A Harder Look At Efficiency

Better energy efficiency atjust 200 U.S. factories could save 1% of all natural gas used in the nation, Department of Energy officials say. And if energy efficiency were aggressively and systematically pursued at the largest 4,000 U.S. factories, the nation's annual natural gas consumption could be cut by 5-10%, according to Jacques Beaudry-Losique, who runs DOE's industrial energy efficiency programs. That would be equivalent to a savings of 1.1 quadrillion to 2.2 quadrillion Btu per year based on current U.S. annual consumption of natural gas.

Many of those plants are chemical facilities that use natural gas as fuel and feedstock and are the nation's largest industrial gas users, Beaudry-Losique notes. These companies have been the hardest hit as U.S. natural gas prices have risen to levels more than three times higher than those of only a few years ago.

Beaudry-Losique is manager of DOE's Industrial Technologies Program, an energy efficiency effort that focuses on seven industrial sectors, including chemicals. Over the years, however, the program has not fared well with the Bush Administration. Funded at $200 million in 1998, the industrial program this year is down to about $56 million. Deep budget cuts have also been proposed for fiscal 2007.

Last November, however, Energy Secretary Samuel W. Bodman announced "Save Energy Now," a new industrial energy efficiency effort to be run by Beaudry-Losique's office. It is an energy-auditing program that uses analytical tools developed by DOE over the past decade, Beaudry-Losique says. DOE-funded auditors take these tools into factories to ferret out wasted energy. In its first year, the program will audit 200 plants, which are some of the U.S.'s biggest energy users. So far, audits at 93 facilities have been completed, he says.

The program's focus is on all energy types, but most of the industrial savings have involved natural gas use.

Initially, DOE identified 4,000 facilities that consume more than 1 trillion Btu of energy each year. These are the top 2% of the most energy-intensive factories in the country, Beaudry-Losique says. He estimates that they burn 58% of the energy used by the industrial sector, which itself accounts for about one-third of all U.S. energy consumption.

With respect to only natural gas, U.S. industries take about 40% of the natural gas used in the U.S., and the top 4,000 plants consume more than half of industry's share, or 20% of the nation's total natural gas demand. Any efficiency gains in the industrial sector can change energy use, demand, and pricing for the nation.

"We can't audit them all," Beaudry-Losique notes, so DOE is hoping for a "snowball effect" in which companies will join the program, take part in the audits, and share information with one another. DOE found plant officials at 600 facilities willing to take part in the energy audits. The department then carved the 600 down to the most energy-intensive 200 and began the audits late last year. DOE top officials have now decided to extend the program for a second year, Beaudry-Losique says, so he may double the number of plant audits.

The Administration's enthusiasm is a departure from just a few years ago, when the President's energy task force recommended increased energy production, not conservation, to counter rising energy prices. Even at the time, however, analysts in DOE's Energy Information Administration and the electric-utility-funded Electric Power Research Institute were saying that energy efficiency could reduce electricity use by 40% (C&EN, May 14, 2001, page 37).

The assessments focus primarily on steam systems and process heating. Steam systems use 30% of all energy in manufacturing; process heating takes another 36% of the total U.S. industrial energy consumption. For chemical companies, the numbers are higher still; about half the sector's energy is consumed just by steam systems, according to DOE.

Beaudry-Losique says DOE has trained 48 energy audit experts who spend about three days at a plant. DOE pays them about $8,000 per audit. The audited companies provide their own staff and agree to train others in the use of DOE's energy software. They also agree to publish the nonproprietary results of their research so other firms may follow suit, he says.

"We want a company to train at least one other person who will carry the gospel to other plants in their corporation," Beaudry-Losique says. "Think about a company like Dow Chemical. It might have 12 or more plants where the information is applicable, and we want to them to apply relevant findings, discovered through the audits, to their plants."

He is hoping for a doubling or tripling in energy savings as the word spreads from plant to plant. Beaudry-Losique estimates that companies can easily realize average annual energy savings of 6-7% by adopting recommendations in DOE's assessments. That figure sounds high but may prove to be conservative.

Beaudry-Losique believes—and data at several companies show—that a deep well of energy savings is possible. Dow, for instance, expects to reduce energy consumption by 47% over a 20-year period due to efficiency gains. In the end, however, all will depend on whether companies make the efficiency changes identified by the audits.

For about 40% of the audits, recommended actions could be paid off in nine months, Beaudry-Losique estimates, and can be achieved by a simple work order. Another 40% call for a payback of nine months to two years. The remaining recommendations are likely to cost more and will need to go through a company's formal competition for capital investment. Energy and environmental expenditures and returns, historically, have often been so small that they fail to merit consideration when compared with other capital investments (C&EN, Sept. 13, 1999, page 22). With today's high cost of energy, however, these investments may get more attention, Beaudry-Losique predicts.

The energy audits are giving company energy engineers the lift they need to get their projects approved, he says. "We've increased the profile of energy projects with companies," he adds. "As a result, the energy groups in companies are thrilled that we are there, because we are providing support for projects that in some cases they have been working on for years."

Energy managers back him up.

"If there is one silver lining in high energy prices," says John Parodi, Roche senior energy manager at its facility in Nutley, N.J., "it is that now it's a lot easier to go out and spend money on energy efficiency projects. They simply make much more economic sense."

Small changes can have a big impact, he says, singling out his company's "blue dot" program. "We put little blue decals on switches that should be turned off after hours. We did it sitewide with thousands and thousands of these little decals and spent about $300 or $400. We save a tremendous amount of energy and around $200,000 per year in energy costs."

Roche is among a host of chemical and pharmaceutical companies taking part in the DOE program.

"We contacted them," Parodi says. "We were anxious to have their expertise brought to bear on our plant, and it is a no-cost service. It would have been crazy for us not to take advantage of it and see what they had to offer."

An auditor spent most of a week at the plant, he says, and in the end recommended replacing an old boiler that was a carry-over from past plant operations and was oversized for current needs. "It was something we had been playing around with doing, but DOE took a look at it, ran some of their software, and validated for us that replacement was something we ought to do."

Another company using DOE audits is Dow. Its participation is particularly important because Dow has had a visible and successful worldwide energy reduction program, going back more than a decade.

Dow has embraced the program with gusto, says Gina Gibbs-Foster, Dow business communications leader in the hydrocarbons and energy division. Dow cut its energy intensity (energy used per pound of product) by 22% between 1994 and 2005. The company-run program saved 900 trillion Btu and $4 billion on energy bills over the period, she says.

"Energy reductions are so valuable to Dow that the company has set another goal to further reduce energy intensity by another 25% by 2015," she continues. "This is a worldwide priority to us."

She is sure Dow can continue to get an annual 2.5% cut in energy consumption for another decade. "We have more opportunities for further reductions," she says. DOE and Dow teams are conducting energy audits at several plants, including Dow's largest plants in Freeport, Texas, and Midland, Mich.

"DOE has developed energy assessment tools that are new to us," Gibbs-Foster says. "As a result, we found new ways to reduce energy use and costs. Now we have transferred the knowledge to other plants in the Dow system."

However, Dow has yet to implement most of the new technical modifications, she says. She explains that efficiency efforts are treated like all capital projects and must go through the same approval scrutiny. But thanks to skyrocketing energy prices, energy efficiency projects have risen higher on the lists of fundable projects.

"Right now, energy costs are about 50% of our expenses worldwide," Gibbs-Foster says, "and changes in energy use can create a lot of value."

Implementation of recommendations will be the big test of the program's success. Beaudry-Losique has no data yet to show whether the assessments are leading to real savings. "We just started this program last November," he says, adding that DOE has "lots of anecdotal information on short-payback projects." He plans to do a detailed review of implementation progress at six, 12, and 18 months after the recommendations are made.

The DOE program is also supported by the American Council for an Energy-Efficient Economy, a policy research group that over the years has pressed DOE to work harder on efficiency. Neal Elliott, ACEEE's industrial program director, observes the message in Dow's success.

"Dow is doing a really good job," Elliott says. "Dow has been doing this for 20 years, and when they first announced their energy reduction goal in 1994, there was a lot of skepticism. But now they did it and are on track to make the 2015 goal. The point is that there still is a lot of low-hanging fruit out there."

Elliott worries, however, about the continuation of DOE's overall industrial energy efficiency effort. He notes that the Administration's 2007 budget proposed a 20% cut in the Industrial Technologies Program, down to $45 million per year.

"This Save Energy Now campaign is proving the value of the Industrial Technologies Program," Elliott says. "It shows how much can be saved by industry through energy audits."

He points out, however, that the auditing software and experience that is showing such value for the Save Energy Now effort was developed over the years through the larger program that DOE appears to be trying to eliminate. As an example of DOE's intent, Elliott singles out DOE funding for the Industrial Assessments Centers (IACs) at 26 U.S. universities, which is proposed to be reduced by more than one-third in the President's budget proposal for fiscal 2007.

IACs aid small and medium-sized companies; that is, those with sales below $100 million and fewer than 500 employees. IAC engineering students and faculty conduct about 600 free energy assessments per year. The new DOE energy audit program is quite similar to some 13,000 audits done over the years by IACs. DOE estimates that audited facilities have saved an average of $55,000 per year in energy costs and that the improvements have had paybacks in less than one year.

Of equal importance, supporters say, is the value of the assessment program for the training of young engineers doing the audits and for the companies that want to hire them. Each year, about 250 engineering students learn how to conduct energy assessments through the program. Upon graduation, these students are sought by companies trying to lower their energy costs.

"IAC students are in demand by industry," Elliott says. "Companies seek them out. The students and the program are helping build an infrastructure for long-term energy savings. It's time for the country to take a long view of the power of energy efficiency."