Industrial Energy Efficiency Potentials

There is significant scope to improve energy efficiency in industry. Many energy efficiency improvements are cost effective in their own right. The wider adoption of best available technologies could yield significant gains in the short and medium term. New technologies offer the prospect of additional gains in the longer term. These energy efficiency improvements need to be captured if GHG concentrations are to be put on a path to stabilize at levels between 450 ppm and 550 ppm by 2050. Governments should exploit industrial energy efficiency as their energy resource of first choice. It is the least expensive large scale option to support sustainable economic growth, enhance national security, and reduce further climate damage.

Total final energy use in industry amounted to 121 EJ in 2006 (Table 2.1). This includes petrochemical feedstocks that are not counted in the IEA statistics as industrial energy, but which are nonetheless closely linked to

Table 2.1: Industrial Final Energy Use, 2005 (EJ/yr) (lea, 2008a)

World

OECD

Africa

Latin

America

Mid

dle

East

Non-

OECD

Europe

FSU

Asia

(excl.

China)

China

Chemical and Petrochemical

35.2

18.4

0.4

1.5

2.6

0.3

3.2

3.4

5.3

Iron and Steel

25.0

7.5

0.4

1.2

0.1

0.3

3.5

1.6

10.4

Non-metallic

Minerals

11.3

3.7

0.1

0.4

0.0

0.1

0.8

1.4

4.7

Paper, Pulp and Printing

6.7

5.1

0.0

0.4

0.0

0.0

0.3

0.2

0.7

Food, Beverage and Tobacco

6.1

2.9

0.0

1.0

0.0

0.1

0.5

0.7

0.9

Non-ferrous

metals

3.9

2.0

0.1

0.4

0.0

0.0

0.1

0.0

1.2

Machinery

4.2

2.3

0.0

0.0

0.0

0.0

0.3

0.2

1.4

Textile and Leather

2.2

0.8

0.0

0.1

0.0

0.0

0.1

0.2

1.1

Mining and Quarrying

2.3

1.0

0.2

0.1

0.0

0.0

0.4

0.1

0.4

Construction

1.6

0.7

0.1

0.0

0.0

0.0

0.2

0.0

0.4

Wood and Wood Products

1.2

0.8

0.0

0.0

0.0

0.0

0.1

0.0

0.2

Transport

Equipment

1.4

0.8

0.0

0.0

0.0

0.0

0.2

0.0

0.4

Non-specified

19.7

4.5

2.4

1.8

2.3

0.1

1.3

6.5

0.9

Total final energy

120.7

50.5

3.8

7.0

5.0

1.1

11.1

14.3

27.9

Total primary energy

491.5

231.8

25.7

22.2

21.9

4.5

42.6

55.7

79.4

Note: Includes petrochemical feedstocks, coke ovens and blast furnaces. FSU: Former Soviet Union.

industrial activities. These 121 EJ represent 32% of total final energy use across all end-use sectors. 65% of industrial final energy use is accounted for by four sectors: chemicals and petro-chemicals, iron and steel, non-metallic minerals (especially cement) and pulp and paper. Industry also uses significant amounts of electricity. Refineries are not counted in the IEA statistics as part of manufacturing industry but they use also significant amounts of energy (11.7 EJ in 2006, additional to that used by manufacturing industry). Industrial direct CO, emissions from fossil fuel use and process emissions accounted for 25% of total global CO, emissions. This increases to 40% if the indirect emissions entailed in generating electricity for industrial use are also taken into account.

Developing countries and transition economies account for 58% of total industrial final energy use. China’s share alone amounts to 23%. Asia as a whole accounts for 35%. Africa accounts only for 3.1%.

In terms of primary energy total industrial consumption in 2006 amounted to 156 EJ, equivalent to 32% of total global primary energy use. Regional shares of the total primary energy used in industry vary from 19% in Africa to 46% in China. In some countries such as China, industry consumes more energy than any other sector. Industry’s share of primary energy use has declined from 36.5% in 1971 to 31.7% in 2006. But most of this reduction occurred in the early paid of this period. Industry’s share of the total has remained fairly constant over the last ten years, with percentage reductions elsewhere being largely offset by rapid industrialisation in China.

Despite significant effort in recent years to collect efficiency data for energy intensive industries, important gaps remain, especially in the data for developing countries and transition economies. 17% of all industrial energy use is reported as “non-specified”. Tins poses a major problem for industrial energy and climate change policy making and decision making worldwide. Collection of better data should be a priority, in order to ensure a solid basis for policy making. UN- Energy can play an important role in this data collection, especially for developing countries and transition economies.

According to IEA statistics, 35% of industrial energy use is accounted for by non-energy intensive industries, including a categoiy for non-specified industrial uses (Fig. 2.16). Some of the non-specified energy use should in fact be allocated to energy intensive industries, so 30% is probably a better estimate of the energy used in non-energy intensive industries. The way in which energy is used in these industries is not well understood. Some of them, such as food and beverages, textiles and leather, machinery and wood processing, are of special importance in developing countries. It is recommended that indicators be developed, and appropriate data collected, for these sectors.

Since 1973, improvements in energy efficiency and structural change across all sectors have helped to keep final energy use virtually constant in IEA countries. It is difficult to split energy efficiency and structural change accurately, but it has been estimated that the bulk of this gain, at around 1.4% a year, can be attributed to efficiency improvements. Accurate data do not exist for non- OECD countries. It is likely that energy efficiency improvements have been even larger in non-OECD countries, but these have been more than offset by increases in industrial prodirction.

Without those energy efficiency improvements, energy demand would have been 58% higher (IEA, 2008a). More conventional fuel would have had to have been supplied and used, increasing GHG emissions. In the United States alone energy demand would be four times higher than it was in 1970 (Laitner, 2008).

Share of industrial sectors in total industrial energy use (primary energy equivalents assuming 40% efficiency in power generation), 2006 (IEA, 2009)

Fig. 2.16 Share of industrial sectors in total industrial energy use (primary energy equivalents assuming 40% efficiency in power generation), 2006 (IEA, 2009).

Reduction of direct CO, emissions in industry can be achieved by improving efficiency, but also through other means such as enabling fuel switching and capture and storage. Figure 2.2 shows the role that those technologies are expected to play in 2050 in a scenario whereby global emissions are reduced by 50% and those related to industry by 20%. The largest contribution to emissions reduction comes from energy efficiency (IEA, 2009).

Long-term C0 emissions reduction potentials in industry considering a 50% and 20% reduction globally and in industry respectively by 2050 (IEA, 2009)

Fig. 2.17 Long-term C02 emissions reduction potentials in industry considering a 50% and 20% reduction globally and in industry respectively by 2050 (IEA, 2009).

Given its consumption of one third of all annual primary energy use and its production of a similar share of the world’s energy and process CO, emissions, industrial efficiency deserves special attention. There remains considerable scope to achieve further improvements.

Benchmarking studies allow for estimating the potential energy and emission saving in industrial sectors. They commonly feature the comparison of the energy or emission intensity of a fleet of plants with some of the best performing plants. The potential is estimated by means of comparing current performance with at 10% of the cumulative production (benchmark). Global benchmarking studies show the potential for a further 10 to 20% improvement if all industrial plants were to operate at least at the levels of efficiency achieved by the benchmark plant (Grelen, 2009).

Indexed benchmarking curves for energy intensive commodities, 2006/7 (Knapp, 2009; IFA, 2009; Solomon, 2005; GNR, 2009). Note

Fig. 2.18 Indexed benchmarking curves for energy intensive commodities, 2006/7 (Knapp, 2009; IFA, 2009; Solomon, 2005; GNR, 2009). Note: Includes feedstock energy.

These benchmarking exercises tend to be supported mostly by well managed, and often more energy efficient, plants. The benchmarking curves may therefore underestimate the global efficiency potentials. Using Best Available Technologies (BATs), and moving beyond this to promising new technologies that are not yet commercially available,would also increase this potential substantially. To enable these issues to be understood more clearly, comprehensive benchmarking data sets for key energy intensive commodities should be developed as a matter of priority.

Table 2.2 sets out the potential for energy savings in each of the most energy intensive industrial sectors. This shows the potential for savings of 10 to 20% as against BPT. The potential saving is significantly higher if BATs or new technologies are assumed, rising to between 20% and 30%. Given the slow rate of technology development, it is possible to forecast future improvements with some level of confidence.

Table 2.2: Sectoral Technical energy efficiency potentials base on benchmarking and Indicators analysis (primary energy equivalents)

Share of total global energy demand [%]

BPT

[%]

BPT, BAT and break-through technology [%]

BPT, BAT, break through technology and additional systems options [%]

Source

Iron and steel

5

15

25

35

Gielen, 2009, UNIDO estimate

Aluminium

1

15

30

35

Gielen, 2009, UNIDO estimate

Ammonia

1

15

25

40

Gielen 2009, UNIDO estimate

Petrochemicals

5

15

20

30

Saygin et al, 2009

Pulp and paper

1

20

30

35

IEA, 2007, 2008a, UNIDO estimate

Cement

2

25

30

35

GNR, 2009, UNIDO estimate

Petroleum

refineries

2

IQ-

20

15-25

15-25

Worrell and Galitsky, 2005, UNIDO estimate

Analysis of energy and materials systems can also provide interesting insights, especially for the 30% of energy used outside the energy intensive sectors. For example, the more efficient use of compressed air in the United States has been shown to achieve savings of to 20% or more (CAC/U.S. DOE, 2004). Steam supply systems offer potential energy efficiencies of 10% or more and electric motor systems offer potential efficiencies of 15 to 25% (IEA, 2001a). Fuel-use reductions of up to 35% can be achieved by the wider adoption of combined heat and power. Similar substantial gains are possible if heat flows were to be optimized between different processes and between neighbouring installations. There is a limit however, in terms of the distance over which the transport of hot water or steam makes sense which limits the potential of this option. Furthermore, increased recycling and energy recovery from organic waste materials such as plastics and wood, and improvements in the way in which industrial commodities are used (e.g. stronger steel, more effective nitrogen fertilizers) can raise these potentials still further.

To some extent the potentials identified in such an analysis will overlap with the BPT potentials listed in Table 2.2. But a broader systems perspective will often reveal the potential for significant additional energy efficiency improvements over and above those that would be identified by a narrow process perspective.

Achieving these energy efficiency potentials will depend heavily on the deployment of existing BPTs and on research, and on the development and demonstration of new technologies and systems. Production of most industrial commodities is projected to double between now and 2050. Energy efficiency alone will not be sufficient to achieve deep emission cuts. But given the magnitude and urgency of the energy and CO, challenge and the relatively limited potential of alternative options, energy efficiency must be called upon to make an important and early contribution.

The practical, cost-effective potential for energy savings is much smaller than the technical potential identified above. One important factor is the fact that much of the existing capital stock has a long life still in it. Retrofitting is usually much more costly than green field investment and replacing plant earlier than necessary in order to increase its energy efficiency, given the scale of most industrial investment, is rarely economic.

Efficiency potentials are not uniformly distributed across the world. Generally, efficiency potentials are higher in developing countries than in industrialized countries. Outdated technology, smaller scale plants and inadequate operating practices all play a role. But this is not always the case. The most efficient aluminium smelters are in Africa. India has the most efficient cement industry worldwide. And China has some state-of-the art steel factories. To some extent this can be attributed to the young age of the capital stock in these countries, and the older age of plant in OECD countr ies.

Government policies with regard to energy efficiency play an important role. In terms of the CO, savings that might be achievable, IPCC analysis suggests that industry might be expected to make savings of 2.5 to 5.5 GtCO, equivalent in 2030 compared to a baseline scenario. This would be a saving of 15 to 30% of the total baseline emissions in 2030. 90% of this potential, most of which would come from energy efficiency improvements, could be achieved at less than USS 50/tCO, saved. The remaining 10% could be achieved at between USS 50 and USS 100/tCO, saved (IPCC, 2007). 80% of the potential is in developing coimtries and transition economies.

Global GHG abatement cost curve beyond business-as-usual - 2030

Fig. 2.19. Global GHG abatement cost curve beyond business-as-usual - 2030

(McKinsey, 2009)

This picture is reinforced by IEA analysis that suggests that energy efficiency would constitute more than half of all industry’s contribution to a scenario which envisages global CO, emissions halving by 2050.

Industrial energy efficiency has improved historically at a rate of about 1% per year, although effective policies and programmes have resulted in that rate being doubled in some countries (UNF, 2007). Countries that have had ambitious policies for some time, such as Japan and the Netherlands, tend to be more efficient than countries without such policies. Based on this experience, the G8 has made a commitment to reduce industrial energy intensity by 1.8% a year by 2020 and 2% a year by 2030. These are ambitious targets.

McKinsey and Company has assessed more than 200 GHG abatement opportunities across 10 major sectors and 21 world regions between now and 2030. The results comprise an in-depth evaluation of the potential, costs and investment required for each of those measures. Cost curves have been developed for the world (see Fig. 2.4) and for a range of individual countries (Australia, Belgium, Brazil, China, Czech Republic, Germany, Sweden, United Kingdom, United States). These cost curves show a significant potential for energy efficiency at low or negative life cycle cost. Capturing all the potential will be a major challenge: it will require change on a massive scale, strong global cross-sectoral action and commitment, and a strong policy framework.

Energy efficiency is the most cost-effective, least-polluting, and readily- available energy “resource” available in all end-use sectors in all countries.

 
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