Obama order boosts industrial energy efficiency

Today President Obama signed an executive order aimed at increasing investment in industrial energy efficiency.  The order, titled "Accelerating Investment in Industrial Energy Efficiency" (see official text at whitehouse.gov), directs the federal government to take a series of steps furthering this goal.  At stake is the competitiveness of U.S. industry; according to the accompanying press release, the efforts called for in the executive order could save manufacturers as much as $100 billion in energy costs over the next ten years.

Combined heat and power (CHP), or cogeneration, represents the efficient use of fuels to produce both electricity and useful heat.  In a traditional non-CHP electric generation station like a coal-fired power plant, a fuel is burned to boil water into steam; the steam is then used to spin a turbine connected to an electrical generator.  These traditional systems do produce electricity, but much of the energy content of the fuel being burned is wasted as heat released to the air or cooling water.

CHP systems are designed to recover heat that normally would be wasted in an electricity generator, and save the fuel that would otherwise be used to produce heat or steam in a separate unit.  The Obama administration believes that the efficient production of heat and electricity can improve the competitiveness of United States manufacturing, lower energy costs, free up future capital for businesses to invest, reduce air pollution, and create jobs.

According to the U.S. Clean Heat and Power Association, the nation is home to about 82 gigawatts of installed CHP.  These systems currently supply about 12% of U.S. generating capacity.  The USCHPA cites industry estimates that the technical potential for additional CHP at existing sites in the U.S. is approximately 130 GW, plus an additional 10 GW of waste heat recovery CHP.

Today's executive order directs an array of federal executive departments and agencies to convene stakeholder groups to identify, develop, and encourage the adoption of investment models and State best practice policies for industrial energy efficiency and CHP; provide technical assistance to States and manufacturers to encourage investment in industrial energy efficiency and CHP; educate the public on the benefits of investment in industrial energy efficiency and CHP; and use existing authorities to support investment in industrial energy efficiency and CHP.

The order also sets a new national goal of 40 gigawatts of new combined heat and power capacity by 2020.  According to the White House, meeting this goal would save energy users $10 billion per year, result in $40 to $80 billion in new capital investment in manufacturing and other facilities that would create American jobs, and would reduce emissions equivalent to 25 million cars.

Electricity can be transmitted long distances over transmission lines, but heat generally must be used relatively locally -- either at the site where it is produced, or at a nearby site connected by steam or other piping.  Because CHP works at sites with significant heat demands, much of the growth in CHP resulting from today's order will likely be at manufacturing facilities and other industrial sites.