The U.S. economy is incredibly energy inefficient, a key reason even strong climate action has such a low total cost — one tenth of a penny on the dollar.

This inefficiency is summed up best in one remarkable statistic that I first learned at the U.S. Department of Energy and then reprinted in my 1999 book, Cool CompaniesHow the best businesses boost profits and productivity by reducing greenhouse gas emissions:

The average fossil-fuel electric power plant converts only one-third of the primary energy it burns–coal, oil, or gas–into electricity.  More energy is lost distributing it from the power plant to the end user.  The energy lost by U.S. electric power generators equals all of the energy that the entire country of Japan uses for all purposes:  buildings, industry, and transportation.  Most of this lost energy is in the form of waste heat that is literally thrown away by electric utilities:  Thus, more fossil fuels must be burned in your company’s furnaces and boilers to generate the heat and steam needed to run your business.

The key to reducing most of that waste is the simultaneous generation of electricity and heat, called cogeneration, combined heat and power (CHP) or recycled energy. You can read the basics here.

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I have included CHP as one of the 12-14 “stabilization wedges” we need to stabilize at 350 to 450 ppm (here). Some people, like my friend Tom Casten, Chairman, Recycled Energy Development, think it could be multiple wedges.  In an interview I recommend all readers watch (here) or read (here), Casten asserts that in this country alone:

We could take the 42 percent of carbon dioxide that comes from electricity and cut it in half and save $70 billion.

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For more details on the U.S. commercial and industrial CHP potential — estimated to be some 160,000 MW (!) — and the policies needed to achieve it, see “Recycled Energy — A core climate solution.“  For a September profile on Casten with a fascinating case study of recycling energy, see this Forbes article.

The rest of this post excerpts the second half of the introduction to Cool Companies, which presents numerous case studies of manufacturing companies that have cost-effectively employed CHP and other low-carbon strategies to boost profits and productivity — strategies that are still available to the overwhelming majority of US companies, strategies that will become the norm once the nation is committed to strong climate action.

CHAPTER SIX looks at “cool” power.  Just as every business from the service sector to manufacturing can improve the energy efficiency of its workplaces, so too can everyone chose energy sources that have lower emissions of greenhouse gases….

Today, off-the-shelf natural gas technologies can simultaneously generate electricity and steam with 80 percent to 90 percent efficiency right at a factory or building.  This power deserves the label “cool” not merely because it has lower emissions of greenhouse gases but also because it is not wasteful of heat.  Chapter Six examines companies big and small that have reduced emissions of carbon dioxide by one-quarter to one-half while lowering their energy bill simply through the use of cogeneration, also known as combined heat and power:

  • One small fiber processor in New York City installed a cogeneration system that cuts its energy costs by more than half and its carbon dioxide emissions by one-third, all with a two-year payback.
  • A 90 percent efficient cogeneration system at the Chicago Convention Center saves $1 million a year in energy costs and cuts carbon dioxide emissions in half.

We’ll also examine the remarkable advances in renewable energy, including solar, wind, and geothermal, that will allow a company to get some of its power from these coolest of energy sources.

  • Some Phillips 66 gas stations are using geothermal energy to cut energy costs and carbon dioxide emissions from heating, cooling, and refrigeration by 40 percent.
  • Toyota has chosen to purchase electricity from purely renewable sources for virtually all its California facilities.  This choice, made possibly by California’s utility deregulation, instantly cut Toyota’s carbon dioxide emissions by more than half.

[In March 2009, Toyota announced “the completion of a 2.3-megawatt rooftop photovoltaic (PV) system that began operation in early October at Toyota’s North America Parts Center California (NAPCC) in Ontario, California, making it the largest single-roof PV installation in North America. The Sunpower system is expected to generate approximately 3.7 million kilowatt-hours of electricity annually, or nearly 60 percent of the total electricity needs of the facility.  GE Energy Financial Services will finance, own and operate the solar power system, providing Toyota with immediate savings and a long-term hedge against rising peak power prices.]

A few companies have combined energy efficiency in their buildings with cool power, to achieve large reductions in greenhouse gas emissions:

  • McDonald’s is using both geothermal energy and energy-efficiency in a new restaurant near Detroit to reduce greenhouse gas emissions 40 percent to 50 percent while cutting energy costs by 20 percent.
  • The first cool U.S. skyscraper-the 48-story office tower, Four Times Square, in Manhattan-has cut greenhouse gases emissions 40 percent.  The design combined energy efficiency with two fuel cells for cogeneration as well as photovoltaics for clean electricity from the sun.

“Only a third of U.S. manufacturers are seriously scrutinizing energy usage, where savings in five areas can move billions to the bottom line” — Fortune magazine

CHAPTERS SEVEN AND EIGHT focus on energy efficiency in manufacturing.  The five areas on Fortune’s list are energy-efficient lighting and efficient HVAC (heating, ventilation, and air conditioning), covered earlier, and motors, compressed air, and steam.  (These are the five easiest gold mines.  Two others that I discuss on these pages-cogeneration and process improvement-add billions more to the bottom line.)  Large savings are available.  General Motors audited ten of their manufacturing plants and found opportunities for cutting energy used in compressed air and steam systems by 30 percent to 60 percent.

CHAPTER SEVEN examines motors and motor systems (including compressed air).  These are probably the juiciest opportunities for most companies since electricity production generates so much carbon dioxide, and since motors consume nearly three-fourths of industrial electricity.  At one research, development and manufacturing facility, Lucent Technologies examined 54 motors and found that 87 percent were oversized:  some were operating at only 16 percent of full load.  The Department of Energy audited a dozen industrial motor retrofits around the country and found an average energy savings of one third with a payback of a year and a half.  What was rare even five years ago is off-the-shelf today:  You can reduce the energy use of motor systems by one-quarter to one-half with increases in productivity and decreases in maintenance and scrap:

  • An Arkansas steel tube manufacturer replaced a key motor and drive.  The 34 percent energy savings would have paid for the new system in five years, but the improvement in productivity and reduction in scrap paid for it in five months–a 200 percent return on investment.
  • A California textile plant cut the energy consumption of its ventilation system 59 percent by installing motor controls, saving $101,000 a year.  An energy services firm paid for the system, turning a 1.3-year payback into an instantaneous one.  By reducing the plant’s airborne lint, the new system increased product quality.

What happens to that sharp manufacturer who pursues the comprehensive approach I describe-making its motors, compressed air systems, and buildings all more energy efficient?  You become a cool company like Perkin-Elmer, maker of analytical instruments.

  • Perkin-Elmer cut energy consumption per dollar of sales by 60 percent from 1991 to 1997.  Its Norwalk, Connecticut plant cut the electric-power bill 26 percent, despite an increase in rates and expansion in square footage.

CHAPTER EIGHT examines the large opportunities for saving steam and process energy.  These strategies are of most value to heavy manufacturing and the process industries, such as chemicals, pulp and paper, and steelmaking, which are the industries responsible for most manufacturing energy usage.  Steam accounts for $20 billion a year of U.S manufacturing energy costs and over a third of U.S. industrial carbon dioxide emissions.  To be cool, your industrial company needs to improve the efficiency with which you generate and use steam, as these companies have:

  • At a multi-factory complex in Flint, Michigan, General Motors combined efficiency with cool power to cut carbon dioxide emissions from steam use by more than 60 percent.  Annual savings came to $4 million with a two-year payback.
  • Simply by insulating its steam lines, Georgia-Pacific reduced fuel costs by one-third with a six-month payback at its Madison, Georgia, plywood plant.  The project saved 18 tons of fuel per day, lowered emissions, made the workplace safer, and improved process efficiency.

Even the most energy-intensive industries, such as chemical manufacturing, can achieve remarkable results when they take a systematic approach that combines all seven cool strategies:  energy efficiency in lighting, HVAC, motors, compressed air, and steam systems with improved cogeneration and process redesign.

  • From 1993 to 1997, DuPont’s 1,450-acre Chambers Works in New Jersey reduced energy use per pound of product by one-third and carbon dioxide emissions per pound of product by nearly one half.  Even as production rose 9 percent, the total energy bill fell by more than $17 million a year.  By 2000, the company as a whole has committed to cut greenhouse gas emissions by 40 percent compared to 1990 levels.

CHAPTER NINE examines how you can help your employees and your community lower their energy bill while reducing their carbon dioxide emissions.

  • Chicago-based A. Finkl & Sons has cut energy consumed per ton of forged steel shipped by 36 percent and has planted more than 1,600,000 trees, which capture carbon dioxide.  As a result, the company’s net manufacturing emissions of greenhouse gases are zero.

[The company’s goal today is to plant 6,000,000 trees.]

  • A shade tree planted near a city building saves ten times as much carbon dioxide as a tree planted in the forest because it reduces the energy used for air conditioning and helps to cool the entire city.  Such tree-planting, coupled with use of lighter colored roofs and road material, could cool a city like Los Angeles by five degrees, cutting annual air-conditioning bills by $150 million, while reducing smog by 10 percent, which is comparable to removing three-quarters of the cars on L.A.’s roads.

Perhaps you are a manufacturer whose raw materials require more energy to create than the energy you buy to run the company.  Reducing the so-called embodied energy in your products could become part of your new cool strategy.  Consider the case of Interface, Inc., a leading manufacturer of carpet and carpet fiber:

  • The embodied energy in the material that Interface uses to make 25 million square meters of carpet tile a year exceeds the process energy needed to manufacture that carpet tile by a factor of 12.  Interface Flooring Systems made process improvements that saved 2.5 million pounds of nylon from being purchased.  The embodied energy of the unneeded nylon equaled the energy used by their manufacturing and administrative facilities.

[In short, wasted material means wasted energy.]

CHAPTER TEN explores a key issue for your company’s planning:  What is the future price of carbon dioxide likely to be as the world’s nations move to restrict greenhouse gas emissions?

SYCOM is an energy services company based in New Jersey that helps companies adopt the cool strategies described in this book to reduce their emissions of sulfur dioxide and oxides of nitrogen (NOx), which at the same time reduces their carbon dioxide emissions.  Some economic models suggest that the price of carbon dioxide needed to meet the Kyoto target may be as high as $30 to $60 a ton (which would raise energy prices substantially).  SYCOM’s experience suggests the price for carbon dioxide will ultimately be far less, well below $15 a ton.

[This, of course, has been a central point of this entire post — the cost of climate action can be far lower than most models suggests, if the government breaks down the barriers to energy efficiency and CHP and clean energy solutions.  Waxman-Markey, the stimulus bill, and numerous Obama administration initiatives are aimed at doing just that.]

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