Crackdown on energy use pays off

On the site of an old sugar plantation on the banks of the Mississippi in Louisiana, between Baton Rouge and New Orleans, stands the Geismar chemicals plant. For 40 years it has pumped out chemicals that help manufacture a wide range of everyday items – laundry detergents, cosmetics, pharmaceuticals, plastics and car brake fluids, to name a few. Like other such plants, it needs a vast amount of energy to generate the heat and power to produce these chemicals. But today it needs less than it used to.

Four years ago, with the cost of energy already starting to rise along with concern over greenhouse gas emissions, Geismar underwent a rigorous assessment of the efficiency of its technologies and processes. Nothing was too small or too large to check, clean or replace if need be – every nut, every valve, every process came in for scrutiny. Some of the older technologies gave way to more efficient newer versions.

The results were impressive: over 5% less energy used, amounting to a drop in costs of millions of dollars a year – and lower emissions. The approach at Geismar became a model for owners Shell as the company embarked on a similar energy efficiency drive in its refineries and chemicals plants across the world.

Chemicals is one of a number of major industries that are vital to keep the world’s economies turning, but inevitably use a lot of energy. Such industries account for one-third of all energy consumed and produce 25% of all carbon dioxide (CO2) emissions, according to the International Energy Agency (IEA). Around 30% of those emissions come from the iron and steel industry alone. By 2050, says the IEA, emissions from industrial energy use could be 66% up on 2005 levels unless a range of measures are taken, including improving energy efficiency.

Yet, while the environment may benefit, it is the soaring cost of energy that is helping to drive companies towards greater efficiency. When the price of oil was around $10 a barrel at the end of the 1990s, little incentive existed to cut energy use. But now the kind of assessment that happened at Geismar is taking place increasingly at many industrial sites around the world. Companies have little choice but to reduce their use of energy. They are re-examining their processes and introducing new technologies to cut energy consumption – and with it, CO2 emissions. In time, they find that greater efficiency means fewer costs: they make more money.

The Geismar chemicals plant, a model of energy efficiency for Shell

The similarities with the dramatic reaction to the oil shocks of the 1970s, when prices were also at record levels, are stark. Then, car makers began to produce smaller, more fuel-efficient cars. Speed limits were introduced to reduce consumption. Interest in alternative energy sources like wind and solar accelerated. Today there is a growing realisation that the world needs a “fundamental restructuring” of technology and behaviour linked to energy consumption, says the US-based Cambridge Energy Research Associates (CERA). “Energy efficiency is at the leading edge of how not only to lessen the impact of current energy prices, but also to combat rising greenhouse gas emissions,” says Robert Lacount, CERA’s Senior Director, Climate Change and Clean Energy. “Energy efficiency is one option that can produce significant results in the near term.”

The efficiency drive that followed the 1970s oil shocks failed to last as the oil price tumbled. This time round, increasing concerns over fossil fuel emissions and climate change – a factor not present 30 years ago – may make the long-term difference, regardless of the price of oil. Energy efficiency may be here to stay.

McKinsey, the management consultants, says there is a clear financial incentive, too – saving energy should equate to saving money. A projected rise in energy demand of 45% by 2020 on 2003 levels could be halved, it says, if prime industries such as iron and steel, chemicals, aluminium, cement and oil refining invested more in energy efficiency, with improvements more than paying for themselves through the savings they bring about.

With easy-to-access oil and gas harder to come by, making better use of the resources available becomes even more critical. The world’s population is set to rise from over six billion to nine billion by 2050. More importantly, hundreds of millions of people in rapidly-developing nations like China and India are growing wealthier, the amount of energy they consume rising as their lifestyles improve. Without action to cut energy use, supply will increasingly struggle to meet demand, pushing up the cost of energy still further.

New ideas

Heavy industry is saving energy – and cutting emissions – using several approaches. In some cases, it is radically redesigning processes and installing new technologies that do a more efficient job. In others, it is cracking down on energy wastage, however small, and improving processes – savings made like this, as at Geismar, can add up to large sums of money.

In South Korea, steel-maker Posco has worked with Siemens VAI to develop a new approach that cuts out conventional blast furnaces in the making of the raw material for steel, known as hot metal. Removing oxygen from iron ore in a traditional blast furnace requires coked coal and iron ore that has already been heated at very high temperatures and is known as sinter. Both are produced from two separate but highly energy-intensive processes. At Pohang, two Posco plants do away with the need for coke and sinter by producing hot metal directly from tiny lumps of iron ore and coal. Not only has this reduced energy use, it has also cut production costs by 15% over the traditional blast furnace method.

Near Shanghai in China, another approach to making steel cuts out the blast furnace by using coal instead of coke and larger iron ore pieces instead of sintered ore. Again, energy use is down and production costs have fallen 10%, according to developers Siemens. Gas recovered from the process is burnt to generate power, increasing efficient energy use.

Steel-making is one of the biggest energy consumers among major industries

Another highly energy-intensive industry, cement manufacturing, typically uses coal-fired kilns to produce clinker, the basic ingredient of cement. At Lafarge Cement’s Cauldon works in Staffordshire, UK, however, a new solid fuel is being used instead of coal for the first time. It is made from paper, plastics and biodegradable waste generated in homes and businesses. Lafarge Cement says it is replacing around 12,500 tonnes a year or up to 45% of the coal it has traditionally used, and reducing annual CO2 emissions by 17,000 tonnes.

In oil, the movement of hydrocarbons from the reservoir to the point of delivery offers major opportunities to save energy. Pumps move oil and compressors move gas – and both need power. “Incorporating factors at an early stage of project design that will maximise energy efficiency is by far the best way of minimising energy consumption and greenhouse gas emissions over the lifespan of an oil or gas field,” says Sonia Ellero, CO2 Senior Analyst with Shell’s Exploration & Production business.

The aluminium industry is among the world’s largest users of electricity, consuming almost 2% of the total. Some 40% of the cost of producing each tonne of aluminium goes on electrical power. The incentive to save energy is strong. In what it describes as a potential breakthrough, Rio Tinto Alcan is developing a new generation of smelting technology that it says could reduce energy consumption by up to 20% by cutting down the amount of electrical resistance in the process.

Small is big

Small energy savings that can add up to a significant reduction in costs and CO2 emissions are increasingly being made within industry, too.

Energy accounts for up to 30% of the production costs in the paper industry, for example, leading to a continuous drive to reduce energy use that is now being stepped up because of rising prices. British paper mills have cut their energy use by 37% since 1990, with half of this saving achieved in the past three years as energy prices and environmental pressures rose. Technology that recovers waste heat to generate more power has been behind most of the recent efficiency gains, but major savings have also come from a series of smaller improvements – the use of more efficient motors and pumps, for instance.

An oil refinery typically uses between 4% and 8% of its crude oil input to generate the heat it needs to produce fuels and petrochemicals. The crude oil going to refineries today, however, is becoming heavier as conventional resources deplete: turning it into useful products as well as meeting ever-tighter regulations on sulphur content means more processing and therefore more energy. It need not mean wasted energy, however.

“There are significant opportunities to save energy by making relatively basic operational improvements and without spending significant amounts of capital,” says Andy Brittain, Global Discipline Leader, Carbon and Energy Management at Shell Global Solutions, the technology consultancy arm that supports Shell’s energy efficiency drive at its chemicals plants and refineries. It also advises other companies inside and outside the oil industry on how to save energy at large plants.

“A lot of people think they have to replace plant and do big things. They may well have to, but there are a lot of short-term operational changes that can be made first.”

For example, in a major review of technologies and processes, Shell Canada identified improvements at its Montreal refinery with the potential to save millions of US dollars a year. For such a vast saving, the energy-wasting weak spots were individually small: a series of minor leaks in automatic valves, or steam traps, that together equalled the output of one of the refinery’s four boilers; cracks and corrosion in the oil furnaces, allowing air to enter the system; and clogged-up heat exchangers.

Shell's Montreal refinery has improved its energy efficiency

“People in general have been surprised,” says Bas Kikkert, Shell Manufacturing’s Energy Efficiency and CO2 Global Process Owner. “Many think that in terms of easy fixes most of the low hanging fruit, so to speak, has already been picked and the work done. That indeed applies to several plants but not to all of them.”

A high rate of return on investment in improvements can occasionally be achieved, Kikkert points out. “The payback time can be less than a year. For every half million dollars spent on a steam trap programme, for example, you might get back about $2 million dollars a year through energy costs saved. That said, for most of our sites – including those already considered world class in this area – we know we still have to make significant efforts and investment to continue to improve efficiency.”

Nonetheless, back on the banks of the Mississippi, the 530 employees who keep the Geismar chemicals plant running may feel some pride that they are part of a global energy efficiency drive which is already reaping rewards, and not just for the environment.

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