The Case for Industrial Energy Efficiency
Economic and Climate Impacts
- Create a cleaner, healthier, safer world by building an energy efficiency foundation, driving efficiency returns and gaining efficiency insights
- Deliver industry savings of $437 billion
- Save 11% of global energy-related carbon emissions by 2030
The Case for Industrial Energy Efficiency
Economic and Climate Impacts
- Create a cleaner, healthier, safer world by building an energy efficiency foundation, driving efficiency returns and gaining efficiency insights
- Deliver industry savings of $437 billion
- Save 11% of global energy-related carbon emissions by 2030
Doubling energy efficiency is industry's biggest emissions ally this decade.
Doubling energy efficiency by 2030 could cut greenhouse gas emissions by almost a third compared to today’s levels, according to the International Energy Agency (IEA). And for industrial players, the opportunity is immense.
The Energy Efficiency Movement estimates that if applied across industry the 10 simple measures in this guide could save almost 2 billion metric tons (gigatons) of carbon emissions a year by 2025, and more than 4 gigatons by 2030.
That’s equal to taking around three-fifths of the world’s internal combustion vehicles off the roads—while saving roughly $437 billion by the end of the decade. Read on to find out how.
There is no underestimating the challenge facing industry as it strives to meet global decarbonization targets while addressing growing demand.
In 2021, the world’s industrial players consumed more energy than the whole of China, emitting 9 billion metric tons of carbon dioxide or 45% of total direct greenhouse gas emissions from end-use sectors, according to the IEA.
And given that demand for industrial products is set to rise, with crude steel output growing 30% by 2050, for example, “There is no way to reach net zero emissions without strong and coordinated action on emissions reduction in the industry sector,” says the IEA.
This means industrial greenhouse gas emissions need to be almost completely eradicated in less than three decades. Never before has industry faced a requirement for such deep transformation.
Industrial decarbonization is all the more challenging because many industries qualify as ‘hard-to-abate’ sectors where electrification, powered by renewable energy, can only provide part of the required emission reductions.
Furthermore, different industries face different decarbonization challenges and pathways. This means there is no one size that can fit all circumstances.
However, industry has one thing on its side in its attempts to reduce emissions: most industrial players can achieve significant cost and emissions savings today simply through greater energy efficiency.
In some cases, the savings arising from efficiency measures mean that transformation projects can be self-funding. Elsewhere, investments in efficiency can serve as a valuable hedge against energy and carbon price volatility, improving energy security while helping to meet voluntary targets and regulatory goals.
This guide builds on “The industrial energy efficiency playbook”, launched in 2022 by the Energy Efficiency Movement.
It aims to give corporate leaders key insights into 10 measures that rely on mature technologies, have a meaningful impact on costs and emissions and can be deployed quickly without complex or expensive projects. The annual aggregated carbon savings associated with these 10 measures are summarized below.
For the purposes of this analysis, “industry” refers to the steel, aluminum, chemicals, paper, and cement sectors, as well as IEA-classified “light industry,” including food, machinery, textiles, vehicles, timber, construction, and mining. In some cases, emissions from “buildings” and “transport” sectors may also be in scope. Source: https://www.iea.org/energy-system.
The measures could also save industry billions of dollars a year while reducing air pollution, saving natural resources and improving productivity.
They are listed in order to deliver a logical sequence of results, with foundational actions first, followed by those that provide growing returns and are based on increasing levels of insight, although for each organization the relative importance and complexity of each measure will vary.
The intention is for leaders to use this report as a starting point for enterprise-wide energy efficiency programs, and to this end, each measure is accompanied by a more detailed model setting out the economic and climate case for investment. These models can be accessed separately online.
While all the measures in this guide are valuable contributors to savings and emissions reduction, our analysis shows that three—connecting assets, installing heat pumps and creating smarter buildings—could deliver around 70% of the total energy efficiency benefit available to industry.
As a first step, we encourage you to join the #energyefficiencymovement, a forum where businesses, investors, public decision makers, academia, non-governmental organizations and individuals can share energy challenges and discuss ideas and lessons learned.
ABOUT THE ENERGY EFFICIENCY MOVEMENT
The Energy Efficiency Movement is a forum that brings together like-minded stakeholders to innovate and act for a more energy-efficient world.
Through innovation, the sharing of knowledge and insights, adoption of available energy-efficient technologies, smart investments and the right regulations and incentives, we can optimize energy efficiency and accelerate progress toward a decarbonized future for all.
The Movement was launched by ABB in 2021 and has received a positive reaction throughout industry, with more than 400 companies joining as of 2023.
www.energyefficiencymovement.com
Why you need a strategic approach to energy efficiency
Harnessing energy efficiency’s considerable benefits requires a strategic approach.
Initial actions can set the foundation for deeper business transformations later on.
Efficiency deserves board-level sponsorship and support.
Energy efficiency, dubbed the "first fuel" by the IEA, is underappreciated and underutilized. Moves to harness efficiency are sporadic and often poorly executed, leading to mixed results. Yet when done properly, the results are substantial.
The IEA estimates that efficiency measures adopted since 2000, for example because of minimum performance standards for electric motors, have saved the equivalent of around 30% of total final energy consumption up to 2021.
Around 45% of these savings were down to efficiency improvements in industry, and a further 35% from transport. But to meet global climate targets, efficiency will need to double by 2030.
It is expected that much of this drawdown will be due to the transition from inefficient fossil fuel power to more efficient electrical systems powered by renewables.
According to research, the share of non-fossil energy in industrial power systems could double, from 38% to 76%, between now and the end of the energy transition around 2050.
Low-temperature processes will be completely electrified, the research predicts, along with industrial drying and separation plus power for motors, drives and lighting.
The issue for leaders is how to implement an efficiency program that has the range and depth needed to truly address climate goals, in a strategic way that maximizes the benefits and the chances of success.
To this end, we have grouped the actions in this guide into a strategic framework divided into three pillars:
Points to note regarding this approach are:
- The relative importance of each pillar, and of the actions within it, will vary from one industrial enterprise to another, although all should be embraced for maximum impact.
- The order of priority of different actions may differ from one situation to another, but some actions, such as carrying out an energy efficiency audit, are of paramount importance regardless of the strategy.
- The actions are not exhaustive, and any efficiency strategy should be designed as an iterative process where initiatives build on each other for continued financial and emissions reduction results.