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Researchers are exploring ways to make industrial and manufacturing processes much more efficient. Industry accounts for about one-third of all energy consumption in the United States, more than any other sector of the economy, and its use of energy is expected to grow about 11% (0.4% per year) during the next 25 years. Nearly all of that increased demand will be for petroleum and natural gas.
Economics is the principal driver for industry; the largest incentive for increased energy efficiency is to lower total operating costs. Fortunately, the opportunities for increased efficiency are numerous and substantial. Independent studies indicate that U.S. industry as a whole could reduce energy use by 14% to 22% in the near term through cost-effective efficiency measures—particularly existing technologies that make use of the heat produced in power generation.
The most energy-intensive industries are petroleum refining, bulk chemicals, paper, and metal—chiefly iron and steel, and aluminum. As a result, public- and private-sector partnerships and research programs are focusing on those areas.
The single largest industrial consumer of energy is bulk chemical manufacturing (including petroleum refining), which consumes more than half of all fuel used by this sector. There are more than 84,000 chemicals registered for use in the United States, up from 62,000 in 1982, with an estimated 2,000 new ones registered each year. Much of the fuel used by this industry comes from oil and natural gas, which are used both as energy sources for heat and as feedstocks, or raw materials, in the production of many chemicals.
The single largest industrial consumer of energy is bulk chemical manufacturing (including petroleum refining), which consumes more than half of all fuel used by this sector.
Implementation of advanced technologies can dramatically improve efficiency in the chemical industry. Studies show that energy savings in the range of 10% to 20% are possible in petroleum refining alone through the use of high-temperature reactors, corrosion-resistant metal- and ceramic-lined reactors, and sophisticated process controls.
The extraction and processing of mined materials, such as coal, is also highly energy-intensive. By 2040, mining is expected to consume 53% of all the energy used in the non-manufacturing subsector of U.S. industry, while accounting for only 23% of the value of all shipments. This is not entirely because of inefficiencies: Energy intensity will increase as established sites are exhausted and mining moves to less productive areas. Nonetheless, the equipment and processes used to search for and extract ore, separate it from unwanted materials, and transport it all present opportunities for energy savings.
All three non-manufacturing industries—construction, agriculture, and mining—are on track to reduce their energy intensity through 2040, resulting in a total reduction of 9.2%.
A similar effort is under way in analyzing the energy-intensive forest products industry. Researchers have identified enhanced raw materials, next-generation mill processes, improved fiber recycling, and wood processing as candidates for improvements in efficiency.
Energy efficiency, or energy use per unit of activity, is often considered the “first fuel” or “hidden fuel.” It has the potential to mitigate over 40% of energy-related greenhouse gas (GHG) emissions by 2040 across all sectors.
Much of today’s industrial technology is far less energy-efficient than the best available systems. Updating and retrofitting industrial plants to become more efficient can reduce between 10–20% of industrial emissions while also delivering economic benefits through reduced fuel expenditures.
In the International Energy Agency (IEA)’s “Net Zero 2050” scenario, industrial energy consumption increases by 16% by 2030 (relative to 2020) when energy efficiency gains are not considered. With energy efficiency gains incorporated, the industrial energy consumption increases by 8% by 2030 (relative to 2020).
Most of the efficiency-related improvements needed are in developing countries and economies in transition, where relatively inefficient equipment is widely used and where most of the growth in energy demand is expected to occur. However, there are some exceptions, such as in the cement sector, where countries like India and China are leading in energy efficiency with a younger technology stock compared to Europe.
Public policies to accelerate the adoption of best available technologies and practices through a combination of measures range from financial incentives to audits to capacity building through information and training, but these have had limited success. Distorted energy prices, lack of capacity and lack of access to capital are key barriers. A combination of four solutions — regulations, information and training, energy audits and digital management systems, and financial incentives — can help to boost industrial efficiency.
Enforcing existing policies and regulations is just as critical as adopting more ambitious regulations. There are several recent examples of policies covering large energy users in the sector. For instance, India’s Perform, Achieve and Trade (PAT) scheme sets energy intensity targets, and China’s Top-1,000 and Top-10,000 programs require industry to implement energy-saving strategies.
Energy efficiency can make an important contribution in terms of short-term, cumulative emission reductions and lowered energy demand. At the same time, energy efficiency gains and emissions reductions from retrofits in the near term should be balanced with the adoption of new decarbonization technologies in the long term — particularly in industrial plants with long expected lifetimes, such as steel plants.
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