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Page 248
22
Industrial Energy Management
The industrial sector is made up of a wide variety of
manufacturing and other industries that use energy to extract,
refine, and process raw materials to produce a variety of goods.
The nomenclature used to define industrial categories varies from
country to country. In the United States, the Standard Industrial
Classification (SIC) system is used to designate industry groups at
different levels of aggregation. Table 22.1 shows the major
elements of the U.S. industrial sector. The heterogeneity of this
sector makes an analysis of energy use and potential savings
substantially more difficult than for other sectors of the economy
contributing to greenhouse gas emissions.
Table 22.1 also shows the direct consumption of energy by the
U.S. industrial sector (classified by SIC code) for 1986 which
amounts to 21.7 quads.1 Adding the
6.4 quads lost in the generation and distribution of electricity
brings the total sector share to 28.1 quads of total primary energy
use. This total consumption amounts to 36 percent of all primary
energy used in the United States (Oak Ridge National Laboratory,
1989). Six industry groups account for more than 70 percent of
total primary industrial energy use. These major groups, and their
corresponding percentage of total industrial energy consumption,
are chemicals (21 percent); petroleum refining (19 percent);
primary metals (14 percent); pulp and paper (8 percent); stone,
clay, and glass (4 percent); and food and kindred products (4
percent). Purchased fuel oil and natural gas each account for
roughly one-third of the total direct energy used by industry.
Electricity, coal, and other energy sources (primarily wood)
account for the remainder.
International studies show that the industrial sector accounts
for the largest component of most nations' energy use, averaging
nearly 43 percent of total primary energy consumed in the
Organization for Economic Cooperation
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TABLE 22.1 End-Use Industrial Energy
Consumption in 1986 (quads)
Industry Group
SIC Codea
Electricityb
Natural Gas
Fuel Oil
Coal
Other Sources
Totalc
Chemicals
28
0.52
1.86
1.74
0.33
0.21
4.67
Petroleum refining
29
0.12
2.28
2.59
0.00
0.10
5.18
Primary metals
33
0.50
0.66
0.15
1.41
0.14
2.85
Pulp and paper
26
0.28
0.36
0.28
0.23
0.47
1.62
Stone, glass, clay
32
0.10
0.40
0.04
0.30
0.17
1.03
Food
20
0.15
0.40
0.08
0.11
0.14
0.89
Textile mills
22
0.08
0.07
0.03
0.03
0.06
0.27
Fabricated metals
34
0.08
0.14
0.02
0.00
0.09
0.33
Machinery
35
0.12
0.12
0.02
0.02
0.08
0.36
Transportation equipment
37
0.11
0.11
0.03
0.05
0.05
0.35
Other manufacturing industriesd
0.34
0.23
0.09
0.07
0.13
0.86
Nonmanufacturing industriese
0.39
0.05
2.82
0.06
0.05
3.41
TOTAL
2.79
6.69
7.90
2.63
1.70
21.71
aSIC Code
= Standard Industrial Classification.
bDirect
electricity consumption represents 30 percent of the total primary
energy associated with electric energy use. Losses in the
generation and transmission of electricity are approximately 2.3
times the direct use. Total losses for the industrial sector are
6.41 quads.
cTo obtain
primary energy consumption, add electrical losses (see footnote
b).
dIncludes
all remaining SICs between 20 and 39.
eIncludes
agriculture, construction, and mining.
SOURCE: Oak Ridge National Laboratory (1989).
Page 250
and Development (OECD) countries in 1985. The percentage is even
higher in developing countries, where industrial energy use
accounts for nearly 60 percent of all energy consumption. Reported
values for the former Soviet Union are slightly under 50 percent
(Lashof and Tirpak, 1991).
Recent Trends
Several recent studies have documented dramatic decreases in the
energy intensity of the U.S. manufacturing sector (Ross, 1989a;
U.S. Department of Energy, 1989a; Schipper et al., 1990). Figure
22.1 shows the long-term (27-year) trend in the aggregate energy
intensity of U.S. manufacturing (i.e., the ratio of energy used per
unit of production as defined by the Bureau of Labor Statistics).
In the last 20 years, the average energy intensity of U.S.
manufacturing (which does not including the mining, agriculture,
and construction industries) has decreased by nearly 40 percent.
Most of this decline was due to decreased direct use of fossil
fuels, whose intensity fell by 50 percent between 1971 and 1985
(Figure 22.2). Electricity intensity, on the other hand, declined
only slightly during that same period. The total levels of
manufacturing energy use from 1958 to 1985 are shown in Figure
22.3. 2
FIGURE 22.1 The aggregate energy intensity of
U.S. manufacturing (relative to 1970).
SOURCE: Ross
(1989a).
Page 251
FIGURE 22.2 The aggregate electricity and fossil
fuel intensities of U.S. manufacturing (relative to 1972).
SOURCE: Ross
(1989a).
FIGURE 22.3 Manufacturing energy use by fuel
type.
SOURCE: Schipper
et al. (1990).
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Two major factors contributed to the trends shown in Figures
22.1 through 22.3. One was a structural shift in the economy,
resulting in lower demands for energy-intensive products such as
steel, aluminum, and paper. The other factor was improvements in
the efficiency of manufacturing processes, resulting in less energy
needed per unit of production (Boyd et al., 1987). The relative
importance of structural changes and energy efficiency improvements
has been analyzed by the U.S. Department of Energy (1989a), which
attributes two-thirds of the overall change since 1970 to energy
efficiency improvements. A more recent study by Schipper et al.
(1990) draws similar conclusions using other measures of industrial
production to examine the effects of structural and efficiency
changes.
Effects of Structural Changes
Figure 22.4 shows the impact of structural changes alone on
manufacturing energy use (i.e., the energy use that would have
occurred if the products and energy intensities of each industry
group had remained constant at their 1973 levels while the
proportion of manufacturing sector output produced
FIGURE 22.4 Impacts of structural changes on
manufacturing energy use (activity and intensity fixed at 1973
levels).
SOURCE: Schipper
et al. (1990).
Page 253
by each industry group followed its actual historical pattern).
By this measure, energy use between 1973 and 1985 would have
declined by 18 percent due to structural changes alone. This
analysis found that the largest contributor to the structural
change was a decline in output from coal-intensive industries,
particularly iron and steel (Schipper et al., 1990). The longevity
of structural changes in industrial output remains somewhat more
speculative. Several studies suggest a decline in the per capita
consumption of energy-intensive products as industrial countries
attain higher levels of affluence (e.g., Williams et al., 1987;
Lashof and Tirpak, 1991). This ''saturation" phenomenon implies a
long-term reduction in the demand for energy-intensive materials,
which could (if sustained) have important implications for future
industrial energy demand.
Other factors believed to have contributed to the changing
structure of U.S. manufacturing include higher oil prices and
economic policies that affect the competitiveness of U.S. goods.
The extent to which structural changes will continue to affect the
total demand for energy in the industrial sector depends also on
the absolute growth rate of manufactured products. There is some
controversy over whether manufacturing represents a constant or
declining share of real U.S. gross national product (GNP). To the
extent that manufacturing output is coupled to GNP, decreases in
energy intensity due to structural shifts may be offset at least
partially by a higher total demand for manufactured goods as GNP
continues to rise. Recent studies performed for DOE, however,
assume a decline in the future manufacturing share of GNP (Ross,
1989b).
Effects of Efficiency
Improvements
Recent improvements in energy efficiency for the U.S.
manufacturing sector have been analyzed by DOE for the period from
1980 to 1985 (U.S. Department of Energy, 1990) and by Schipper et
al. (1990) for the 29-year period from 1958 to 1987. The latter
study attempted to develop an indicator of aggregate energy
efficiency improvements independent of the structural changes noted
earlier. The output of each industry group was assumed to remain
constant at its 1973 value, whereas its energy intensity followed
the actual historical path. By this measure, the structure-adjusted
energy intensity of the manufacturing sector as a whole declined by
2.5 percent per year from 1958 to 1973 and by 2.7 percent per year
from 1973 to 1985. The aggregate changes for 1958 to 1985 (Figure
22.5) were 15, 37, and 44 percent for coal, gas, and oil,
respectively, and 6 percent each for wood and electricity
intensity. For the period from 1985 to 1987, aggregate energy
intensity continued to fall by roughly 2 percent per year. Overall,
the structure-adjusted reduction in energy intensity between 1973
and 1987 was estimated at approximately 33 percent, due primarily
to a reduction in direct fossil fuel use (Schipper et al.,
1990).
Page 254
FIGURE 22.5 Impacts of intensity changes on
manufacturing energy use (activity and structure fixed at 1973
levels).
SOURCE: Schipper
et al. (1990).
A DOE industry-by-industry analysis for 1980 through 1985
supports the conclusion of a continuing trend toward greater energy
efficiency in the industrial sector (Table 22.2). Although the
energy price shocks of the 1970s undoubtedly contributed to
improvements in energy efficiency, the more significant driving
force for energy improvements in the industrial sector appears to
have been the long-term changes in basic process technology, which
reduce overall production costs as well as energy costs. Thus, even
at the relatively low energy prices prior to 1973 and since 1980,
manufacturing processes have become increasingly energy efficient.
Although energy prices certainly have affected the fuel mix in the
industrial sector (e.g., oil and gas use fell significantly in
response to price increases of the 1970s), the sustained
improvements in energy efficiency indicate that the industrial
sector is not merely substituting one fuel for another (e.g.,
electricity for oil and gas). Rather, real reductions in energy
intensity are being achieved through conservation measures and
process technology innovations. The outlook is that this trend will
be sustained through the turn of the century.
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TABLE 22.2 Energy Efficiency Changes in Manufacturing
Industry Groups, 1980 through 1985
Energy Efficiency Ratiosa
Energy Efficiency
SIC
Industry Group
1980
1985
Changeb,c(%)
20
Food and kindred products
3.5
2.7
22.9
21
Tobacco manufactures
Q
Q
Q
22
Textile mill products
5.7
4.8
16.3
23
Apparel and other textile products
NA
NA
NA
24
Lumber and wood products
Q
Q
Q
25
Furniture and fixtures
1.9
1.6
17.4
26
Paper and allied products
16.0
13.9
13.0
27
Printing and publishing
1.1
0.9
15.2
28
Chemicals and allied products
15.1
12.4
17.6
29
Petroleum and coal products
5.4
4.4
19.8
30
Rubber and miscellaneous plastic products
4.3
3.1
27.8
31
Leather and leather products
Q
Q
Q
32
Stone, clay, and glass products
21.6
16.6
23.0
33
Primary metal industries
16.4
14.6
11.0
34
Fabricated metal products
2.8
2.3
16.4
35
Machinery, except electrical
1.7
0.9
43.6
36
Electrical and electronic equipment
1.7
1.2
26.4
37
Transportation equipment
1.5
1.1
25.0
38
Instruments and related products
1.7
1.2
29.3
39
Miscellaneous manufacturing industries
1.8
1.4
23.9
—
All manufacturing
5.8
4.4
25.1
NOTE: Q = Withheld because relative standard error
is greater than or equal to 50 percent; NA = not available.
aThousand
British thermal units per constant (1980) dollar of value of
shipments.
bA
decrease in energy efficiency ratios from 1980 to 1985 indicates an
improvement in energy efficiency and thus a positive value for
"energy efficiency change."
cEstimates
of energy efficiency change are calculated from unrounded energy
efficiency ratios and may differ from changes calculated from the
rounded ratios in columns 1 and 2.
SOURCE: U.S. Department of Energy (1990).
Page 256
Emission Control Methods
Carbon dioxide emissions from the industrial sector are due
primarily to the combustion of fossil fuels for heat and power:
CO2 is formed from the primary fuels
used in boilers and process heaters and from the use of fuel
by-products such as coke, petroleum plant gas, and coke oven gas.
Additional emissions occur from industrial processes such as
calcining and cement manufacture, which give off CO2 when raw minerals (e.g., limestone) are
heated.
The use of purchased electricity contributes to CO2 emissions indirectly from the combustion
of fossil fuels at power plants. Thus the magnitude of
electricity-related CO2 emissions
depends on the utility fuel mix in a particular region. Because
many energy-intensive industries tend to be located in regions of
(historically) cheap electricity (e.g., hydroelectric power), the
national average fuel mix may not necessarily be a good indicator
of potential CO2 emission reductions
from reduced electricity demand.
Because of the extraordinary heterogeneity of the industrial
sector, this chapter makes no attempt to discuss specific
technological measures for reducing energy use in each of the major
industries. Excellent summaries of energy use technologies on an
industry-by-industry basis are available elsewhere (e.g., Decision
Analysis Corporation, 1990). The intent here is to outline more
generally the categories of methods available to industry
and to estimate—insofar as possible—the magnitude of
CO2 emission reductions achievable
using current technology. Toward this end, 11 general mechanisms
for reducing CO2 emissions in the
manufacturing sector have been identified by Ross (1990a), who
estimated qualitatively their overall potential and limitations
(Table 22.3). These measures can be aggregated into four general
categories: (1) fuel and energy switching, (2) energy conservation
measures, (3) process design changes (including recycling), and (4)
macroeconomic structural changes.
Fuel and Energy Switching
Fuel and energy switching measures reduce CO2 emissions by substituting fuels with
less carbon per unit of energy for those fuel and energy forms
currently in use. For example, switching from coal to natural gas
reduces CO2 emissions by
approximately 40 percent (for the same energy use), and
substituting oil for coal lowers CO2
by roughly 20 percent. The potential for fuel substitution is
limited by the technical and economic circumstances of different
industries. For example, the largest use of coal occurs in the iron
and steel industry for the production of coke, which is used in
blast furnaces to produce iron. This use of coal cannot be
eliminated by simple fuel substitution. Similarly, when fuel such
as coal and oil are used in
Page 257
TABLE 22.3 The CO2
Reduction Mechanisms in Manufacturing—Technological
Opportunities and Constraints
CO2 Reduction
Mechanisms
Overall Reduction Potentiala
Physical Limitations
Capital Limitations
Need for New Technology
Conservation
High
Mod
Mod
Mod
Housekeeping
Low
Imp
—
—
Process change
High?
Mod
Imp
Imp
Energy switching
Other fuels to natural gas
High
Imp
—
—
Fuels to electricity
High
Imp
Imp
Imp
Co-generation
High?
Imp
Mod
Mod
Fossil to biomass
Low
Imp
Mod
Mod
Recycle
High
Mod
Mod
Imp
Materials substitution
Low?
Imp
Mod
Mod
Sectoral shift
Low
Imp
Mod
Mod
Manufacturing share
Low
Imp
Imp
Mod
NOTE: Imp = important, Mod = moderately important,
and — = relatively little importance.
aJudged by
size of opportunity and potential degree of public policy
impact.
SOURCE: Ross (1990a).
remote locations, such as in the forest products industry,
substitution of natural gas (requiring a pipeline) is unlikely to
be feasible.
The principal opportunities for fuel substitution lie in
industrial boiler applications, particularly in industries that
switched more heavily to coal during the 1970s in response to fuel
price and regulatory pressures. The price, availability, and
reliability of alternate fuel supplies are the key issues in all
circumstances.
The technical potential for short-term fuel substitution at
existing facilities has been estimated by DOE on the basis of a
recent survey of manufacturers (U.S. Department of Energy, 1988).
Results are shown in Figure 22.6, which displays the maximum,
minimum, and actual 1985 fuel usage for the manufacturing sector.
Actual 1985 coal use is seen to be near its maximum technical
potential, whereas distillate and residual oil use were near their
technical minima. A rough estimate of the potential reduction in
CO2 emissions from fuel switching at
existing facilities can be obtained by assuming that 0.6 quad of
current coal use (the difference between actual and minimum use) is
displaced by either oil or natural gas. Based on the average carbon
content of fossil fuels, this would yield a CO2 reduction of
FIGURE 22.6 Minimum, actual, and maximum energy
consumption by manufacturers for 1985.
SOURCE: U.S.
Department of Energy (1988).
24 Mt using gas or 13 Mt using oil.