This month’s Atlantic has a fantastic article by Lisa Margonelli about the huge gains in energy efficiency that the US economy could harness if industries recycled their waste energy, most of which is in the form of steam and heat. Apparently, 55% of the energy that the US uses is wasted, a truly shocking figure. It’s relatively cheap to do and allows companies to make money by selling the energy they create from waste steam, yet almost nobody is doing it. Why?
The first barrier is obvious from a trip through ArcelorMittal’s four miles of interconnected pipes, wires, and buildings. Steel mills are noisy, hot, and smelly—all signs of enormous interdependent energy systems at work. In many cases, putting waste energy to use requires mixing the exhaust of one process with the intake of another, demanding coordination. But engineers have largely been trained to focus only on their own processes; many tend to resist changes that make those processes more complex. Whereas European and Japanese corporate cultures emphasize energy-saving as a strategy that enhances their competitiveness, U.S. companies generally do not. (DuPont and Dow, which have saved billions on energy costs in the past decade, are notable exceptions. ArcelorMittal’s ownership is European.)
In some industries, investments in energy efficiency also suffer because of the nature of the business cycle. When demand is strong, managers tend to invest first in new capacity; but when demand is weak, they withhold investment for fear that plants will be closed. The timing just never seems to work out. McKinsey found that three-quarters of American companies will not invest in efficiency upgrades that take just two years to pay for themselves. “You have to be humbled,” Matt Rogers, a director at McKinsey, told me, “that with a creative market economy, we aren’t getting there,” even with high oil prices.
Some of these problems may fade if energy costs remain high. But industry’s inertia is reinforced by regulation. The Clean Air Act has succeeded spectacularly in reducing some forms of air pollution, but perversely, it has chilled efforts to reuse energy: because many of these efforts involve tinkering with industrial exhaust systems, they can trigger a federal or local review of the plant, opening a can of worms some plant managers would rather keep closed.
Much more problematic are the regulations surrounding utilities. Several waves of deregulation have resulted in a hodgepodge of rules without providing full competition among power generators. Though it’s cheaper and cleaner to produce power at Casten’s projects than to build new coal-fired capacity, many industrial plants cannot themselves use all the electricity they could produce: they can’t profit from aggressive energy recycling unless they can sell the electricity to other consumers. Yet byzantine regulations make that difficult, stifling many independent energy recyclers. Some of these competitive disadvantages have been addressed in the latest energy bill, but many remain.
A huge amount of energy has gone into promoting cap and trade or cap and auction schemes to reduce American carbon dioxide emissions, yet there has been almost no public attention paid to policies that would reduce the amount of energy wasted. Margonelli cites a study that argues that we could cut energy use and CO2 emissions by a full fifth just by recycling energy that would otherwise be wasted, which would go a long way towards huge reductions in carbon emissions that experts say are necessary to combat global warming. Implementing energy recycling would be a win, win, win policy, as it would allow us to reduce carbon emissions, reduce energy use while still allowing the companies in question to make money by selling their electricity back to the grid. Given the challenges we are facing, why aren’t people talking more about this?