How industrial companies are responding to the energy upheaval
While progress has been made, there is still plenty of work to be done.
ABB’s latest global report on trends in global energy efficiency, “Intelligent manufacturing: Targeting better energy efficiency,” reveals how much has been done by industrial companies to cut energy consumption. More importantly, however, it highlights the immense scope for what more could be achieved via investment in new plant and machinery, ever more use of information technology to monitor processes and, in some cases, the public relations impact of being perceived as a better corporate citizen.
Based on a survey of more than 300 industry executives, as well as direct interviews, the study focuses on manufacturing, which accounts for about one-third of total global energy demand, and is expected to rise. “Targeting better industrial energy efficiency – first and foremost the efficiency of the manufacturing processes at the core of industry – is the most effective lever available to curb industrial energy consumption,” it argues.
In just 25 pages, the report reveals widespread awareness in industry about the importance of energy efficiency and the latter’s role in promoting sustainability. It extols significant efforts to boost energy efficiency in areas such as lighting, heating and air conditioning. Coming on the heels of a comparable study two years ago, it also reveals an encouraging dynamic in how companies have altered priorities and perceptions as climate change has climbed the global agenda.
Around 77 percent of the manufacturers surveyed said energy efficiency would be a critical success factor for profitability in the next 20 years, both because of the high cost of energy and the volatility of energy prices and concerns about security of supply.
But while progress has been made, there is massive scope for more. The Alliance to Save Energy, a Washington-based lobby, reckons US manufacturing industry alone has the potential to improve its energy productivity by at least one-third by 2035. And the International Energy Agency, the Paris-based international agency, argues global industry can save some $3.3trillion in energy costs by the same date.
The report draws attention to the way in which more sophisticated software, along with rising analytical capabilities in interpreting the oceans of data available through increased sensoring, can contribute to better energy management and more innovative process design and execution. “Over time, it is likely that improvements in energy efficiency will be driven more by software and apps and less by equipment and plant,” the study suggests.
Curiously, though, the survey reveals many companies remain reluctant to spend on energy efficiency – even if the proportion of them has declined slightly since the previous report. In 2011, 42 percent of companies surveyed cited financial barriers as grounds for not investing, compared with 37 percent today.
That remains a significant share of the total. The good news is that the report’s prediction of ever greater use of software, rather than entirely new plant, could help persuade those manufacturers citing cost as their main disincentive to greater investment on energy efficiency.
“The key to improved energy efficient will increasingly lie in software rather than in hardware,” says the report.
As encouraging, it implies awareness of energy efficiency – and its priority – is trickling down the supply chain. The report acknowledges that smaller companies are less active in investing in energy efficiency than larger ones (though the authors provide at least one case of an exemplary smaller manufacturer). But they hint bigger groups – which because of theirsheer size and energy bills are particularly energy conscious – are increasingly transmitting such concerns down the value chain to their suppliers.
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Editor’s note: this article was written by freelance writer Haig Simonian and published by Ilona Braverman. The views expressed in this post do not necessarily reflect or represent the views of ABB or its employees.