Industrial energy efficiency

Industrial energy efficiency offers one of the most cost-effective solutions to curb growing greenhouse gas emissions and tackle climate change. Here we discuss how industry can strengthen our global economy and environment.
  • FAST FACTS: The power of industrial energy efficiency
  • Energy efficiency – which means getting more from our existing energy resources – could reduce industrial energy use by over 25 percent. If realized, that potential represents 3.92 Gt CO2 – an 8 percent reduction in global energy use and a 12.4 percent reduction in global CO2 emissions. That’s equivalent to the annual emissions of more than 800 million passenger vehicles; 1,100 coal-fired plants; or the energy use in nearly 200 million homes.

The Climate Challenge

There is consensus from international climate experts that not taking timely and aggressive action against rising greenhouse gas (GHG) emissions would lift the world’s average temperature by up to 6˚C, meaning a higher incidence of extreme weather events and sea level rises. These changes would usher in a new era of poverty in many parts of the world, as well as lead to mass migration and higher incidences of death and disease.

Right now industrial GHG emissions account for around a third of the global total, and industrial energy demand could increase as much as 44 percent over the next two decades, particularly in emerging and developing countries. Without a major step-change in how industry operates, demand for new fossil fuel-fired power plants will continue unabated, exacerbating harmful climate change. Swift action is needed so inefficient practices and system designs are not locked in for decades to come.

Energy Efficiency

Industry has huge potential to slash both emissions and energy use, and this could help our environment as well as save billions of dollars. The key to this transformation will, in the short term, be integrating energy efficiency into all aspects of industrial operations.

There are numerous opportunities for industrial enterprises to be more efficient and even to produce their own energy from industrial processes. Enterprises stand to gain by saving up to 10-30 percent of their annual energy use – and therefore their energy budget – through better energy management. Energy efficiency can also increase manufacturers’ operational efficiency and productivity, and improve risk management. 

There are wider benefits too. Research shows that energy efficiency is the fastest, most cost-effective response to growing energy demand and the global climate crisis. It brings a host of benefits to human health and the environment, generates jobs and drives economic growth.

Barriers

With all the potential benefits, why is there no great tide of change towards energy efficiency?

For a start, while energy efficiency measures have repeatedly demonstrated their effectiveness in increasing company competitiveness and productivity, they have yet to attain mainstream recognition as a priority and as a strategic investment for future profitability.

Within enterprises, one of the biggest roadblocks is lack of support from senior management. Naturally this filters down into the culture of the organization and how staff value management of energy and the environment. Plant managers tend to focus on meeting production targets rather than managing the use of energy.

Other barriers include low or subsidized energy prices in some regions, perceived technical and operational risk associated with the implementation of energy efficient practices, limited knowledge of new energy-saving technologies and strategies, or a lack of access to capital.

Solutions

Governments, academia, non-profit organizations and industry have all been looking at potential solutions to the wide range of barriers to industrial energy efficiency – many of which can be overcome with the right approach, commitment and investment. But they need to be tackled in a holistic fashion, not in a piecemeal way.

Potential solutions include stronger senior management commitment, better information and education; appropriate financial mechanisms; comprehensive energy efficiency policies; better energy management practices within enterprises; and ambitious and harmonized global codes and standards. For more information about what policies, programs and technologies have been developed to spur industrial energy efficiency, please see our databases.

*All figures provided in this release are based on IEA data.