none is expected to be built in the future .94

Most new capacity, is being located in Australia,

Canada, Brazil, and Venezuela.

ALUMINA REFINING: BAYER PROCESS

The Bayer refining process produces pure

alumina from bauxite. The bauxite is crushed and

ground, then digested in hot (280 to 450F)

caustic soda (NaOH) solution. The alumina

minerals in the ore react with the caustic soda and

dissolve as sodium-aluminate. Most of the impu90 Electric power Res~ch ~ti~te, power Utilization in Flat Processing of Steel, Report No. EM-5996 (pdo ~tO, CA: Electric pOW~

Research Lnstitute, January 1989).

91 Energe(ics, Inc., fndustry profiles: Steei, Op. Cit., fOO@Ote 75.

w U.S. Congess, office of Technology Assessment, Nonferrous Metals: Industry Structure, OTA-BP-E-62 (was~tou DC: U.S.

Gov ernment Printing OffIce, September 1990), ‘‘AluminunL” McGraw-Hill Encyclopedia on Science and Technology (New York NY:

McGraw-Hill, 1987). Energetic, Inc., Industry Profi[es: Alum”num, prepared for the U.S. Department of Energy, Offke of Industrial

Technologies, Report No. DE-ACO1-87CE40762, December 1990.

93 u.S. Dq~ent of CommerW, Bureau of tie Cemus, 1990 AnnUl Sumey of Manufacmres:Stati.~ ticsfor Idustry Groups andIndusrn”es,

op. cit., footnote 24.

94 D~g the 1980s, 10 ~urninum smelters closed and capacity declined by 16 percent. The last new smelter in the United States opened

in 1980.
Table 3-12—Energy Use by Aluminum Production Technologies

Energy use

(mllllon Btu/ton of aluminum)

Current State-of-the-art Advanced

Process (1980) (2010) (2010)

Alumina refining: Bayer process. . . . . . . . . . . . . . . . . . . 35.5 27.0 27.0

Aluminum smelting: Hall-Heroult process

Electrolysis (kWh per lb of aluminum). . . . . . . . . . . . 49.5 (7.3) 42.3 (6.2)

Fume recycling and other electricity.. . . . . . . . . . . . . 3.4 (0.5) 2.7 (0.4)

Anode production: heat and energy. . . . . . . . . . . . . . 5.4 3.3

Anode production: raw materials. . . . . . . . . . . . . . . . 14.6 12,5

Fluoride prduction. . . . . . . . . . . . . . . . . . . . . . . ., . . 2.0 0.4

Subtotal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.9 61.2 49.0b

Ho/ding, casting, melting, alloying, and scrap remelting. 9.5 9.5 9.5

Total end use energy

Based on domestic alumina refining. . . . . . . . . . . . . 119.8 97.7 85.4

Based on imported alumina. . . . . . . . . . . . . . . . . . . . 84.3 70.7 58.4

Electricity tosses c, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.6 64.2 51.7

Total ~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177.7 148.4 123.6

a Average of currently implemented technologies.

b Based on estimated 20 percent improvement in smelting energy efficiency.

c /&um~ that 65 percent of electricity is prw.iuced from thermal sources (68 percent losses) and 35 perceflt is

produced from hydro sources (1 O percent losses).

d A~UmeS that half of the alumina is refined domestically and half is imported.

NOTE: Purchased electridty is counted at 10,500 Btu/kWh; generation and transmission losses are included.

SOURCES: S.Y. Shen, Argonne National Laboratory, Energy and Materials Flows in the Production of IWnary

Ahmirrurn, Report No. ANUCNSV-21 (Springfield, VA: National Technical Information Service, October 1981). R.M.

Arons and A.M. Wolsky, Argonne National Laboratory, Energy and Materials Flows in the fabrication of Aluminum

Products, Report No. ANIJCNSV-3 (Springfield, VA: National Technical Information Service, August 1978). Energetic

Inc., industry Profiles: Aluminum, prepared forthe U.S. Department of Energy, Office of Industrial Technologies, Report

No. DE-AC01-87CE40762, December 1990.

rities in the ore precipitate out as ‘‘red mud, ’

which is removed by countercurrent recantation

and filtration. The solution is then seeded with

starter crystals and agitated to crystallize out

alumina hydrate. This material is then calcined in

kilns (to remove the water) and the result is pure

alumina.

Alumina refining accounts on average for

about 27 percent of the energy used in aluminum

production (based on 1980 data). State-of-the-art

technologies can reduce energy use in alumina

production by 24 percent (tables 3-12 and 3-13).

However, these savings do not apply to all

aluminum production, because about half of U.S.

alumina supplies are imported instead of refined

domestically.

ALUMINUM SMELTING: HALL-HEROULT

PROCESS

The Hall-Heroult smelting process reduces the

alumina to aluminum. Alumina is dissolved in a

molten cryolite (Na3AlF6) bath contained in

carbon-Lined steel cells (pots). In each pot, a direct

current is passed through the bath (between a

carbon anode and the carbon bottom of the cell)

to reduce the dissolved alumina into aluminum.

Molten aluminum collects at the bottom of the

pots and is siphoned off into large crucibles. The

aluminum (averaging about 99.8 percent purity)

is poured directly into molds to produce foundry

ingot or further refined and/or alloyed to make

fabricating ingot. Scrap aluminum may be added

to the melt either at this last stage or when the

ingot is remelted at the foundry or fabricating
Table 3-1 3—Major Energy Saving Features of Improved Aluminum Production

Process State-of-the-art Advanced

Aluminum smelting (Hall-Heroult process)

Electrolysis More efficient rectifiers and computer control Retrofit

of amperage flow. Closer anode-cathode spacing.

Design changes in carbon anodes. Highly conductive electrolyte.

Improvements in the chemical bath. Bipolar anode-cathode assemblies.

Low-current density design cells. Soderberg conversion.

Increased furnace insulation.

Replacement

Pora composite anode.

Advanced technology reduction cell, with

bipolar electrode with 3, 4, and 5 bipolar

plates.

Alcoa aluminum chloride smelting process.

Inert anode.

Carbothermic reduction process.

Advanced technology reduction cell.

MonoPolar electrode.

Retrofit

Composite anodes.

Oxygen resistant, high electrical conductivity material for anodes.

Solvent refined coal or lignite liquids.

Replacement

Inert anode, cathode, and sidewalls.

Carbothermic reduction process.

SOURCE: Energetic, Inc., Industry Profiles: Aluminum, prepared for the U.S. Department of Energy, Office of Industrial Technologies, Report No.

Anode production

DE-AC01-87CE40762, December 1990.

facility. The carbon anodes, which are consumed

in the process, are produced at the smelter by

baking petroleum coke and coal tar pitch at 1,800

F +

The smelting process is continuous. Alumina is

added, anodes are replaced, and molten aluminum

is siphoned off without interrupting current in the

cells. A potline may consist of 50 to 200 cells with

a total line voltage of up to 1,000 volts at current

loads of 50,000 to 225,000 amps.

Smelting accounts on average for 65 percent of

the energy used in aluminum production (based

on 1980 data). Most of this energy is electricity.

Electricity use in the electrolysis section of

smelters currently averages about 7.3 kWh/lb of

aluminum. 95 Modern, state-of-the-art smelters

use 6.0 to 6.5 kWh/lb.

Energy use in the Hall-Heroult process is

determin ed by the design and operation of the

electrolysis cell. About 45 percent power of the

energy input is used to reduce the alumina to

aluminum, and the remainder is lost as heat. The

primary cause of this low efficiency is the spacing

(typically 1.75 inches) between the anodes and

cathodes. Narrower electrode spacings give lower

power consumption and improved energy efficiency. However, there are limits to how close the

electrodes can be spaced. Undulation in the metal

95 mough the basic process Of dumimun smelting is over 100-years-old, the technology has improved steadily. Just after World War II, about

12 kwh of electricity was required to produce a pound of aluminum.
108 I Industrial Energy Efficiency

bath (caused by magnetic fields interacting with

metal pad currents and gases from the deteriorating anodes) can periodically short out the circuit

if the electrodes are spaced too closely. It is

estimated that reducing anode-cathode spacing

from 1.75 to .75 inches could reduce electrolysis

electricity use by 23 percent, and that reducing the

spacing to .25 inches would result in energy

savings of 33 percent. Realizing these potential

savings would require developments in cell design, electrode and lining materials, and electrolyte composition.96

RECYCLING

Scrap recycling reduces significantly the energy used to produce aluminum products. Recycling requires only about 5 percent of the energy

needed to produce primary aluminum from bauxite. In recent years, recycling has accounted for

about one-third of total aluminum production in

the United States.97

SUMMARY

Most improvements in aluminum production

are expected to be marginal over the next 20

years. Full implementation of state-of-the-art

technologies, such as more efficient rectifiers and

computer control of amperage flow, would lower

energy use by an estimated 16 percent from

current average practices .98 If breakthroughs were

made in the development of advanced technologies, such as the Pora composite anode, the inert

anode, or carbothermic reduction process, energy

use may be reduced by an additional 17 percent.

1 Cement99

Cement is the bonding agent that holds particles of aggregate together to form concrete.

Cement production is very energy-intensive, but

the final concrete is one of the least energyintensive construction materials.

The raw materials for Portland cement, the

most commonly used cement, are limestone

(calcium carbonate), silica sand, alumina, iron

ore, and small quantities of other materials. These

materials are quarried, crushed, ground, and

mixed together, and then burned at 2,700 to

2,9000F in large rotary kilns. This sinters and

partially fuses the materials into marble-sized

pellets known as clinker. The clinker is then

cooled, ground into a fine powder, and mixed

with gypsum for use as cement. The main

processes involved in cement manufacture are

raw materials preparation, clinker production,

and finish grinding.

There are two principal categories of cement

production, the wet process and the dry process.

In the wet process, water is added to the process

stream at the grinding stage and later the materials

are fed into the kiln as a slurry. In the dry process,

the raw materials are ground without water, then

preheated or precalcined, and finally fed into the

kiln as a dry meal that contains less than 7 percent

moisture. The preheat and precalcine stage uses

waste heat from the kiln. In some plants, this

intermediate stage is skipped and the dry ground

materials are fed directly into the kiln.

The choice of whether to process wet or dry

depends on the initial moisture content of the raw

materials. Materials with greater than 15 percent

96 Energetic, kc., lndusrry Projiles: Alwninum, op. cit., foomote 92.

97 pa~cia A. Pltiefi and Errol D. Sehnke, “Aluminum, Bauxite, and Al-,’ Minerals Yearbook, vol. I, 1990 ed. (Washingto~ DC:

U.S. Department of the Interior, Bureau of Mines, 1993).

98 ~s ms~es tit on~~ of tie U.S. ~m supply continues to be imported.

99 ~~cemen~” The Ac~emi~Ame~”~un Encyclopedia, online edition (Danb~, a: GrOfier El(x@otic hblihhg, 1991). U.S. Congress,

OffIce of lkchnology Assessment, Fueling Development: Energy Technologies for Developing Countries, op. cit., footnote 12. Energetic, Inc.,

Indf{srry Profi”les: Cement, prepared for tbe U.S. Department of Energy, Office of Industrial ‘Ikchnologies, Report No. DE-AC01-87CE40762,

December 1990.
moisture are wet processed, because there is

insufficient waste heat from the kiln to reduce

their moisture content to levels low enough for

dry processing. The dry process is the most

popular of the two production methods and its use

has been growing because of its greater energy

efficiency.

The energy sources of the wet and dry processes differ considerably, with the dry process

using somewhat more electrical energy and substantially less thermal energy. In recent years,

electricity use in cement manufacture has increased because of the shift to the dry process,

greater environmental controls, and more extensive use of preheater that require large fan

systems. In addition, greater production of more

finely ground, higher strength cements has also

increased electricity use. 100 This is partially offset

because less cement is needed when higher

strength types are used.

RAW MATERIALS PREPARATION

This step, which includes the crushing, proportioning, drying, grinding, and blending of the

various minerals, accounts for about 8 percent of

the energy used in cement manufacturing (tables

3-14 and 3-15). The grinding stage, which consumes the most energy, is done either wet or dry.

The wet process requires less energy at the

grinding stage, but much more energy in clinker

production. Grinding is particularly inefficient,

with an estimated 2 to 5 percent of the input

energy going to breaking materials apart, and the

remainder going into heat and vibration. Full use

of state-of-the-art technologies such as the dry

process, with additional drying in the mills and

improved classification schemes, are estimated to

reduce energy use in raw materials preparation by

about 19 percent from current average practices.

Technologies, not yet commercialized, such as

advanced sensors and instrumentation, modeling

and controls for grinding circuits, and differential

grinding, may be able to reduce the energy use an

additional 23 percent.

CLINKER PRODUCTION

Sintering and fusing the ground materials into

clinker is the most energy-intensive stage of the

process. It accounts for approximately 80 percent

of the energy used in cement production. The dry

process with precalcining or preheating uses the

least energy, the wet process uses the most.

Advances in the preheater and precalciner processes have led to significant improvements in the

overall energy efficiency of cement production in

recent years.

State-of-the-art technologies, such as the dry

process with either preheat or precalcine and

improvements in kiln refractories, kiln combustion, and improved clinker cooling techniques,

are estimated to reduce energy use in clinker

production by about 26 percent from current

average practices. Advanced technologies such as

catalysts to lower calcination temperatures, advanced kiln control based on artificial intelligence, and modifications to alkali specifications

may be able to reduce the energy use an additional

17 percent.

FINISH GRINDING

Grinding the clinker into a fine powder and

mixing it with gypsum accounts for about 11

percent of the energy use of cement production.

The same low (2 to 5 percent) grinding efficiencies that exist in the raw materials stage exist here

ICO stew~w,Tre~Ou~ck~dA]exMj~hu]~vjcQ“E~er~andEnv~Onrnent Consjderatlons for fie Cement Industry, ” paper presented at

the Energy and the Environment in the 21st Century conference. Massachusetts Institute of Technology, Cambridge, MA, Mar. 26-28, 1990.
Table 3-14—Energy Use by Cement Production Technologies

Process mix

(fraction of clinker processed, Energy use

except where noted) (thousand Btu/ton of clinker)

Current State-of-the-art Advanced Current - State-of-the-art Advanced

Process (1988) (2010) (2010) (1988) (2010) (2010)

Raw materials preparation

Primary crushing. . . . . . . . . . . . . . . . .

Secondary crushing. , . . . . . . . . . . . . .

Proportioning. . . . . . . . . . . . . . . . . . . .

Drying. . . . . . . . . . . . . . . . . . . . . . . . . . .

Raw grinding (wet). . . . . . . . . . . . . . . .

Raw grinding (dry). ., . . . . . . . . . . . . .

Blending. . . . . . . . . . . . . . . . . . . . . . . . .

Subtotal. . . . . . . . . . . . . . . . . . . . . . .

Clinker production

Long kiln (wet). . . . . . . . . . . . . . . . . . . .

Long kiln (dry), no preheat/precalcine.

Short kiln (dry), with preheat. . . . . . . .

Short kiln (dry), with precalcine. ... , .

Stationary clinkering, with precalcine.

Clinker cooling. . . . . . . . . . . . . . . . . . . .

Subtotal. . . . . . . . . . . . . . . . . . . . . . .

Finish grinding

Ball milling. . . . . . . . . . . . . . . . . . . . . . .

Ball milling, with pregrinding. . . . . . . .

Roller milling. . . . . . . . . . . . . . . . . . . . .

Nonmechanical grinding. . . . . . . . . . .

SubtotaL . . . . . . . . . . . . . . . . . . . . . .

Total

From domestic clinker. . . . . . . . . . . . .

From imported clinker. . . . . . . . . . . . .

From secondary materials. . . . . . . . . .

Weighted average. . . . . . . . . . . . . . . .

1.00 1.00 1.00

1.00 1.00 —

1.00 1.00 1.00

0.16 — —

0.34 — —

0.66 1.00 1.00

1.00 1.00 1.00

0.34 — —

0.16 — —

0.20 0.20 —

0.30 0.80 0.80

— — 0.20

1.00 1.00 1.00

0.95 — —

0.05 0.99 0.70

— 0.01 0.20

— — 0.10

97% 93% 7470

30/0 7% 6%

— — 20%

26

32

21

270

275

312

2

425

4,932

4,294

3,469

3,332

—

63

4,121

525

473

—

—

522

5,067

522

—

4,925

24

28

19

—

—

270

2

343

—

—

3,000

3,000

—

57

3,057

—

378

420

—

378

3,778

378

—

3,528

42

b

19

—

—

203

2

266

—

—

—

2,500

2,360

57

2,529

—

321

315

300

318

3,112

318

—

2,325

a Average of currently implemented technologies.

b Included in primary crushing.

NOTE: Purchased electricity is counted at 10,500 Btu per kWh; generation and transmission losses are included. Estimated losses in 1988 were

approximately 944 thousand Btu per ton of cement.

SOURCES: S.R. Venkateswaren and Howard E. Lowitt, Energetic, Inc., The U.S. Cernenthxfustry:An Energy Perspective, prepared for the U.S.

Department of Energy, Office of Industrial Programs, Report No. DCWRU0183GT58 (Springfield, VA: National Technical Information Service, May

1988). Energetic Inc., Industry Profiles: Cernerrt, prepared for the U.S. Department of Energy, Office of Industrial Technologies, Report No.

DE-AC01-87CE40762, December 1990.

as well. Addition of a pregrinding stage saves classification techniques, are estimated to reduce

about 10 percent of the energy used in grinding. energy use in finish grinding by about 28 percent

Currently, only about 5 percent of clinker is from current average practices. Partial use of

preground. advanced technologies such as roller milling and

State-of-the-art technologies, such as pregrinding nonmechanical comminution might be able to

and improvements in the grinding media and reduce energy use an additional 16 percent.
Table 3-15—Major Energy Saving Features of Improved Cement Production

Process State-of-the-art Advanced

Raw material Wet process slurry dewatering with filter presses

preparation and slurry thinners.

Waste heat drying using preheater exit gases/

cooler heat in roller or air-swept ball mills.

High-efficiency classifiers in closed-circuit grinding plants.

Roller mills.

Improved grinding media and wear resistant

linings.

Clinker production Dry precalciner kilns.

Dry suspension preheater kilns.

Use of waste fuels, including: coke, municipal

wastes, rice hulls, wood wastes, rubber tires,

hazardous wastes, waste oil, pot liners, sewage sludge, etc.

Optimized heat transfer conditions in the clinker

cooler through better distribution of clinker

and air.

Improved insulating refractories and seals to

reduce kiln shell heat loss.

Kiln combustionimprovements, including semi-direct/

indirect coal firing, optimal oxygen levels, and

advanced burners matched to the kiln/coler

design.

Material recirculation in flash precalciners to

improve calcination efficiency.

Cogeneration using exhaust heat from kiln and/

or coler.

Kiln internal heat transfer enhancement: chains,

lifters, and trefoils.

Low pressure-drop cyclones for suspension

preheater.

High-temperature ceramic filters for kiln exhaust.

Finish grinding Roller mills.

High-efficiency classifiers in closed circuit

plants.

High-pressure roller press for clinker pregrinding.

Improved grinding media and wear resistant

linings.

Modified bail mill configuration and operation.

Particle size distribution control.

Grinding aids.

Fluidized-bed drying with low-grade fuels.

Advanced sensors for particle size, fineness,

and mass flow measurements and automatic

computer control of grinding circuits.

Differential grinding: limestone and clay raw

materials ground separately.

Nonmechanical comminution, based on ultrasound, lasers, thermal shock, electrical shock,

or cryogenics.

All electric kilns and hybrid fossil-electric kilns.

Stationary clinkering systems, including fluidizedbed kilns and trough kilns.

Sensors and online analysis of kiln exhaust,

temperature and clinker quality, and high level

computer-based kiln control.

Alkali specification modification.

Blended cements: Portland cements with fly ash,

kiln dust, blast furnace slag, and natural

pozzolana.

High-pressure roller press as an autonomous

grinding unit.

Modified fineness specification.

Advanced sensors for particle size, fineness,

and mass flow measurements and automatic

computer control of grinding circuits.

Nonmechanical comminution, based on ultrasound, lasers, thermal shock, electrical shock,

or cryogenics.

SOURCE: S.R. Venkateswaren and Howard E. Lowitt, Energetic, Inc., The U.S. Cement Industry: An Eitergy Perspective, prepared for the U.S.

Department of Energy, Office of Industrial Programs, Report No.DO13Rl_101830-T58 (Springfield, VA: National Technical Information Service, May

1988). Energetic, Inc., kdustry Profiles: Cement, prepared for the U.S. Department of Energy, Office of Industrial Technologies, Report No.

DE-AC01-87CE40762, December 1990.
—

112 | Industrial Energy Efficiency

I Glass101

Glass is produced by melting silica, limestone,

and soda ash, in a furnace and allowing them to

cool to an amorphous (noncrystalline) state.102

Other elements may be added to alter the color or

other properties. While still molten, the glass is

formed into a variety of products including:

windows, mirrors, bottles, jars, light bulbs, tableware, and fiberglass. The principal processing

steps are batch preparation, melting and refining,

forming, and postforming.

The energy used to manufacture glass varies

significantly among the major categories of glass

products: flat, containers, pressed and blown, and

fibrous. Currently, between 15 and 27 million Btu

are used on average to produce a ton of glass,

depending on the product (based on 1985 data).

For the industry as a whole, widespread adoption

of state-of-the-art technologies can reduce energy

consumption by an estimated 21 percent (tables

3-16 and 3-17) from current average practices.

The estimated reductions are greatest for flat glass

and smallest for fibrous glass. Advanced technologies, not yet commercialized, could possibly

reduce energy use an additional 30 percent.

BATCH PREPARATION

Glassmaking begins with raw materials weighing and mixing. Recycled material (cullet) is

crushed and added to the process at this stage.

Batch preparation accounts for an average of 4

percent of the energy used in glass production.

Computer control for the weighing, mixing, and

charging saves about 10 percent of the energy

used in batch preparation.

MELTING AND REFINING

The raw materials are batch charged or continuously charged to the melting furnace, where they

are heated to between 2,400 to 2,900°F. After

melting, the glass passes to the refining section of

the furnace where it stays long enough for the

bubbles to escape. Glass is produced in various

types of melters including regenerative, recuperative, electric, and pot furnace or day furnaces.

Most furnaces are freed by gas or oil, but

electricity is becoming more widely used.

Regenerative furnaces are used in large continuous melting operations and account for approximately 90 percent of U.S. capacity. The

charge is melted by a flame that plays over the

glass surface. Fuel and preheated air are fired at

one end of the furnace and the hot combustion

exhaust gases pass through an open brick lattice

(checker) at the opposite end. After 15 minutes,

the flow is reversed. The air is preheated by

passing through the hot checker and the exhaust

gases from the combustion heat the checker at the

other end for the next cycle. Recuperative furnaces are similar, except that they were originally

built without checkers and have since been

retrofitted with heat recovery units. Fossil-fueled,

regenerative furnaces are 40 to 55 percent efficient in terms of end-use energy.

Electric melters heat the glass by passing

current between electrodes embedded in the

charge. These melters are approximately 60 to 75

percent efficient in terms of end-use energy.

Among the advantages of electric melting are:

reduced pollution; improved glass quality (more

uniformity and fewer stones); better control of

operations; faster furnace rebuilds; and small

101 “Glass and Glass Products,” McGraw-Hzll Encyclopedia on Science and Technology (New Yorlq NY: McGraw-Hill, 1987). “Glass,”

The Academic American Encyclopedia, online edition (Danbury, CT: Grolier Electronic Publishing, 1991). E. BabcoeL A. Elaahi, and H.J.?.

Lowitt, Energetic, Inc., The U.S. Glass Industry: An Energy Perspective, prepared for the U.S. Department of Energy, Office of Industrial

Programs, Report No. DOE/RL/O1830-T60 (Springfield, VA: National Tecbnical Information Service, September 1988).

IOZ GINS cm IX produced without silica, but most commercial glass products axe based on it.
—

Chapter 3-improved Technologies and Practice I 113

I l l

0

0

CL
Table 3-16-Energy Use by Glass Production Technologies-(Continued)

Process mix Energy use

(tons of production of finished glass) (million Btu/ton of product)

Current State-of-the-art Advanced Cur rent” State-of-the-art Advanced

Process (1985) (2010) (2010) (1985) (2010) (2010) Product

Pressed and blown glass

Batch preparation. . . . . . . . . . . . . . . . . . . . 1.51 1.51 1.51 0.76 0.68 0.68 Batch processed glass

Melting and refining

Small fossil fueled melter. . . . . . . . . . . . 1.30 1.30 — 10.10 8.00 Melted glass

Small electric melter. . . . . . . . . . . . . . . . 0.14

—

0.14 — 9.90 8.90 — Melted glass

Advanced melter with batch preheat. . — — 1.30 — — 3.00 Melted glass

Moly-lined electric melter. . . . . . . . . . . . — — 0.14 — — 6.70 Melted glass

Subtotal. . . . . . . . . . . . . . . . . . . . . . . . 1.44 1.44 1,44 10.08 8.09 3.37 Melted glass

Forming. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.37 1.37 1.37 5.31 4.50 4.05 Formed glass

Post-forming

Fire polishing. . . . . . . . . . . . . . . . . . . . . . 1.37 1.37 — 1.20 1.10 — Postformed glass

Annealing. . . . . . . . . . . . . . . . . . . . . . . . 1.37 1.37 — 2.04 1.79 — Postformed glass

Advanced. . . . . . . . . . . . . . . . . . . . . . . . — — 1.37 — — 2.74 Postformed glass

Subtotal. . . . . . . . . . . . . . . . . . . . . . . . 1.37 1.37 1.37 3.24 2.89 2.74 Postformed glass

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 1.00 1.00 27.37 22.80 15.18 Finished glass

Fibrous glass

Batch preparation. . . . . . . . . . . . . . . . . . . . 1.30 1.30 1.30 1.15 1.04 1.04 Batch processed glass

Melting and refining

Small fossil-fueled melter. . . . . . . . . . . . 1.11 1.11 — 9.89 9.08 — Melted glass

Small electric melter. . . . . . . . . . . . . . . . 0.12 0.12 — 9.90 8.90 — Melted glass

Advanced melter with batch preheat. . — — 1.11 — — 3.00 Melted glass

Moly-lined electric melter. . . . . . . . . . . . — — 0.12 — — 6.70 Melted glass

SubtotaL . . . . . . . . . . . . . . . . . . . . . . . 1.24 1.24 1.24 9.89 9.06 3.37 Melted glass

Forming. ... , . . . . . . . . . . . . . . . . . . . . . . 1.11 1.11 1.11 7.24 6.00 5.40 Formed glass

Post-forming

Curing. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 1.00 — 1.10 0.94 Postformed glass

Drying. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00

—

1.00 — 1.64 1.40 Postformed glass

Advanced. . . . . . . . . . . . . . . . . . . . . . . . —

—

— 1.11 — — 2.22 Postformed glass

Subtotal. . . . . . . . . . . . . . . . . . . . . . . . 1.00 1.00 1.11 2.74 2.34 2.22 Postformed glass

Tofal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 1.00 1.00 24.51 21.56 13.98 Finished glass

a Average of mrrentty implemented technologies.

NOTE: Purchased electricity is counted at 10,500 BtukWh; generation and transmission losses are included. Estimated losses in 1985 were approximately 2.6 million Btu/ton of flat glass;

4.4 million Btu/ton of mntainer glass; 9.2 million Btu/ton of pressed and blown glass; and 7.6 million BtWton of fibrous glass.

SOURCES: E. Babcock, E. Elaahi, and Howard E. Iavitt, Energetic, Inc., The U.S. Glass ktdustry:An Ehergy Perspective, prepared for the U.S. Department of Energy, Office of Industrial

Programs, Report No. DOE/RlfOl 830-T60 (Springfield, VA: National Technical Information Service, September 1988). Energetic Inc., Industry Profiles: Glass, prepared for the U.S.

Department of Energy, Office of Industrial Technologies, Report No. DE-ACO1-87CE40762, December 1990.
Chapter 3--improved Technologies and Practice I 115

Tables 3-17—Major Energy Saving Features of Improved Glass Production

Process State-of-the-art Advanced

Batch preparation Computer controlled weighing and mixing

and charging.

Melting and refining

Gas/oil-fired melters Oxygen-enriched combustion air.

Electric boosting.

Dual-depth melter.

Regenerator flow controller (process control).

Chimney block regenerator refractories.

Chemical boosting.

Oxygen monitoring (process control).

Sealed-in burner systems.

Reduction of regenerator air leakage.

Automatic tap changing transformers

for electric melters.

Dual-depth melter.

Electric melters

Coal-fired melters

Chemical process

Forming

Post-forming

Computerized inspection.

Computerized inspection.

Batch preheating.

Cullet preheating.

Raw material purification.

Submerged burner combustion.

Batch liquefaction.

Advanced glass melter.

Thermochemical recuperator.

Ultrasonic agitation and refining.

Pressure swing absorption oxygen generator.

Excess heat extraction from generators.

Improved furnace insulation.

Molybdenum lined electric melter.

Direct coal firing (substitution of coal for gas

or oil).

Coal-fired hot gas generation

(COHOGG)(substitution of coal for gas or

oil).

Sol-gel process.

Improved productivity, resulting from greater

production of lighter weight containers and

tempered flat glass products.

Improved mold design.

Improved mold cooling systems.

Automatic gob control.

Improved productivity, resulting from greater

production of lighter weight containers and

tempered flat glass products.

Improved glass strengthening techniques.

Improved protective coating for glass.

SOURCES: E, Babcock, A. Elaashi and Howard E. Lowitt, Energetic, Inc., The U.S. Glass lndustry:An Energy Perspective, prepared for the U.S.

Department of Energy, Office of Industrial Programs, Report No, DOE/RL/01830-T60 (Springfield, VA: National Technical Information Service,

September 1988). Energetic, Inc., Industry Profiles: Glass, prepared for the U.S. Department of Energy, Office of Industrial Technologies, Report

No. DE-ACO1-87CE40762, December 1990.

space requirements. 103 However, there are also Melting and refining account for 50 to 68

major drawbacks, including: electricity costs, percent of the energy used in glass production and

reduced refractory life, more frequent furnace are the focus of energy conservation efforts in the

rebuilds, capacity limitations, and the inability industry. State-of-the-art technologies such as

melt glasses that are oxidizing or that contain oxygen-enriched combustion air, electric boostmetals that attack the molybdenum electrodes. ing, improved process control, and better refracto10S E. Ba~ock, A. Elaahi, and H.E. Imvitt, Energetic, Inc., op. cit., foo~ote 101.
116 | Industrial Energy Efficiency

ries can reduce the energy use of this stage by an

estimated 8 to 37 percent from current average

practices. Advanced technologies could possibly

reduce energy use an additional 38 to 63 percent.

FORMING

Once refined, the molten glass flows to the

forehearth section of the furnace where it is

homogenized and heat conditioned to establish

and maintain temperature uniformity. Overall, the

melt is cooled to the proper working temperature,

where its viscosity is suitable for shearing and

gob formation. However, it must also be heated

periodically to eliminate temperature gradients

within the glass. The cooling function interferes

with the heating function, making the forehearth

a larger energy user.

Molten glass is drawn from the forehearth when

it is ready to be formed. The forming stage differs

greatly depending on the product being produced.

Flat products such as windows are formed

primarily by the float glass process developed in

the 1950s. In the float process, a continuous strip

of glass from the melting furnace floats onto the

surface of a molten metal, usually tin, at a carefully

controlled temperature. The flat surface of the

molten metal gives the glass a smooth, undistorted surface as it cools. After sufficient cooling

the glass becomes rigid and can be handled on

rollers without damaging the surface finish. The

glass can be formed at high speeds and is much

less expensive to produce than similar quality

glass made by grinding and polishing methods.

Containers are formed by blowing or suction

techniques. To form a jar or bottle, a gob of hot

glass is blown or sucked into a mold on a

continuous machine. Light bulbs are produced by

a similar technique, except that the glass is fed

into the forming machine as a ribbon, rather than

individual gobs of glass, and a special nozzle

blows glass from the ribbon into the molds. A

high-speed ribbon machine produces light bulbs

at a rate of more than one every 2 seconds.

Products such as tableware, cooking utensils,

and laboratory equipment are produced by blowing and pressing techniques. A gob of hot glass is

placed in a metallic mold, and a metallic plunger

is forced into the mold to form the glass into the

desired shape. Patterns in the mold surface are

pressed onto the glass.

Fiberglass is formed by one of four techniques:

rotary fiberization, steam or air blowing, mechanical drawing, and flame blowing. In the rotary

process, glass is extruded from holes on the

periphery of a spinning mold. After extrusion, the

diameter of the fibers is reduced (attenuated) by

a blast of hot air or gas. The other processes all

extrude the glass through holes in a stationary

platinum mold, but differ in their attenuation

techniques.

Forming accounts for 12 to 33 percent of the

energy used in glass production. State-of-the-art

forehearth technologies can reduce the energy use

of this stage by an estimated 10 to 20 percent from

current average practices. Advanced technologies

could possibly reduce energy use an additional 10

percent.

POSTFORMING

Postformin g operations are used to adjust the

strength and other properties of the formed

product. Like the forming stage, these processes

vary according to the product being made. Flat

products are annealed and cut, and then either

tempered and quenched or laminated and autoclaved. Sometimes they are also coated. Containers and pressed and blown products are annealed,

coated, and finished. Pressed and blown products

are sometimes cut and fire polished. Fiber glass is

either dried or cured.

Postforming accounts for about 11 to 18 percent

of the energy used in glass production, State-of-theart technologies can save an estimated 11 to 28

percent of this energy from current average

practices. Advanced technologies could possibly

reduce energy use an additional 5 to 14 percent.

Ios E. Ba~~~ A. Elm, and H.E. Lowitt, Energetic, Inc., op. cit., footnote 101.
c

Energy

in the

Corporate

Context 4

orporations’ internal cultures and external relationships

are very important influences on industrial energy use

and efficiency. The first part of this chapter discusses the

internal climate and decisionmaking practices underly -

ing investment in general, and investment in energy efficiency in

particular. The second part focuses on relationships between

corporations and their energy utilities and on utility efforts to

improve industrial energy efficiency.

INVESTMENT IN EFFICIENCY

The improved equipment, processes, and practices described

in the previous chapter enhance energy efficiency only to the

extent that private companies use them in actual production

settings. The investment and implementation step encompasses

several major hurdles. Technical and economic feasibility are the

most commonly studied of the factors influencing energy

efficiency investment, but companies’ general willingness to

invest in process improvements, their energy awareness, and

their access to information also have important impacts,

 The Will to Invest

Perhaps the most important factor affecting industrial energy

efficiency is the willingness of firms to invest in new technologies, whether energy-focused or not. Capital investment in

modern equipment usually enhances energy efficiency, even

when efficiency is not the primary purpose of the investment.

The propensity to invest depends on the business climate,

corporate culture, managers’ personalities, and regulations.

These determine the incentives for corporations in general and

managers in particular to improve their production processes.

117
118 | Industrial Energy Efficiency

BUSINESS CLIMATE AND CORPORATE CULTURE

The working cultures of corporations emanate

to a large extent from the dominant figures within

those organizations. However, business climates

also foster and shape corporate culture. For

example, companies in young, high-growth industries tend to invest heavily in innovative

products and technologies in order to build

market share. In mature industries with pricebased competition and low margins, companies,

especially small ones, may have little incentive

and few resources to invest.

A business climate imbued with strong market

growth and competition is important for fostering

investment. Without market growth, corporations

have neither the resources nor the incentive to

invest. Without competition, companies are under

little pressure to invest. Competition that is

vigorous, but fair, signals to companies that being

profitable depends on being efficient with respect

to energy as well as other production inputs. If

profits are secure without investment, there will

be no investment.

Competitive survival in the face of economic

hard times or a vastly superior competitor can be

a major impetus to aggressively improve energy

costs and efficiency. For example, U.S. copper

companies reduced their energy use significantly

when they restructured themselves in the rnid1980s to remain competitive in world markets.1

The effects of the business environment on

corporate culture and managers’ decisionmaking

and investment behavior are illustrated in table

4-1.2 Within these categories are managers that

invest readily, ones that would invest if capital

were more available, and ones that are reluctant to

invest in almost any circumstance. Decisions by

hands-on managers occur quickly, while those by

bureaucrats are long and involved.

MANAGERS’ PERSONALITIES

Corporations are not monolithic, and neither

are their investment strategies. Decisions about

investments are made by many managers, acting

either as individuals or groups. The managers

respond to different stimuli and react to situations

in different ways. No one type of incentive system

works for all managers. Once their basic goals

regarding production quotas, reject rates, and

other factors have been met, managers differ in

their effort and desire to improve production

processes and products. In the context of the “if

it’s not broke, don’t fix it adage, managers differ

in their ideas about what is meant by ‘‘broke. ’

For some, an operation is ‘‘broke’ only if it is not

up and running. They are satisfied if they are

meeting their basic goals, and only “fro’ things

when those goals are not being met. For other

managers, an operation is ‘‘broke” if it can be

improved. These managers continue ‘‘fixing’

things until the process is producing high-quality

products as efficiently as possible.

REGULATIONS

Investment can also be mandated, as in the case

of environmental regulation. In some cases,

mandated investment can increase the efficiency

and competitiveness of companies. In other cases,

regulatory mandates can lead to higher costs and

greater energy use, and in severe cases, lead to

plant closures and capital migration. This can

happen if the mandated costs are too onerous and

if foreign competitors do not face commensurate

increases in production costs or tariffs. Higher

costs do not, however, automatically lead to plant

closures. There are tradeoffs among the costs of

doing business, the costs of relocating, and the

benefits of being close to markets.

i U.S. Congress, Office of ‘lkcbnology Assessment, Copper: Technology and Competitiveness, OTA-E-367 (Washington DC: U.S.

Gov emrnent Printing Office, September 1988).

Q The eategones, which were developed to describe managers in commercial fii, are also applicable to managers in small- and

medium-sized industrial firms. Managers in large fii are more difficult to categorize, because their behavior is more strongly governed by

corporate cultures that are unique to their firms.
Chapter 4–Energy in the Corporate Context | 119

Bureaucrats

Survival-focused

Table 4-l-Categories of Managerial Behavior

Manager type Industry type Management characteristics

Enlightened managers High growth. Early adopters of technologies who closely monitor

and control energy consumption and expense, and

seek to maximize equipment efficiency and reliability.

Slow, but stable, growth. Shortsighted, risk averse, and somewhat cash constrained. Multiple decisionmakers and lengthy,

formal, decision cycle.

On the edge of bankruptcy. Focus exclusively on activities that will generate cash

to keep the business afloat. Emphasis on revenue

generation over cost reduction. Minimize financial

risks.

Hands-on managers Business built around a somewhat A simple decisionmaking structure anchored by a

price-insensitive product. single individual who is directly involved in the daily

operations of the business. Focus on decreasing

operating costs more than increasing revenue.

Avoids financial risks and investments in new

technologies regardless of the potential benefits.

Operating cost sensitive Volatile growth.

Innovators Slow, but steady growth.

Prevalent concern for managing and containing operating costs. Uses a rigorous set of financial criteria to

guide acquisition decisions and performance.

Commitment to innovation in product line and business as a whole. Pays more attention to operating

costs and efficiencies than to initial costs of

energy-related equipment. Willing to adopt new

energy management technologies and invest managerial time in monitoring and controlling energy

costs.

Constrained relationship Highly energy intensive and Recognize opportunities to achieve greater efficiency,

seekers highly leveraged. but high debt loads and lack of cash prevents the

acquisition of fuel-efficient technologies and the

expertise to manage energy consumption.

Uninvolved Mature products in mature mar- Averse to adopting new technologies in particular and

kets. Slow, but occasionally vol- risk in general. Negligible concern about energy.

atile, growth.

Complacent Perceived price insensitive mar- Risk averse and unwilling to invest in new technolokets. gies, and are not particularly sensitive to cost

control.

SOURCE: Electric Power Research Institute, An Overview of EPRI’s Commercial Needs-Based Market Segmentation Framework, EPRI Project No.

RP2671-01 (Palo Alto, CA: Electric Power Research Institute, November 1990).

 Energy Awareness their energy costs by improving their energy

If there is a willingness to invest, the next efficiency. The importance that companies attach

hurdle is for managers to know how energy is to reducing costs in general, and energy costs in

used in their plants and to be aware of technolo- particular, varies greatly however.

gies available to improve the situation. Industrial To some extent, the level of companies’

companies view energy primarily in terms of cost. concern about energy is proportional to energy’s

They have direct financial incentives for reducing share of total production costs (see figure 2-8). In
120 | Industrial Energy Efficiency

industries such as steel, aluminum, cement, and

industrial gases, where energy is a major portion

of total costs, concern about energy efficiency is

high. The existence of energy-efficiency "champins, ’ enlightened management, or efficiency

promotion programs can also give energy a high

profile in corporate decisionmaking. For example, Dow Chemical’s Louisiana Division has a

very successful contest for identifying and funding energy efficiency projects (box 4-A). Sudden

energy price shocks or availability problems can

also prompt companies to improve their energy

efficiency.

The above cases notwithstanding, cutting energy costs via technical means is not a high profile

concern in most industrial companies. Energy

costs do not command the attention of senior

management and do not garner the resources

needed to implement improvements. Even in the

operations divisions of firms, where cost issues

are most focused, energy is but one of many

concerns. An operations manager’s top priorities

are keeping the production line up and running

smoothly, making products that meet consumer’s

specifications and expectations, and meeting

regulatory guidelines. Energy costs tend to be

secondary concerns. The general lack of concern

afforded energy in many corporations is a major

barrier to the implementation of energyefficiency improvements.

Low energy awareness is less of a setback to

efficiency in situations where there are new

technologies with production benefits in addition

to energy saving characteristics. Fortunately,

many technologies fall into this category. They

are implemented primarily to boost product

quality, further automate production, or enhance

some other characteristic. They improve energy

efficiency as a side benefit. For example, continuous casting is put into steel mills primarily to

improve material yields and product quality and

to shorten processing times. Secondarily, the

improved design of the process uses less energy

per ton of steel produced.

 Role of Information

Convenient information regarding new technologies and their energy characteristics is vital to

efficiency implementation. Managers, especially

those in small firms, do not have the time and

resources for gathering and analyzing large amounts

of information to support their decisions. This is

particularly true when equipment fails and needs

immediate replacement. There is little time to

research the best available replacement technologies, and then test and tune them up once they

arrive. Replacements are needed quickly, and

must have minimal startup problems. Consequently, in these situations, managers usually

stick with the technologies that they know well—

the ones that were used before.

Providing information is a role that State and

Federal Government are involved in. Utilities are

also involved in disseminating information as

well as conducting audits to inform companies

about energy saving opportunities. Sometimes

such outside organizations are successful in

promoting energy efficiency technologies, because they can better deal with issues that straddle

bureaucratic boundaries within fins.

 Technical and Economic Feasibility

Lastly, technologies must be technologically

and economically feasible to be implemented.

Technologies must not only work successfully,

but also be reliable, serviceable, and proven. In

addition, they must be economical with respect to

initial capital outlays, energy and other input

prices, and costs of capital. In addition, there are

various hidden costs, such as operator retraining,

equipment testing and adjustment, and process

downtime during installation and startup, associated with getting a technology up and ruining.

These hidden costs can be sizable, but are often

overlooked.

TECHNOLOGICAL FEASIBILITY

On the technical side, risk can be a large barrier

to new technology implementation. Many companies are very risk averse and only invest in
Chapter 4–Energy in the Corporate Context 1121

Box 4-A—Dow Energy/Waste Reduction Always Pays (WRAP) Contesti

The Louisiana Division of Dow Chemical Co. sponsors an annual contest to generate ideas for improvements

in energy use, product yield, maintenance, and waste reduction. When t he contest started in 1981, it covered only

energy saving projects that cost less than $200,000 and paid for themselves within a year. The scope of the contest

was expanded to include product yield projects in 1983, maintenance projects in 1986, and waste reduction

projects in 1987. Today, the Energy/WRAP Contest accepts any project within this scope that saves more than

$10,000 year and has a return on investment (ROI) greater than 30 percent.2

Employees submit ideas for cost savings to the Energy Evaluation Committee. Each submissionintentionally kept simple-must include a brief project description, a summary of utility (e.g., electricity and steam)

and yield savings, ROI calculation, before-and-after sketches, and if applicable, the type and quantity of waste

reduced. The incremental costs for utilities and the formula for calculating ROI are published on t he entry forms,

so individuals can determine for themselves whether they have a good project. After an initial review of the entries,

four or five members of the Committee discuss the proposals with the submitters. This review process is designed

to evaluate projects, not people. The purpose is to ensure that all approved projects are technically viable and have

a high probability of being successful. Winning individuals and teams are recognized through a formal awards

presentation, where they are presented plaques by the division general manager. In addition, winners receive

strong management and peer recognition in t heir own plants and departments. No monetary awards are given by

the Energy Evaluation Committee to winning projects. Instead, supervisors are asked to put each individual’s

contest participation in the context of overall job performance and reward him or her accordingly. Later, the

completed projects are audited to verify t hat each project accomplished what it was supposed to. The objective

is not to find fault with unsuccessful projects, but to learn what makes good projects.

Between 1982 and 1988, there were 404 winning projects costing a total of $68 million. The average ROI

each year varied between 77 and 340 percent. All but four of the projects had costs less than $2 million. In 1988,

the 94 winning projects costing less than $2 million each required expenditures of $9.3 million and generated

savings of $18 million per year. The savings came from fuel use (23 percent), product yield improvements (60

percent), capacity increases (14 percent), and maintenance (3 percent). The contribution of waste reduction

projects is included in the product yield improvement category. From 1982 to 1991, more than 100 trillion Btus of

energy have been saved. Dow credits the success of the program to the following elements.

●

☛

●

●

●

●

●

●

Top management support-The contest seeks out cost-effective projects and has low overhead. It does

not require a new department, redeployment of people, or a million dollar budget.

Employee recognition-Credit for thinking of, developing, and implementing projects goes to the submitters

and their plants, not to the contest or to the Energy Evaluation Committee.

Funding-The Energy Evaluation Committee does not directly control the allocation of capital. The

contest’s high credibility y and demonstrated past performance lead to funding within normal budgeting and

capital allocation procedures,

Minimal paper work.

Learning experience--The contest develops and strengthens skills such as uncovering and analyzing

plant problems, calculating potential savings, developing viable solutions, estimating project costs, and

making presentations.

IIdea sharing-Descriptions of every project, winners and nonwinners, are published and distributed

throughout the division.

No conflicts with plant priorities objectives-Many of the plants reexamine their priorities as part of t heir

contest activities.

No numerical goals-The contest does not set numerical goals such as the number of projects submitted

or dollar savings. The overall objective is to encourage continuous improvement.

1 Kenneth E. Nelson, ‘(Are There Any Energy Savings ~fi?” Chemjca/ Processing, January 1989. Kenneth

E. Nelson and Joseph A. Lindsiy, “Case Study: Winning Ideas Reduce Waste at DOW,” Pollution Prevention

Review, spring 1991.

2 Rol calculated as annual savings or earnings X 100 / project cost.
122 | Industrial Energy Efficiency

technologies that have been proven on an industrial scale elsewhere. This aversion to risk may

come from management itself or imposed on it by

outside providers of financing. Regardless, many

companies do not like to be the first to try

expensive new process technologies. There are,

of course, exceptions. Nucor recently built a new

steel mill in Indiana around a thin-slab casting

technology that was very unproven.

Companies also want technologies to be very

reliable, because of the great costs associated with

malfunctions in processing lines. For example,

many companies place very high premiums on the

proven reliability of a certain type of pump or fan

and its manufacturer; on minimizing spare parts

inventories; on simplifying maintenance; and on

timely delivery of spares. They are often unwilling to switch to a different manufacturer to get a

slightly more efficient pump or fan for a specific

application.

Other important considerations in energy decisionmaking are the connections between energyusing technology and product quality, yield of

materials, maintenance of equipment, capacity of

production, and so forth. Energy conservation

measures are not undertaken if managers believe

that the new technologies are likely to interfere

with production in any way.

ECONOMIC FEASIBILITY

Standard accounting procedures can be used to

evaluate the economics of all the technical

factors, including the risk, mentioned above.

However, the evaluation process itself can be

costly and burdensome. Small projects are therefore often evaluated solely on their initial capital

outlays and cost savings (box 4-B). Factoring in

the risk, hidden costs, and other difficult to

quantify costs and benefits occurs through managerial intuition.

CAPITAL AND PERSONNEL AVAILABILITY

Funding is another major impediment to implementing energy efficiency improvements. Two

general classes of projects, mandatory and strategic, usually have the highest -claims on companies’ available investment capital, Mandatory

projects focus on regulatory compliance, capitalized maintenance, replacement of essential equipment, and maintenance of product quality. Strategic projects are market development activities,

such as market share enhancement, new product

development, capacity expansion, and acquisitions.3 Though discretionary, strategic projects

are high priority uses of finds.

The amount of capital left over for lowerpriority discretionary projects such as energy

efficiency improvements and other cost cutting

efforts is often small. Getting funding for energy

projects can, thus, be much more difficult than the

standard evaluation criteria (e.g., simple payback,

internal rate of return, and net present value)

would suggest. In a 1983 survey of project

funding practices in large industrial firms, the

Alliance to Save Energy found that many firms

use capital rationing as a project funding control

mechanism. 4 Under capital rationing, projects

compete among themselves for a freed amount of

discretionary capital, and some projects that are

otherwise economically attractive do not get

funded if the capital pool is too small. For firms

that manage capital in this manner, the de facto

internal cost of capital for discretionary projects

can be extremely high, making many projects

appear unattractive.

In addition to the scarcity of capital for

efficiency projects, there is often a shortage of

technical personnel. With many companies running as lean as possible, engineers and technicians are kept busy making sure the production

lines run smoothly and in compliance with

3 Alliance to Save Energy, Industrial Investment in Energy Efli”ciency: Opportunities, Management Practices, and Tu Incentives, July

1983.

4 Ibid.
Chapter 4–Energy in the Corporate Context | 123

Box 4-B–Evaluating a Project’s Financial Worth

Various methods are used to calculate the financial worth of a project to a company. They all attempt to

measure the net monetary effects of a project’s costs and benefits over its useful life. The costs include capital

outlays, operating and maintenance disbursements, startup downtime, etc. The benefits include improved product

quality, increased productivity y, energy savings, etc. Three of the more common project evaluation techniques are

simple payback, return on investment, and net present value. Companies choose the technique t hat best reflects

their management style and accounting practices.

Simple payback, the crudest measure, is the time in years for cumulative cash flow (net benefits) to equal

the project’s capital cost. This method essentially measures the time it takes for a project to pay for itself. For

example, a $600,000 investment that returns $200,000 per year “pays back” in 3 years. Generally, low payback

periods make projects attractive investments. Many firms are reluctant to invest in projects with paybacks greater

than 2 or 3 years. However, this cutoff varies widely not only by company, but also by project size.

The more sophisticated evaluation methods, return on investment (ROI) and net present value (/VPV),

explicitly take the time value of money into account. They compare a project’s worth to that of other investments

(including no-risk financial instruments). ROI is the discount rate that equates the value of estimated future cash

flows (net benefits) arising from an investment with the initial capital outlay. NPV is the value of the future cash

flows (discounted at a set rate) minus the initial capital outlay. High ROIs or NPVs make projects attractive for

investment. Depending on the company and the size and risk of the investment, typical industrial projects must

have ROIs of at least 15 to 30 percent to be considered attractive. Projects with 30 percent ROIs typically have

paybacks in the 3 to 4 year range. The following table shows equivalent ROIs for various payback periods and

project durations.

Payback and annual return on investment conversion table1

Payback Project lifetime (years)

period

(years) 5 7 10 20 40

1 . . . . . . . . . . . .

1.5. . . . . . . . . . . .

2 . . . . . . . . . . . .

2.5. . . . . . . . . . . .

3

3.5: : : : : : : : : : : :

4 . . . . . . . . . . . .

4.5. . . . . . . . . . . .

5 . . . . . . . . . . . .

6 . . . . . . . . . . . .

7 . . . . . . . . . . . .

8 . . . . . . . . . . . .

9 . . . . . . . . . . . .

10. . . . . . . . . . . .

1 59%

86

55

37

25

16

10

4

0

—

161%

90

60

44

33

25

19

14

11

5

0

—

—

161%

91

63

47

37

30

25

20

17

12

8

5

2

0

161%

91

63

48

39

32

28

24

21

17

14

12

10

8

161%

91

63

48

39

33

28

25

22

18

15

13

12

10

1 Annual return on Investment is calculated based on a stream of equal monthly savings or benefits. For Example, a

project that costs $24 and yields $1 of benefits each month for 5 years has an ROI of 55 percent (and a payback period

of 2 years).

The process of estimating a project’s future cash flows for ROI and NPV analysis can be very sophisticated. It may

include assumptions and forecasts regarding the project’s technical performance, the product’s market and prices,

the prices of inputs (e.g., energy, raw materials, and labor), interest rates, depreciation rates, tax rates, etc. The

evaluation may be further enhanced by analyzing the effects of uncertainties regarding the various factors (i.e.,

sensitivity analysis) and accounting for business and technical risks. Highly sophisticated evaluations can require

very costly information are therefore used only for very large projects. For smaller projects, rule-of-thumb

assumptions are often made for many of the factors,

SOURCE: Office of Technology Asessment, 1993.
124 I Industrial Energy Efficiency

government regulations, These personnel are

concerned primarily with the business’ core

activities and have little time left for discretionary

concerns. Hiring additional personnel or using

outside consultants to alleviate shortages of

technical expertise can be expensive. Costly

training is required to fully acquaint the new

engineers and technicians with equipment and

production processes. Furthermore, these employees become burdensome overhead if the

business has to cut back to the core activities

during economic hard times, Companies are

reluctant to routinely hire and lay off engineering

personnel through business cycles, partly because

it fosters a reputation that makes attracting

top-flight technical talent difficult. Using outside

consultants to implement discretionary projects

can also present problems. Consultants require a

great amount of technical and contract oversight,

and if proprietary processes are involved, may

represent an unacceptable security risk.

ENERGY PRICES

Rising energy prices increase energy awareness and improve the economic feasibility of

efficiency projects.5 Likewise, declining prices

cause energy awareness to wane. Because implementing a new technology saves energy in the

future, companies are more sensitive to expectations of future energy prices than to the current

prices in their investment decisions.6

 The Efficiency Gap

There is much anecdotal evidence of industrial

companies failing to undertake energy-saving

projects that are presumably cost-effective. Industrial managers want energy efficiency projects

to pay back very quickly, often in 2 years or less.7

A payback period of 2 years represents an internal

rate of return of about 60 percent, a rate much

higher than the market cost of capital (box 4-B).

Projects that have rates of return between the

market cost of capital and the much higher

internal threshold rate are presumably costeffective, yet not undertaken. These projects fall

into what has been called the ‘‘efficiency gap. ”

The efficiency gap is caused by features such

as: lack of information, uncertainty about fuel

prices, uncertainty about investment benefits (i.e.,

equipment performance), misplaced managerial

incentives, and equipment supply infrasructure

problems. Industrial managers often cite lack of

funds and technical personnel (discussed earlier)

as the reasons that many cost-effective projects

are not undertaken.

Except for the personnel aspect, these same

factors apply to residential investments in energy

efficiency and have been studied extensively.8

Interpretation of these conservation-inhibiting

factors is a matter of some controversy. Conservation advocates generally view the factors as

market barriers, and see a role for government in

helping the market encourage more energy efficiency investment. Alternatively, economists see

most of these factors as a reflection of competitive

markets, and argue that government intervention

is neither justifiable nor beneficial. From an

economist’s viewpoint, many projects that are

presumably cost-effective are in reality not so,

because of the costs associated with these factors.

5 The quantitative effects of prices on industrial energy eftlciency is unclear, however. See discussion under, ‘ ‘What Role Do Energy Prices

Play?” in ch. 1.

b Alliance to Save Energy, op. cit., footnote 3.

7 Marc H. Ross and Daniel Steinmeyer, ‘‘Energy for Industry, ’ Scientific American, vol. 263, No. 3, September 1990, pp. 89-98. Winslow

H. Fuller, XENERGY Inc., “Industrial DSM-What Works and What Doesn’t, ” Proceedings of ACEEE 1992 Summer Study on Energy

Eficiency in Buildings (Washington DC: 1992).

8 Roger S, Carlsmiti William U. Chandler, James E. McMahon, and Dan.ilo J. Santini, Oak Ridge National Laboratory, Energy Eficiency:

How Far Can We Go? Report No. ORNLfI14- 11441, January 1990. Richard B. Howarth and Bo Andersson, Lawrence Berkeley Laboratory,

“Market Barriers to Energy Eftlciency, ” Paper No. LBL-32541, July 1992. Ronald J. Sutherland, “Market Barriers to Energy-Efficiency

Investments,” The Energy Journal, vol. 12, No. 3, 1991.
Chapter 4–Energy in the Corporate Context | 125

INDUSTRIAL COMPANIES AND UTILITIES

 Fuel Flexibility

As mentioned earlier, companies see energy in

terms of cost. They have incentives not only to

become energy efficient, but also to seek out the

lowest priced, most secure energy sources. To

obtain low energy prices and a margin of safety in

terms of reliability, companies (especially energyintensive ones) prefer to be as flexible as possible

in their fuel use. The ability to easily switch to

alternative fuels protects companies against severe energy price fluctuations and supply cutoffs.

It also increases companies’ bargaining power

with their utilities. For example, by threatening to

install cogeneration capacity, companies can

push for more favorable power contracts from

their utilities.

While fuel flexibility can save companies

money, it may come at the expense of lower

energy efficiency. Processes designed for multiple fuels are sometimes not as efficient as those

designed for a single fuel. Moreover, investments

made for fuel flexibility purposes use up funds

that could be used for energy conservation or

efficiency projects.

 Industrial Companies as

Energy Producers

In addition to being energy consumers, companies in several industries (e.g., pulp and paper,

chemicals, and petroleum refining) are large

energy producers. They, or third-party partners,

produce electricity with cogeneration facilities,

and sell to the grid whatever power they cannot

use at the plants. The electricity sales can be a

large source of revenues. As energy producers,

these companies have a great deal at stake in the

many rules governing electricity generation, transmission, and distribution. For example, two

changes that many large industrial companies

would like to see are: 1) being able to sell their

power to retail customers (retail wheeling), and 2)

being able to transfer power from one of their

plants to another over the grid (self-wheeling).

Currently, neither of these practices is allowed.

Access to the electricity market affects the value

of cogenerated electricity and thus the economics

of constructing cogeneration facilities. Increased

access to electricity markets increases the overall

cogeneration potential of industry.

 Demand-Side Management9

Demand-side management (DSM) is the planning, implementation, and monitoring of utility

activities intended to modify customers’ patterns

of energy use. The utilities’ interest in such

programs is to achieve a better balance between

the supply and demand for their power. By more

closely matching the timing and level of their

demand load with the available supply, utilities

are better able to control their costs and rates. For

utilities, facilitating energy savings may be less

expensive than adding new supply capacity.

Currently, DSM is practiced principally by electric utilities, but such programs do exist at some

natural gas utilities.

Utilities have special interest in their industrial

customers for several reasons. Industrial companies are large energy users that represent a major

part of utilities’ baseload. Indeed, most large

industrial customers receive lower rates because

they supply utilities with large, dependable portions of electricity demand. As large individual

power loads, industrial plants also represent

highly concentrated sources of load shape modification potential for utilities. In a similar vein,

industrial DSM programs require fewer resources

to effect a given amount of energy savings than do

programs in the residential and commercial sectors, This is because industrial projects are larger,

and relatively few people need to be involved to

save large amounts of energy. Lastly, utilities

want their industrial customers to be competitive

g A comprehensive look at demand-side management is presented in U.S. Congress, Office of ~chnology Assessment, Energy Eficiency:

Challenges and Opportunitie.rfor Electric Utiiities, OTA-E-561 (Washington DC: U.S. Government Printing Office, in press).
126 | Industrial Energy Efficiency

and financially healthy because of the jobs they

provide, in the plants themselves and in the

communities at large. This employment is important for sustaining the utilities’ residential and

commercial markets.l0

Despite the advantages of industrial DSM, it

has lagged behind its counterparts in the commercial and residential sectors. The ‘‘diversity and

complexity of industrial energy uses, limited

utility experience with industrial processes, and

the scarcity of industrial DSM demonstrations

have combined to inhibit the implementation of

industrial-sector DSM. ’ ’11

There are several major types of DSM programs that utilities use to influence the energy

decisions of their industrial customers. These

include: alternative pricing, customer education

and advertising, trade ally cooperation, direct

customer contact, and direct incentives.12 Alternative pricing is the most common industrial

DSM approach, but more and more utilities are

assuming more proactive marketing and technology oriented roles.13

ALTERNATIVE PRICING

Utilities have traditionally relied on alternative

rate designs such as time-of-use, interruptible,

promotional, and variable level-of-service pricing

to achieve industrial sector DSM objectives.14

These incentives have produced the largest changes

in industrial load shape for most utilities. New

rate programs can be difficult to establish, however. They require review and approval by

regulatory commissions.

Many companies have complex power contracts with their electric utilities. Charges are

incurred for energy use (kilowatt-hour), energy

demand (kilowatt peak), power factor, and various other electricity characteristics. In addition,

the rates may vary by time of day and season of

the year. Such time-of-use rates can be used to

encourage companies to shift their energy use to

off-peak periods such as the nighttime. An

example, is for textile mills to run their chillers

only at night (instead of all the time) and store the

cool water for use during the day. These time

shifts may not actually conserve energy, but they

lower its costs.

EDUCATION AND ADVERTISING

Utility promotions, publicity, direct contact,

advertising, and field tests and demonstrations

perform valuable functions in companies’ need

for technology information. Advertising and/or

education programs are particularly valuable for

generating interest in DSM programs and technologies. Field tests and demonstrations of new

technologies are receiving increasing interest.

The purpose of such programs is to obtain and

disseminate information on the cost, performance, reliability, and operational characteristics

of the technologies. The Bonneville Power Administration (BPA) and the Tennessee Valley Authority (TVA) have active field testing and demonstration programs. The programs at BPA have

included efficient aluminum smelting cathodes,

adjustable-speed drives, and a pulp-refining process. At TVA, the programs have included thermal

10 Elec~c pOwer ReS~ch Insti~te, 1990 Survey ofIndustrial-SectorDema ndSide Management Programs, EPRI CU-7089 (Pdo Alto, CA:

Electric Power Research Institute, January 1991).

11 Elec@ic power Rese~ch Imtitute, Industrial LoadShaping: An IndustrialApplication ofDemand-Side Management, EPRI CU-67MV01.1

(Palo Alto, CA: Electric Power Research Institute, May 1990).

12 Elec~c powm Res~ch I~ti~te, Demand Side Management, vo/. 5: Industrial Markers and Programs, EpM E@ M-3597 (p~o Alto,

CA: Electric Power Research Institute, March 1988).

13 EpM CU-7089, op. cit., footnote 10.

14 EpN Cu.1’egg, op. cit., footnote 10.
Chapter 4–Energy in the Corporate Context | 127

storage systems, biomass cogeneration units,

energy efficient motors, and microwave driers. 15

TRADE ALLY COOPERATION

Trade allies are firms, individuals, or organizations that can influence the relationship between

companies and their utilities. Trade allies can be

helpful in promoting energy efficient technologies to companies during critical decision phases

of projects. For example, utilities may provide

technology and design information to architectural and engineering (A&E) firms that design

and build industrial facilities.

DIRECT CUSTOMER CONTACT

Most utilities contact their large industrial

customers two or more times a year. The frequency with smaller firms is usually lower. As

part of the effort, utilities may offer audits,

engineering assistance, and/or feasibility studies.

Some utilities offer audits to all industrial customers, others just to small customers. The reason

for targeting small industrial customers is that

they often lack the in-house engineering staff,

knowledgeable about energy saving practices and

relevant DSM technologies, that large companies

have. The engineering services offered by utilities

range from drafting equipment installation proposals to designing, installing, and maintaining

equipment, Continued contact with the industrial

customer allows the utility to:

●

●

●

Identify and describe opportunities for efficient energy use and energy cost savings;

Answer any problems or questions related to

energy utilization, supply, or billing; and

Advise customers on technologies for improving productivity and competitiveness.

DIRECT INCENTIVES

Utilities use a variety of financial incentives to

“discount” the purchase cost and improve the

internal rate of return of companies’ efficiency

investments, Such incentives include: loans (ranging from interest-free to full-market rate), lease

and purchase agreements, rebates, allowances,

and buy-back or shared savings programs. A

variation of this strategy is to offer the incentive

to only one company in exchange for demonstrating the technology, so that other companies might

become interested.16

Motors programs are among the most common

of the direct incentives initiatives. Most promote

the use of high-efficiency motors in new motor

applications and as replacements for burned-out

old motors, A few also promote adjustable-speed

drives. The rebates are designed to cover most of

the cost difference between an efficient motor and

a standard motor. Minimum qualifying efficiencies are specified for each standard horsepower

rating +

Motor programs have generally had very low

participation rates. Among the reasons have

been: 17

Customers’ bad early experiences with highefficiency motors due to improper sizing and

installation;

Unfamiliarity of customers and dealers with

the substantial operating cost savings available with high-efficiency motors;

Multiple decisionmakers on motor purchase

decisions and difficulties in reaching the

right decisionmaker;

Customer hesitancy to shut down production

lines to replace an operating motor;

IS EPR1 EA/EM-3597, Op. Cit., fOOtIIOtC 12.

16 ~c Na[lo~~1n~u~~~ Competl[lyrcncss ~oughcfficlencj~: F.ncr~, Environment, ad Economics (NICE3) gf~t program, mn by the

Department of Energy and the Environmental Protection Agency uscs a similar swategy (see ch. 1).

17 ~e~clm Council for an En~r~_Efficient Economy, ~.Tro~.T ~~rned: A Re\,;eN of [lti[iO, E.rpcrience With Consen’afion and b~

Manogenwrrt Program for Commercial and Industrial Custonlcr.r, April 1990.
128 I Industrial Energy Efficiency

. A tendency by many customers to speed up

motor replacements by replacing burned-out

motors with identical motors, and to both

speed replacements and cut capital costs by

rewinding burned-out motors instead of

replacing them; and

. Low rebate levels that cover only a portion

of the cost of new, high-efficiency motors.

 DSM: Rate and Equity Concerns

Some industrial energy users worry that DSM

will ultimately raise electricity prices. 18 They

argue that there is great uncertainty in the

program costs and conservation benefits of DSM,

and that the programs may well cost too much for

the energy savings that they actually deliver.

Because of the costs of DSM programs and the

reduced rate base, electricity rates may increase.

There are also equity issues associated with

DSM. Is it fair for a company to invest in an

energy efficiency project with its own capital and

later have its utility help fund a similar project at

a competitor’s plant?19 This may forestall investment, as companies delay programs in order to see

what DSM incentives may be offered to them.

Another issue is cross-class subsidies. Should

industrial customers be made to pay higher rates

to cover the program costs of residential and

commercial DSM programs.

One utility, Niagara Mohawk, has begun to

address some of these concerns, It has an experimental conservation rebate program that allows

industrial customers to pay slightly lower rates if

they forgo the rebates. Under the program, an

industrial company must pay for up-front conservation audits, then decide whether or not to

implement the recommended conservation measures and give reasons for its decision. The utility

will put up the initial capital to implement the

audit recommendations and will be repaid out of

the energy savings. Companies that decline the

utility’s offer for capital and ‘‘opt out’ out of the

program get to pay $.015 per kWh less for their

electricity. All companies, though, even those

that “opt out,” must cover 60 percent of the

conservation program’s cost.20

 DSM: Experience to Date

In a recent survey, the Electric Power Research

Institute identifiled 417 industrial-sector DSM

programs conducted by 154 utilities.21 Table 4-2

shows the general classes of DSM programs

pertinent to the industrial sector and their reported

load impacts. These programs have involved

nearly 50,000 industrial customers. Some of the

programs are designed exclusively for industrial

customers, but more than half also apply to

commercial customers, and many are designed

primarily for the commercial sector.

Another survey, by the American Council for

an Energy-Efficient Economy (ACEEE), found

that industrial DSM programs focus primarily on

equipment upgrades such as high-efficiency motors and lighting systems.22 Few programs focus

18 One ~oup espousing this viewpoint is the Electricity Consumers Resource COmC~ ELCON).

19 ~ese issues of ~uity d. not, however, a@y to competitors in different utility service areas, which pres~ably have different mtes

anyway.

JO David Stipp, “Some Utilities’ Plans to Cut Energy Use Cost More and Save Less Than Projected, ” The Wall Sfreef Journal, May 27,

1993. “Industrials Can ‘Opt Out’: Who Won+ Who Imst in New York’s New Shared Savings Experiment?, ” The Electricity Journal,

January/February 1993.

21 EpRI CWTOS9, op. cit., footnote 10.

‘2 Jennifer A. Jordan and Steven M. Nadel, American Council for an Energy-Efficient Economy, ‘‘Industrial Demand-Side Management

Programs: What’s Happened, What Works,‘‘ proceedings of ACEEE 1992 summer Study on Energy Eficiency in Buildings ~ashingtoq DC:

1992).
Chapter 4-Energy in the Corporate Context | 129

Table 4-2-industrial Demand-Side Management Programs

Peak load reduction Load addition

Technology category (kW/participant) (kW/partlclpant) Program features

Audit and building

envelope

Heating, ventilating, and

air conditioning (HVAC)

Lighting

Electrotechnology

Thermal storage

Load control

Economic development

Special rate

Standby generation

Motor and motor drive

Power quality and

conditioning

188

1.0 to 3.6

12.3 to 23.0

54.8 to 7,500b

22.0 to 2,1 00’

12.0 to 383

24.6 to 85,400d,

e

32.9 to 7,000cI

d

242 to 8,000d

1.0 to 76.3b,

d

f

56.6”

4.8’

753.6 to 1,000

—

—

162 to 5,800d

19,500

f

Industrial energy conservation, building shell improvements, facility energy analyses, productivity audits, and

process efficiency assessments.

Electric space heating, space cooling, ventilation, and

air-quality equipment.

Efficient lamps and fixtures, task lighting, outdoor lighting,

and lighting control systems.

Promotion or testing of electric-driven technologies that

support industrial processes.

Storage space heating, storage water heating, storage

air-conditioning, and storage refrigeration systems.

Utility control of customer loads or the promotion of facility

energy management systems.

Efforts to attract industry to, or retain industry within, an

area by offering enhanced services or by implementing

competitive pricing strategies.

Offering nonstandard industrial rates, such as interruptible

or time-of-use rates, that are not associated with specific

technologies.

Promotion of customer cogeneration or utility-dispatchable

standby generation equipment located at the customer

site.

High-efficiency motors and/or electronic adjustable speed

drives.

Equipment for decreasing power disturbances or controlling power conversions or utility services designed to solve

customer power quality problems.

a Designated as off-peak.

b RepOrt~ as equipment operating demand reduction in some cases..

c RepOrt~ as load shifted off-peak.

d Includes commercial customers.

e RepOrt~ as contracted interruptible load.

f Data not reported.

SOURCE: Electric Power Research Institute, 1990 Survey oflndustrial-Sator Demand-Side Management Programs, Report No. EPRI CU-7089

(Palo Alto, CA: Electric Power Research Institute, January 1991).

on improving the efficiency of entire manufactur- S

ing systems or processes. Roughly 60 percent of

the programs surveyed offer custom measure ●

incentive programs, such as:

. cash incentives for the incremental cost of

efficient equipment, ●

●

incentives based on energy saved or load reduced in first year (i.e., $/kWh or kW saved),

rebates based on a percentage of materials

and installation costs,

cash grants,

low-to-no-interest loans, and

payback period buy-down incentives.
130 | Industrial Energy Efficiency

The most frequently covered investments are

process heating and cooling measures, refrigeration improvements, and lighting and motor upgrades. About 40 percent of the programs are

prescriptive measure rebates, which generally

offer direct rebates for installation of highefficiency motors, steam traps, adjustable-speed

drives, and compressed-air system improvements.

Rebates are calculated in terms of either dollars

per unit of energy saved or percentages of project

costs.

The ACEEE survey found that while a few

programs had achieved significant savings and

participation, on average the programs have had

little impact. The average program is almost 4

years old, has seen participation by about 6

percent of the utility’s industrial customers, and

has cumulatively saved less than 0.4 percent of

the utility’s industrial energy sales at a levelized

cost of $.012/lcWh. Examples of some of the more

successful, or more innovative, industrial DSM

programs reported in the ACEEE survey are

presented in box 4-C.

Box 4-C-Examples of Industrial Demand-Side Management Programs1

Bonneville Power Administration: Aluminum Smelter Conservation and Modernization (Con/Mod)

Program and Energy Savings Plan2

The Bonneville Power Administration’s (BPA) Con/Mod program is the largest industrial demand-side

management (DSM) program in the Nation. BPA pays the 10 participating aluminum smelters $.005 (in 1985

dollars) for each kilowatt-hour that they save through efficiency improvements. The program was begun in 1987

and was planned to last for 10 years. The near-term objective was to modernize the aluminum plants so that they

would be economically viable even when aluminum prices are low. The long-term objective was to give BPA

low-cost conservation by requiring Contract Demand reductions (decreases in total contract power entitlements)

for the modernization projects completed by June 30, 1991? In fiscal year 1992, the program saved an average

of 107 MW. Savings over the lifetime of the program have been about 4.1 percent of BPA’s industrial sales. In an

associated effort, the Variable Rate program, BPA offers electricity to the smelters at rates tied to the price of

aluminum. BPA’s Energy Savings Plan is targeted at smaller industrial customers. This custom rebate program

pays customers $.15 per kilowatt-hour saved in the first year or 80 percent of the project costs, whichever is

smaller. The program has saved about 5.5 percent of BPA’s nonaluminum industrial sales.

Central Maine Power: Power Partners and Efficiency Buy-Back Programs

The Power Partners program offers energy management contracts paying $,01 per kilowatt-hour of delivered

savings. Commercial and industrial customers, as well as energy service companies, are eligible to bid on these

1 Except where noted, taken from Jennifer A. Jordan and Steven M. Nadel, Anwrican Counoil for an

Energy-Efficient Economy, “Industrial Demand-Side Management Programs: What’s Happened, What Works,”

Proceedings of ACEEE 1992 Summer Study on Energy Efficiency in Buildings (Washington, DC: 1992) and

/ndustna/Demand-Side Management Programs: What’s Happened, Wbat 144xks, What’s Needed, prepared for the

Padfic Northwest Laboratories of the U.S. Department of Energy, DOE/Ef301830-Hl (Washington, DC: Maroh,

1 993).

2 Bonneville power Administration, Offim of Energy Resources, Business Servioes Branch, A/uminum

Sme/ter Conservation/Modernization Program, W 1992 Year End Report, January 1993.

3 During fiscal year 1992, BPA and the smelters agreed on a Contract Demand Reduction amount of 124.6

annual average MW.
.

Chapter 4–Energy in the Corporate Context! 131

contracts. Over its lifetime, the program has saved 1.2 percent of industrial sales and 7 percent of the eligible

customers have participated.

The Efficiency Buy-Back program targets larger customers and provides incentives of up to 50 percent of

project costs. Proposed projects must save at least 5 GWh per year. The program has achieved savings of about

0.9 percent of industrial energy sales with low participation at low cost.

Wisconsin Electric: Smart Money for Business Program

This combination custom and prescriptive rebate program offers commercial and industrial customers a wide

variety of incentives for efficient motors, lighting, and process equipment. Over its lifetime, t he program has saved

2.5 percent of industrial energy sales at a cost of about $.021 per kilowatt-hour saved. Nearly half of the utility’s

industrial customers have participated in the program. The program was refined after 3 years to improve the

communication with the industrial consumers. Now, utility engineers communicate with process-level personnel,

such as plant engineers and maintenance operators, for smaller projects. Simultaneously, utility executives

interact with industrial vice presidents for larger projects.

Puget Sound Power and Light: Industrial Conservation Incentive Program

This program, which targets the 100 largest industrial customers, offers incentives of $.02 to $.15 per

kilowatt-hour saved in the first year of efficiency projects. The incentive covers about 50 to 80 percent of projects

costs. The program is a very labor-intensive, full-service program. Utility personnel work with participants to

analyze entire industrial systems, identify where energy and other benefits lie, oversee project bidding, assist in

project design and planning, and perform energy-savings verification tests. Over its lifetime, the program has

saved 2.0 percent of industrial energy sales at a cost of about $.015 per kilowatt-hour saved.

United Illuminating: Energy Opportunities Program

This program co-funds engineering studies of advanced process, energy management, cogeneration, and

heat recovery measures for industrial and commercial customers. The financial incentives for project

implementation are based on the projects’ costs and payback periods. Incentives of $.15 per kilowatt-hour saved

in the first year are offered for measures with payback periods greater than 5 years, Measures with shorter payback

periods receive rebates as a percent of project cost, with rebates declining as the payback period decreases. After

2 years, t he program had a large portion of the program budget remaining so the maximum incentive was doubled

to $.30 per kilowatt-hour saved in the first year. Over its lifetime, the program has saved 1.2 percent of industrial

sales and 3.2 percent of the eligible customers have participated. The utility cost for t he program has been $.014

per kilowatt-hour saved.

Southern California Gas: High-Efficiency Industrial Equipment Replacement and

Industrial Heat Recovery Programs

These programs are examples of natural gas DSM efforts, which are currently much less common than

electric DSM activities. These programs offer industrial customers incentives to perform consultant studies and

install efficient equipment. The measures most commonly funded are installation of high-efficiency boilers and

burners in the efficiency program and economizers and recuperators in the heat recovery program.

Pacific Power and Light: Energy Finanswer Program

This newly-created program offers industrial customers loan financing rather than cash rebates for

energy-efficiency improvement projects, The utility offers to pay 100 percent of the cost of design and

implementation of a cost-effective, energy-saving project upfront, with the customer paying back the utility at the

prime interest rate plus 2 percent over a period of 5 to 10 years. Customers must have a load of at least 500 kW

to participate in t he program. Recently, the utility has added a guaranteed savings feature to the program format.
Appendix A:

Funding of DOE,

Office of Industrial

Technologies Research

and Development

Program
Industrial wastes

Waste utilization

and conversion

Waste minimization

Municipal solid wastes

Waste combustion

Waste data collection

Cogeneration

Advanced topping

cycles

Electric drives

Materials processing

Metals initiative

Process electrolysis

Recovery of marketable plastics, metal, and fiber fuel from automobile shredder

residue (2,000).

Expansion of markets for surface-activated waste tire rubber (1 ,053).

Conversion of tire rubber, mixed plastics, sludges, and wood and/or paper wastes to

plastics (1 ,000).

Bio-reactor for acetic acid production (700).

Reduction of: byproduct wastes in oxygenated chemicals production; metal ions in

plating wastes; VOCs and CFCs in super-critical parts cleaning; and CFCs in circuit

board soldering (2,790).

Reduction of wastes in chemicals, chemical-using, and petroleum industries (2,300).

Production of hydrogen and sulfur from hydrogen sulfide wastes; UV dual cure coatings

process; reduction of wastes and emissions in silicon and ferrosilicon production;

reduction of amine use in removing C02

from raw natural gas; and removal of VOCs

from waste gas streams using membrane technology (1 ,578).

National Industrial Competitiveness through efficiency: Energy, Environment, and

Ecmomics (N ICE3

) program (1 ,500).

Sewage sludge and MSW burning technologies; natural gas reburn and lime injection

to reduce acid gas emissions; and direct injection of chemicals to meet chlorine and

sulfur emissions standards.

Development and dissemination of energy, economic, environmental, safety, and

health data on MSW processes such as Waste Thermal Energy plants and

material-recovery facilities.

Ceramic components for retrofit into stationary gas tubines (3,222)

Increased electricity generation from simple back pressure steam turbines (555).

Determine R&D requirements on electric motor systems (1 68).

Initiate and organize multi-party program to demonstrate energy -efficient motor drive

systems (163).

Assist in establishing a training program on motor and drive selection in two resource

centers (155).

Experimental program for direct ironmaking; design manual to support commercialization of direct iron/steelmaking; feasibility study to define concept and configuration

of a demonstration plant (8,550).

Sensor probe to rapidly determine chemical composition of molten iron and steel

(1,419).

Single-wheel thin strip steel caster, using open channel process (984).

Improved cathodes for aluminum smelting (708).

Cell design, scale-up, control, and operating procedures for aluminum reduction cells

based on cermet inert anodes (841).

Metal ceramic inert anodes for magnesium production (430).

Electrolytic method to produce neodymium metal from an oxide feed (216).

$5.9 $7.9 $11.1

7.3

0.6

1.0

3.2

—

17.5

9.6

0.7

2.3

4.5

0.7

17.9

15.9

0.7

2.2

9.2

2.1

19.4

1.0 1.5 1.5
Foundries and glass

Separations

Membranes

Pulp and paper

Food, chemicals,

textiles, and

agriculture

Sensors and controls

Bioprocessing

Enabling materials

Continuous fiber

ceramic composites

Engineered industrial

materials

Inventory management system for coils of cold rolled sheet steel as part of “Integrated

Manufacturing Information Systems” (2,975).

Ultrasonic inspection and electromagnetic filtration to detect and eliminate defects in

castings and increase production yield (1 ,487).

Identify barriers to implementation of best available technologies for energy reduction

in metals, glass, cement, and refractory industries (1 ,035).

Rapid glass refiner (464).

Hybrid distillation/facilitated transport membrane system for separation of propane and

propylene (930).

Catalytic ceramic membrane reactor to ethylbenzene or isobutane dehydrogenation

(671 ).

Black liquor pulsed combustion and gasification (2,377).

Black liquor recovery boiler computer model (663).

Demonstration of hot solids firing of black liquor (470).

Develop programs to address technology needs for the pulp and paper mill of the future

(132).

Disseminate strategic R&D and management plan for Alternative Feedstocks Utilization Programs and initiate R&D on high-volume, starch-to-chemicals processes

(2,280).

Develop programs to address technology needs for the petroleum refinery and textile

industry of the future (250).

Sensors and controls for various pulping and papermaking process parameters

(1 ,215).

Sensors and controls for various agriculture and food processing parameters (530).

Metal catalyst for the production of maleic anhydride; bimetallic catalysts for

combustion of pollution gases; and zeolite catalysts for processing petroleum

feedstocks into chemicals (1 ,786).

Biocatalyst for use in both aerobic and anaerobic systems (1 ,470).

Fixed-bed and fluidized-bed bioreactors for organic acids and alcohol production

(1 ,000).

Use of dehydrogenation, electroreduction, and methane selective oxidation reactions

to produce chemicals from renewable feedstocks (600).

Processing and fabrication technologies for continuous fiber ceramic composites

(4,700).

Performance requirements for continuous fiber ceramic composites (2,205).

Develop and characterize intermetallic alloys, including aluminizes of nickel, iron, and

titanium (2,672).

Coordinate ceramics research and apply work to specific industrial uses; apply titanium

diboride fabrication techniques to other composites; flame spraying and other

coatings techniques; reactive metal infiltration composite systems; silicon carbide

powder synthesis; infrared opacification of aerogels and modification of the

materials for applications such as membranes, catalysts carriers, and filters (2,396).

Develop and deploy composites formed by chemical vapor deposition of silicon carbide

(1 ,200).

6.7 6.4 9.0

1.8

2.8

1.0

2.4

4.9

6.7

4.7

1.9

3.9

2.5

1.8

5.2

6.9

6.3

—a

6.2

6.8

1.8

5.1

7.5

8.0

-.

x
Materials manufacturing

technologies

Improved combustion

efficiency

General combustion

processes

Engine combustion

processes

Industrial combustion

equipment

Process heating and

cooling

Heat pumps

Recuperators

Thermal science

Implementation and

deploymentt

Capital equipment

Program management

Total budget

Microwave processing of glass and ceramic powders; use of conducting polymers, thin

film surface modification techniques, magnetic field processing, and bimetallic

coatings in membrane applications (3,086).

Spray dynamics processes, with focus on nonpetroleum backup fuels for natural gas

furnaces and process heaters (600).

Control on nitrogen oxide in combustion of natural gas (400).

Catalytic combustion to achieve higher heat release rate and lower emissions in gas

turbines and radiant burners (395).

Pulse combustors for industrial applications (385).

Eliminate soot particles and reduce nitrogen oxide from diesel combustion emissions

(1,175).

Stratified charge combustion in 2-stroke engines (686).

Combustion kinetics and knock in burning gasolines of the future in existing engines

(525).

Ferrous scrap preheater fueled by natural gas and oil on the scrap (1 ,226).

Work piece temperature analyzer for use in metallurgical heat treatment and ceramic

processes (1,1 12).

Wet oxidation technology (992).

Porous ceramic burner technology (666).

Liquid vapor-and solid vapor-chemical heat pumps (890).

Process integrated heat pumps for use by corn syrup processors, petroleum refineries,

and pulp and paper mills (801 ).

Syn-gas chemical reactor unit and a unit for indirect burning of hazardous waste to

operate a gas turbine (1,731).

Design data and performance prediction methods for use in developing enhanced

surfaces for high-efficiency heat exchangers; analysis of transport mechanisms for

advancing understanding of membrane separation technologies (1 ,477).

Energy Analysis and Diagnostic Centers (EADCs) located at 25 universities (3,937).

Technology transfer activities, including workshops, demonstrations, document preparation and dissemination, and other outreach activities (275).

3.7

1.1

4.2

1.4

3.9

1.8

2.8

4.1

3.3

2.1

—

1.9

1.9 2.2 1.7

2.4 2.3 2.7

2.4 2.6 2.5

3.5 4.5 7.5

0.9 2.8 1.6

7.8 5.9 7.2

96.7 112.8 137.1

aln~~rated within the food, chemicals, textiles, and agriculture area of the %paMiOnS program.

KEY: VOC - volatile organic compounds; CFC = chlorofluorocarbons; COZ - carbon dioxide; MSW = municipal solid waste; R&D - research and development.

SOURCE: U.S. Department of Energy, Congressional Budget Request, IV 1994, Volume 4, April 1993.
Index

Accounting systems, 7-8, 69

Adjustable-speed drives, 71-72, 127-128

Advanced technologies. See Technology and practice

improvements

Advertising programs, 27, 126-127

Air quality concerns. See Environmental concerns

An Alternative Energy Future, 56, 59-60

Alternative pricing programs, 126

Alumina refining, 106

Aluminum production

corporate context of energy, 120

energy consumption and intensity, 7, 49, 51

smelting, 106-108

technology and practice improvements, 102, 106-108

America’s Energy Choices: Investing in a Strong Economy

and a Clean Environment: Technical Appendixes,

56-57,60-62

Anode production, 106-108

ASDs. See Adjustable-speed drives

Basic oxygen furnaces, 103-104

Batch preparation stage of glass production, 112

Bauxite ore, 106

Bayer refining process, 106

Bleaching process, 94

Boilers, 74-75

Bonneville Power Administration, 14, 126-127

British thermal unit (Btu) tax proposal, 28-30

Capital available for efficiency improvements, 8-9, 23-24,

122-124

Carbon and energy taxes, 27-30

Catalytic processes, 79, 84-85

Cement production, 49, 52, 108-112, 120

Ceramics and glass production, 49, 52, 112-116

Changing by Degrees: Steps to Reduce Greenhouse Gases,

57,62-63

Chemical industry

energy consumption and intensity, 7, 45-48,

energy efficiency improvements, 90

energy intensive processes, 86-87

technology and practice improvements, 73, 86-90

Chemical processes, 89,93-94

Clean Air Act of 1990,9,98

Clinker production, 109

Clinton tax proposal, 28-30

CO2 emissions. See Emission standards

Coal-based iron production, 102-103

Cogeneration

advantages and growth of, 75-77

chemical industry and, 86

energy efficiency improvements, 77-78

energy policy goals, 20, 24-27

EPACT provisions, 16, 19

generic technology and practice improvements, 73-78

industrial companies as energy producers, 125

sources of energy, 40-42

Cokemaking, 98

Combined cycle cogeneration sets, 74-75

Combustion turbine cogeneration sets, 74-75

Competitiveness

corporate investment in energy efficiency and, 118, 124

cost-effectiveness of technologies and, 22

DSM and, 125-126

NICE3 program and, 19

policy background and context, 9, 12, 14, 20-21

policy options, 23-24, 30

137
138 | Industrial Energy Efficiency

Component oversizing, 73

Computerized process controls and sensors, 78, 80

Conservation audits. See Energy audits

Conservation of energy. See Demand-side management;

Energy saving features of improved technologies and

practices; Federal energy initiatives; Policy context;

Policy options

Consumption and intensity. See also Demand-side

management

categories of consumption, 35-36

consumption by fuel, 5, 9, 10

consumption by functional uses, industry, and energy

source, 42

consumption by sector, 4, 8

energy intensity and industry consumption, 1-2, 53-56

energy sources used by industry, 37-43

industrial processes consuming much energy, 67-68

industries and their energy use, 7, 42-53

international comparisons, 5-6, 55-56

materials production, 46, 49-52

metals fabrication, 47, 52

nonmanufacturing, 47, 53

nonmetals fabrication, 47, 52-53

outlook for industry energy use, 56-63

overall energy consumption, 3, 7-8, 23, 35-37

primary metals production, 49, 51-52

process industries, 45-49

steam production and cogeneration, 73-75

Container glass production, 116

Continuous casting process, 104-105

Conversion processes, 84

Corporate context of energy

cost-effectiveness of technologies and, 22

DSM and, 125-131

economic efficiency of industry, 22

economic feasibility of improvements, 122

efficiency gap and, 124

energy awareness and, 12-14, 119-120

energy prices and, 7, 23, 124-125

energy-saving mechanisms, 7-9

information role, 12,24-27, 120, 126-127

investment in energy efficiency, 117-124, 127-128, 130

technological feasibility of improvements, 120-122

utilities relationship with corporations, 125-131

Corporate income tax provisions, 30

Costs of energy, 1-2, 20,69-73, 122-124. See also Price of

energy; Production costs

Cracking processes, 84, 89

Cryogenic distillation process, 88-89

Customer education and advertising programs, 126-127

Cylinder machine, 94-95

Demand-side management

corporate context of energy, 27, 125-131

industrial programs, 19, 128-131

policy considerations, 11-12

policy options, 31

public utility commissions and, 13

rate and equity concerns, 128

Demonstration programs. See Research, development, and

demonstration

Direct process heat, 42-43

Direct steelmaking, 104

Distillation processes, 79-80,82-84,88-89

DOE. See U.S. Department of Energy

Dow Chemical Co., 120-121

Drive control, 71-72

Dry cement process, 108-109

DSM. See Demand-side management

Dual- and multi-fuel steam systems, 74

Economic competitiveness. See Competitiveness

Economic efficiency, 1-2

Economic issues. See also Costs of energy; Financial

incentives; Price of energy; Production costs

corporate investment in energy efficiency, 117-124, 127-

128, 130

cost-effectiveness of technologies, 5-6, 22

feasibility of technology improvements, 120-124

market-based approaches to policy, 12

RD&D costs and benefits, 18-19

Education programs, 27, 126-127

Electric arc furnaces, 103-104

Electric melters, 112, 115

Electric motor drive, 42-43,69-73

Electric utilities. See Utilities

Electricity. See also Cogeneration; Sources of energy

DSM and, 125

energy policy goals, 21, 24-27

growth in use of, 9, 39

transmission access, 16, 19

Electrolysis, 107-108

Emission standards, 20, 31-32,85-86

End-use energy consumption, 35-37

Energy and carbon taxes, 27-30

Energy audits, 16,24-27, 127-128

Energy Consumption and Conservation Potential: Supporting Analysis for the National Energy Strategy, 56-59

Energy control management systems, 69

Energy costs. See Costs of energy

Energy efficiency improvements. See Corporate context of

energy; Technology and practice improvements

Energy intensity. See also Consumption and intensity;

Technology and practice improvements

chemical industry, 86-87

decline in industrial energy intensity, 6-7, 11

energy efficiency and intensity, 1-2, 54-55

industries and their energy use, 43-45

Energy Policy Act of 1992,2, 14-20,27,31-32,71

Energy Policy and Conservation Act, 14

Energy prices. See Price of energy

Energy saving features of improved technologies and

practices

aluminum production, 106-107

cement production, 109, 111
Index | 139

glass production, 112, 115

petroleum refining industry, 81-83

pulp and paper industry, 90, 92

steel production, 98, 100

Energy security. See Market security

Energy sources. See Sources of energy

Energy Tax Act of 1978, 14

Engineering efficiency, 1-2

Environmental concerns

advocate roles in industrial energy use, 13

energy policy goals, 20-22

permits, 31-32

petroleum refining industry, 85-86

policy background and context, 9, 12

steel production, 98

Environmental Protection Agency, 14, 17, 27, 96-97

EPACT. See Energy Policy Act of 1992

EPCA. See Energy Policy and Conservation Act

Equipment changes and upgrades, 8, 69,73, 128-129.

See also Fuel-switching potential

Equipment maintenance programs, 7-8,67-69

Equipment standards, testing, and labeling, 15,17-18,27,31,

71

Equity concerns, demand-side management and, 128

Ethylene production, 89-90

Federal energy initiatives

energy audits, 16

equipment standards, testing, and labeling, 17-18

introduction, 14-16

nonutility power generation, 19

public recognition of industry efforts, 17

reporting and targeting programs, 17

technical assistance programs, 16-17, 24-27

technology RD&D, 18-19

utility-industry programs, 19-20

Feedstocks, fictional uses of energy, 42-43

Fiberglass production, 116

Financial incentives, 27, 76-77, 127

Financial worth evaluations, 122-124

Finish grinding process, 109-110

Finishing processes, 85

Flat glass production, 116

Fluidized-bed reactors, 78

Food industry energy consumption and intensity, 45,49,73

Forecasting industry energy use, 56-63

Foreign energy taxes, 28-30

Forming process, 105-106

Forming stage of glass production, 116

Fossil fuels, policy context and, 9-10, 14,20,24-27. See also

Sources of energy

Fourdrinier machine, 94-95

Free market approach to energy use, 59-60

Fuel switching potential

corporate context of energy and, 125

dual- and multi-fuel steam systems, 74

energy policy goals, 20, 21, 24-27

RD&D efforts and, 18-19

sources of energy, 40-41

Fuel use. See Consumption and intensity; Sources of energy

Functional uses of energy, 42-43

Funding for energy efficiency improvements, 122-124

Funding for research, development, and demonstration,

18-19

Gas utilities. See Utilities

Generic technology and practice improvements

catalysts and, 79

energy control management systems, 69

housekeeping, maintenance, and accounting, 65-69

motor drive equipment, 69-73

process controls and sensors, 78, 80

process integration, 79

separation processes, 79-80

steam production and cogeneration, 73-78

waste heat recovery, 78-79

yield improvements and recycling, 80-81

Glass and ceramics production, 49, 52, 112-116

Green Lights program, 17, 27

Greenhouse policy planning, 16

Grinding process, 109-110

Hall-Heroult smelting process, 106-108

Heat recovery, 78-79,94-96

Heat treating process, 105-106

High-efficiency motors, 69-71, 127-128

Housekeeping programs, 7-8, 67

Hydrocracking process, 84

Hydrotreating process, 85

Improved technologies and practice. See Technology and

practice improvements

Income taxes, 27-30

Industrial competitiveness. See Competitiveness

Industrial demand-side management. See Demand-side

management

Industrial energy consumption. See Consumption and

intensity

Industrial Energy Use, 8-9

Industrial gas industry, 120

Industrial structure, energy intensity and, 1-2,5-6, 11,54-56

Industry output, 1-2, 11,43-45,53-56

Information dissemination to corporations, 12, 120, 126-127

Integrated resource planning, 11-12, 19,27

International comparisons of energy intensity, 5-6,55-56

International Iron and Steel Institute, 97-98

Investment in energy efficiency

business climate and corporate culture, 118

capital investment, 8-9, 23-24, 122-124

corporate income tax provisions and, 30

manager’s personalities and, 118-119

regulations and, 118

willingness to invest, 117-118

Investor income tax provisions, 27

Iron ore preparation, 98
140 | Industrial Energy Efficiency

Ironmaking, 101-103

IRP. See Integrated resource planning

Kraft processes, 93-96

Load management. See Demand-side management

Loan assistance to corporations, 27, 127

Maintenance programs, 7-8

Managerial styles and corporate energy investment, 118-119

Manufacturing Energy Consumption Survey (MECS), 17,31

Market growth, corporate investment in energy

efficiency and, 118

Market security, 9, 20-21. See aIso Supply of energy

Marketable permits, 32

Materials production

energy consumption and intensity, 46, 49-52, 73

policy background and context, 7, 12-13

technology and practice improvements, 97-116

Materials recycling. See Recycling

Mechanical pulping processes, 93

Melting and refining stages of glass production, 112,115-116

Membrane separation process, 89

Metal Casting Competitiveness Research Act of 1990, 14

Metals fabrication, 47, 52

Moltex process, 89

Motor drive equipment, 4243,69-73

Motor programs, 127-128

Motor standards, testing, and labeling, 15, 17-18,27,31,71

Multi-fuel steam systems, 74

National Energy Conservation Policy Act, 14, 17

National Energy Strategy, First Edition, 1991/1992, 56,58

National Industrial Competitiveness through efficiency:

Energy, Environmental, and Economics program

(NICE3

), 19

Natural gas use, policy context and, 10. See also Sources of

energy

NECPA. See National Energy Conservation Policy Act

Niagara Mohawk, 128

Nitrogen production, 88-89

Nonmanufacturing sector, 47,53

Nonmetals fabrication, 47,52-53

Nonutility power generation. See Cogeneration

NUCOR, Inc., 105, 122

Oak Ridge National Laboratory, 104

Office of Industrial Technologies, 18

Ore-based steelmaking, 97, 104

Ore-to-powder steelmaking, 104

Output. See Industry output

Oxygen production, 88-89

Paper industry. See Pulp and paper industry

Paperboard products, 96-97

Papermaking process, 95-96

Personnel available for efficiency improvements, 122-124

Petroleum refining industry

energy consumption and intensity, 7, 45-48, 48

energy efficiency improvements, 85-86

increasing energy requirements, 66-67

technology and practice improvements, 73, 81-86

Petroleum use, policy context and, 10, 20. See also Sources

of energy

Policy context

energy policy goals, 20-22

energy policy issues, 6, 22-23

Federal policy, 14-20

institutional trends, 11-12

political trends, 12

stakeholders and interested parties, 12-14

technical and economic trends, 10-11

Policy findings

corporate energy-saving mechanisms, 7-9

introduction, 1-2

policy considerations for saving energy, 9-10

technical potential for saving energy, 3-7

Policy options

financial incentives, 24-30

industrial policy strategies, 23-24

information programs, 24-27

product reuse and materials recycling, 32-33

regulations, 24-26, 30-32

studies forecasting energy use, 56-63

technology RD&D, 32

Political issues influencing energy policy. See

Competitiveness; Environmental concerns; Market

security

Pollution permits, 31-32

Portland cement, 108

Postforming stage of glass production, 116

Power conditioning, 71

Powerplant and Industrial Fuel Use Act of 1978, 14

Pressure swing adsorption process, 89

Price of energy. See also Costs of energy

alternative pricing programs, 126

competitiveness and, 20

corporate context of energy, 7, 23, 124-125

DSM and, 126, 128

international comparisons, 5-6, 55-57

policy context, 23

sectoral and industrial energy prices, 10, 38-40

Primary finishing process, 104-105

Primary metals production, 7,49, 51-52, 73. See also

Aluminum production; Steel production

Process controls and sensors, 78, 80

Process industries

energy consumption and intensity, 45-49

policy background and context, 7, 12-13

steam production and cogeneration in, 73

technology and practice improvements, 81-97

Process materials use, 80-81

Process refinements and changes, 8, 79, 80-81. See also

Cogeneration; Recycling; Waste heat recovery

Product reuse, 20, 32-33. See also Recycling

Product shifts, 8

Production costs, energy share of, 7,44-45, 119-120

Production of energy-intensive products, 54-55
Index | 141

Public recognition of industry efforts, 15-17, 27

Public utilities. See Utilities

Public Utility Regulatory Policies Act, 14, 19,76-77

Pulp and paper industry, 7,45,48-49,73, 90-97

Pulping processes, 93-94

PURPA. See Public Utility Regulatory Policies Act

Rates, demand-side management and, 126, 128

Raw materials preparation, 109

RD&D. See Research, development, and demonstration

Rebates, 128-130

Recovered waste heat, 78-79, 94-96

Recovery processes, 94

Recycling

aluminum production, 108

energy policy goals, 20, 21

policy options, 32-33

pulp and paper industry, 96-97

technology and practice improvements, 80-81

Refineries. See Petroleum refining industry

Refining processes, 106

Refining stage of glass production, 112, 115-116

Reforming processes, 85

Regenerative furnaces, 112

Regulation. See also Federal energy initiatives

corporate investment in energy efficiency and, 118

industrial behavior and, 24-26, 30-32

political issues and policy concerns, 12

Reorganization processes, 85

Reporting and targeting programs, 15-17, 31

Research, development, and demonstration, 15, 18-19,

24-26, 32

Research organizations of utilities, 13

Rewound motors, 71

Sales taxes, 28-30

Scrap-based steelmaking, 97, 104

Secondary finishing process, 105-106

Semimechanical pulping process, 93

Separation processes, 49, 79-80, 82-84,89

Smelting processes, 106-108

Sources of energy. See also Fossil fuels

cogeneration, 40-42

electrification, 39

fuel switching potential, 40-41

fuel use trends, 10

functional uses of energy, 42-43

market security and, 20

mix of, 37-38

sectoral and industrial energy prices, 38-40

State-of-the-art technologies. See Technology and practice

improvements

Steam-only boilers, 74-75

Steam production, 42-43, 73-78. See also Cogeneration

Steam turbine cogeneration sets, 74-75

Steel and Aluminum Conservation and Technology

Competitiveness Act of 1988, 14

Steel production

corporate context of energy, 120

energy consumption and intensity, 7, 49, 51-52

steelmaking, 103-104

technology and practice improvements, 97-106

Studies forecasting industrial energy use, 56-63

Sulfite processes, 93-94

Sulfuric acid production, 86-88

Supply of energy, 7,9, 10, 20, 21

Target programs, 15-17,31

Tax options, 27-30

Technical assistance programs, 16-17, 24-27

Technical personnel available for efficiency improvements,

122-124

Technology and practice improvements

corporate context of energy, 119-124

energy efficiency improvements, 7-8, 11,77-78,85-86,90

energy intensity and, 54-55, 65-67

generic improvements, 67-81

industrial DSM programs, 19, 128-131

industrial policy strategies, 23-24

materials production, 97-116

primary metals production, 97-108

process industries, 81-97

technical potential for saving energy, 3-7

Technology research, development, and demonstration. See

Research, development, and demonstration

Tennessee Valley Authority, 126-127

Textile industry energy consumption, 45

Thermal cracking process, 84, 89

Thermomechanical pulping process, 93

Thin slab casting, 105

Tobacco industry energy consumption, 45-48

Trade ally cooperation programs, 127

Trade associations, policy developments and, 13

Treating processes, 85

Twin-wire machines, 94-95

U.S. Department of Energy

energy efficiency programs, 13-14

EPACT provisions, 14-20, 31-32

fuel switching surveys, 40

ironmaking technology research, 102-103

studies forecasting energy use, 56-59

Utilities. See also Demand-side management

corporate context of energy, 125-131

industrial energy use role, 13, 19-20

information dissemination to corporations, 120, 126-127

policy considerations for saving energy, 9, 11-12

Value of shipments. See Industry output

Waste heat recovery, 78-79,94-96

Waste paper recycling, 96-97

Waste reduction, 19, 80-81, 120-121

Waste Reduction Innovative Technology Evaluation

program, 19

Wet cement process, 108-109

Wood preparation process, 93

WRITE program, 19

Yield improvements, 80-81

U. S. GOVERNMENT PRINTING OFFICE : 1993 0 – 330-074 ; QL 3