Recycled Energy Development
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Energy efficiency advocates often seem to miss the big picture when looking for the best ways to get more bang for their energy buck. Conventional wisdom says it’s all about the little things — changing our light bulbs, for instance, or putting more insulation in our homes. Those are the hot ticket items that make environmentally-minded consumers feel like they’re making a difference. But the reality is we could do far more to cut global warming emissions if we paid attention to something far less sexy but far more consequential: the way power is actually generated.
Two-thirds of greenhouse emissions come from the production of power and heat. Although the industrial sector by far uses (and wastes) the most energy, efficiency advocates concentrate almost exclusively on homes and commercial offices — the spaces with which they are familiar. But in fact, manufacturing facilities provide the biggest chance to slash emissions while simultaneously reducing energy bills. Take, for instance, ArcelorMittal’s steel plant in East Chicago, Indiana. A series of waste heat recovery projects are turning the plant’s smokestack emissions into clean electricity and useful steam — utilizing an energy source that would otherwise be vented. In all, these projects are producing more than 200 megawatts of power and saving ArcelorMittal an estimated $100 million a year. Meanwhile, the plant’s carbon dioxide emissions have dropped by 800,000 tons annually. That’s as much as if 140,000 passenger vehicles were taken off the road.
Opportunities for similar industrial efficiency gains abound. Through techniques such as waste heat recovery and cogeneration — the latter of which involves putting a power plant on site at manufacturing facilities, then recycling its waste heat — our nation’s industrial sector could become far more efficient. A 2007 Department of Energy study found untapped potential for 135,000 megawatts of cogeneration in the U.S. In addition, a Lawrence Berkley National Laboratory study identified another 64,000 megawatts that could be obtained from industrial waste energy recovery. Together, these two forms of energy recycling could provide about 40% of total U.S. power use.
Too bad efficiency advocates (and the general public) tend to ignore these supply-side opportunities. Thomas Edison did not. Wanting to maximize his profits, the great inventor realized that his early power plants produced heat as well as electricity. He marketed the waste heat to nearby buildings and factories, doing more to maximize efficiency than most of today’s power producers.
What happened to Edison’s approach? In an effort to electrify America quickly, government entities created monopoly electric utilities. These utilities were guaranteed profits based on how much money they spent on capital. Moreover, regulations allowed these power providers to pass all of their operating costs on to consumers. Responding to those signals, utilities became extremely inefficient: they built large generators that cost a lot of money, but failed to recycle waste heat.
America, of course, has long been electrified, but the model of monopoly-owned and electric-only power plants persists. And the waste is substantial. The typical power plant burns three units of fuel to generate just one unit of electricity. That 33 percent efficiency rate has not improved by a single percentage point since the late 1950s. Few other industries could report such dismal progress.
A variety of our international competitors have realized they cannot afford such waste, and they’ve increased their efficiency rates. Japan, Germany, France, and Russia recycle far more of their energy, yet Denmark offers perhaps the most notable change. Shortly after the oil shocks of the 1970s, the Danes decided to shift away from centralized, electric-only power plants to smaller cogeneration facilities that use just one fire to supply customers with both heat and power. As a result, Denmark has achieved true energy independence, at the same time that it cut pollution and increased industrial production.
The only sensible way to proceed from here is to make it costly to be wasteful and profitable to be efficient. As a baseline, laws and regulations that encourage inefficiency should be relaxed or eliminated. In addition, generators who use energy efficiently, most likely by capturing waste heat for industrial facilities, should receive greenhouse gas credits. Polluters, meanwhile, should pay for the health and environmental costs that they traditionally have passed on to the general public.
Rather than just focus on light bulbs and insulation for homes, efficiency advocates need to visit the industrial places where far more energy waste can be captured. Rather than only concentrate on trying to convince consumers to reduce their energy demand, advocates would achieve far more results by improving the efficiency of energy generation and by developing the price signals that make efficiency profitable.
Richard Munson, senior vice president at Recycled Energy Development (www.recycled-energy.com), is the author of From Edison to Enron.
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