Economic Energy-Savings Potential

Economic Energy-Savings Potential

by American Council for an Energy-Efficient Economy

A 1997 study performed by the Alliance to Save Energy, American Council for an Energy-Efficient Economy (ACEEE), Natural Resources Defense Council, Tellus Institute, and Union of Concerned Scientists shows energy efficiency can be good for the economy, strengthening our competitive edge and creating jobs.

Energy Innovations, A Prosperous Path to a Clean Environment (Energy Innovations) shows that, by following the proposed “Innovation Path,” the U.S. could cut carbon dioxide emissions to ten percent below 1990 levels while saving consumers money and creating additional jobs. Specifically, by 2010, national energy costs can be reduced by $530 per average household and nearly 800,000 additional jobs can be created. Following the “Innovation Path” would allow the industrial sector to reduce its primary energy use by 14 percent by 2010 compared to the present path. By 2030, the industrial sector could become a net electricity producer rather than a net consumer.

These benefits can be attained through policies that stimulate the introduction and use of energy efficiency measures and renewable energy sources, such as combined heat and power, fuel cells for powering vehicles, high efficiency heat pumps for space and water heating, new bioenergy conversion techniques, and industrial process improvements such as membrane separation technologies and advanced sensors and controls. Energy Innovations also proposes new market mechanisms such as emissions performance allowances and revenue-neutral financial incentives, energy efficiency standards on buildings, appliances, and vehicles, renewable energy standards on power generation, research and development initiatives, and other cost-effective policies for stimulating greater energy efficiency and renewable energy use.

ENERGY EFFICIENCY IN THE INDUSTRIAL SECTOR

Industry accounts for 36 percent of U.S. primary energy use. The industrial sector is diverse, with a wide range of processes, energy requirements, and pollution issues. Although for some industries (e.g., primary aluminum, hydraulic cement and industrial gases) energy accounts for more than 20 percent of value of shipments, for most of the manufacturing sector, energy expenditures are a small part of operating costs, averaging less than two percent of value of shipments (Census 1992). The fact that energy is cheap and is not a major cost component for most industries, makes energy efficiency a low priority for most industries. In addition, most industries do not perceive energy as a discrete issue, but as a component of broader issues such as cost of manufacturing, environmental compliance, safety and productivity. A 1996 survey of 40 corporate energy managers from large companies indicated that only 12 percent of these managers focus solely on energy, with the majority also responsible for issues such as water, waste, environmental compliance, facility design and management, fire and safety. Since most projects that save energy impact some of these other issues, the decision-making process will involve an evaluation of all these issues together.

Energy efficiency competes with other issues for limited resources within a company. While capital is the most often cited resource, staff time may be of equal or greater importance. Corporate downsizing has resulted in less staff available to address all issues. Since energy is a component of most processes and these other processes merit greater attention from management, it makes sense to understand the interrelationships among these variables in order to promote energy efficiency more effectively to management. Studying these interrelationships shows that energy efficiency projects often have benefits that extend beyond energy savings to include pollution prevention, process efficiencies, and increased productivity. Conversely, energy savings often accompany projects that focus on pollution prevention, process efficiency, or increased productivity. Thus, when making a case for any of these types of projects it makes sense to present total benefits. Only by understanding the total costs and total benefits of a project can a business evaluate its financial impact on shareholder value.

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