Industrial Energy Efficiency Programs National and International Trends

1
Industrial Energy Efficiency ProgramsNational
and International Trends

• California Public Utilities Commission
• Pre-hearing Conference
• Energy Efficiency Strategic Planning
• 2009-2020
• November 5, 2007
• Aimee McKane
• Lawrence Berkeley National Laboratory

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Energy Efficiency and Climate Change
Gt of CO2
Increased nuclear (10) Increased renewables
(12) Power sector efficiency fuel
(13) Electricity end-use efficiency (29) Fossil
fuel end-use efficiency (36)
Alternative Policy Scenario
Energy efficiency is the major path to limiting
growth in global energy consumption and carbon
emissions
Improved end-useefficiency accounts for
two-thirdsof avoided emissions in 2030
2030
Source International Energy Agency, World Energy
Outlook. 2006
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Focus on industrial energy efficiency is growing
around the globe

• UN Industrial Development Organization is
  promoting systems energy efficiency and energy
  management standards for both developed and
  developing nations.
• International Organization for Standardization(IS
  O) is initiating a broad portfolio ofinitiatives
  to promote energy efficiency.
• China initiated plan to reduce energy use 20per
  unit of GDP over 2005 levels by 2010.
• Through the Asia Pacific Partnership, the U.S.,
  Australia, Korea, Japan, China, and India
  arepromoting greater industrial energy
  efficiency.
• Energy efficiency is now a major focus of
  G-8meetings.

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Industrial Energy Efficiency Global Context

• Goal
• integrate energy efficiency projects into
• existing management structures
• for continuous improvement
• Elements
• Energy management standard
• Training (energy management, system optimization)
• Capacity building- create cadre of system experts
  to develop projects
• Access to tools to identify opportunities and
  document compliance
• Recognition of companies that make outstanding
  efforts to improve their energy efficiency
• Agreements with industrial sectors that establish
  plant-specific energy efficiency targets

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Industrial Energy Efficiency Policies that Work

• Energy Management Standards
• Purpose is to provide guidance for industrial
  facilities to integrate energy efficiency into
  their management practices. All existing and
  planned energy management standards are
  compatible with ISO 9000/14000
• Industrial System Optimization
• Purpose is to provide immediate opportunities
  (often 2 year payback or less) from projects to
  optimize industrial systems for energy
  efficiency. These systems are found in all
  industrial sectors. Training is essential.
• Target-setting Agreements
• Also known as voluntary or negotiated agreements
• Purpose is to establish targets for energy
  intensity reduction in industrial sectors.
  Agreements are typically between a government and
  industrial companies, based on sector-based
  negotiated agreements

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Why an Energy Management Standard?

• Most energy efficiency in US industry is achieved
  through changes in how energy is managed in an
  industrial facility, rather than through
  installation of new technologies
• An energy management standard provides a
  framework for integrating energy efficiency into
  existing industrial management systems for
  continuous improvement. All existing and planned
  energy management standards are compatible with
  ISO 9000/14000, as well as other management
  systems (e.g- 6 Sigma)
• Companies who have voluntarily adopted an energy
  management plan (a central feature of an energy
  management standard) have achieved major energy
  intensity improvements1, for example
• Dow Chemical achieved 22 improvement (4B
  savings) between 1994 and 2005, now seeking
  another 25 from 2005 to 2015
• United Technologies Corp reduced global GHG
  emissions by 46 per dollar of revenue from 2001
  to 2006, now seeking an additional 12 reduction
  from 2006 to 2010

1 Btu/lb of product
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Components of an EM Standard

• Typical features include
• a strategic plan that requires measurement,
  management, and documentation for continuous
  improvement for energy efficiency
• a cross-divisional management team led by an
  energy coordinator who reports directly to
  management and is responsible for overseeing the
  implementation of the strategic plan
• policies and procedures to address all aspects of
  energy purchase, use, and disposal
• projects to demonstrate continuous improvement in
  energy efficiency
• creation of an Energy Manual, a living document
  that evolves over time as additional energy
  saving projects and policies are undertaken and
  documented
• identification of key performance indicators,
  unique to the company, that are tracked to
  measure progress and
• periodic reporting of progress to management
  based on these measurements

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Plan-do-check-act model
Source Danish DS 24032001, Energy
Management-Specifications
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Energy Management Standards

• Current Status
• Several countries already have energy management
  standards (Denmark, Ireland, Sweden, US)
• Energy management standards are under development
  in China, Spain, Brazil, Korea and the European
  Union
• ISO will be initiating work on an international
  energy management standard, with preparatory
  assistance from the United Nations Industrial
  Development Organization (UNIDO)
• The US has proposed to lead the ISO effort

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Supportive Policies for National Energy
Management Standards

• In all countries with existing standards
• Energy management standards are voluntary
• Programs target large industrial plants
• Technical assistance is available
• Case studies are used to publicize benefits
• Provide recognition for outstanding performers
• In addition, most countries
• Offer financial incentives for compliance,
  usually as part of a voluntary agreement1
• Provide training on standards compliance
• Provide opportunities for companies to network
  and learn from each other
• Several countries also offer system optimization
  training

1 typically energy or carbon dioxide tax relief
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Business Benefits

• Assists the company to
• Develop a baseline of energy use
• Actively managing energy use and costs
• Reduce emissions without negative effect on
  operations
• Continue to improve energy use/product output
  over time
• Document savings for internal and external use
  (e.g. emission credits

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Why make this public policy?

• Many companies, especially those with small and
  medium sized facilities, do not have the internal
  resources and expertise required to develop an
  energy management plan without assistance
• A turnkey program could be rapidly established by
  drawing on existing and available resources (EPA,
  DOE, LBNL, Georgia Tech)
• Could leverage national and international
  activities, placing California in a leadership
  position among states
• Applies to all industrial sectors

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System Optimization

• Steam and motor-driven systems account for nearly
  50 of final manufacturing energy use worldwide
• These systems typically offer at least a 10-30
  improvement opportunity using readily available
  technology because they are engineered for
  reliability without regard to energy efficiency
• Both industrial markets and policy makers tend to
  focus on system components, which have a 2-5
  improvement potential
• Barriers to improvement are institutional, not
  technical
• Systems engineered for energy efficiency are
  actually more reliable, have lower operating
  costs, and can result in higher productivity

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Industrial Systems Energy Efficiency
System efficiency 13
15 kW motor efficiency 91
Combined motor pump efficiency 59
Adapted from Don Casada (Diagnostic Solutions)
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Why are these systems so inefficient?

• Most managers are unaware that these systems are
  energy inefficient
• System performance is not measured
• No data no way to assess performance or
  performance improvement
• Management focus on production, not energy
  efficiency
• Separate budgets for equipment
• purchases and operating budgets

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Save Energy Now initiative

• The U.S. Department of Energy (DOE)
• Created initiative in 2006 based on more than a
  decade of experience in industrial system energy
  efficiency
• Trains DOE energy experts to work with plant
  energy teams to identify opportunities for
  improving steam, process heating, pump, or
  compressed air systems through Energy Savings
  Assessments (ESAs)
• Together with energy experts, trains plant
  personnel to apply DOE software analysis tools to
  identify additional opportunities
• Recognizes plants with high energy savings
  resulting from implementation
• http//www.eere.energy.gov/industry/saveenergynow/

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USDOEs Save Energy Now Energy Savings
Assessment Status (March 15, 2007)

• 303 assessments completed
• Implemented energy savings 13.1 TBtu/ 69.6
  million
• Planned energy savings 27.4 TBtu/334
  million
• Identified total energy savings 55.5 TBtu
• Identified energy cost savings gt 548 million
• Total potential carbon dioxide (CO2) emissions
  reduction 3.6 million metric tons

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Target-setting Programs

• Industrial sector target-setting programs are
  common
• Range from voluntary to mandatory
• Targets can be set for either industrial
  sub-sectors or industrial facilities
• Typically based on signed agreements committing
  upper management to reaching targets
• Some include energy or GHG taxes
• Some include emissions trading
• Supporting policies and programs are essential
  for assisting industry in reaching ambitious
  targets

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Industrial Target-Setting Supporting Policies
and Programs

• Informational campaigns
• Energy management standards
• Energy audits, system assessments, benchmarking
• Assistance in preparing inventories, identifying
  opportunities, developing energy management plans
• Financial assistance and incentives

• Government and public recognition
• Relief from additional regulations or exemptions
  from regulations
• Reduced or avoided energy/GHG taxes
• Penalties for non-compliance stricter
  environmental permitting, penalty fees, energy or
  CO2 tax
• Emissions trading

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Examples of Industrial Target-Setting Programs

• Netherlands
• 20 energy efficiency improvement by 2000 (1989
  baseline)
• Long-Term Agreements contracts between the Dutch
  Minister for Economic Affairs and associations
  representing 29 industrial sectors (1250 firms)
  representing 90 of industrial energy consumption
• U.K.
• 20 CO2 emissions reduction by 2010 (1990
  baseline)
• Climate Change Agreements Government signed
  agreements with either industrial sector
  associations or individual companies representing
  44 sectors (about 5,000 companies and 10,000
  facilities) responsible for 90 of
  energy-intensive industry
• China
• 20 reduction of energy use per unit of GDP by
  2010 (2005 baseline)
• Top-1000 Energy-Consuming Enterprises contracts
  between Provincial governments and 1000
  enterprises representing 48 of industrial energy
  consumption and 30 of total energy consumption
  in China

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Netherlands Long-Term Agreements on Energy
Efficiency

• Results
• Overall energy efficiency savings of 22.3
  realized
• 157 PJ or 9 MtCO2/year saved
• 1/3 to 1/2 of the savings stimulated by the
  agreements (remainder was autonomous)
• Cost to government of program was 10-20/tCO2
  saved, depending upon whether full costs of all
  subsidies are included
• Industry realizing 650 M per year in reduced
  energy costs

improvement in energy efficiency, 1989-2000
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UK Climate Change Agreements

• Goal Carbon savings of 9.2 MtCO2 between 2000
  and 2010 (2.5 MtC) which is ten times the
  estimated savings from the Levy without the
  agreements
• Climate Change Levy tax on energy (natural gas,
  coal, LPG, electricity)
• Companies that agree to and achieve GHG emissions
  reduction targets receive an 80 Climate Change
  Levy discount
• Company that does not enter into an agreement and
  does not reach its target must pay 100 of the
  energy tax
• Supporting Policies and Programs
• Carbon Trust an independent body to promote
  carbon reductions in industry and commerce
  provides site visits, advice, information and low
  costs loans for energy efficiency projects
• Enhanced Capital Allowance Scheme 100 tax
  allowances on capital spending on energy saving
  equipment (specified in a government list)
  against taxable profits for the year during which
  a business make the investment
• Domestic Emissions Trading Scheme
• Light Touch on energy efficiency regulation

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UK Climate Change Agreements

• Results
• 2001-2002 reductions of 16.4 MtCO2
• 2003-2004 reductions of 14.4 MtCO2
• Sectors did better than expected because industry
  underestimated what they could achieve via energy
  efficiency
• Industry is saving over 832 M/year on the energy
  it has not purchased as a result of meeting the
  CCA targets, in addition to the savings on the
  Climate Change Levy itself

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Superior Energy Performance Partnership

• A partnership between industry and government
  to accelerate US industrys energy efficiency by
  
• Delivering tools, training, technologies
  standards to all types of manufacturing plants
• Facilitating recognition and incentives for
  effective industrial energy management and energy
  efficient technology adoption

• Partners
• U.S. Industry
• U.S. Department of Energy Industrial Technologies
  Program
• U.S. Environmental Protection Agency ENERGY STAR
  Program
• U.S Department of Commerce Manufacturing
  Extension Partnership
• American National Standards Institute

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Vision By 2017
US industry improves energy intensity by 25 from
2007

• US Industrial Sector
• A world leader in energy efficiency
• Known for best-in-class plants for
  energy-efficient technology
• A leading exporter of energy efficiency
  technologies and solutions
• Staffed by and working with engineers with
  extensive energy management expertise
• Driven by the performance of manufacturing plants
• using ANSI-certified energy management systems
• implementing system assessment protocols

• Leading US Corporations
• Over 100 major corporations
• Have integrated energy management into their
  business strategy
• Improved their energy intensity by more than 25
  from 2007 to 2017
• Assist their plants and supply chain in becoming
  ANSI certified for energy efficiency

• US Manufacturing Plants
• 25 of the 200,000 U.S. plants with 10 employees
  (50,000 plants) have adopted basic energy
  management principles
• 5,000 plants are certified by an ANSI accredited
  organization for energy management committed to
  continuous improvement in energy efficiency

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Superior Energy PerformanceInterim Steering
Committee

• Interim Steering Committee Members
• Representative Organization
• Bill Allemon Ford
• Joe Almaguer Dow Chemical
• Bill Bailey DuPont
• Sean Diamond Texas Petrochemical
• Tom Dunn Weyerhaeuser
• Betsy Dutrow EPA
• Fred Fendt Rohm and Haas
• Martha Gibbons IPSCO Steel
• Jim Hoffman Huntsman Chemical
• Greg Jason Cargill
• Brad Reed Toyota
• Paul Scheihing DOE ITP
• Steve Schultz 3M
• Dan Pitkin NIST
• Don Verdiani Sunoco
• Glen Wieger Eastman Chemical
• Jeff Yigdall PPG

• Address need for a consistent, performance-based
  framework that fosters continuous progress in
  industrial energy efficiency
• The proposed framework provides a mechanism to
  help individual companies
• Assign greater value to energy efficiency
  improvements
• Verify the resulting energy savings
• Receive public recognition for achievements
• Lay the groundwork for carbon and energy
  efficiency credits

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What is a Corporate Partner?

• Energy Policy Act (EPAct) of 2005, Section 106
• Voluntary Commitments to Reduce Industrial Energy
  Intensity
• Authorizes the Secretary of Energy to enter into
  voluntary agreements with industrial firms that
  consume significant amounts of energy to reduce
  the energy intensity of their production
  activities
• Participating companies agree to a 25 energy
  intensity reduction goal over 10 years
  (2007-2016) or an average of 2.5 per year from
  date the corporation joins the program
• Requires DOE to recognize and publicize the
  achievements of participants
• Partner may receive
• Early credit for energy intensity improvements
  and carbon reductions
• For high-performers, preference in RDD
  solicitations
• Enhanced technical assistance from DOE to
  achieve energy intensity goals and to assist
  corporations plants and supply chain to become
  ANSI certified.

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What is a Partner Plant?

• Any size industrial facility, regardless of their
  level of experience in energy management, that
• Seeks to accelerate existing energy efficiency
  efforts
• Participates in self assessment of energy
  management practices
• Takes steps to save energy
• Benefits
• Develop baseline on energy use
• Begin actively managing energy use
• Identify energy cost savings opportunities
• Recognition for efforts

• Tools Resources
• Quick Start website
• Energy management guidelines
• Plant Energy Profiler
• System optimization training
• Assessments
• Software tools
• Access to qualified specialists
• Opportunity calculator

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What is an ANSI-accedited Certified Plant?

• Meets ANSI Energy Management Standard (revision
  of existing ANSI standard)1
• Applies System Assessment Standards for
  industrial systems (initially pumping, compressed
  air, steam, process heating) to assess plant
  facilities
• May use Certified Practitioners, recognized by
  third party (details TBD), to assist in
• Complying with energy management standards
• Implementing system assessment standards
• Uses an ANSI-accredited process to independently
  verify energy savings and compliance with the
  ANSI Energy Management Standards

1 ANSI MSE 20002005. Note the International
Organization for Standardization (ISO) is
undertaking work on an international energy
management standard in 2008.
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How Does a Plant Become Certified?

• Current Proposal
• The plant achieves validated initial energy
  intensity performance improvement via
• Compliance with ANSI Energy Management Standard
• AND
• implementation of gt30 of total Btu energy
  savings opportunities that meet the companys IRR
  and as identified by system assessment standards,
  OR
• demonstrates energy intensity improvement of gt5
  over past two years OR
• meets or exceeds the best practice threshold
  (TBD) from the application of each system
  standard.
• Note some fee structure will be associated
  w/certification

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Superior Energy Performance Timeline

• Tax credits
• Potential carbon credits
• OTHER ?

INCENTIVES

• Recognition (ENERGY STAR, other)
• Access to low-interest capital
• Market value
• ITP resource commitment

2008
Save Energy Now Partner Plant
Save Energy Now Corporate Partner Agreement
Pilot Certification
Certified Plant (ANSI accredited
ENERGY STAR Plant
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Resources

• LBNLs industrial energy use website
  http//industrial-energy.lbl.gov
• Energy management information http//industrial-e
  nergy.lbl.gov/node/398
• Voluntary agreement information
  http//industrial-energy.lbl.gov/node/93
• Energy Management --UNIDO Experts Group Meeting
• http//www.unido.org/doc/64561
• UK Climate Change Agreements http//www.defra.gov
  .uk/environment/ccl/index.htm
• US DOE BestPractices http//www1.eere.energy.gov
  /industry/bestpractices/
• US DOE Save Energy Now http//www1.eere.energy.g
  ov/industry/saveenergynow/
• US EPA Energy Star for Industry
  http//www.energystar.gov/index.cfm?cindustry.bus
  _industry
• US EPA Climate Leaders http//www.epa.gov/statepl
  y/
• US ClimateVISION www.climatevision.gov
• US Superior Energy Performance
  http//www.superiorenergyperformance.net/

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Contact Information

• Aimee McKane
• Lawrence Berkeley National Laboratory
• P.O. Box 790
• Latham, NY 12110
• 518 -782-7002
• atmckane_at_lbl.gov