Introduction to Industrial Energy Efficiency: Energy Auditing, Energy Management, and Policy Issues

Preface

This book would not have been completed without several key persons. First of all, we would like to express our sincere gratitude to Associate Professor Mats Söderström for his detailed and sharp views on earlier drafts of this book. We would also like to thank Professor Sven Werner at the University of Halmstad and Dr. Per-Åke Franck at CIT Industrial Energy AB for their review of the Swedish book manuscript. Their valuable comments helped to improve the book.

We also want to thank the key people who reviewed an earlier version of the book manuscript. We would like to thank Roland Dahlström, Head of Scania Industrial Maintenance AB; Leif Rydell, former Energy Engineer at Xylem Water Solutions; and Henric Dernegård, lead energy controller at Södra Forest Owners Economic Association for their valuable comments from an industrial perspective. We would also like to thank Dr. Nawzad Mardan at the University of Gävle and Associate Professor Curt Björk at Linköping University for their valuable comments from a research perspective.

Also, we would like to address our sincere thanks and gratitude to a number of people who have served us with proof reading of selected parts or major versions of earlier drafts of the book manuscript.

We would like to address our sincere gratitude to a number of people who have served us with proof reading of earlier drafts of the part involving Lean energy management: Dr. Esther Widmer and Anna Wollin Ellevsen. Also, we would like to thank our colleagues at Volvo Construction Equipment such as Frank Bengtsson, Adam Björk, Katarina Heikkilä, Niklas Nillroth, and Boris Radojcic and to Birgitta Sjögren at Swedish Environmental Research Institute.

Moreover, our sincere thanks to Dr. Osamu Kimura, CRIEPI, Japan and Dr. Sandra Backlund, Swedish Ministry of Economics for providing comments on the parts involving policies and programs. Furthermore, our sincere thanks to Hugo Salamanca and Vida Rozite at the International Energy Agency for very valuable comments on an earlier draft of the manuscript, in particular, those related to energy audits. Furthermore, sincere thanks to Dr. Maria Johansson, Simon Johnsson and Elias Andersson, Linköping University for valuable comments on selected parts of the manuscript.

Moreover, we would like to express our thanks to co-authors of previous Journal articles, conference papers, and book chapters that some parts of the book emanate from.

Finally, we would like to thank Fredrick Andersson at the Swedish Energy Agency who many years ago strongly advocated that we seriously should start the book manuscript process and for your views on a previous version of the book related to policy.

Finally, our sincere thanks to our dear families, you are invaluable for us!

1

Introduction

Abstract

This chapter introduces the reader to the area of the book by first describing the importance of energy efficiency in industries. Thereafter, the reader is provided by the background on the issue of global warming in relation to energy efficiency, followed by some words on industrial energy use globally and the allocation of energy end-use in industrial companies. Then, the definition of the main theme of the book is presented, namely, energy efficiency, together with some adjacent concepts. Subsequently, the reader is given some words on the vertical perspective mainly applied in this book when discussing improvement of energy efficiency, followed by an introduction of the important systems perspective aspects when improving energy efficiency. Before giving a presentation on the disposition of the book, an introduction of the potential of improved energy efficiency directs the reader to the three parts that the book has been divided into: energy efficiency level, energy management level, and energy policy level.

Keywords

Energy efficiency; manufacturing industry; energy efficiency gap; systems perspective on energy efficiency; energy efficiency potential

Chapter Outline

Outline

1.1 Energy efficiency—first fuel 1

1.2 Background 2

1.2.1 Climate change mitigation 2

1.2.2 Key areas for reducing energy costs 3

1.3 Global industrial energy use 3

1.4 Energy end-use among different industrial companies 4

1.5 Energy efficiency 4

1.5.1 EU’s energy efficiency directive, definitions—an example 6

1.6 Vertical or horizontal perspective 6

1.7 Systems perspective on energy efficiency 7

1.8 Potential for improved energy efficiency 8

1.8.1 Energy efficiency and nonenergy benefits or multiple energy benefits 10

1.9 The disposition of the book 11

References 12

Further reading 13

1.1 Energy efficiency—first fuel

In addition to an increased share of renewable energy, more efficient energy use is by far the most important means for achieving sustainable energy systems—locally, regionally, and globally. Efficient energy use in the manufacturing industry is a key factor in ensuring that individual companies, industries, and industry as a whole continue to be competitive on a global market with scarce resources. According to the Intergovernmental Panel on Climate Change (IPCC),¹ more efficient energy use in industry is the single most important means of preventing global warming. The International Energy Agency is in the same line, calling energy efficiency first fuel, that is, the first action that should be taken.

Efficient industrial energy use refers to everything from operational energy efficiency measures in the production process and capital-intensive major investments in new production lines, to technology solutions for controlling supply temperatures in heating systems, procurement of energy services from external energy service providers, implementation of energy audits, internal energy management work, and the establishment of energy strategies at management level in an organization and more. This complexity regarding both technology and organization places high demands on the organization as well as the competence for the energy efficiency work to be carried out successfully. This book aims at increasing knowledge for our readers about, and thus promoting, a more efficient industrial energy use. The focus is on manufacturing industry, but much of the content is applicable in other sectors and industries as well. Efficient energy use, in turn, contributes to the cost-effective improvement of industrial energy systems, the elimination of barriers to energy efficiency, and the improvement of the procurement competency of the industry in terms of energy-related products and services.

1.2 Background

Global climate change due to increased greenhouse gas emissions, which, in turn, is a consequence of primarily the use of fossil fuels for energy supply, is pushing decision-makers in taking important decisions related to climate change mitigation. Within the EU, the EU Energy Service Directive (ESD) was launched in 2006 aimed at improving energy efficiency by 9% to 2016. In 2012 the ESD was replaced by the Energy Efficiency Directive. The aim of the 2012 directive was to reduce energy end-use by 20% by 2020, compared with the 2005 level. The new target within the EU for 2030 was set in 2018 and states a 32.5% improvement in energy end-use by 2030.

1.2.1 Climate change mitigation

The human-related, so-called anthropogenic, environmental problems have changed over the centuries; from local and regional phenomenon to today’s global environmental issues such as ozone thinning and increased greenhouse effect. These induce entirely new demands on how to pursue sustainable environmental work. Many researchers today consider that global climate change is by far the greatest threat to mankind (IPCC, 2014). The use of fossil fuels is the single largest cause of the emergence of global climate change issues. Therefore, the highest priority in sustainable environmental work is to limit greenhouse gas emissions without sacrificing measures to improve sustainability on regional and local levels. All gases, except for the two-atom molecules containing only one kind of atoms (N2, H2, O2, etc.), are so-called greenhouse gases. The strength of a greenhouse gas is due to the gas’s ability to absorb heat radiation and its useful life. Methane is, for example, a 23 times stronger greenhouse gas than carbon dioxide. Gases with absorption bands where the atmosphere is transparent, gives rise to extremely strong greenhouse gases. Examples of gases with these properties are those which contain bonds between carbon and chlorine and carbon and fluorine, the so-called freons. Despite the fact that carbon dioxide is not a particularly strong greenhouse gas, the extensive combustion of fossil fuels means that these emissions, compared with other greenhouse gases, are very large.

Global climate change, EU’s efforts to limit greenhouse gas emissions and rising energy prices, means that there are strong incentives for both state and industry to act strongly to achieve more efficient supply and end-use of energy.

1.2.2 Key areas for reducing energy costs

The negative effect of increased energy costs can be reduced in two ways: either the company aims to negotiate a lower price with the energy supplier, or the company can undertake internal measures to improve energy end-use efficiency and also investigate potential own supply of energy. The four key areas in which a company can reduce its energy costs are:

• operation changes, for example, more efficient operating and maintenance routines and changed behavior;

• investments in energy-efficient technologies;

• time control, for example, load management; and

• conversion from one energy carrier to another, for example, from electricity to district heating.

The overall aim of the book is to convey a system perspective on more efficient energy end-use in different types of industrial energy systems.

1.3 Global industrial energy use

Industry accounts for a large share of global energy end-use. Depending on how the term industry is defined in different reports, the industry accounts for between 25% and 50% of global energy end-use. In 2014 the industrial sector used 43,000 TWh/year or 36% of the world’s total energy end-use (IEA, 2017). The world’s most energy-intensive industries are according to the IEA (2017) chemicals and petrochemicals, iron and steel, cement, pulp and paper, and aluminum representing about 69% of the global industrial energy end-use (IEA, 2017). Chemicals and petrochemicals and iron and steel account for about 10% and more than 8% of the world’s energy end-use, respectively (IEA, 2017).

About half of the energy end-use in the chemical and petrochemical industry comes from oil, and most of the remaining energy end-use emanates from natural gas. The iron and steel industry mainly uses coal in its processes. Both industries also use a lot of electricity. More than half of the energy end-use in the cement industry comes from coal, while the remainder is relatively evenly distributed between electricity, natural gas, and oil, and a very small part of biomass. For the pulp and paper industry, almost half of energy end-use comes from fossil fuels, while the remaining share is biofuels. Electricity is the dominant energy form for the aluminum industry, while almost half of the energy end-use is fossil fuels. The energy use in the different industries is found in Fig. 1.1, showing the five most energy-intensive industries globally.

Figure 1.1 Energy use in the different industries (%), in total 43,000 TWh (IEA, 2017).

1.4 Energy end-use among different industrial companies

Among non-energy intensive small and medium-sized enterprises, the support processes, such as ventilation, space heating, cooling, and lighting, stand for the companies’ main energy use. On the contrary, among energy-intensive companies, the production processes represent the largest energy use. Table 1.1 shows the energy end-use in a large non-energy intensive engineering industry, while Table 1.2 displays the energy end-use in a large iron foundry, which is energy intensive and where the production process is discontinuous. Table 1.3 displays a large chemical pulp mill, which is highly energy intensive and where the process is continuous.

Table 1.1

Table 1.2

Table 1.3

As shown in Tables 1.1–1.3, energy end-use differs significantly between the different industrial companies. In the engineering company, production processes account for less than 30% of the total energy end-use, while in the iron foundry, about 50% of the energy end-use is found in the production processes. For the chemical pulp mill, only about 16% of the total energy end-use can be found in Others in which support processes are included, but also a number of minor production processes. The differences between the companies clearly affect how they can conduct effective industrial energy management, but also their respective potential for more efficient energy use.

1.5 Energy efficiency

The book primarily uses the concept of energy efficiency, which should not be considered as energy saving. Energy savings is specified as the amount of kWh saved, that is, it is an absolute measure. Energy efficiency, however, is indicated in relation to something. It indicates how effective a process is or how much more effective it can become, given a certain measure, such as X MWh per ton more efficient. Governmental energy goals are often formulated in terms of energy savings. However, for individual companies, it is more relevant to consider energy use from an efficiency perspective, that is, how a unit to a customer can be produced more efficiently and thus more sustainable.

In Jaegemar (1996) energy efficiency is defined as: Energy efficiency is a measure of the balance between the energy gained and the sacrifice necessary to bring about this gain. An energy-efficient system is thus a system that provides its function with the lowest possible energy use at reasonable cost. This definition is useful, for example, when discussing indoor environment aspects as when Abel and Ekberg (2002) stress the importance of two aspects when implementing efficiency measures:

1. The implementation of an energy efficiency measure should not have a negative effect on the building (or production) and its function.

2. The primary use of resources when implementing an energy efficiency measure should be related to the total energy reduction due to the measure.

These two requirements are to be fulfilled in order for a measure to be categorized as an efficiency measure. This sorts out measures where the function of the building, such as indoor air quality (IAQ) issued, or the production is reduced or when the measure results in a use of resources not in proportion to the reduction of energy use (Abel and Ekberg, 2002). Another aspect in defining an energy efficiency measure could be to establish an energy payback criteria, where the energy payback index represents the potential saving per year divided by the embodied energy, and thus results in a relation of how long it will take for the measure to save as much energy as it has required in production.

1.6 Vertical or horizontal perspective

When aiming to improve energy efficiency in companies, a vertical perspective is usually applied. The company’s energy use at a geographically defined site is studied, for example, a factory within a company group or all plants in the company group. The company’s energy end-using processes are audited, analyzed, and improved, for example, by energy auditing, energy management, procurement of energy services, and process integration activities.

Another point of departure for improving energy efficiency is the horizontal perspective, where instead the product’s processing chain or value chain is studied. According to this perspective, the energy end-use of the product from cradle to grave is included, for example, via a life cycle analysis.

In this book, an emphasis is placed on the vertical perspective, and these methods are described later on in the book.

1.7 Systems perspective on energy efficiency

In order to realize the full energy efficiency potential, both technology measures, behavioral measures as well as knowledge about both single processes and a number of processes togehter, are needed. This way of viewing a challenge from a number of different perspectives is called a systems’ perspective or systems’ thinking. With regard to improved energy efficiency, it is crucial to apply a system perspective. When undertaking system changes, it is important, for example, to take into account the type of energy used. A process that requires heating at low temperatures does not necessarily need to use electricity. Electricity should preferably rather be reserved for processes that require high-quality energy, such as electric motors, while more low-quality energy sources (such as excess heat from other parts of the plant) can be used for heating.

Energy savings in a certain part of the system can lead to consequences in other parts of the system, which can counteract or even increase overall energy demand. For example, if there is a heating requirement in a room, the installation of more energy-efficient lighting means that less heat is supplied to the room (through losses in the lighting as all electricity uses in the lighting fixture is later transformed into heat). Thus additional heat must be supplied to the room during the cold winter season, due to the improvement of the lighting. This, of course, applies only if there is a heat requirement in the room. On the other hand, in cooled rooms, a switch to energy-efficient lighting affects the cooling demand positively. However, it is important to consider what energy quality is required, that is, is it wise to use electricity for heating?

When implementing several energy efficiency measures at the same time, it is important to take into account that the actions may interfere with each other and that the respective energy efficiency potentials are not necessarily additive. For example, the energy efficiency potential for reduced cooling demand in a location can decrease if an energy efficiency measure in a process is carried out simultaneously, which reduces the overall heat demand in the room. Adding the saving potential for the cooling requirement with the energy efficiency potential of the process in the room gives an incorrect result.

When analyzing industrial energy systems, the choice of system boundary is very important. As mentioned earlier, different energy efficiency measures may interfere with each other, which may be overlooked if an overly tight system boundary is selected. System boundaries are important in discussions about electricity production and the use of excess heat from industrial processes, that is, heat that turns out as a surplus and could be used for secondary heating delivery in, for example, a district heating system. In a district heating system with cogeneration plants, that is, plants that produce both heat and electricity, the amount of electricity that can be produced is controlled by the amount of heat that can be delivered. Therefore if the industrial excess heat from an industry is delivered to a district heating system with combined heat and power (CHP), the electricity generation in the CHP will decrease. If it is very profitable to produce electricity, it can be unprofitable to use industrial excess heat in these district heating systems. Energy policies that promote renewable electricity generation in district heating systems, for example, the Swedish and Norwegian electricity certificate scheme, which favors biofuel-based electricity generation, may then counteract with the aim of increasing industrial excess heat in these district heating systems.

1.8 Potential for improved energy efficiency

The potential for improved energy efficiency varies between different companies, industries, and countries (Sorrell et al., 2000). As a result of various barriers such as lack of time, of capital and information asymmetries and imperfections that inhibit improved energy efficiency, not all energy efficiency measures are realized, even though they are perceived as profitable. The difference between potential for energy efficiency and what de facto is implemented is referred to as the energy efficiency gap, initially defined by Hirst and Brown (1990).

In a paper by Jaffe and Stavins (1994), they outline a number of different levels of energy efficiency potentials, or energy efficiency gaps, stating that the actual energy efficiency potential level is dependent on which view that is applied. On the lowest level, the economist’s potential, the potential can be reached by overcoming the so-called market failures in the energy technology markets. The technologist’s potential, which is on a higher level, can be reached by overcoming both market failures and market barriers, while the highest level, the hypothetical level, may be reached by also overcoming market failures on the energy markets Jaffe and Stavins (1994).

The energy efficiency gap is based on the view that there are a number of cost-effective energy efficiency measures, primarily technical, which are profitable and lead to more efficient energy use. Energy use is calculated by multiplying power with time. Technologies and processes that use energy have a power demand during operation hours which means that how technologies and processes are operated affect both power demand and operation hours. The part related to how technologies and processes are used refers to as the energy management gap meaning that there is in fact a higher energy efficiency potential if energy management is also included in addition to energy efficiency technology measures. This refers to as the extended energy efficiency gap, initially defined together with the energy management gap by Backlund et al. (2012a). Fig. 1.2 displays this gap.

Figure 1.2 The extended energy efficiency gap: the energy efficiency potential level is increased if energy management practices are also included (the energy management gap) (Backlund et al., 2012a).

In a paper by Backlund et al. (2012b), the extent to which the energy management gap exists and if so to what extent, was explored through a case study. Two different groups of companies were studied:

• Category X: Energy-intensive firms that have participated in a voluntary agreements program (VAP) or conducted an energy audit in the last 3 years.

• Category Y: firms that have not participated in a VAP nor conducted an energy audit in the last 3 years. Mostly non-energy intensive and small and medium-sized enterprises.

The result of the perceived energy efficiency and energy management gap is displayed in Table 1.4 and reveals that the potential seems to be quite evenly distributed between technology and management. Notably, the energy-intensive companies perceive a larger relative potential for management (6%) than for technology (4.6%) and for the non-energy intensive and small and medium-sized companies, the potential is relatively larger and also, technology is perceived to have a higher degree of energy efficiency potential than management-related measures.

Table 1.4

A consecutive study of the energy efficiency measures implemented within the Swedish VAP, the program for electricity-intensive industry, which was a 5-year policy program for industry involving energy auditing and the implementation of the world’s first industrial energy management standard, SS 62000 was carried out. The study found that about 61% of the implemented 1254 energy efficiency measures emanated from the implementation of new technology, and the rest came from management and operational measures (Paramonova et al., 2015).

In a study of the Swedish steel industry, Brunke et al. (2014) found that the extended energy efficiency potential was perceived to be 9.7%, which was 2.4% higher than if only the potential for cost-effective technologies was considered (Brunke et al., 2014).

From the national perspective, energy policies are used to promote improved energy efficiency. Properly designed, these policies can help companies reduce both the energy efficiency and the energy management gaps. The difference between potential for energy efficiency and energy management with the help of policies, and which policies that are put into place, that is, that are currently present in an Economy, is referred to as the energy policy gap, initially defined by Thollander and Palm (2013).

Fig. 1.3 displays the three gaps related to improved energy efficiency.

Figure 1.3 The energy efficiency, energy management, and energy policy gaps (Thollander and Palm, 2013).

1.8.1 Energy efficiency and nonenergy benefits or multiple energy benefits

When an assessment is made of the implementation of an energy efficiency measure on an operational level, the cost-effectiveness of an energy efficiency measure is assessed using commonly used tools, for example, net present value, internal rate of return, life cycle cost, or simple payback. These assessments normally include:

• the investment cost of the measure;

• the reduced annual cost for energy; and

• sometimes the maintenance cost.

Research in the area reveals that if other benefits are included as well, for example, increased productivity, reduced waste, and improved working conditions, the cost-effectiveness of the measures increase (Nehler et al., 2014). These additional benefits are referred to as nonenergy benefits (NEBs) or multiple energy benefits.

Research reveals that when larger investments on a strategic level are undertaken, many of the NEBs are included in the assessment (Nehler and Rasmussen, 2016), while on an operational level, these NEBs often remain overlooked. Fig. 1.4 displays the positive effects of including these benefits in an investment assessment.

Figure 1.4 Inclusion of NEBs and the effect it has on the energy efficiency potential, and its relationship to the operational and strategic dimensions of investments in an industrial company (Nehler et al., 2014).

Fig. 1.4 shows that when including NEBs in the assessment, a number of more measures are likely to pass threshold for what is perceived as cost-effective or not among industrial companies, leading to the fact that the energy efficiency potential is higher than if NEBs remains overlooked (Nehler et al., 2014).

1.9 The disposition of the book

The book is divided into three parts and has its starting point in the energy efficiency, energy management, and energy policy gaps, see Fig. 1.3.

Part I focuses on energy auditing and energy efficiency of companies from a predominantly technical perspective. This part is aimed toward students at, for example, university levels, energy and environmental managers in industrial companies, technical consultants, and various public policy actors and stakeholders, such as regional energy agencies and county administrative boards. Part I has its starting point in the so-called energy efficiency gap. Chapters 3–12 are included in Part I of the book.

Part II focuses on energy management in the manufacturing industry. This part is mainly aimed toward students at, for example, university levels, as well as energy and environmental managers in companies. Even technical consultants and public actors at, for example, national regional energy agencies may benefit from this part. Part II is based on the so-called energy management gap. Chapters 13 and 14 are included in Part II of the book.

Part III focuses on energy efficiency policy instruments and how these can be designed, implemented, and evaluated as well as one chapter covering barriers to energy efficiency. This part is primarily aimed toward actors who administer and operate policy programs at national, regional, and local levels, and for persons interested in studying barriers to energy efficiency. This part may also benefit groups that want to take a holistic approach to energy efficiency-related issues and companies that want to reduce the negative environmental impact of energy use throughout the value chain, that is, including suppliers. Part III is based on the so-called energy policy gap. Chapters 15–17 are included in Part III of the book.

After the book’s introductory chapter, general energy theory and a review of commonly used concepts, terms, and definitions is provided in Chapter 2. Chapter 2 is aimed toward readers who need to freshen up their energy skills or lack a technical energy educational background.

References

1. Abel, E., Ekberg, L., 2002. Energieffektivitet, Rapport Effektiv 2002:01, Borås, Sweden (In Swedish).

2. Backlund S, Thollander P, Palm J, Ottosson M. Extending the energy efficiency gap. Energy Policy. 2012a;51:392–396.

3. Backlund, S., Broberg, S., Ottosson, M., Thollander, P., 2012b. Energy efficiency potentials and energy management practices in Swedish firms. In: Proceedings of the ECEEE Industry Summer Study, 11–14 September,