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A New Snapshot of Energy Use in Midwest Manufacturing

Policymakers at all levels of government are focusing on getting the economy moving again. Recent economic news suggests that the manufacturing sector, which has struggled in recent decades and lost 30% of its workforce between 2000 and 2010, is leading the U.S. out of recession.

By including industrial energy efficiency as a core component of economic development strategies, policymakers can help ensure that today’s capital investments in infrastructure and industry leave U.S. manufacturers better positioned to compete in the 21st century. The World Resources Institute’s Midwest Industrial Energy Efficiency project aims to make cost-effective industrial energy efficiency opportunities more tangible to policymakers, investors, and manufacturing companies. To that end, we have just published a working paper, Midwest Manufacturing Snapshot: Energy Use and Efficiency Policies, which offers a detailed picture of Midwest industrial energy use and current state approaches to reducing industrial energy intensity while cutting energy costs for Midwest manufacturers. It was released at the Midwestern Governors Association (MGA) Winter Meeting, as an agenda item of the outgoing MGA Chairman, Illinois Governor Pat Quinn.

The “Snapshot” paper, developed in collaboration with partners at the Great Plains Institute, the MGA, and the University of Illinois at Chicago’s Energy Resources Center, presents for the first time estimates of manufacturing subsector-specific energy use alongside industrial energy efficiency policy summaries for the 10 states in the MGA.1 Since these data previously were only available at the regional level, our state-by-state profiles provide valuable context for those seeking to tap into the Midwest’s industrial energy efficiency resource potential.

Some Snapshot Highlights:

  1. The Midwest economy is rooted in manufacturing: While manufacturing’s share of total Midwest regional2 GDP declined between 2000 and 2010, it remained significantly higher than the U.S. national average (see Figure 1). In 2010, the Midwest accounted for 30% of total U.S. manufacturing, while the regional manufacturing workforce represented 10% of the region’s total employment, more than in any other region.
  2. Midwest manufacturers could be more efficient: By several measures, Midwest manufacturing is more energy-intensive than the national average. For example, oil-fired and coal-fired boilers in Midwestern states are, on average, more than 8 years older than boilers located in the rest of the country (EPA, 2011).3 Compared to the national average, the Midwest also has significantly less installed combined heat and power capacity in its manufacturing facilities.
  3. <p>Figure 2: Midwest Manufacturing Fuel Use by State (Click to Enlarge)</p>

    Figure 2: Midwest Manufacturing Fuel Use by State (Click to Enlarge)

    Energy-intensive sectors drive total manufacturing energy use: In 2006, energy-intensive sectors4 generated 42% of Midwest manufacturing value added, while those same subsectors accounted for 80% of regional manufacturing fuel use (see Figure 2). In the same year, Ohio manufacturing, which is dominated by energy-intensive steelmaking, consumed 20% of total energy used by regional manufacturers, more than any other Midwestern state.
  4. Policy and economic drivers create new opportunities for investment: The paper discusses energy-efficiency policy and market trends that are expected to significantly influence manufacturing facility efficiency investments in the coming months and years. For example, utility-run ratepayer-funded energy efficiency programs are on the rise nationally and the paper describes energy efficiency resource standards that have been adopted by seven Midwestern states: Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, and Wisconsin.

Why Industrial Energy Efficiency?

Energy efficiency investments offer promising returns in terms of both economic growth and employment. The case for focusing greater public and private sector resources toward industrial energy efficiency, in particular, is strong and growing stronger.

  • Studies have long shown that investments in more productive energy use result in a more productive and efficient economy, now and for decades to come. Using less energy also means fewer emissions, which is good for public health and the environment. These factors make industrial energy efficiency an important, strategic tool for companies to cut energy costs and protect public health while complying with environmental regulations.

  • Past energy price spikes have been harmful to U.S. manufacturing businesses; natural gas price spikes, in particular, have been blamed for multiple plant closures and curtailed operations. Improved energy efficiency can help insulate domestic manufacturers from future spikes by reducing fuel input requirements.

  • Domestic manufacturers are becoming increasingly exposed to international competition, with older and less efficient U.S. facilities now competing with new state-of-the-art facilities located in developing countries.

What’s Next?

To help us build on the information presented in this working paper and at the Size of the Prize industrial energy efficiency summit, we welcome your feedback and contributions to WRI’s Midwest Industrial Energy Efficiency project. In spring 2012, watch for the launch of WRI’s Power Almanac of the American Midwest—a data-rich web-based tool for exploring the region’s electric resources and installations of combined heat technology and power and industrial boilers. This summer we will also release a new report quantifying Midwest industrial energy efficiency potential for key energy-intensive subsectors, including iron & steel and pulp & paper manufacturing.

These efforts are central to WRI’s larger goal of achieving broader recognition that industrial energy efficiency improvements can help manufacturers cut fuel costs, increase competitiveness, and reduce emissions while renewing the Midwest’s foundation for sustainable growth. Through this project, we look forward to expanding our network to include additional public and private sector manufacturing partners, including state-level manufacturing business groups, government officials, and civil society organizations.



  1. Member states of the MGA are Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, South Dakota, and Wisconsin. 

  2. The Midwest U.S. Census region includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. 

  3. The most recent public boiler data were collected in 2008 by the U.S. EPA during the development of regulations for toxic air emissions from industrial sources. The industrial boiler MACT (Maximum Available Control Technology) rules were initially finalized in March 2011 and then delayed by a reconsideration process that is expected to be finalized in early 2012. Our age estimate focuses on oil-, coal-, and biomass-fired boilers (i.e., not gas-fired boilers), which will be subject to more significant compliance requirements under the pending rule. 

  4. For the purpose of this discussion, “energy-intensive sectors” are those North American Industry Classification System (NAICS) 3-digit level sectors that consume relatively more fuel per dollar of value added. These sectors include primary metals, petroleum and coal products, chemicals, food, nonmetallic minerals, paper, and wood products (Source: 2006 MECS, table 6.1). 

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