UNIDO: Industrial energy efficiency: Picking the low-hanging fruit

The following article is the keynote article in the Global Sustain Yearbook 2016/17 by LI Yong, Director General of the United Nations Industrial Development Organization (UNIDO).

Li Yong focusses on two aspects:

1. The benefits of implementing Energy Management Systems and - especially - the non-energy-benefits
2. The role of innovation

You can find his article below with some areas highlighted and some headings added for easier reading as well as further links incl a link to full Yearbook, "The Energy [R]Evolution" e-book, published by Global Sustain.

The challenge

Across the globe, industry is a large consumer of energy. Today the industrial sector accounts for almost 40% of the world’s total final energy consumption. And, over the next two decades, industry’s demand for energy is expected to further increase, at a rate of 1.3% annually. Industry is also the single largest source of greenhouse gas (GHG) emissions, accounting for nearly one third of total global emissions.

The good news is that the adoption of energy efficiency measures could reduce industrial energy use by over 25%. The potential for energy efficiency in the industrial sector is substantial. Not only does industrial energy efficiency reduce overall energy consumption – thereby reducing many countries’ dependence on energy imports – it also encourages development, creates jobs and decreases pollution. Indeed, efforts to improve industrial energy efficiency are critical to achieving the 2030 Agenda for Sustainable Development and the Sustainable Development Goals, especially those related to climate change and sustainable energy.

One of the main barriers to energy efficiency in the industrial sector is that industrial companies focus on driving production and most are not aware of the multiple benefits of implementing energy efficiency activities or of the array of available technologies. But, over the last two decades, Energy Management Systems (EnMS) have emerged as a proven best practice methodology to ensure sustainable energy efficiency and continually improve industrial performance. (An Energy Management System is a series of processes that enables people of varied responsibilities across an organization to use data and information to maintain and improve energy performance, while improving operational efficiencies, decreasing energy intensity, and reducing environmental impacts.)

The role of EnMS - ISO 50001

The globally accepted and recognized standard for EnMS is ISO 50001 and its implementation can assist industry in developing strategies and processes to manage energy use, increase efficiency, reduce costs, and improve environmental performance. 

Policies and market mechanisms that encourage the uptake of EnMS within industry can be highly effective for improving efficiency. This is because an energy management system establishes closer linkages between energy efficiency and core industry values, such as cost reduction, increased productivity, environmental compliance and global competitiveness. 

Over the past decade, the United Nations Industrial Development Organization (UNIDO) has been supporting enterprises in developing countries and emerging economies with the implementation of EnMS, thereby helping them improve their energy performance, productivity and environmental sustainability. For companies in developing countries that are new to it, energy management can yield energy savings of 5 to 15% in the first one to two years of implementation. [for examples in the form of short case studies, check here] EnMS are so effective in achieving significant and sustainable reductions in energy consumption that many governments require large energy end users to implement them. Most countries in Europe have already made energy management central to their energy efficiency programmes.

Governments wanting to create the conditions to facilitate the adoption of energy management and implement ISO 50001 need to put in place policies and mechanisms that promote its uptake. In developing a policy mix that best suits the industrial sector, it is important to analyze the instruments and schemes that are in use across the world and to present relevant considerations to policymakers in developing countries.

Minimum Energy Performance Standards (MEPS)

Setting energy performance standards for industrial equipment is another area that holds significant potential for energy savings in industry. Many developed countries already have mandatory Minimum Energy Performance Standards (MEPS) in place for a range of energy consuming equipment within industry, while many developing countries are also moving towards the introduction of mandatory MEPS for industrial equipment such as motors and boilers.

Efficient components may bring about gains in the range of two to five per cent, but systems optimization measures can attain average efficiency gains of 20 to 30% with a payback period of less than two years. Therefore, efforts to address the obstacles for optimizing energy efficiency in the design, operation and maintenance of industrial energy systems will have to be made in order to capture the full economic and environmental potential of energy efficiency.

Innovation

Looking ahead to the future of energy efficiency in industry, the other key driver/factor to achieve a transformational change to lower-carbon and higher-productivity development paths is innovation – and by that I mean innovation in technologies, applications, production processes and business models. 

Technology innovation has reached the top of policymakers’ agendas in many countries, including many member states of UNIDO. However, substantial work remains ahead for governments, industry, the private sector, investors and organizations like UNIDO in order to effectively promote, support and accelerate the development of innovative clean technologies and solutions, especially in and for the industrial sector. Governments need to create ecosystems to identify innovative solutions for the technical challenges faced by industry and to work with industry and the broader research and development community to solve them.

Government support for green manufacturing, small and medium-sized enterprise (SME) innovation competitions, and incubators and accelerators for innovation has risen over the past few years. This is a very positive sign. UNIDO, together with key partners like the Global Environment Facility and the Cleantech Open, has been able to develop the UNIDO-GEF Global Cleantech Innovation Programme for SMEs, now covering seven countries and expected to be expanded to additional ones, to help unlock the full potential of energy efficiency in industry.  

A new area of focus for UNIDO in terms of innovation for industrial energy efficiency is Big Data and the Internet-of-Things. Recent reports from the McKinsey Global Institute have provided a very interesting insight into the potential for productivity and innovation that Big Data and the Internet-of-Things offer to industry. A study performed by one of Europe’s leading digital businesses has found that the implementation of information and communications technologies (ICT) and the digitizing of business processes can help remove 7.6 gigatonnes (GT) of carbon emissions across six industrial sectors, including 2.2 GT from utilities and 0.7 GT from manufacturing.[

Most companies are still capturing only a fraction of the potential value of data, analytics and ICT application, and the manufacturing sector is one of the sectors where progress has been particularly slow. Interestingly, the study also highlights the fact that the biggest barriers companies face in extracting value from data and analytics are organizational; many struggle to incorporate data-driven insights into day-to-day business processes.

At UNIDO we have started to look at some of these opportunities and their associated barriers, and we are now working in several countries, including Russia and Iran, on the application of state-of-the-art internet-based solutions for energy efficiency analysis and monitoring in industry, allowing for instant tracking of energy performance and a real-time measurement of energy use and savings.

Other innovative solutions that have very good potential for industrial energy efficiency include services related to remote monitoring and control of energy utilities, especially for SMEs, and automated systems to monitor and report on energy performance.  Industrial companies and innovative entrepreneurs working in collaboration with the UNIDO industrial energy efficiency programme have experienced multiple benefits beyond pure energy cost savings, including increased productivity and competitiveness, reduced exposure to volatile energy prices and greater operational reliability. Yet, most countries still have substantial unrealized opportunities to improve their industrial energy efficiency.  

Links and further EEIP remarks

Full yearbook accessible here

A linked theme is how to finance investment in industrial energy efficiency. EEIP is a partner in a European project on connecting industry and ESCOs with capital markets.  Here you can find more information and how to collaborate.
The project, called ICP, receives funding from European Union´s Horizon 2020 research and innovation programme under grant agreement No 754056