Industry in North America uses about 30% of all energy. Communities use about 80% of all energy. It doesn’t take a statistical expert to see that industrial and urban energy use have significant overlaps. However, even the most cursory observation shows the almost total lack of any attempt to capture benefits that could come from industry and the city integrating their strategic energy thinking.
In the past few weeks, I have seen a few signs that this may be beginning to change. This could create significant changes in how industry invests in energy productivity. It may even factor in to how senior management decides where new factories will be located, or which ones will be expanded.
For decades, cities have basically relied on regional gas and electrical utilities to make all of the energy-supply-related decisions for their cities. The regulations that utilities operate under are mostly set by state and federal governments. The efficiency of energy use in buildings is set by building codes, which are also established at state level supported by national guidelines.
This picture is beginning to be challenged by cities as they realize the potential competitive benefits of regaining a higher degree of control over their energy destinies. Widespread upgrading of the efficiency of homes and buildings creates local employment, reduces overall energy costs, and improves the long-term value of the city’s real-estate. Widespread use of local distributed heat and power generation from both fossil and renewable fuels and sources improves supply security, reduces overall fuel use, and reduces long-term price volatility and cost.
The scale of the potential benefits is beginning to be realized as communities critically analyze their energy situations. However, the same analysis that identifies the potential to at least double the energy productivity of their cities also identifies that most of the policy levers are beyond their control. Inevitably, most plans end up being a collection of voluntary measures, delivering only a small percentage of potential benefits.
A handful of North American communities are beginning to challenge this picture. They are tackling deep energy restructuring despite policy barriers. They are finding that credible promises of future energy price stability, supply security, and reduced environmental impacts are attracting industrial investors and employment. It is important to take a slightly deeper look at the possible synergies between industry’s energy needs and the host community.
As one example, on-site generation of electricity has many attractions for industry from both a cost and a security standpoint. It also makes a lot of heat, most of which cannot be used by industry in any economic way. If the city is structured to take this heat and use it for winter heating and summer cooling, this completely redefines the environmental impacts and costs for both the industrial host and the community. A city with an integrated thermal strategy can also usefully absorb much of the waste heat that many industries create, again lowering cost and pollution for both parties.
These communities add an additional benefit for industry. In many cases, there are specific corporate targets for greenhouse gas emissions increasing the attraction of working in communities with a structured approach to energy productivity.
What happens if a significant portion of communities in a state or province successfully implement fully integrated energy policies? Energy efficiency and distributed generation radically change the need for new generating capacity, lower energy costs and supply risks, and reduce the greenhouse footprint. The competitive advantage sought by cities in effect elevates to the regional level.
Recently my team has been involved in community-level energy planning in Ontario, which spans this synergy between industry and community. It is interesting that the provincial government is beginning to suggest that widespread integrated energy planning at the city level could be the key to a completely rethought provincial energy strategy. government is also beginning to realize that city planning without city commitment to implement is an exercise in futility. However, city accountability can only happen with the appropriate adjustments of policy.
This dialogue starting in Ontario could be the early signs of a shifting balance between state and cities over energy, which could have deep and positive impacts for industry. With the right preparation, industries anticipating investments in a new plant or upgrading an existing plant can be a major influence in accelerating this community-level integration.
In addition, I was recently interviewed by a U.S. organization well-respected for its focus on energy efficiency. The theme of the interview was around the success of third-party provisions of integrated energy services. Is this another sign of the growing awareness of the need for cooperative thinking when it comes to energy solutions?
In many parts of the world, industrial parks are configured to serve both industry and community with benefits for both. Is it time for this potential competitive advantage to be pursued more vigorously?