Energy Efficiency in Manufacturing

Rob Habgood: Senior Sustainability Consultant

EEF: WHO ARE WE?

• EEF is a trusted partner to thousands of employers around Britain.

• We work on behalf of over 6,000 companies in manufacturing, engineering, technology and beyond. Together they employ close to a million people.

• We foster enterprise and evolution to keep UK manufacturing competitive, dynamic and future focused

• Our regional network brings us much closer to the businesses we support, whilst our offices in London and Brussels stay equally close to government.

• We work to influence the way policy is made and alerting our members to changes in legislation that might affect them.

• On environmental and health and safety issues, we run one of the country’s largest and most respected training networks

The Stern review suggests that savings can be made in a number of areas

Resource Efficiency

Over 90% of the materials used in

production do not find their way into the final

product and companies might spend up to

5% of their annual turnover on waste,

including unused materials, defects, energy

and water. Overall, the UK is missing out on

resource-efficiency savings of £6.4 billion a

year.

EEF ENVIRONMENT SURVEY –DRIVERS FOR IMPROVED ENVIRONMENTAL PERFORMANCE• % companies identifying drivers to environmental performance

0 10 20 30 40 50 60 70 80 90

Other

Voluntary industry initiatives

Raw material supply

Shareholder and investor attitudes

Supply chain pressures

Board level decision

Regulators

Reputation and brand integrity

Increasing competitive advantage

Customer requirement

Adhering to an Environmental Management System

Legislation

Costs

%

2009

2008

• Oil prices between 1998-2009 increased four-fold, while GB gas and coal prices have more than doubled on average during that period.

• To continue to satisfy current demands – up to £200 billion investment may be required by 2020. More than doubling the recent rate of investment.

• Impact on consumers would be sudden and sustained rises in energy prices with underlying possibility of energy shortages if supply capacities not fulfilled.

Energy Markets (growing concern)

Energy Markets (growing concern)

Average UK Industrial Electricity Prices, 1999-2008

0 . 0

1. 0

2 . 0

3 . 0

4 . 0

5 . 0

6 . 0

7 . 0

8 . 0

19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8

p/ kWh

Outlook

• Gas and Electricity prices have been fairly flat since the recession (unlike oil)

• Gas prices forecast to be depressed for a few years due to an over supply.

• 3+ years indicators show return to higher prices.

• Government plans to introduce a levy on electricity bills to fund carbon capture and storage demonstration.

• Possibility of generic low carbon energy support mechanism.

• Feed in tariffs to support onsite renewable generation (i.e sub 5MW) will be introduced (electricity April 2010 and heat April 2011)

Regulation on Energy Use

• Climate Change Levy (2001)

• Climate Change Agreements

• EU ETS (2005)

• Environmental Permitting Regime (2008)

• Carbon Reduction Commitments (2010)

• Low Carbon Levy?

Regulation now effects energy using processes through in their

design, operation and use. It enforces additional costs and requires

effective improvement actions.

EU Emissions

Trading Scheme

EuP

Directive

Carbon Reduction Commitment

• This new scheme was announced in the Energy White Paper 2007. It will apply mandatory emissions trading to cut carbon emissions from large non-energy intensive users in the private and public sectors by 1.1 MtC / year by 2020. CRC is designed to drive energy efficiency and carbon saving by giving organisations a financial incentive to do so through emissions trading, and combining this with Corporate Social Responsibility incentives through publishing organisations’ performance in a league table.

• The scheme targets organisation's annual half hourly metered (HHM) electricity use, if that's at least 6,000 Megawatt hours (MWh) they'll qualify for the scheme - or typically those that spend £500,000 a year on electricity.

CRC Changes

• The scheme also has a new name, the CRC Energy Efficiency Scheme, to

reflect the fact its main focus in to cut power use and therefore emissions.

• All large energy users, from government departments to big-business,

have to take part in the scheme from 1 April next year.

• These include allowing organisations to only report emissions in the first

year (2010/11), then in following years they will have to buy allowances

matching their emissions from energy use and then surrender them by the

end of the year.

• In the second year (2011/12) extra weighting will be given to organisations

'taking action early' to improve energy efficiency.

• Organisations which use 'onsite' renewable energy like wind turbines or

solar panels by publishing the increased carbon savings from such

measures will get increased 'recognition' under the CRC.

• The Environment Agency will publish the qualification and registration

guidance for potential CRC participants by November.

Competitive Stance.

The South West is leading the way with the supply of renewable energy.

Site Energy Efficiency (Examples)

• EEF member, JJ Churchill, has reduced electricity and gas

consumption by 12% and 30% respectively – and achieved a zero-

cost waste management system. All since introducing an extensive

resource efficiency programme.

• It’s estimated that many businesses save 4 or 5% of their turnover by using energy, water and raw materials more efficiently.

• In Manufacturing nearly 60% of immediate energy savings can be

achieved by looking at more efficient motor/drive systems.

ENERGY INITIATIVES

Compressor

up-grade

New capital

investment

impact

analysis

Smart-

metering

Computer-

linked roller-

doors Rapid roller-

doors

Motor

inverters

Warm-up

cycle timers

Change

factory

lighting

Compressed

air zoning

Compressed

air leak

survey

Energy

Savings

Site efficiencies

Know where you stand

• Understand what’s being used and what’s being wasted across your

business – and what it’s costing you.

Prioritise action

• Prioritise the actions you’ll take based on the payback each will deliver.

Make plans

• Underpin your resource efficiency programme with clear objectives and

targets.

Monitor and review

• An Environmental or Energy Management System will help you

stay focused and make sure standards of performance are attained

and then maintained.

• Certification to ISO 14001 or BS16001 demonstrates commitment

for continuous improvement by the organisation.

Disconnection…

Production vs Product

Resource Efficient

ISO 14001

Low Carbon

Over built/packaged

Low Efficiency

High impact

Materials

& Energy

Production

Product

Wastes

&

Pollutants

Waste

Linear Production Model

Materials

& Energy

Production

Product

Re-use & Recovery

Recovery

Closed Loop Production Model

Product and Process.

• 80% of all product-related environmental impacts are determined during the product design phase.

• Resource-efficient products have longer life spans and a good capacity for repair, dismantling, reuse and recycling.

• Redesigning products to reduce waste – e.g. lighter products can reduce energy or water consumption during manufacture

Joined up thinking?

• Supply chain initiatives

• Life Cycle Analysis of product impacts

Example

• The Wedge Group (Galvanising operations) worked with it’s suppliers to re-engineer its processes to use a ‘low fume flux’ for the galvanizing process which avoided the need for expensive abatement of emissions.

• The pilot was a major success and has since been rolled out across other Wedge Group facilities. As well as keeping emissions below the required levels and reducing the amount of raw materials used, the new process has resulted in a significant reduction in energy consumption giving Wedge Group considerable savings in energy costs.

Opportunities for UK Manufacturers

“Environmental standards and regulation, togetherwith changing consumer tastes and rising fuel andcommodities prices, will require the ongoingresearch, design and development of ever-moreefficient products and services. The companies thatcreate them will tap into a growing and significantcustomer base.”

Opportunities for UK Manufacturers

• The UK market for low-carbon products and services is already worth more than £100 billion a year

• More exciting still, it’s expected to grow at a recession-beating 5% per annum and to top £150 billion by the year 2015.

• The global market for low-carbon products and services was worth in excess of £3 trillion in 2008 and is projected to grow 50% to £4.5 trillion by 2015

Automotive industry: companies that position themselves well could create 60% additional value

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Aluminium industry: potential to be transformed by shift to low carbon energy sources

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Building insulation: high growth potential in developing markets

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Consumer electronics: significant demand for products that enable low carbon lifestyles

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Success through innovation…

Manufacturing Support

www.manufacturingyourfuture.co.uk

WE CAN HELP TO GET YOUR BUSINESS IN SHAPE...

• Get your copy of our new major report Low Carbon LocationWe examine UK manufacturers' potential to compete in the low carbon arena and challenge government to strengthen its support for manufacturers.

• Download our guide - Low carbon, high growthDiscover your opportunities in a £4.5 trillion marketplace.

• Download our guide - Are you ready?Find out what you need to do to prepare for the Carbon Reduction Commitment.

• What are the business opportunities in a low carbon world?Find out at our senior management workshops on climate change.