Expert studies show that there is still vast untapped energy efficiency potential of up to 25% in European heavy industry. Moreover around half of that, or 10-15%, could be delivered through behavioural change at zero capital cost. So far, the EU has mandated energy audits for large companies, but not application of their results. Energy Post looks at how a new heating and cooling strategy due on 16 February and a review of the EU’s energy efficiency directive later this year, could improve energy management in industry – and deliver big carbon cuts.
Energy-intensive industries in Europe still have the potential to deliver a 20-25% cut in final energy consumption by 2050, according to a new study for the European Commission published in January. The research, carried out by consultancy ICF International, models the energy consumption and savings potential of eight energy-intensive industries (accounting for 98% of European industrial energy use) out to 2050.
But the eye-catching 20-25% figure comes with a caveat: only 8-10% of the savings are economically viable. This is defined as feasible with a 2 to 5-year payback period. It turns out that of the 230 or so energy saving opportunities assessed, just under half (100) are sector-specific and not economically viable at all. ICF concludes that there is a need for “significant effort” to commercialise already available technologies as well as on innovation and R&D.
Besides economic and technical barriers, the authors draw attention to another problem: “There is insufficient attention paid to the internal perspective [of an enterprise], which consists of many under-evaluated behavioural elements.” Ulrika Wising, head of sustainable energy use at DNV GL, which sells energy management systems and advice, couldn’t agree more: “There is not enough of a focus on non-technical solutions. It’s much easier to buy a new motor than teach personnel to run the existing motor differently.” (Editor’s note: Ulrika Wising is one of the speakers at a round table moderated by Energy Post on this topic next week in Brussels)
Going through the motions
Large European companies are required to undergo an energy audit every four years under the 2012 EU energy efficiency directive. Many of them have turned to energy management systems certified by the international ISO50001 standard to comply with this requirement. But in Wising’s experience, EU member states interpret the energy efficiency directive differently and the audit can “become a thing that needs to happen rather than something that can inspire energy efficiency.”
Energy audits are not up for review as part of a revision of the EU’s 2012 energy efficiency directive later this year.
For example, there are some countries, such as Germany and the Czech Republic, that mandate audits even if companies are renting (meaning their scope for action is limited, as tenants) or individual office sites are actually low energy consumers (meaning action here is of little consequence). Other countries set the example. For example, Denmark requires audits only if consumption is at least 100 MWh/yr and Slovakia exempts companies that rent. The UK says audits must cover 90% of the energy consumption of the whole enterprise, thereby excluding small offices.
Pushing for change
In theory there is a window of opportunity to tighten the screws on audits later this year, when the 2012 energy efficiency directive is due to be revised by the European Commission. But that turns out not to be the case. The relevant article is not up for review. The public consultation on a new energy efficiency directive makes that clear. The directive’s big weakness to date is that while audits are mandatory, applying their results is not.
What is mandatory is a requirement for energy distributors or suppliers to deliver 1.5% energy savings among end-users every year from 2014 to 2020. Trade associations such as the European Chemical Industry Council (CEFIC), warn that in practice this requirement is passed on to – and raises costs for – them. In its response to the energy efficiency consultation, CEFIC states that the 1.5% savings requirement “is neither an effective nor an efficient tool since it obliges all sectors to make consumption reductions at any cost”.
The Commission plans to develop “benchmarks/guidance for best practice on energy efficiency and renewable energy” that would be part of the permitting conditions for new industrial plants.
Further emission reductions in the chemicals sector, which has halved its energy intensity over the last 20 years the Commission acknowledges, “will come at higher costs”, says CEFIC, and “will continue within the limits of what is economically and physically feasible but not a rate of 1.5%”. It argues that the Commission should avoid energy efficiency targets for heavy industry, since the EU Emission Trading Scheme (ETS) will already drive efficiency improvements.
Lieven Stalmans, Energy and Environment Manager at chemicals company Borealis, says: “We do promote energy efficiency but absolute energy reduction targets hamper industrial end consumers.” (The ICF International study forecasts an increase in total energy consumption for two energy-intensive industries out to 2050 – iron and steel, and chemicals – both underpinned by strong increases in production.) Stalmans also argues that the energy saving and energy audit obligations effectively target the same changes. Audits can be demanding, he adds: “In a few countries where we work with voluntary agreements, the local authorities very rigorously follow up on energy efficiency audits and their application.”
The European Commission plans to give fresh attention to energy audits in a new heating and cooling strategy due to be published as part of a wider EU energy security strategy on 16 February. In a draft seen by Energy Post, the Commission notes that industry accounted for a quarter of EU final energy consumption in 2012 and nearly three-quarters of that (73%) was used for heating and cooling. Driven by rising energy costs – in part also due to the EU ETS – European industry has cut its energy intensity twice as fast as the US since 2000.
But “significant potential” remains, the Commission says in the draft strategy. It “invites” member states to “stimulate the take-up of the recommendations of company energy audits”. It will provide companies with guidance for “identifying cost saving opportunities from energy audits and energy management systems”. The Commission also proposes to set up round tables with industrial sectors and develop “benchmarks/guidance for best practice on energy efficiency and renewable energy” that would be part of the permitting conditions for new plants.
The results of these roundtables would be integrated into EU R&D projects through the EU’s Strategic Energy Technology (SET) Plan.
With plenty of potential for more energy efficiency improvements in industry and fresh plans from policymakers to promote these, what obstacles remain? Wising says that that half of the 20-25% potential savings that are left in industry could be delivered through organisational and behavioural changes that require no capital investment. Commitment of a different kind is needed: “Bring down the energy questions to the lowest level of decision in a plant, which is the operator. He’s the one that decides how to run the machinery.” She also urges the integration of production and maintenance departments.
“It’s an organisational change we are talking about here, rather than a technical change. And that’s challenging for a lot of industries because they are run by engineers.”
After that, it’s about “the right indicators, training and responsibilities”. Wising sums up: “It’s an organisational change we are talking about here, rather than a technical change. And that’s challenging for a lot of industries because they are run by engineers.”
The big advantage however, is that this kind of change can deliver significant cost savings – energy typically makes up 25-40% of an energy-intensive company’s operating costs – at a time when margins are tight and big investments hard to justify. “A lot of investors say that if it’s more than 12 months return on investment, they won’t be allowed to do it,” explains Wising. “It used to be two years.” This indeed, is the minimum payback time used in the ICF International study for the Commission. The cutback is down to factors like the crisis, lower demand and rising energy costs. It all increases the case for behavioural change.