Executive Summary

Industry produces nearly all of the daily necessities and comforts we take for granted, from the paper and pens that we write with, to the cars and trucks we drive, to the fuels that power our mobility and heat our homes. It’s also a crucial part of the economy, employing almost 20 million people and generating more than 40 percent ($6 trillion) of the United States’ GDP.

Industry is complex and diverse. Industry’s products provide millions of services produced in thousands of basic production processes, each with hundreds of variations. However, despite the incredible diversity of products, processes, and plants, just two purposes—running motors and heating materials—account for more than three-quarters of U.S. industry’s primary energy use.

Excluding feedstocks, U.S. industry used 24.4 quads of primary energy in 2010, roughly one-fourth of the nation’s total. By 2050, if U.S. industry’s energy-using habits stayed the same, its energy consumption would balloon to more than 44 quads per year.

However, industry has a long track record of delivering reductions in energy intensity. Because of these routine energy efficiency improvements and a shift from heavy industries toward higher-value products, industry’s energy use (again excluding feedstocks) is expected to grow to only 30.5 quads per year in 2050.

Furthermore, RMI’s Reinventing Fire analysis predicts that energy savings from increased focus on cogeneration (“combined heat and power” or CHP), energy efficiency technologies, and changes in the electricity and transportation sector (such as the shift from oil-based fuels to electricity and biofuels) would cut industry’s 2050 energy needs by about 30 percent below projections or 9–13 percent below actual 2010 use, despite 84 percent higher industrial output.

Viewing Industry Through the Efficiency Lens

Reinventing Fire describes the cost-effective energy savings that are available at each step of the industrial value chain. RMI’s analysis focuses on adopting efficiency technologies aggressively yet cost-effectively, yielding at least a 12 percent annual real rate of return.

This analysis finds that by 2050, emerging efficiency technologies could reduce U.S. industry’s annual primary energy use by 2.3 quads, while combined heat and power could save an additional 2.4 quads a year, beyond the 4.4-quad savings already included in the U.S. Energy Information Agency’s (EIA) business-as-usual projection.

This requires systematically harnessing four kinds of innovations, all showing impressive technological progress: reducing the energy needed for basic processes, the losses in energy service distribution in the plant, the losses in devices that convert energy into services, and the waste of energy that’s discarded rather than reused.

Besides these conventional measures, further savings are available from integrative design, whose whole-system thinking often yields multiple benefits from single expenditures. This can often make energy savings bigger but cheaper, and by focusing first on downstream requirements, can compound savings of energy and capital upstream.

Integrative design can be extremely effective in a giant industrial plant’s pipes and pumps, its ducts and fans, and its drivesystems, but can also be applied to basic process design, whether in a chemical plant or a data center (which is described in more detail within Reinventing Fire). Conservatively, RMI’s analysis includes integrative design only for drivepower and fluid-handling systems, which (based on detailed case studies) could save up to an additional 1.1 quads/y in 2050. We didn’t assume integrative design in underlying industrial processes, because they’re too complex to extrapolate from our successful use of this approach in many diverse engagements.

How Much More Productive Can Industrial Energy Use Become?

Even without integrative design or radical changes in technologies, U.S. industrial energy demand can drop 9 percent, from 24.4 quads of primary energy in 2010 to 22.3 quads in 2050, while industrial output rises by 84 percent. However, still more fossil fuel can be displaced by other means, notably fuel-switching, process redesign, and dematerialization.

Fuel-switching: Natural gas can replace coal in many uses and already has or is. Though currently the preferred fuel for most process heat, natural gas can technically be displaced with electricity (either directly or via heat pumps) or by solar heating. With continued innovation and more accurate price signals, this type of fuel-switching may become the rule rather than the exception. Indeed, some solar process heat is already entering commercial use, though our analysis conservatively assumes none even by 2050. Other substitutions may also make sense, especially with proper incentives; for instance, some cement kilns have begun to replace coal with old tires, used solvents, and landfill wastes.

Process redesign: Many industrial processes are still designed on the old heat-beat-and-treat model, with energy an afterthought. However, Reinventing Fire analyzes the opportunities to move past this obsolete model. Imitating nature’s designs and production processes (“biomimicry”), for instance, can often yield radical energy savings and superior results. RMI’s analysis also explores, but does not assume, further innovations such as 3D printing, which can cut material use by as much as an order of magnitude.

Dematerialization: Designing out waste throughout industrial products’ value chain can save energy and money in the upstream process steps, all the way back to the mine or other raw-material source. Many products are discarded when they’re out of style, broken, or superseded, but can instead be reused, repaid, remade, or recycled. Redesigning products to accommodate remanufacturing (updating parts, not remaking wholes) can create major new business opportunities while drastically lowering industrial energy needs to provide the same services.

Except for the most cost-effective fuel-switching measures, these important opportunities were conservatively not assumed in our analysis, increasing confidence that our ambitious goals for saving fossil fuels in industry can be met or exceeded.

Doubling Industrial Energy Productivity

RMI analysis shows that industry’s commitment to energy efficiency could save upwards of a half-trillion dollars in 2010 net present value, with savings 2.5 times their cost—not to mention direct and indirect gains in quality, throughput, other non-energy benefits, and of course global competitiveness.

However, though the opportunities for efficiency and savings are compelling, many profit-driven companies have not yet been able to lock up a significant portion of these opportunities.  RF outlines these challenges and proposes recommendations to catalyze the changes that could double the United States’ industrial energy productivity by 2050.