(NSR) program tends to hinder energy efficiency improvements at industrial facilities. As part of the 1977 Clean Air Act Amendments, Congress established the NSR program and modified it in the 1990 Amendments, but old coal plants and industrial facilities were exempted from the New Source Performance Standards (NSPSs) to be set. NSPSs are intended to promote use of the best air-pollution control technologies, taking into account the costs of such technologies, their energy requirements, and any non-air-quality-related health and environmental impacts. However, investment in an upgrade could trigger an NSR, and the threat of such a review has prevented many upgrades from occurring.

Drivers for Improving Energy Efficiency in Industry

Helping to overcome the barriers to improving energy efficiency in industry is a set of motivators that include the following:

  • Rising energy prices and fuel/electricity availability. Rapid increases in fuel prices command management’s attention. To remain competitive, industry must find ways to reduce costs, and higher energy costs can make efficiency investments more beneficial.

  • Air quality. Many states are allowing industry to use energy efficiency to qualify for NOx and SO2 offsets in non-attainment areas. Increasingly stringent ambient air-quality standards, together with cap and trade markets, have resulted in rising prices for NOx and SO2 allowances. The high costs of these allowances provide incentives to reduce energy use.

  • Demand charges and demand-response incentives. Demand charges to industrial and commercial customers—based on their peak electricity demand—can be greater than the payments for the consumed energy itself. These charges provide strong incentives for a plant to manage its electricity usage to avoid peaks and to shift power use from periods of peak prices.

  • Collateral benefits. An efficiently run plant, in terms of both energy use and other factors, will likely also have excellent product quality, high labor productivity, reliable production schedules, and an enviable safety record.



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