The commitment by most major companies to reduce their carbon footprint is showing interesting shifts in priorities. For decades, most electricity has been generated by coal and natural gas. This produced a convenient alignment of the cost and carbon reduction benefits of efficiency aimed at reducing electricity use. Conversely, efficiency measures aimed at process and space heating usually yielded high carbon reductions but offered poor economics, especially where natural gas is as cheap as it is now in the U.S.
The result has been predictable. Most corporate efficiency programs tend to prioritize electrical efficiency measures over thermal efficiency. Put simply, we are more likely to invest in efficient lighting, motors, and compressors than we are to rethink heat-based production processes or even improve insulation and windows in buildings.
Electricity is decarbonizing quickly in many parts of the world, including the U.S. This is driven by policy and market forces that serve to reduce coal and increase renewables and natural gas. The economics of electrical efficiency measures remains attractive, but the carbon reduction benefit is shrinking. The need to meet demanding carbon targets while maintaining sound economics is shifting businesses’ focus to cost-effectively decarbonizing heating.
As always, the first step is to reduce heat waste through end-use efficiency. In heat-intensive manufacturing, this inevitably means reconfiguring the process, which demands a high level of trust between the energy and production teams. In buildings, the focus must be on the envelope efficiency. The carbon reduction tends to be high; the economic gain, while attractive, is proportionally less.
Shifting focus to heat efficiency will inevitably lead to a discussion of acceptable returns. It’s common for energy-efficiency projects to be asked to deliver one- to two-year paybacks, equivalent to returns in excess of 50%. Changing this to still-attractive levels closer to 25% may be needed to meet both economic and carbon challenges.
Allied with heat efficiency is heat recovery and reuse. The reality on many sites is that recovering heat can be costly and complex, and the available uses are relatively small as compared with the primary processes. However, the goal of decarbonizing heat will inevitably bring at least some heat recovery and reuse back into play. This is especially true where heat recovery is technically relatively easy, as it is with air compressors.
In some locations, using on-site combined heat and power generation, or CHP, may reduce overall emissions. However, this will be the case only if the heat can be effectively used, and often it can’t. Many industrial sites already have high levels of heat waste, so adding CHP simply exacerbates the challenge of decarbonizing heat use. Despite this, local power generation may be economically attractive because of relative gas vs. electricity costs. This creates a risk of conflict between the company’s economic and carbon goals, though.
These last two challenges of heat recovery and effective use of CHP within a single site raise the question of cooperation with neighbors. The bigger and more diverse the energy needs, the more likely that it’s possible to find creative and profitable energy solutions.
Pooling the waste heat potential with the heating requirements of multiple co-located plants has the potential to be a win-win. Creating a structure where waste thermal energy can be a communal resource can cut both costs and carbon footprint for all concerned.
Similarly, the diversity of processes from multiple sites is likely to make it easier to optimize the power and heat use from CHP when viewed as a shared asset rather than dedicated to a single site. If CHP can run at fuel efficiencies of 80% or higher, economics are likely to be good, and carbon footprints will generally drop. Similar end-use diversity may make sharing other assets, such as compressors or steam boilers, economically and environmentally viable.
The last step in decarbonizing heating will be to steer away from fossil fuel in favor of alternatives such as biomass or biogas. In most industrial settings, this is not a practical short-term option, but it may well be realistic in the not-too-distant future. The more efficient the overall heating system is, the easier it will be to migrate to alternative fuels.