Tuesday, September 4, 2012

Obama's Energy Efficiency Executive Order for Industry

On August 30th, 2012, President Obama signed an executive order focused on efficiency in industrial facilities. That order sets a national goal of 40 GW of new combined heat and power (CHP) by the end of 2020. As stated in the order, the industrial sector accounts for over 30 percent of all energy consumed in the US, and energy costs affect overall competitiveness. The goal is to increase investments to reduce energy use through more efficient manufacturing processes and facilities and the expanded use of combined heat and power (CHP).

The Federal Government will help to overcome barriers to investment in industrial energy efficiency. This includes encouraging private sector investment by setting goals and highlighting the benefits of investment, improving coordination at the Federal level, partnering with and supporting States, and identifying investment models beneficial to the multiple stakeholders involved.

Section one of the executive order asks stakeholders at all levels to "identify, develop, and encourage the adoption of investment models and State best practice policies for industrial energy efficiency and CHP; provide technical assistance to States and manufacturers to encourage investment in industrial energy efficiency and CHP; provide public information on the benefits of investment in industrial energy efficiency and CHP; and use existing Federal authorities, programs, and policies to support investment in industrial energy efficiency and CHP."

Section two of the order encourages investment in industrial efficiency. The Departments of Energy, Commerce, and Agriculture, and the Environmental Protection Agency, in coordination with the National Economic Council, the Domestic Policy Council, the Council on Environmental Quality, and the Office of Science and Technology Policy, shall coordinate policies to encourage investment in industrial efficiency in order to reduce costs for industrial users, improve U.S. competitiveness, create jobs, and reduce harmful air pollution. In doing so, they shall engage States, industrial companies, utility companies, and other stakeholders to accelerate this investment.

Section two of the executive order supports efforts to accelerate investment in industrial energy efficiency and CHP by:

- providing general guidance, technical analysis and information, and financial analysis on the value of investment in industrial energy efficiency and CHP to States, utilities, and owners and operators of industrial facilities;

- improving the usefulness of Federal data collection and analysis; and

- assisting States in developing and implementing State specific best practice policies that can accelerate investment in industrial energy efficiency and CHP.

Help companies to achieve the goal of reducing energy intensity by 25 percent over 10 years, as well as utilizing existing partnership programs to support energy efficiency and CHP.

Environmental Leader reports that the Department of Energy’s Better Buildings, Better Plants program announced that five companies — Kingspan Insulated Panels, semiconductor manufacturer Cree, General Aluminum Manufacturing Company, PaperWorks and Harbec, a maker of machine tools and injection-molded plastic parts — have signed on, and committed to improving their energy intensity by 25 percent over 10 years.

Partners in the Better Buildings, Better Plants program have already realized at least $80 million in cost savings, according to the DoE. These actions are expected to save about $1 billion cumulatively by 2020.

The executive order intends to accelerate investments in industrial energy efficiency, which could save manufacturers at least $100 billion in energy costs over the next decade, according to the White House. Meeting the President’s 40 GW CHP goal would mean $40 billion to $80 billion of new capital investment in American manufacturing facilities. But the White House says investments in industrial energy efficiency, including CHP, incur as little as half the cost of traditional forms of new baseload power.

An August report by Pike Research that indicates the global market for commercial CHP systems will reach $11.2 billion by 2022, with 80 GWe installed by that year. California has already set a goal of 4 GW of new CHP generation in the state by 2020, with 1990 as a baseline. Harbec, one of the new private sector commitments to the Better Plants program, has set a goal of becoming a carbon neutral company by 2013.

There is an opportunity to save industrial users tens of billions of dollars in energy costs over the next decade. Accelerating these investments in American factories can improve US competitiveness, lower energy costs, free up future capital for businesses to invest, reduce air pollution, create jobs and enhanced grid security.

© 2012, Richard Matthews. All rights reserved.

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