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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program Executive Summary The mission of the Department of Energy’s (DOE’s) Industrial Technologies Program (ITP) is to decrease the energy intensity1 of the U.S. industrial sector through a coordinated program of research and development (R&D), validation, and dissemination of energy efficiency technologies and operating practices. To carry out this mission, the ITP partners with industry and other stakeholders in order to reduce U.S. reliance on foreign energy sources, reduce the environmental impacts of U.S. industry, increase the use of renewable energy sources, improve the competitiveness of U.S. industry, and improve the quality of life for U.S. workers, families, and communities. The ITP currently funds research addressing the needs of seven energy-intensive industries, known as the Industries of the Future (IOFs). These industries are aluminum, chemicals, forest products, glass, metal casting, mining, and steel. The petroleum-refining industry is also designated as an IOF. Together the IOFs account for 75 percent of the energy consumed by the U.S. industrial sector (see Figure ES-1). The leadership of the ITP asked the National Research Council’s Board on Manufacturing and Engineering Design to assess the overall technical quality and effectiveness of the program by assessing the strategy, management, and decision-making processes used by the ITP to determine research directions as well as the application of these processes to individual subprograms and the program as a whole. The Committee for Review of the Department of Energy’s Industrial Technologies Program was formed to undertake this task. It was asked to include in its report findings and recommendations related to the quality and appropriateness of all projects and programs in the ITP. This report represents the consensus conclusions and recommendations of the committee. PROGRAM-LEVEL EVALUATIONS Strategic Plan of the Industrial Technologies Program The ITP Strategic Plan describes the program’s mission and vision and outlines six key strategies for achieving improvements in industrial energy efficiency and environmental performance: To focus on energy-intensive industries, To use public-private partnerships to plan and implement the program, 1 Energy intensity is defined in the ITP Strategic Plan as energy consumed in British thermal units (Btu) per unit of industrial output (in U.S. dollars of gross domestic product) as compared with Btu per unit of industrial output in 2002 (DOE, 2003c, p. 2).
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program FIGURE ES-1 Estimated energy consumption of the Industries of the Future as a percentage of U.S. manufacturing and mining energy consumption for 2002. SOURCE: DOE, 2003c, p. 8. To identify grand challenges2 that would dramatically improve industrial energy efficiency, To implement a technology portfolio that is balanced in terms of near-, mid-, and far-term research, To perform process-specific and crosscutting R&D to improve long-term energy efficiency, and To perform technology delivery activities to improve near- and mid-term energy efficiency (DOE, 2003c, pp. 8–12). The committee finds that the ITP Strategic Plan presents a coherent link between higher-level plans (specifically, the National Energy Policy, the DOE Strategic Plan, and the Office of Energy Efficiency and Renewable Energy [EERE] Strategic Plan) and the ITP Multi-Year Program Plan (MYPP; DOE, 2004a). The ITP strategies are consistent with the mission of the ITP and address the needs of the DOE and U.S. industry for decreased energy intensity and improved environmental protection. The ITP Strategic Plan contains two overall quantitative goals: a 25 percent decrease in energy intensity for the IOFs between 2002 and 2020 and the commercialization of more than 10 industrial energy efficiency technologies between 2003 and 2010.3 The committee recommends that the ITP provide additional information on how these goals were selected and how their achievement will be measured. Without this information, it is difficult to assess whether or not these goals are reasonable. Multi-Year Program Plan of the Industrial Technologies Program The Multi-Year Program Plan translates the ITP’s strategies and strategic objectives into specific technical, funding, and schedule requirements. In addition, it contains a description of the implementation strategy, including the multi-year plans for the individual subprograms. The committee recommends the continuation and an acceleration of the evolution of the MYPP toward a more manageable set of corporate milestones and recommends that, in the preparation of future MYPPs, the ITP look for opportunities to increase coordination across subprograms, especially in the area of grand challenges. The ITP has developed and is instituting a new decision-making model to refine the project selection process and implement ITP strategies. The decision-making model is based on the following steps: 2 A grand challenge is defined as an important technical problem facing an industry, or group of industries, that, if solved, holds the potential to produce large improvements in energy efficiency, environmental performance, and product yield (DOE, 2004a, p. 65). 3 B.Garland, DOE, 2004, “Industrial Technologies Program Corporate Programmatic Review,” Presentation to the Committee, Washington, D.C., May 19.
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program (1) the identification of focus areas that hold potential for improvement in a particular area, (2) the identification of barriers that prevent improvement in this area, and (3) the determination of pathways to overcome these barriers. Inputs to the decision-making process include industry vision documents and roadmaps, energy footprint4 and bandwidth5 analyses, and energy and environmental profiles, as well as ITP and industry expertise. The committee finds that these tools and processes are appropriate for guiding the prioritization and selection of projects. Corporate Strategy of the Industrial Technologies Program The ITP corporate strategy, described in the MYPP, is an effort to streamline business and management processes within the ITP. It consists of five components: (1) realizing a vision for the future of industry; (2) strategy for government investment; (3) understanding and awareness; (4) long-term, focused partnerships; (5) and superior business practices (DOE, 2004a, p. 46). The committee concurs with the ITP that the realization of its vision and goals requires an understanding of the realities of both industry and government and an iterative planning process driven by measurable results. To increase the effectiveness of project selection metrics, the committee recommends that market pricing, acceptance, and the potential economic impact of all projects, including grand challenges, be estimated. The committee finds that activities undertaken by the ITP such as energy showcases and partnerships with other government agencies are effective in increasing understanding and awareness and that numerous government-industry partnerships are in place and working. In addition, the committee finds that maintaining public-private partnerships, including academic partnerships, is critical to the success of the ITP. There appears to be considerable focus on systematic and aligned planning, analysis, decision-making, and project management processes. The data are beginning to show significant cumulative energy and cost savings. The committee observes that a high level of energy and momentum exists within the ITP staff for implementing changes and improving the ITP. EVALUATIONS OF INDIVIDUAL SUBPROGRAMS The committee was asked to review the ITP’s seven Industry of the Future subprograms by evaluating the individual effectiveness of each subprogram, its integration with the overall ITP strategy, and the likelihood of its achieving its goals. In addition, the committee was asked to review the five crosscutting subprograms (combustion, sensors and automation, industrial materials of the future, supporting industries, and software tool development), as well as ITP’s technology delivery subprogram and the ITP activities at the EERE regional offices. Aluminum The aluminum subprogram is dynamic, having an excellent historical and ongoing interaction with the U.S. aluminum industry. This subprogram focuses on relevant needs of the aluminum industry, and its portfolio addresses the key priorities in the current focus areas. The committee commends the staff of the aluminum subprogram on their work and recommends continued evolution and growth in the subprogram’s direction as the needs of U.S. industry change. The committee further recommends: Combining the two focus areas on smelting R&D (alternative reduction systems and advanced Hall-Héroult cells) into one area that includes the only major project currently in the alternative reduction systems area; Leveraging of other ITP subprograms, such as sensors and materials, in the efficient melting 4 A footprint analysis evaluates energy end-use and loss patterns to identify the areas in which the greatest energy savings are possible. 5 A bandwidth analysis compares actual energy use from a process with the theoretical thermodynamic minimum in order to identify the areas in which the greatest energy savings are possible.
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program technologies focus area; Considering initiating the “Design and Build Advanced Furnace” grand challenge earlier than the proposed FY 2008 timeframe; Reorganizing the focus area on advanced forming technologies into a focus area named “advanced fabrication technologies”; Leveraging efforts through Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) mechanisms to involve R&D organizations in the early stages of project development; Commissioning a study forecasting the growth or shrinkage of aluminum processes in the United States to guide subprogram decisions; and Expanding outreach activities, including dissemination of the results from plant assessments such as that done with Alcoa (DOE, 2004k). Chemicals The chemicals subprogram has worked closely with the Chemical Industry Vision2020 Technology Partnership to leverage public and private resources and to ensure application of research results. The efforts are appropriately focused, and the portfolio of projects is well balanced from the perspectives of topicality, risk, duration, and potential impact. The committee commends the use of exergy analysis and recommends that this analysis technique be extended to other ITP subprograms. Many of the achievements and results of this subprogram should also find wide application in the petroleum-refining and other segments of processing industries. The subprogram appears on track to contribute to the ITP’s meeting its stated energy and environmental objectives. The committee recommends: Greater integration between the chemicals and sensors subprograms because of the obvious potential impact on the chemical industry; and Establishment and enforcement of clear criteria for the termination or redirection of underperforming projects or projects least likely to meet their goals. Forest Products The U.S. forest products industry accounts for about 16 percent of U.S. domestic manufacturing and mining energy use and must therefore remain an active part of the ITP. The committee is concerned that the recent movement of two major programs (black liquor gasification and the new forest-based materials effort) out of the ITP will create issues in uniformity of management practices in these two programs. Overall, the committee finds the research portfolio of the forest products subprogram to be consistent with the mission and goals of the ITP. To sharpen the focus on energy, environmental, and competitiveness issues in the forest products industry, the committee recommends that the ITP: Involve small companies, entrepreneurs, suppliers, and equipment manufacturers to a greater extent in the strategic process of defining focus areas and barriers, as well as participating in and providing constructive comments during proposal reviews; Undertake a critical review of the results of the 2004 paper technology summit, with the goal of updating the industry roadmap and identifying grand challenges; Include energy and exergy balances, as well as economic constraints of the industry, in analysis when selecting portfolio directions; Develop a mechanism for obtaining ideas and concepts from relevant sources outside the forest products industry, its related academic programs, and the traditional suppliers and equipment manufacturers; and
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program Require key ITP personnel to attend conferences and meetings related to the forest products industry, as well as to travel to forest products companies; discussions with operations and R&D personnel need to be included. Glass The glass subprogram received very effective industry participation in the identification of its focus areas and barriers. The focus areas appropriately address areas in which the largest energy savings can be made, and funds have been allocated accordingly. Overall, the glass subprogram is in very good shape. The decision-making approaches used are logical and reasonable, and industry buy-in makes success likely. However, achieving adoption of radical process changes in this conservative industry is a significant challenge. The committee recommends that the following gaps in research be addressed: Since melting is a focus area in the glass subprogram and since cullet melting (i.e., the melting of pre-melted glass) tends to reduce energy consumption, some emphasis should be put on this area. The idea of recycling as it pertains to energy savings should be included in the glass subprogram, in collaboration with other ITP subprograms and with agencies such as the Environmental Protection Agency. Metal Casting Although the metal-casting industry is vital to the U.S. economy and national defense, the United States is losing metal-casting capabilities as a result of the decline in the number of foundries owing to low-cost imports. Significant improvements in energy efficiency have been made by this industry during the past two decades, but it needs to make additional gains to be globally competitive. Overall, the metal-casting subprogram has had good interaction with industry, and the projects selected are, in general, the right ones to achieve ITP goals. The mix of near-, mid-, and far-term research is reasonable. Significant efforts toward attracting a new workforce for the metal-casting industry are enjoying considerable success through emphasis on the participation of students in research projects. The committee recommends: Augmenting the project portfolio in the advanced melting focus area, for example by adding aluminum melting, since opportunities for energy savings are substantial; and Leveraging the metal-casting subprogram through past and current R&D from the aluminum area to gain maximum benefit from DOE and industry funds. Mining In the mining subprogram, cost sharing by industry is robust, at 57 percent. Overall, the mining subprogram has a high level of collaboration and cooperation with industry partners. The focus areas are appropriate and are supported by the data sources used. The composition of the project portfolio appears reasonable, in general. To further increase the impact of the mining subprogram, the committee recommends: Clarifying the definitions of focus areas, barriers, and pathways in the MYPP, and soliciting additional input from The Minerals, Metals, and Materials Society, particularly its extraction and processing division; Providing more detailed information on the assumptions and calculations used in the footprint and bandwidth analyses; Considering research on solid-liquid and solid-solid separations despite the fact that these processes are not common to all sectors of the mining industry; Considering risk-benefit analysis in project selection in order to take into account the
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program environmental impacts of energy efficiency measures; Documenting the estimates of energy savings resulting from subprogram activities including detailed information on calculations and derivations used; and Requiring ITP personnel to attend the annual meetings of the Society for Mining, Metallurgy, and Exploration and The Minerals, Metals, and Materials Society, as well as visit industrial sites. Steel The steel subprogram has a long history of interaction with the steel industry, primarily through the American Iron and Steel Institute and the Steel Manufacturers Association. Though vital to the national economy and defense, the U.S steel industry is extremely vulnerable to offshore competition and must become more resource-efficient and less capital-intensive. The majority of the projects in the subprogram portfolio appear to be appropriate for the achievement of ITP goals. The committee recommends improvement in the following areas: Obtaining better independent reviews of data sources and facts and figures to provide a strong foundation for policy decisions; Moving the power-delivery modeling focus area from the ITP steel subprogram to another DOE unit; Increasing the subprogram emphasis on secondary processing and specialty steels—areas in which maximum benefits can be derived from both energy and economic standpoints; Clarifying mechanisms and providing guidance for protecting intellectual property arising from ITP-funded projects; Defining more clearly what constitutes a successful project and how underperforming projects are handled; Leveraging of efforts through SBIR and STTR mechanisms to involve R&D organizations and universities in the early stages of project development; and Leveraging of resources within the EERE and other programs and with the National Science Foundation’s Steel Research Centers. Overarching Recommendations for Industry of the Future Subprograms While evaluating the seven IOF subprograms described above, the committee identified several overarching issues and programmatic best practices relevant to all seven of these subprograms as well as to the crosscutting subprograms described below. The committee recommends the following: Leveraging limited resources. Because federal funding is limited and because not all industry goals overlap fully with government goals, it is necessary to leverage limited available funding—for example, by leveraging projects on sensors, electrodes, or refractories and by leveraging SBIR and STTR mechanisms. Focusing on grand challenges. It is critical for policy makers to establish goals, and to measure success when these goals are achieved. Overarching goals, such as grand challenges, that a number of projects can aim toward fulfilling should be instituted. Managing intellectual property. The intellectual property arising from the development of energy efficiency technologies must be managed in a policy environment that is currently contentious. Two potentially conflicting goals have been expressed by the manufacturing community: improving both U.S. and global energy efficiency through the development of new energy efficiency technologies and providing a business advantage to U.S. industry through the development of these same technologies. The committee recommends that the ITP develop a comprehensive policy to clarify mechanisms and to provide guidance for managing the intellectual property that arises from ITP-funded projects.
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program Combustion The committee finds that the combustion subprogram is operating in a cost-effective manner and is well organized in terms of its overall strategy, individual project selection, and development and application of metrics. The ITP projects in this area have resulted in significant technical accomplishments. The ability of subprogram personnel to attend key industry conferences is important to communication with industry, however, and should be increased over current levels. The committee makes the following recommendations for improvement: Metrics should be clarified and a process developed for weighting the value to the program of emissions reductions in each specific pollutant, e.g., nitrogen oxide (NOx), carbon monoxide (CO), sulfur oxide (SOx), mercury, acid gases, volatile organic compounds (VOCs), and particulates. Legacy projects that do not fit within the new decision-making methodology should be phased out. ITP should attempt to incorporate projects with a more diverse range of renewable and non-renewable fuels, rather than being focused exclusively on natural gas. Research should be funded to improve fundamental understanding of issues important to industrial combustion, such as the chemistry of ultralow NOx burners and modeling of the interactions between chemistry and turbulent flow mechanics. ITP has a role to play in identifying issues and bringing stakeholders together to improve and evaluate CFD modeling tools to meet the needs of industrial burners and furnaces, possibly in coordination with the sensors subprogram. More emphasis is needed on retrofit applications, which may also enhance the acceptance rate of developments relevant to new designs. Consideration should be given to supporting new approaches to reducing carbon dioxide (CO2) emissions—for example, gasification and oxygen-fuel combustion with CO2 recycling. Emissions control efforts should include research on key pollutants other than NOx and CO2. The waste heat recovery project is a candidate for removal from the combustion subprogram in order to focus resources more effectively. Sensors and Automation Sensors and automation are a problem-rich environment in which vast opportunities exist. The ITP has done a good job of administering the sensors and automation subprogram thus far. However, a new paradigm is needed to foster collaborative activities in the development, maturation, and integration of sensor technologies. The committee recommends that: Funding for the implementation of wireless networking of sensors be redirected toward more fundamental, high-risk development of new sensor technology; Research be undertaken to improve sensing of the composition and properties of multicomponent and multiphase industrial streams, especially surface and interfacial properties; A vehicle for joint participation in sensor and automation development be created—for example, the development of a family of sensors for which the same technology could be adapted to handle a wide range of applications across several industries; Better metrics be developed for determining the benefit to all ITP subprograms from investment in sensor and automation development; Vendors be included early in the development process and communication be improved among the IOFs on existing sensor and automation needs and activities; and A sensor development project be identified that can be included in a grand challenge.
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program Industrial Materials of the Future The crosscutting industrial materials of the future subprogram is in a transition stage from the older, opportunity-driven strategy to the new ITP method of targeting R&D areas and using the barrier-pathway approach for identifying R&D targets and developing metrics. Overall, the committee considers that this subprogram is on the right track with the very deliberate targeting methods now used by the ITP. There is some concern about finding well-qualified teams to perform the R&D in areas such as refractories. The difficulty arises because of the consolidation and shrinkage of this industry and the trend toward foreign ownership of domestic companies. The committee recommends working with industry organizations such as the Refractories Institute or the American Ceramic Society’s Refractories Division to develop sources of qualified partners. Supporting Industries The committee believes that the supporting industries subprogram is a vital one, and that it is unique. The industries in this subprogram are truly crosscutting and would be difficult to manage under any other subprogram. This subprogram currently exists under difficult circumstances, including coverage of a larger variety of industries than is covered by any other subprogram, limited resources, and a lack of data. However, the committee believes that the prospective portfolio for this subprogram is on track to achieve the ITP’s mission and that the supporting industries subprogram has a role to play in any crosscutting grand challenges that are identified by the ITP. The committee recommends that: Bandwidth analyses be performed for the industrial heating equipment and fabricated metals areas; The different areas of the supporting industries subprogram be packaged differently, particularly in industrial heating equipment, to avoid overlap with other subprograms; More breakthrough projects be included in the portfolio, perhaps jointly with other subprograms; and More transparency for GPRA analytical data be provided. Software Tool Development The software tool development subprogram supports the ITP mission of increasing the energy efficiency of U.S. industry by developing software tools that allow individual plants to identify losses in energy generation, distribution, and conversion systems. Overall, the committee believes that this subprogram is an important element in the success of the ITP. Given its use of the focus area-barrier-pathway process to identify critical gaps for tool development and its focus on plantwide and user-friendly opportunity and screening tools, the committee believes that the software tool development subprogram is focused correctly to achieve ITP goals. The committee recommends: The continued development of plantwide assessment and value-stream mapping tools in support of the long-term goals of the ITP; and The establishment of an end-user feedback loop through the use of online tools, such as discussion forums. Technology Delivery The technology delivery subprogram of the ITP has as its mission the reduction of the energy intensity of U.S. industry by several means: developing, maintaining, and disseminating best practices in energy management and selectively investing in the development, verification, and validation of emerging technologies that offer significant energy savings. The committee views the technology delivery subprogram as being very successful; its major challenge going forward will be to find additional ways to increase effectiveness through improved communications to industry. The committee recommends:
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program Modifying the ITP Web site to make it easier for different levels of industry management to get information on the potential for energy cost savings in their facilities; Considering the creation of links to scenario planning that would relate the magnitude of opportunities for energy cost savings to energy cost scenarios; Increasing efforts directed toward equipment manufacturers and engineering companies that design systems, with the goal being to encourage them to design equipment and systems for energy efficiency; and Looking for opportunities to create new or modify existing software programs aimed at designing for energy efficiency. Regional Offices The EERE regional offices are a crucial link between laboratory development of new energy efficiency technologies and deployment to U.S. industry. The burden for the delivery of ITP technology efforts has fallen primarily on the regional offices, because the field offices have remained principally focused on their core mission of project management. The committee finds that the regional offices have a proper sense of their post-reorganization mission. However, it has some concerns about the ability of ITP to disseminate program information at current levels of funding and staffing. To increase effectiveness, the committee recommends that: Regional offices be fully integrated into the project management loop; Unless issues of intellectual property exist, industry communications and outreach to other industrial partners and the public be made a condition of contract; The restrictions on travel by ITP headquarters staff be eased; and The restrictions on travel by regional office personnel be eased. CONCLUSIONS AND RECOMMENDATIONS The Industrial Technologies Program has evolved overtime into a well-managed and effective program. Its strategy is consistent with higher-level plans of the nation and the Department of Energy, and its management and decision-making processes are solidly based. The program’s scope and depth of analysis and reporting are impressive. The ITP significantly leverages its resources through a large and growing number of partnerships with industry, industry associations, and academic institutions. Project portfolios are in place to achieve subprogram goals and, presumably, overall program goals. Current ITP leadership is strong, and the enthusiasm, dedication, and knowledge of subprogram managers are noteworthy. As an overall assessment, it is clear that the ITP team works well together and that a working environment has been established that has made and will continue to make the subprograms succeed. In the spirit of continuing to improve an already excellent program, the committee offers the following recommendations: Explore new ways to benefit industries other than those directly targeted through Industrial Technologies Program partnerships. Program managers should increase efforts to promote and disseminate the ITP’s accomplishments and broaden its benefits to additional energy-intensive industrial locations by: Increasing face-to-face contact of ITP subprogram staff with technology developers, equipment manufacturers, system designers, and technology end users by encouraging appropriate travel for headquarters personnel and mandating their attendance at technical meetings, at visits to project sites, and at potential end-user locations; Allocating additional resources to the regional offices (ROs) of the Office of Energy Efficiency and Renewable Energy and refocusing the efforts of RO personnel in order to integrate them more effectively into ITP project activities and directing them to work closely with headquarters
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Decreasing Energy Intensity in Manufacturing: Assessing the Strategies and Future Directions of the Industrial Technologies Program staff and industry partners to extend the impact of ITP projects to additional industrial sites; and Remodeling the ITP Web site to make information more easily accessible to all levels of industry management and to emphasize the cost benefits of energy conservation technology. Develop more effective mechanisms for collaboration and coordination across ITP subprograms and projects to reduce stovepiping and to encourage the achievement of broader goals. As part of a grand challenge strategy, the ITP should continue to pursue plans to increase the average size of projects, but it should also continue to maintain a healthy balance of small, medium, and large projects. Redirect student education activities to other governmental entities that have direct educational missions, with the exception of those activities directly related to the plant assessments performed by students for the ITP’s Industrial Assessment Centers. Because the mission of the ITP is energy savings, not education, any student educational activities undertaken by the ITP should be justified in terms of their energy-saving results, not their educational goals. Review ITP subprogram management practices to ensure clarity and consistency or, where practices differ, to ensure that differences are justified. Increase benefits by propagating the ITP strategy, where appropriate, to other programs in the Office of Energy Efficiency and Renewable Energy.
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