While manufacturing is a critical part of the U.S. economy, it’s struggled over the last several years—both financially and environmentally. Overall U.S. manufacturing employment has dropped by more than one-third since 2000. Meanwhile, U.S. industry—of which manufacturing is the largest component—still uses more energy than any other sector and serves as the largest source of U.S. and global greenhouse gas emissions.
The good news is that energy efficiency can help U.S. manufacturing increase profits, protect jobs, and lead the development of a low-carbon economy. The Midwest’s pulp and paper industry is a case in point: New WRI analysis finds that the pulp and paper sector—the third-largest energy user in U.S. manufacturing—could cost-effectively reduce its energy use in the Midwest by 25 percent through use of existing technologies. These improvements could save hundreds of thousands of jobs, lower costs, and help the United States achieve its goal of reducing emissions by 17 percent by 2020. As the White House moves to cut carbon dioxide pollution in America, energy efficiency improvements in Midwest pulp and paper mills are a tangible example of the win-win-win emissions-reduction opportunities in U.S. industry.
Saving Energy, Emissions, and Jobs in Midwest Pulp and Paper Mills
WRI’s new report, Energy Efficiency in U.S. Manufacturing: The Case of Midwest Pulp and Paper Mills, analyzes energy efficiency opportunities in Midwest pulp and paper mills. The Midwest has the largest share of overall industrial economic activity, and its energy-intensive pulp and paper mills are important for helping to save U.S. manufacturing and forge a new low-carbon economy. Lessons from this sector and region can shed light on the broader challenges and opportunities for industrial energy efficiency.
Energy Efficiency Yields Economic Benefits
The U.S. Environmental Protection Agency’s ENERGY STAR® program has created an Energy Performance Indicators tool that assigns a score of 50 to pulp and paper mills whose energy efficiency performance matches the national average. The higher the Energy Performance Score (EPS), the better their energy efficiency. Mills with an Energy Performance Score of 75 or above may be eligible for ENERGY STAR certification. Nearly two-thirds of the Midwest mills assessed in this study—64 percent fall short of the average EPS.
We found that underperforming Midwest pulp and paper mills analyzed in this report could reduce their total annual energy costs by $120 million if they improved their energy efficiency performance to the level of the average U.S. mill. A range of proven efficiency technologies are available to achieve this goal, such as by reducing process energy requirements, capturing waste heat, and increasing efficient on-site energy use.
Taking things a step further, those savings could grow to $240 million in annual energy costs if these mills improved efficiency to the level of the ENERGY STAR performance benchmark.
Energy Efficiency Reduces Emissions
Improving pulp and paper’s efficiency could also yield significant greenhouse gas emissions reductions. Bringing Midwest mills up to the ENERGY STAR benchmark level of performance would cut their total CO2 emissions by 30 percent.
Energy Efficiency in U.S. Manufacturing: The Case of Midwest Pulp and Paper Mills
The report presents a mill-level assessment of energy efficiency performance, case studies of pulp and paper mills that have successfully invested in energy efficiency, and recommendations for policies and practices that can improve mill energy efficiency. The findings of this report reveal an emerging model of more efficient manufacturing that is economically competitive and significantly less carbon-emitting. We found that improving the energy efficiency of Midwest pulp and paper mills could provide three major benefits: lower costs, emissions reductions, and job preservation. Download the report here.
Energy Efficiency Saves Jobs
In 2010, the U.S. pulp and paper manufacturing sector accounted for 350,000 jobs. By enabling these facilities to successfully compete and remain in operation, energy efficiency investments can help preserve jobs at American mills. As illustrated in this report’s case studies, mills that have invested in energy efficiency have increased their competitiveness, thereby boosting production while reducing energy costs.
For example, the Flambeau River Papers mill in Wisconsin emerged from bankruptcy and increased paper production by 11 percent between 2006 and 2011. In addition to allowing the mill to re-open, Flambeau’s energy efficiency investments generated annual energy savings of $2.9 million by reducing steam leakage, installing variable frequency drives, replacing pumps, and improving facility lighting.
What More Can Be Done?
While the technologies to improve pulp and paper mills’ energy efficiency exist, it’s clear that they aren’t being sufficiently utilized throughout the industry. New corporate and government policies can lower the hurdles preventing companies from fully realizing available cost savings and emissions reductions.
Companies can adopt more proactive energy management programs to maximize energy efficiency in their facilities. For example, ISO 50001—a voluntary energy management standard—helps companies introduce energy-saving practices and systematically track facility performance against savings targets.
Government policy can also facilitate efficiency improvements. For example, the federal government can regularly update minimum efficiency performance standards for new equipment (such as motors and engines), work with industry to benchmark facilities’ performance, and develop targeted strategies for research and development. States can develop programs to support greater utility-manufacturer collaboration on energy efficiency and increased use of combined heat and power (CHP). For example, standardized standby fee structures could enable consistent CHP facility access to electricity markets.
Energy efficiency is a win-win-win option for manufacturing—and for the United States as a whole. As the leading source of U.S. emissions, manufacturing has a significant role in helping the country meet its 17 percent emissions-reduction target and grow economically. With the right know-how and enabling conditions, industry can—and must—play a leading role in ushering in a low-carbon economy.