The yen for energy efficiency is beginning to take hold in industrial America. Whether it's axles in Detroit or beer in Delaware, there are companies that realize they could eventually be touched by pending federal legislation to put a price on carbon emissions.
So they have begun to take a second look at the power-hungry machines they use to carve metal and to heat kettles of their brew.
Thousands of companies that operate factories, power plants and refineries would begin paying fees to emit carbon dioxide if Congress passes a law regulating greenhouse gas emissions. Many others, like Dogfish Head Craft Brewery, could see their electricity bills rise as utilities hike their rates in response to federal carbon charging.
Generally, they are finding a lot of room for improvement, using power-conserving equipment, efficient light bulbs and keen energy management. For some, it's as simple -- and novel -- as hitting the "off" switch during idle periods.
"Energy is a huge cost of brewing," said Greg Christmas, the plant engineer at Dogfish's brewery in Milton, Del., listing a series of steps that require the prolonged use of boilers, kettles and cooling systems to make beer.
The brewery was able to slash the amount of energy it uses to produce each barrel (31 gallons) of beer by 15 percent last year, meaning it's able to earn a few more cents on every bottle. A new refrigeration system and some mechanical changes that keep the brewery's many pumps and small motors running at minimum power help save electricity.
The Senate version of a climate bill, introduced by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.), would begin reducing emissions in 2013, by 4.75 percent, and continue on a steady path downward until 2050, when it seeks to have eliminated 83 percent of the nation's greenhouse gas output. But it isn't the only prod for the energy reduction action under way. In Detroit, for example, improvements have sprouted from industry doldrums.
Poof! Easy steps save $3,300 a month
Slumping demand for vehicles led American Axle & Manufacturing, which makes various auto parts, to idle some of its eight plants.
Afif Bitar, the company's director of corporate facilities, explained that at the Detroit plant, which produces axles for light trucks, large air compressors blast a concentrated breeze that drives equipments and cleans off parts.
Bitar realized these machines were blowing enough air and sucking enough energy for boom times -- too much for the current economic climate. So he shut them down and rented smaller compressors that make more sense for the plant's current production level. He guesses the move saved about $40,000 a month, with a payback of roughly eight months.
The move had little to do with the possibility of federal climate legislation, but it does provide something of a hedge, he said.
"The way we look at it, we take every step right now," Bitar said. "We don't have to have somebody carrying a stick and saying, 'Hey, we're going to charge you more if you don't be a good citizen and use less energy.'"
Morrill Motors, in Erwin, Tenn., is another company taking its first bite of "low-hanging fruit." The company has a market that's not going anywhere: It builds the pint-sized motors that run refrigerators in supermarkets, convenience stores and restaurants.
Yet where the company sits, in the forests of northeast Tennessee, coal is fully two-thirds of the electricity mix. Maintenance Supervisor Jamie Adkins said about 300 people work in the plant, which runs around the clock, every business day. "And some Saturdays, you know, but not every Saturday," he said.
About a year ago, an Energy Department official came to check out the plant's energy use. Some of his recommendations were pretty rudimentary: Get rid of those old light bulbs, switch off the air conditioning for empty rooms, and plug up an air-compression system riddled with leaks.
Adkins said the moves trimmed the electricity bill nearly a quarter, to the tune of $3,300 a month, and that they will pay for themselves in just over a year.
Free cash for 3 years
How exactly a climate bill would affect the manufacturing industry is a complex question, and several Senate votes may hinge on the answer. Sen. Sherrod Brown (D-Ohio), for example, is pushing for more protections against rising operating costs, which could push companies to do business in countries with lower costs.
U.S. EPA is currently analyzing the Kerry-Lieberman bill, named the "American Power Act," so there aren't yet any official figures on its economic impacts.
But last year, the Energy Information Administration said a similar bill offered by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), which passed in the House, would raise electricity prices 3 to 4 percent by 2020. Rates would rise 19 percent by 2030. At the same time, total manufacturing production would drop by 4.3 percent over two decades.
Energy-intensive industries would be the most exposed to higher energy prices. Many industries use steel, aluminum, fertilizer and plastics as inputs, but only after they have come from a facility that forged them from raw natural resources.
These "energy-intensive, trade-exposed" manufacturers include cement, chemicals, forestry products, aluminum, steel and fertilizer. The industries successfully lobbied for a slice of Waxman-Markey's allowance pie, and Kerry-Lieberman has allocated a similar slice. But the industries have maintained that both plans provide insufficient armor against climate policy's triple whammy: higher energy prices, higher input prices, and the cost of paying for their emissions.
Yet Kerry and Lieberman have made some special concessions to manufacturers. The industry would not be counted under the national carbon cap until 2016, three years after utilities and transportation. And during that period, the largest manufacturers would be receiving free allowances.
But large emitters that are actively reducing the amount of energy they use -- and the level of emissions they produce -- could see double savings. As their power costs come down, so does their carbon commitment, meaning that the government would be giving them more allowances than they need.
So they can sell them. That's pure profit, say supporters of the bill.
Some see no low-hanging fruit
But it's not always that easy. Major emitters, like the steel industry, say they have already implemented the easy efficiency measures. Chiseling their energy use down even further will be an expensive job for the future, they assert.
Tom Gibson, president of the American Iron and Steel Institute, said the steel industry's upgrades over the last two decades have cut its emissions by a third. Now, on average, steelmakers get about a third of their energy from electricity, a third from coal and a third from natural gas, with the fossil fuels serving as a direct input in the steelmaking process.
Gibson said there are some "breakthrough" ideas to make steel with far less fossil fuel, but Kerry-Lieberman cuts off assistance to the industry so quickly that the new technologies won't be ready to go. On Capitol Hill, he said, AISI has to convince lawmakers that for the short run, efficiency is spent.
"We're pretty much run out at the very end of that incremental improvement curve. There's no 10 percent to be wrung out of this industry," he said. "You just start running into the limits of what you can do from a chemical point of view."
R. Neal Elliott, associate director for research at the American Council for an Energy-Efficient Economy, agreed that in manufacturing, many of the easy pickings have disappeared, and that a new trend is toward energy makeovers.
Others find it expensive
In the United States, the average industrial boiler -- machines that generate steam to power machinery -- is 60 years old. Small improvements to such a boiler are still possible, he said, but the real solution would be to replace the boiler with a combined heat and power plant -- it would snag the heat from another source and bring it to the factory, reaching efficiencies of up to 70 percent.
It would cost a couple hundred million dollars, and it would take up to a decade to pay for itself, but it would last three to five decades -- well into the carbon-constrained era, were there a climate law.
"Economically, they're a very good deal. They're not the sort of incremental operational improvements that we have become familiar with" in past research, he said. "What we're doing is talking about a structural modernization of the entire manufacturing plant."
At the Dogfish brewery, Christmas, the beer engineer, is optimistic that Kerry-Lieberman could help the company become even cleaner. The company has already invested more than $500,000 in an ammonia cooling system, minimum-running air conditioning, and variable frequency drive units, which keep small pumps and motors running at efficient speeds.
"Those were the easy things," Christmas said, noting that the brewery has a bigger target: generating its own power with a biogas turbine, and using the excess heat to produce steam for the brewing process.
"It's going to have less carbon emissions, because I'm using that energy twice," he said. Christmas hopes the Senate climate bill will pass -- and provide financial inducements for the project.
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