Evaluation of Industry of the Future Subprograms
INDUSTRIES OF THE FUTURE
As indicated in Chapter 1, the Industrial Technologies Program (ITP) currently funds research addressing the needs of seven energy-intensive industries—aluminum, chemicals, forest products, glass, metal casting, mining, and steel—known as the Industries of the Future (IOFs). The petroleum-refining industry is also designated as an IOF, although no projects specifically tailored for this industry are being funded within the ITP at this time. Together the IOFs account for 75 percent of the energy consumed by the U.S. manufacturing and mining sector (see Figure 1–1 in Chapter 1).
Since the IOF initiative began in 1992, industries have been identified as candidates for becoming IOFs on the basis of a variety of factors: high annual energy consumption coupled with high energy intensity; low investment in research and development (R&D) as a percentage of sales; capital requirements that are higher than manufacturing average capital requirements; and intense foreign competition in the market. In addition, consideration has been given to whether or not it is important to national security to maintain a domestic industrial base in the selected industry and whether or not the industry demonstrates a willingness to organize as a group, collaborate internally, and partner with the government (DOE, 2004a, pp. 17–18). Finally, there has been a historical element to the selection of IOFs, including whether an industry was able to achieve internal consensus during the early years of the initiative, whether an industry was considered within the purview of another Department of Energy (DOE) unit, and whether or not funding from ITP or its predecessors was available at the time when an industry was ready to become a member. Other energy-intensive industries that have been candidates for IOF designation include the agricultural, concrete, construction, and food-processing industries.
Prior to the IOF initiative, the DOE’s industrial energy efficiency program followed a “technology push” strategy, in which research projects were selected and prioritized according to their generic potential for reducing energy consumption and waste generation. With the IOFs, a “market-pull” strategy was implemented, in which the technology needs and priorities identified by the IOFs were used to determine project selection (NRC, 1998). Advantages of the IOF approach include responsiveness to the needs of industry, the ability to leverage limited government funds with private-industry funds, and broad industrial participation, including both large and small companies. The first IOF subprogram was created in 1994, when a budget for the forest products industry was established.
Committee Evaluation Criteria
In evaluating each IOF subprogram, committee members asked the following questions derived from the committee’s statement of task:
How were focus areas and barriers identified?
Were appropriate data sources used?
Do the data used support the selection of focus areas and barriers?
Are the focus areas and barriers selected the highest priority or the most appropriate ones relative to the ITP’s mission?
How were the R&D pathways determined?
Are these pathways likely to result in the achievement of program goals?
Are the prospective subprogram portfolios the right ones to achieve the goals of the ITP?
Are there unnecessary research areas or gaps in research?
Is there a reasonable mix of near-, mid-, and far-term research?
It is important to note several aspects of the committee’s evaluations of the IOF subprograms. First, its evaluations of the individual IOF subprograms vary in length, emphasis, and level of detail. This is a reflection of the tremendous variety found in the subprograms, which in turn reflects the variations found in the industries and the history of the IOFs and industry participation.
Second, it is important to note again that the committee was asked to review the future program directions that were indicated by the documents available. The committee’s evaluations are based primarily on the documents provided and on the presentations made by ITP personnel at meetings in May 2004 (see Appendix B). Committee members did not investigate individual projects, but rather looked at the overall research directions, the basis for decision making in the selection of research directions, and compatibility of subprogram research directions with the goals of the ITP, the Office of Energy Efficiency and Renewable Energy (EERE), the DOE, and the National Energy Policy.
Finally, the EERE reorganization and the implementation of the new ITP decision-making model took place in the context of an existing, active research portfolio of several hundred projects. In the initial stages, these new decision-making criteria have been superimposed on existing projects with the intent to see which still fit and which do not. It follows that some existing projects may not fit well with the new decision-making model, and these are likely to be phased out. The committee took this into consideration and tried to recommend clearly which legacy projects should be stopped, without using the existence of these projects as a criticism of the new decision-making process.
The aluminum industry consumes approximately 800 trillion British thermal units (Btu) of energy per year (DOE, 2004j, p. iv), which constitutes approximately 2 percent of all U.S. manufacturing and mining fuel use (DOE, 2003c, p. 8). The aluminum subprogram is dynamic, having an excellent historical and ongoing interaction with the U.S. aluminum industry. Since its designation as an Industry of the Future in 1996, the aluminum industry, primarily through its trade organization the Aluminum Association, has actively participated in the development of overall industry visions and roadmaps. The industry vision was originally published in 1996 and updated in 2002. A number of roadmaps target specific technology or application areas. In addition, the DOE has published a baseline energy and environmental profile of the aluminum industry. This process-based profile has been used in the creation of a bandwidth analysis, which identifies energy-savings opportunities within key aluminum manufacturing processes by comparing theoretical and practical levels of minimum energy consumption with current actual values.
Focus Areas, Barriers, and Pathways
Four focus areas have been identified for the aluminum subprogram: alternative reduction systems, advanced Hall-Héroult cells, efficient melting technologies, and advanced forming technologies. The first two focus areas involve the primary production of aluminum—that is, the reduction of alumina to aluminum metal, otherwise known as smelting. The focus on smelting in the current aluminum R&D portfolio is supported by the bandwidth analysis (based on year 2000 data) indicating that smelting both consumes the greatest amount of energy of all aluminum processes and offers the greatest opportunity for improvement considering the difference between the theoretical minimum and actual energy
consumption (DOE, 2004a, p. 82). It is unclear why two separate focus areas for smelting R&D have been established. The projects within one smelting focus area are based on the chemistry of the Hall-Héroult process, including new concepts such as inert anode and wetted cathode that would require a different cell design. The one project within the other smelting focus area is based on an alternative to the Hall-Héroult process. The committee recommends that these two focus areas be combined into one area, which might be named, for example, “advanced reduction technologies.”
The term melting technologies refers to the production of secondary aluminum from recycled aluminum products. The selection of efficient melting technologies as a focus area is supported both by its identification as a top priority in the 2003 Aluminum Industry Roadmap and by the bandwidth analysis, which indicates that melting technologies are the second most energy-intensive process.1 It is important to note that although the opportunity for energy savings is larger for smelting than for melting when 2000 data are used, this gap will most likely be significantly narrower in the future as a result of changes in the industry. These changes include the idling or closing of primary smelting capacity, particularly in the Pacific Northwest, and increased growth in recycling.
The fourth focus area, advanced forming technologies, is not well formulated. Forming, in aluminum industry use, refers to downstream product-manufacturing processes, such as sheet forming. Forming, as such, is neither identified as a process step with top-priority R&D needs in the 2003 Aluminum Industry Roadmap, nor is this process identified as having a large opportunity for improvement by the bandwidth analysis. Process steps such as solidification and fabrication are, however, identified by the roadmap as having top-priority R&D needs, while the bandwidth analysis identifies rolling, extrusion, and shape (presumably shape casting) as having some opportunity for improvement. To improve the opportunity for impact, this focus area could perhaps be renamed “advanced fabrication technologies” and could incorporate the specific processes identified in the roadmap and bandwidth analysis. This focus area could also incorporate downstream processes such as joining and forming (used in the conventional industry sense) in end-use industries, where appropriate stretch goals can be identified.
Barriers and pathways have been identified for each of these four focus areas. For the two smelting focus areas, the barriers described in the ITP’s Multi-Year Program Plan (MYPP) comprehensively identify the key technical issues, and the pathways described in the presentation to the committee are appropriate. However, the committee notes the substantial environmental impact of spent potliner in the Hall-Héroult process and its potential elimination via the carbothermic reduction process. Similarly, the barriers and pathways for the melting technologies focus area are consistent with information from the roadmap.
The barriers and pathways described for the fourth focus area, advanced forming technologies, lack the specificity and connectedness of the barriers and pathways identified for the other three areas. For example, the MYPP for the aluminum subprogram lists a barrier related to a specific in-line characterization technology with relevance to FreedomCAR, but there is no corresponding pathway. The presentation to the committee described barriers related to a lack of models and accurate material data, with pathways of developing models and data. These are very general and could apply to any industry or technology area. Revising these descriptions, perhaps with a view beyond forming as described above, could help focus the subprogram’s efforts.
In FY 2003, the aluminum subprogram portfolio consisted of 25 projects with a total federal budget of $6.4 million and industry funding of $2.7 million, resulting in an industry cost-share of 30 percent.2 In the area of alternative reduction technologies, the major project is the development of a carbothermic reduction process for aluminum. This project is also one of the current grand challenges listed in the MYPP (DOE, 2004a, p. 65). The project is aggressive in its R&D scope, but it currently consists of only
one U.S. aluminum industry and one university partner, along with one non-U.S. technology contributor. The committee observes that a broader base of participants would make this a more meaningful project. In addition, if the project could be coupled programmatically with the projects in the advanced Hall-Héroult process focus area, the overall focus area would contain a desirable mix of near-, mid-, and far-term projects.
The portfolio of projects in the efficient melting technologies area includes both melting and metal treatment projects.3 These projects are near- or mid-term in nature. In the MYPP, this focus area is identified as possibly being crosscutting, but there does not appear to be significant leveraging of nonaluminum subprogram technologies, such as sensors or materials (DOE, 2004a, p. 74). Also, the MYPP indicates a grand challenge opportunity entitled “Design and Build Advanced Furnace,” to be started in FY 2008, with a 3-year R&D gap prior to that (DOE, 2004a, p. 74). If this grand challenge could be initiated sooner, the aluminum subprogram would engage significant involvement from crosscutting subprograms because of the large potential energy savings.
The advanced forming technologies portfolio contains a mix of deformation processing and casting projects that appear to be somewhat unrelated (DOE, 2004a, p. 75). The committee recommends that this focus area be given attention and restructured as dictated by revised barriers and pathways.
The committee was initially concerned upon learning that only two projects have been terminated in the history of the aluminum portfolio. However, while it would seem that more projects would be stopped owing to typical R&D risk factors, the ability of the programs to be redirected on the basis of expert review enables them to continue and to provide results. This trend, however, points to the larger issue of defining the success of a project. If multiple paths are available to achieve a stated goal, the process of interim review can be used to good effect. However, if no endpoint is identified, redirecting such projects can diffuse the focus of the overall subprogram.
The committee recommends that the aluminum subprogram explore leveraging efforts through Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) mechanisms to involve R&D organizations and universities in the early stages of project development, so as to free up resources within the ITP for projects closer to implementation.
The MYPP lists three additional activities under the aluminum subprogram that are included in the milestone chart. The first of these, “Studies and Analysis,” shows plans for a case study of retrofit Hall-Héroult versus alternative reduction, which the committee supports as important to understanding the relative risks and benefits of these technology approaches in the energy-intensive smelting area. In light of the energy-cost-driven migration of primary production technology offshore, the committee also suggests that a study forecasting the growth or shrinkage of the various aluminum processes in the United States be commissioned to guide future decisions involving the ITP aluminum subprogram.
A category entitled “Best Practices for Interaction for Technology Delivery” is also included on the aluminum milestone chart. The committee believes that there is an opportunity for significant strengthening of this area for aluminum. This strengthening could include expanded outreach activities, including dissemination of the results from assessments such as that done with Alcoa (DOE, 2004k). Alternative methodologies beyond the use of allied partnerships and the distribution of software could broaden the impact, with the expanded use of the Industrial Assessment Centers4 being one promising approach.
The category labeled “Cross-EERE Activities” in the aluminum milestone chart lists a series of other EERE programs across a 3-year time period, but it is not clear what mechanisms for involvement with these programs will be used.
Conclusions and Recommendations for the Aluminum Subprogram
The aluminum subprogram focuses on relevant needs of the aluminum industry, and its portfolio overall addresses the key priorities in the four current focus areas. The committee commends the staff of the aluminum subprogram for their work and recommends continued evolution and growth in the subprogram direction as the needs of U.S. industry change. The committee specifically 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 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).
The chemical industry consumes 6.3 quadrillion Btu (quads) (DOE, 2004h, p. iv) per year, or approximately 19 percent of all fuel used by the U.S. manufacturing and mining sector (DOE, 2003c, p. 8). This makes it the second-largest consumer of energy within the U.S. manufacturing sector (DOE, 2004h, p. iv), behind petroleum refining, and it is therefore a prime target for R&D aimed at improving resource productivity and energy efficiency. The ITP chemicals subprogram has worked closely with the Chemical Industry Vision2020 Technology Partnership to leverage public and private resources and to ensure the accomplishment of roadmap goals. The Vision2020 partnership is an active one: 98 companies, 22 universities, 11 government offices and laboratories, and 11 trade and professional organizations participated in 2003. Activities in 2003 included establishing a chemical industry consensus on precompetitive R&D needs and jointly analyzing R&D opportunities to create research agendas.
The MYPP for the ITP chemicals subprogram is based on input from Vision2020 as well as on white papers, workshops, ITP’s Strategic Plan, and ITP analytic studies. These documents were used to identify and prioritize the focus areas and barriers.
Focus Areas, Barriers, and Pathways
The ITP chemicals subprogram has refined its program around three focus areas: separations, reactions, and enabling technologies. These focus areas are in alignment with the Vision2020 priorities, which include technology for alternative energy production, storage, and transmission; separations; new materials; alternative fossil-based feedstocks and chemistries; energy-efficient process alternatives; and crosscutting capabilities for research and design. The focus areas clearly relate to the direct (separations) and indirect (low conversion and selectivity reactions) causes of high energy use within the industry.
The ITP chemicals subprogram has developed footprint and bandwidth analyses for both energy and exergy5 for 25 process technologies for 18 large-production chemical products. The extension of traditional energy loss analyses to include the concept of exergy is commendable. Exergy analyses are also being done within the forest products subprogram, and it is recommended that this second law of thermodynamics technique be extended to other ITP programs as well. These analyses are critical to meaningful prioritization of R&D pathways for ITP support, as are other metrics, including those relating to materials use, recovery and recycling, waste discharge and other forms of pollution, and other environmental and economic metrics.
In FY 2003, the chemicals subprogram portfolio consisted of 41 projects with a total federal budget of $13 million and industry funding of $13 million, resulting in an industry cost-share of 50 percent.6 According to the chemicals subprogram managers, project funding should be distributed with about 40 percent directed at separations, 40 percent at reactions, and 20 percent at enabling technologies.7 Using this ratio as a basis, the present portfolio is relatively overweighted in reactions and underweighted in separations, and some adjustment is being considered in the selection of FY 2005 projects from the IOF solicitation. In FY 2004, the chemicals subprogram portfolio transitioned to fewer, higher-risk, higher-impact projects with the goal of bringing about revolutionary improvements in chemical processing efficiency (DOE, 2004h).
The subprogram has already achieved significant accomplishments, as indicated by recent commercial successes such as a more selective reactor configuration, membrane and adsorption product recovery systems, and improved reactor alloys to minimize coke and tar formation. The project portfolio outlined in the Chemicals Annual Report, Fiscal Year 2003 (DOE, 2004h) appears to be very promising.
More than half of the energy loss associated with the chemical industry occurs prior to use in chemical processes and includes losses from inefficient off-site electricity generation, transmission, conversion, and distribution.8 Therefore, the chemicals subprogram, again in partnership with Vision2020 and an independent project integrator, is developing an innovative, energy-systems challenge competition to support research, development, and demonstration (RD&D) projects that enhance the productivity of energy systems integrated with chemical processing and energy supply within plant boundaries. The goal of the challenge will be to commercialize one or more innovative energy systems that will have widespread applicability and yield significant energy savings for the chemical industry. Specific technology-performance criteria to be used in R&D solicitations will be defined, the opportunity will be advertised to equipment and technology developers, and projects will be selected for funding. Although this distributed cogeneration challenge may not be the most technologically difficult, additional challenges are envisioned for 2006 and beyond, perhaps in new-unit operations, disruptive process technologies, or supply-chain technology innovation.
Conclusions and Recommendations for the Chemicals Subprogram
A recent peer review found that the strengths of the chemicals subprogram included its diversity of multipartner teams, a focus on commercial applications, its focus on areas of significant potential improvement, strong industrial involvement, strong ties to energy savings, bandwidth studies, and planning.9 To these strengths the committee would add the use of exergy analyses and the leveraged use of the SBIR program, both of which are recommended for other ITP subprograms as well.
Recommendations from the same portfolio review addressed the need to include data from foreign chemical processes, funding to encourage disruptive approaches, the need to pursue alternative chemistries and feedstocks, greater interaction with state programs, and more industry involvement in planning and, especially, in proposal reviews. To these, the committee adds the following recommendations:
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.
Recent changes in the chemicals subprogram are commendable, including the incorporation of exergy analysis in planning, greater emphasis on separations, a bias toward fewer but larger projects, and the effort to identify grand challenges. The committee recommends use of exergy analysis in the other IOF subprograms as well. The ITP chemicals subprogram appears appropriately focused and is managing a portfolio of projects well balanced from the perspectives of topicality, risk, duration, and potential impact. Many of the achievements and results of this subprogram should also find wide application in the petroleum-refining and other segments of the processing industries. The subprogram appears on track to contribute to the ITP’s meeting its stated energy and environmental objectives.
The U.S. forest products industry consumes 3.2 quads per year (DOE, 2004g, p. 3) and is responsible for approximately 16 percent of the fuel use in the U.S. manufacturing and mining sector (DOE, 2003c, p. 8). The forest products industry was the first IOF to produce a vision document. This was done through the American Forest and Paper Association (AF&PA), supported by other organizations, including the Technical Association of the Pulp and Paper Industry (TAPPI) and the National Council for Air and Stream Improvement (NCASI). The vision document was published in 1994 (AF&PA, 1994), and in 1999 an industry roadmap was released (AF&PA, 1999).
The recent EERE reorganization resulted in changes for the forest products subprogram, namely, that the black liquor gasification effort and the new, forest-based materials effort were moved from ITP to EERE’s Biomass Program. Black liquor combustion in the kraft pulping cycle is a high-priority process as far as energy use and conversion in the forest products industry are concerned. Gasification combined cycle holds promise for increasing the efficiency of this process. Although it is beyond the scope of this committee’s review to address the efficacy of moving these program elements, the committee is concerned, from the perspective of uniformity of management, about excising selected energy research programs of the forest products industry. Black liquor gasification poses challenges different from virtually any other biomass gasification technique owing to the high load of inorganic chemicals in the feed stream. These unique challenges would probably receive more attention if black liquor gasification research were part of the ITP’s forest products subprogram instead of its being part of a biomass program in which the challenge of handling inorganics is not as severe.
Focus Areas, Barriers, and Pathways
The four focus areas identified for the forest products industry are enhanced raw materials, next-generation mill processes, improved fiber recycling, and wood processing (DOE, 2004a, p. 99). Barriers to saving energy are identified and prioritized for each of these areas, as well as pathways for overcoming these barriers.
The forest products subprogram relied heavily on the industry vision and roadmap documents, as well as on statistical data published by government offices, in the identification of focus areas, barriers, and pathways. Although these data sources are appropriate, the heavy reliance on them is also somewhat of a necessity. The open literature in the forest products industry consists primarily of
proceedings from conferences, with few of the kinds of dedicated technical journals found, for example, in the chemical and petroleum-refining industries. In March 2004, a summit on paper technology held in Peachtree City, Georgia, brought together the stakeholders in forest products industry research and development (TAPPI, 2004). The committee recommends that a critical review be undertaken of the results of this summit, with the goal of updating the industry roadmap and identifying grand challenges.
The lack of dedicated technical journals in the forest products industry underscores the need for ITP personnel to travel to technical meetings and conferences to gather and disseminate information. It is also important that they visit mill sites to collect and validate the data used to support decision making.
The vision and roadmap documents in the forest products industry generally reflect the executive-level views of large paper companies. However, new technology in this industry is primarily developed and implemented by industry suppliers and equipment manufacturers. The committee strongly recommends that these stakeholders be more involved in defining focus areas and barriers. The relationship between the forest products companies and their suppliers and equipment manufacturers can be an issue, however. Many equipment manufacturers are not U.S.-based companies, and in some areas of technology no U.S.-based companies exist. To facilitate inclusiveness, the committee recommends that the ITP make cooperation with industry suppliers and equipment manufacturers a condition of contract. Explicitly including suppliers and equipment manufacturers, whether they reside in the United States or not, makes sense from both a practical and policy viewpoint, although issues of intellectual property may need to be resolved.
The forest products subprogram should continue to move from the use of simple energy balances to the use of exergy analyses in its identification of opportunities for research and development. A simple energy balance analysis can lead to a focus on large amounts of low-value energy, while more valuable targets may be deemphasized. The program should be commended for steps currently being taken in this direction.
The mission of the ITP does not completely overlap with the needs of the forest products industry. The latter is primarily focused on improved capital efficiency, whereas the ITP is primarily focused on improved energy efficiency. These goals may be in conflict. Therefore, the committee recommends that economics be introduced early in the process of defining focus areas. The need for significant capital investment for a new technology may well stop any attempt at implementation, even if the long-term payback through energy savings promises to be significant. On the other hand, energy-savings approaches that improve capital efficiency (e.g., chemical additives, optimized parameters) are highly valued by the forest products industry—more so than approaches requiring investment from a strained capital infrastructure.
The forest products industry has for some time sought to lower operating costs through the early retirement of experienced personnel, by operating with a bare minimum of professional staff, and by eliminating research and development. These are serious barriers to the development and implementation of new technologies requiring technical expertise. The industry relies to a significant extent on suppliers and equipment manufacturers for technical support. The committee recommends that these barriers be incorporated into the forest products multi-year program plan.
In FY 2003, the forest products subprogram portfolio consisted of 54 projects with a total federal budget of $11.3 million and industry funding of $4.8 million, resulting in an industry cost-share of 30 percent.10 Although the project portfolio of the forest products subprogram is adequate to achieve the goals of the ITP, it may be possible to improve the portfolio further and better address both the ITP’s vision and goals and the needs of industry. Industry participation in the ITP tends to be via trade associations, which is commendable, as trade associations must be part of any attempt to cooperate with an industry. However, these associations have to support the commercial interests of their members, and
the largest member companies may have the strongest influence. This situation could lead to a biased assessment of industry needs.
The current request-for-proposals process, proposal review structure, and cofunding requirements of this subprogram do not support innovative ideas. Forest products solicitations receive a merit review, but the review panels tend to be composed of active and retired industry executives and academics, often using the subject industry’s roadmap as a guide—which can lead to a restricted view of opportunities. Because of pressures for capital efficiency, large forest products corporations are hard pressed to cofund research on innovative technologies that do not provide short-term return on investment. The committee is concerned that this pressure has led in the forest products industry to a portfolio that is currently too heavily weighted toward the near term. A balanced, robust portfolio will yield a greater number of commercialized projects, with “robust” meaning fewer, more-focused programs with healthy near-, mid-, and far-term objectives.
The identification of grand challenges should lead to an increased focus on innovative technologies. In order to promote thinking “outside the box,” the committee also suggests that the subprogram develop mechanisms for incorporating ideas from experts outside the forest products industry. For example, workshops could be organized at which technical overview presentations about the forest products industry were given to participants who had scientific, market, and strategic expertise, but who had no commercial or professional conflicts of interest with that industry.
Finally, the most prolific purveyors of technology tend to be entrepreneurs and small companies. In order to maximize the potential for innovation, the ITP should ensure that small companies and entrepreneurs are incorporated into decision-making processes by direct communication with smaller companies and solicitations specifically aimed at small companies.
Conclusions and Recommendations for the Forest Products Subprogram
The committee finds that the forest products subprogram is mature and that the research portfolio is consistent with the missions of the ITP and is likely to support achievement of ITP goals. The committee recommends the following actions to sharpen the focus on energy, environmental, and competitiveness issues:
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
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.
The glass industry is energy-intensive, with large amounts of energy needed to melt and refine raw materials into glass. Annual industry energy consumption is approximately 250 trillion Btu (DOE, 2004d, p. iv), constituting about 1 percent of the total fuel consumed by the U.S. manufacturing and mining sector (DOE, 2003c, p. 8). Energy purchased in the glass industry for heat and power was responsible for an
estimated 15 to 20 percent of direct production costs in 2001.11 After its designation as an Industry of the Future, the glass industry produced a vision document in 1996 that identified industry priorities and goals. In 2002, through the Glass Manufacturers Industrial Council (GMIC), a technology roadmap was published that identified technical barriers and priority research needs. Overall, the ITP’s glass subprogram has had very effective participation from the glass industry.
Focus Areas, Barriers, and Pathways
The three focus areas identified for the glass subprogram are next-generation melting systems, energy efficiency performance improvements, and advanced processing and environmental R&D (DOE, 2004a). Several publications were used in the identification of focus areas and barriers, including the glass industry’s vision document, its roadmap, and a profile of the industry. In addition, well-known and well-respected consultants from within the industry were used. The data sources used correlate well with the focus areas selected and the barriers identified; in fact, the choices are almost obvious. Melting and refining are clearly the main energy consumers in all glass operations. The conservative nature of the glass industry is a barrier to the adoption of any radical changes.
The R&D pathways were determined according to a glass industry footprint analysis that identified melting and refining as the areas of maximum energy savings opportunities, as well as the areas in which grand challenges should be concentrated. It is reasonable to assume that the chosen R&D pathways will result in the achievement of program goals. A very good approach that the glass subprogram has taken is to commission studies on prior technologies that were not adopted in order to see if those technologies would now be appropriate and to ensure that none of the current projects tries to reinvent them. This efficient and logical approach might also be useful for some of the other subprograms.
A glass industry bandwidth analysis is scheduled for completion in 2005. Such an analysis would refine the ITP’s decision making by estimating current average energy use, state-of-the-art energy use, practical minimum energy use, and theoretical minimum energy use by glass-manufacturing processes.
In FY 2003, the glass subprogram portfolio consisted of 13 projects with a total federal budget of $3.8 million and industry funding of $3.2 million, resulting in an industry cost-share of 46 percent.12 The priorities of the glass subprogram are to achieve maximum energy savings. Within the prospective research portfolio, funds have been appropriately allotted in order to achieve these goals. In fact, most of the legacy R&D projects have also been aimed at melting and refining processes and have involved a diverse group of investigators. The research directions planned are consistent with the mission of the ITP and, in addition, allow for some diversity to accommodate disruptive technologies in other areas, should such proposals arise. The grand challenges, as described, will concentrate primarily on melting and refining and will aim at a radical rethinking of these processes.
Overall, the glass subprogram has distributed funds appropriately and diversified its portfolio in a reasonable way. However, the committee identified some gaps in research. Since melting is a focus area 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. Recycling does not appear to have been considered anywhere, perhaps because it is considered the purview of other agencies. But recycled product as it pertains to energy savings should be within the purview of the ITP, perhaps in collaboration with other agencies such as the Environmental Protection Agency (EPA).
The balance of projects in the glass subprogram tends toward mid- and far-term research. The committee believes that this balance is appropriate for the glass industry. Because the glass industry is conservative, of necessity, it would be difficult to have a large impact with near-term research involving a
significant capital investment and/or loss of production time, and such research would have to be tailored to a specific segment of the industry, thereby reducing the global impact of the work.
Conclusions and Recommendations for the Glass Subprogram
Overall, the glass subprogram is in very good shape. The decision-making approaches used are logical and reasonable, and industry buy-in makes the success of this program likely. 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.
Although the metal-casting industry is vital to the U.S. economy and national defense, a decrease in the number of domestic foundries is resulting in a loss of metal-casting capability. This decrease in foundries is due to an increase in the importation of low-cost metal cast products. In addition, the industry has few resources available to invest in R&D, especially for high-risk, long-term efforts on revolutionary technologies.
The metal-casting industry consumes approximately 328 trillion Btu per year (DOE, 2004i), constituting about 1 percent of the total fuel use of the U.S. manufacturing and mining sector (DOE, 2003c, p. 8). Although significant improvements in energy efficiency have been made by this industry during the past two decades, additional gains are needed.13 The metal-casting industry has long been active within the ITP and its predecessor organizations. Under the auspices of these programs, the metal-casting industry published a technology vision in 1995 that was updated in 2002 and a roadmap in 1998 that was updated in 2003.
Focus Areas, Barriers, and Pathways
The two focus areas identified for the metal-casting subprogram are advanced melting and innovative casting processes. Within the innovative casting focus area, five metal-casting processes have been selected for energy efficiency research: sand casting, lost foam, die casting, semisolid, and permanent mold. Sand casting is by far the most widely used process, accounting for 67 percent of the total tonnage of metal castings produced in the United States. Several energy efficiency barriers unique to these processes have been determined.
A variety of data sources were used in the determination of focus areas, barriers, and pathways. These sources include the metal-casting vision document and technology roadmap, an energy and environmental profile of the metal-casting industry from 1999, a footprint analysis completed in 2003, a bandwidth analysis completed in 2004, and input from the American Foundry Society (AFS). The footprint analysis included data from 15 representative casting facilities. The data sources that were used support the selection of focus areas and barriers and are the right sources to use. The focus areas and barriers selected are a good match with the ITP’s mission, and the R&D pathways developed appear likely to achieve the program goals.
In FY 2003, the metal-casting subprogram portfolio consisted of 21 projects with a total federal budget of $5.2 million and industry funding of $5.2 million, resulting in an industry cost-share of 50 percent.14 The majority of the prospective portfolio for the metal-casting subprogram is dedicated to processes identified by analytic tools (e.g., footprint or bandwidth analyses) as areas with energy-savings opportunities. However, the largest area of opportunity identified by these analytic tools was the area of energy savings from aluminum reverberatory furnaces.15 A number of the metal-casting subprogram projects described for the committee have an impact on minimizing scrap in the aluminum casting process. However, these projects only indirectly save energy, by reducing the amount of metal that has to be remelted. The committee believes that there is a gap in the metal-casting program in the area of advanced melting for aluminum—that is, process developments that reduce the energy required to melt a pound of aluminum.
Overall, the metal-casting subprogram portfolio is deficient in the advanced melting focus area, in which only one project is listed. That project, on yield improvement and scrap reduction in steel, is not really an advanced melting project. The bandwidth analysis for metal casting indicates that substantial energy-savings opportunities exist in this area. The committee recommends that the project portfolio be augmented in this focus area. Since this is also a focus area for the aluminum subprogram, collaboration between these two subprograms could be beneficial. The committee recommends that the metal-casting subprogram leverage the past and current R&D from the aluminum subprogram in developing the metal-casting portfolio for advanced melting. In this way, the maximum benefit will be gained from both DOE and industry funds. The mix of near-, mid-, and far-term research is reasonable.
Finally, the committee observes that the ITP metal-casting subprogram directs significant effort toward attracting a new workforce for the metal-casting industry. This goal is accomplished by emphasizing the participation of students in metal-casting research projects supported by the ITP. Students involved in such research are tracked during and after the completion of their degrees. To date, of the 326 students who worked on various ITP research projects in metal casting, 152 took jobs in the field on graduation.16
Conclusions and Recommendations for the Metal-Casting Subprogram
Overall, the metal-casting subprogram has had good interaction with industry and is achieving the goals of both the ITP and industry. The projects selected are, in general, the right ones to achieve ITP goals. Regarding a specific effort for improvement, 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.
Each year, nearly 47,000 pounds of materials per capita are mined in the United States (DOE, 2004c, p. 1). The extraction and processing of these materials consume an estimated 1.3 quads annually, constituting 11 percent of U.S. industrial energy consumption (DOE, 2004c, p. 6). In addition to consuming energy, mined materials are a source of energy, with coal accounting for 51 percent of all electric power generated in the United States (DOE, 2004a, p. 130). The mining industry was one of the
final industries to be named an IOF. It produced a vision document in 1998 and three roadmaps on crosscutting, processing, and exploration and extraction technologies between 1999 and 2002.
Focus Areas, Barriers, and Pathways
Three focus areas have been identified for the mining subprogram: extraction, materials handling, and beneficiation and processing. These focus areas are in alignment with the traditional mining-industry distinction between extraction and beneficiation and processing. Materials handling is a cross-disciplinary area between the two. The focus areas selected are in alignment with the industry’s vision and roadmapping documents. In addition, the bandwidth analysis showed significant opportunities for improved energy efficiency in these areas. Overall, the three focus areas are of high priority and are appropriate to the ITP’s mission.
The committee finds that the description of barriers and pathways for the mining subprogram (DOE, 2004a) needs improvement.17 First, they need to be better defined, as there appears to be confusion with regard to terminology. Typically, the term extraction refers to mining technologies, or the equipment and processes used to search for and dig the ore being extracted. The term beneficiation and processing refers to the equipment and processes used to separate, concentrate, and/or refine ore from unwanted material. Materials handling refers to the equipment and processes used to transport ore and waste materials. In the MYPP, however, pumps are described as a large source of the energy used in extraction, although pumps are normally attributed to materials handling. Research on abrasion- and wear-resistant materials is listed under the materials-handling focus area, although the work is aimed at extraction equipment. Barriers to improved energy efficiency in beneficiation and processing are based on comminution, sizing, and classification activities that are actually preparatory to beneficiation and processing. The committee recommends that the description of barriers and pathways for the mining subprogram in the MYPP be rewritten to clear up this confusion.
Second, single-source fuel reliance is listed as a barrier within the materials-handling focus area,18 but this is an overstatement. Materials-handling activities are not always dependent on diesel as an energy source; some are based on electricity. The committee recommends that discussion of other power sources be included. Finally, challenges in solid-liquid and solid-solid separations should be listed as a barrier under the beneficiation and processing focus area.
Data sources used include the mining industry’s vision and roadmapping documents, an energy and environmental profile of the industry, an energy footprint analysis, and an energy bandwidth analysis. In addition, input was solicited from various industry groups, including the National Mining Association; National Stone, Sand, and Gravel Association; Industrial Minerals Association-North America; and Society for Mining, Metallurgy, and Exploration (SME). The data sources used are appropriate, and they support the selection of focus areas, barriers, and pathways. However, the committee has two suggestions for improvement. First, additional input should be solicited from The Minerals, Metals, and Materials Society (TMS), particularly its extraction and processing division. TMS is an excellent group to contact for the sectors of hard rock and industrial minerals, and it could provide valuable input for crosscutting research efforts. Second, more detailed information should be provided on the assumptions and calculations used for the footprint and bandwidth analyses.
In FY 2003, the mining subprogram portfolio consisted of 21 projects with a total federal budget of $3.3 million and industry funding of $5.3 million.19 The average industry cost-share was therefore 61 percent, which indicates strong industrial support.
The committee finds that the mining subprogram portfolio is, in general, the right one to achieve the goals of the ITP. The committee’s only suggestion is that research in solid-liquid and solid-solid separations be considered. There appears to be a reasonable mix of near-, mid-, and far-term research. In fact, one component of the mining subprogram that appears to be innovative and well conceived is the solicitation of R&D efforts at three different stages of development: phase I, II, and III. Project size and cost-sharing are scaled with stage of development, so that early-stage R&D involves smaller projects with lower cost-share requirements. This enables participation by more project partners, as well as nontraditional ones. For projects farther along in development with lower technical risk, a higher industry cost-share occurs, as required.
The committee notes that improvements in energy efficiency within the mining industry will be greatest when effort is focused on those areas common to most of the industry. This is true for extraction and materials handling. However, some research areas, such as solid-solid separations (gravity separations, flotation, leaching), should be considered even though they are not common to all sectors of the mining industry and therefore have a smaller return on investment. These areas should be considered because they may make an impact in terms of environmental issues, which play such an important role in this industry. The committee suggests that risk-benefit analysis be considered in the selection of projects in order to take into account environmental improvements and to ensure that new energy efficiency measures do not create additional environmental problems. In addition, the committee recommends that the mining subprogram maintain its current focus on coal, industrial minerals, hard rock, sand, and gravel and avoid focusing on metal and mineral commodities (e.g., copper, gold, lead, zinc, phosphate rock, limestone). Although there is nothing wrong with funding these commodity areas, the committee believes that a general approach will result in greater and more rapid energy savings.
Although mining subprogram projects have only been funded since 1999, estimates of the energy savings resulting from the implementation of these technologies should be available soon. The committee recommends that these numbers be documented with detailed information on the energy calculations and derivations used. Finally, the committee notes that effective government-industry interaction is not possible without the attendance of ITP personnel at professional meetings, such as the annual meetings of the SME and TMS. In addition, because mining operations are typically remote, it is important that ITP personnel (from headquarters or field offices) visit industrial sites to obtain information on current mining issues, as well as to disseminate the results of the ITP mining subprogram.
Conclusions and Recommendations for the Mining Subprogram
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. The committee recommends:
Clarifying the definitions of focus areas, barriers, and pathways in the MYPP, and soliciting additional input from TMS, 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 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.
The U.S. steel industry, though vital to the national economy and defense, has been eroded as a result of the movement of manufacturing jobs offshore in the past two decades. Between 1988 and 1998, U.S. production of raw steel remained at approximately 100 million tons per year, while China’s annual production increased from 62 million to 126 million tons.20 The steel industry is the fifth-largest consumer of energy within the manufacturing sector, with 2 quads consumed in 2001 (DOE, 2004b, p. 2), representing 8 percent of the energy consumed by U.S. industry (DOE, 2004a, p. 33). In order to remain competitive, the industry must become more resource-efficient and less capital-intensive.
The ITP steel subprogram has a long history of interaction with the steel industry, primarily through the American Iron and Steel Institute (AISI) and the Steel Manufacturers Association. As an IOF, the steel industry published a vision document in 1995 and a technology roadmap in 1998, which was updated in 2001. In addition, one group of industry partners produced a report entitled Barriers and Pathways to Yield Improvements (Energetics, Inc., 2003b).
Focus Areas, Barriers, and Pathways
The four focus areas identified by the steel subprogram are cokeless ironmaking, next-generation steelmaking, advanced process development, and power-delivery modeling. Data sources used in the selection of focus areas, barriers, and pathways include the technology roadmap, the industry-produced report on barriers and pathways, an energy and environmental profile, an energy benchmarking and future opportunities study, a theoretical minimum energy study, an alternative ironmaking study, and footprint and bandwidth analyses. These data sources are comprehensive and appropriate, although many appear to have been developed considering only a limited sector of the steel-producing industry. The committee would like to see better independent review of the data sources, facts, and figures used to support decision making.
The selection of cokeless ironmaking as a focus area is supported by the bandwidth analysis, which identifies ironmaking as the process with the greatest opportunity for energy savings. Substantial resources ($5.5 million) have been allocated to the Mesabi Nugget Ironmaking project within this focus area. When implemented commercially, this technology has the potential to reduce energy consumption significantly, reduce emissions, and lower capital and operating costs. A smaller plant infrastructure will most likely be required, which could make plant location more palatable to small communities that would benefit economically from such a plant. In addition, plants could be located closer to the end user, thereby reducing costs associated with reconversion or transportation and making the steel very competitive.
The second focus area, next-generation steelmaking, is aimed at integrating iron- and steelmaking processes in order to reduce energy consumption. Technologies under investigation to achieve such a grand challenge include a combination of microwave, electric arc, and exothermal heating technologies; and flexible fossil-fuel-based processes. Most of the projects in this focus area appear to involve mid- to far-term research and appear to be appropriate for the achievement of the ITP’s goals.
The potential energy savings from activities within the third focus area, advanced process development, are more than twice as great as those in any other focus area.21 However, some of the changes required would be difficult to implement across the broader industry sector, so success would
depend on the characteristics of the individual sites. Accordingly, many of the projects funded in this focus area appear to be collaborative R&D with AISI members, addressing specific issues related to improvement and energy efficiency. Because many processes in the steel industry are also found in other industries, this focus area might benefit from additional input from other industry sectors. Several of these projects have been recognized as providing incremental improvements only, and there is a recognition that the focus should change to yield improvement.22 Success may be better measured via stepped improvements in process yield or other, broader accomplishments.
The final focus area is power-delivery modeling—specifically, modeling of the delivery of electricity to electric arc furnaces and rolling mills. The goal is to develop near- and far-term load-forecasting models as well as intelligent control of electric load dispatching in order to minimize the impact of highly variable loads on processes. The cost of lost power midprocess can be very high, and better predictions and management strategies can greatly reduce waste and improve yield. Such technology could be integrated into regional steel mill operations. While this is a worthwhile goal for the steel industry and will clearly lead to energy savings, the committee believes that this focus area might be better addressed as part of a power systems portfolio within another DOE office.
In FY 2003, the steel subprogram portfolio consisted of 11 projects with a total budget of $15.8 million. Of this budget, $10.3 million was federal funding and $5.5 million was industry funding, resulting in an industry cost-share of 35 percent.23
For the past 30 years, the steel industry has lost an increasing market share to aluminum, composites, and plastics. Steel has increasingly become a commodity product and, as such, profit margins continue to shrink. Many policy makers believe that the focus of U.S. industry should be on higher-technology processes as opposed to commodities. For example, a focus on specialty steels for tools, stainless steel, or high-silicon steels would be of significant future benefit and might provide significant value-added exports. The U.S. steel industry needs change that takes into account global conditions; therefore, an increased emphasis on new technologies and a focus on specialty areas could provide greater economic benefits than those coming from a focus on incremental process improvements. The committee recommends that the steel program shift its focus toward the secondary processing sector and toward grand challenges.
An issue of concern for the committee was how the intellectual property generated by these taxpayer-funded projects, especially the Mesabi Nugget Ironmaking project, would be managed. It was not clear whether the results from this project are to be shared worldwide with other steel producers or whether there are restrictions in place that would allow the U.S. steel industry to have a technological advantage. The committee recommends that a comprehensive intellectual property policy be developed across the ITP. The situation could be further complicated as many steel companies move their R&D efforts overseas.
The steel subprogram has developed a series of milestones and appears to be proceeding on target in each focus area. However, the metrics used for evaluating whether or not a milestone has been reached should be better defined. It is currently unclear what metrics were used to determine whether a project should be continued or terminated. The committee recommends a clearer definition of success in funded projects. In addition, it notes that, for the steel industry, although energy savings is the primary motivator, other issues, such as infrastructure costs, environmental issues, impact on jobs, impact on strategic national needs, and treatment of intellectual property, need to be factored in when selecting or evaluating project benefits.
Finally, the committee recommends greater leveraging of resources from other areas. The steel subprogram should explore leveraging SBIR and STTR mechanisms as a means of involving R&D
organizations and universities in the early stages of project development, thereby freeing up ITP resources for projects that are closer to implementation. Research resulting from other DOE and EERE programs should be leveraged so that improvements can reach industry more rapidly and information can be disseminated more widely. This is particularly important for smaller technology projects such as sensors, electrodes, and refractories. The steel industry subprogram should also leverage the resources of the National Science Foundation’s (NSF’s) Steel Research Centers and promote cross-pollination of projects between the various primary metals producers.
Conclusions and Recommendations for the Steel Subprogram
The steel subprogram has a long and successful history of interaction with the U.S. steel industry. In general, the data sources used to support management decisions for this subprogram are appropriate. 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 in Chapter 4. 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. Following are specific recommendations for leveraging:
Resources on such directed technology projects as sensors, electrodes, or refractories should be highly leveraged with industrial funding so that improvements can be implemented rapidly and information can be disseminated more widely.
Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) mechanisms should be leveraged. These programs tax all EERE funding and can be directed by program managers who volunteer to monitor the procurement and execution of the research. This has a twofold benefit. First, it allows industry to involve R&D organizations and universities in the early stages of project development and, second, it frees up allocated resources for projects that are closer to implementation.
Focusing on grand challenges. It is clear throughout the industrial sectors that many projects are intended to result in incremental improvements to processes, and many of these programs have gone on for many years. It is critical for policy makers to establish goals, and to measure success when these goals are achieved. Although individual project goals are necessary and useful,
overarching goals, such as grand challenges, that a number of projects can aim toward fulfilling should be instituted. These grand challenges are a very visible way to focus program goals and to inspire individual industry and crosscutting subprograms to greater achievements.
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.