One of industry’s biggest—and most misunderstood—business opportunities is therecovery of income lost to energy waste. Out of 17.8 quadrillion Btu of fuel and electricity delivered “to the fence” of industrial facilities in 2001, a conservative estimate claims that 31 percent (5.4 quads) was lost in combustion, distribution and energy conversion activities. At today’s fuel prices of about $7 per MMBtu, those losses equate to more than $38 billion. Table 1 presents an overview of the U.S. industry’s energy use and losses in 2001.

The fundamental laws of physics and thermodynamics make some losses unavoidable, but much of this loss is an opportunity to embrace efficient technologies and practices. Every 1 percent recapture of energy losses saves industry about $380 million. Estimates of practical energy savings available to industry range from 10 to 20 percent. Note that this is an industry average—some plants can save more than this range, some less. Keep in mind that each dollar of energy cost savings is one extra dollar of net income.

Case studies and research conducted by the Alliance to Save Energy have articulated industry’s energy management barriers and strategies. The Alliance shares some major lessons:

• Technology is crucial to achieving energy efficiency, but many plant managers are not fully convinced even by impressive site demonstrations. This is especially true when managers feel that risks are involved.
• Information is crucial to adopting energy-efficient solutions. But the best of engineering proposals, cash flow projections and even outright public grants cannot always overcome the barriers that manifest within manufacturing organizations.
• Top management direction does not always ensure that energy efficiency will be effectively carried out. The conflicting accountabilities that arise from a lack of cooperation across departments and production facilities within a company must first be recognized, and then circumvented.
• Energy management is a process, not a project. Sure, engineering hardware projects are part of the solution, but energy-smart behaviors, folded into standard operating procedure, represent about 30 percent of potential energy savings.

The barriers to industrial energy efficiency include lack of awareness, lack of cross-departmental cooperation, outdated accounting techniques, restrictive budget and financial criteria, lack of management accountability, and lack of resources and complacency. We will take up a spirited discussion of these in next month’s column.

Your questions and comments are welcome. Please reply with your energy management question, concern or story. I’ll respond to each, and publish the more provocative discussions in this column. E-mail crussell@ase.org, and please include your phone number if you wish to discuss the item prior to publication.