Energy Efficiency Offers Relief to Manufacturers Suffering From Run-Up in Natural Gas Prices, Says Alliance to Save Energy

Washington, D.C., November 7, 2005 – Today’s record-high prices for natural gas and other fuels are forcing U.S. manufacturers to pursue energy-efficient technologies and practices. Manufacturers are cutting their energy waste – and thereby energy costs – in an economical and cost-effective manner, according to the Alliance to Save Energy.

In fact, says Alliance Director of Industrial Programs Christopher Russell, manufacturers can cost-effectively avoid energy waste equivalent to about 21 percent of their total energy use with efficiency measures.

Up until today’s high fuel prices made energy efficiency such an urgent need, many manufacturers ignored recommended energy improvements due to the perceived risks involved or reluctance to make the up-front investments.

In today’s high-cost climate, however, “energy efficiency improvements look like a bargain compared to fuel bills,” Russell noted. “At today’s fuel prices, energy improvements pay for themselves much more quickly through the savings they generate, while companies that postpone such improvements continue to bleed cash.”

The U.S. Department of Energy’s Industrial Assessment Centers offer examples of energy savings and their financial impacts:

• A surgical instruments manufacturer in Utah could have invested $2,560 in steam trap improvements in 2002, with a payback of 1.2 years. At today’s energy prices, the payback is reduced to 0.8 year.
• A small, Louisiana food processor’s 2002 energy assessment included a $754 investment to insulate process pipes and vessels, with a 2.5 year payback. In 2005, the payback is accelerated to 1.7 years.
• An Illinois manufacturer of corrugated shipping containers could have pursued a $70,000 boiler replacement in 2002 with a payback of 5.4 years. Today, the payback is only 3.7 years.

“Companies with an existing energy assessment are already halfway there,” said Chuck Miller, director of solution design with Johnson Controls, Inc. “Unless you think energy prices are going to fall, the recommendations that were valid when the assessments were made are even more valuable now.”

The U.S. Department of Energy and the Alliance to Save Energy provide efficiency guidance:

• Technical “how-to” resources: www.eere.energy.gov/industry/bestpractices/
• No-cost energy assessments: www.eere.energy.gov/industry/bestpractices/iacs.html
• Strategies for energy management: www.ase.org/section/topic/industry/corporate/

Manufacturers can realize additional business opportunities from marketing new products and services that actually reduce consumers’ energy burdens. Some examples are Procter & Gamble’s Tide Coldwater laundry detergent that offsets the cost of heating water and Caterpillar’s advanced combustion systems that improve vehicle fuel economy.