Energy is an essential part of human activity. Energy provides the much-needed impetus to the continuation of social beings and other living things on Earth as well as enabling the positive development of the economies of the world. Energy is a vital aspect in generating income in both the developed and developing countries (Jacobsson, n.d.). The development of the sources of energy has increased tremendously since the middle of the twentieth century, in which the bulk of the energy came from fossil fuels that were cheap in terms of monetary value and readily available to most homes and industries. As a consequence and an added human population, the energy source was exploited largely and with no regard to the efficient energy management. In the run up to the 1960s, concerns of energy resource depletion started to take center stage in most of the international community discussions and they were extended to the national level in mainly developed country jurisdictions. Despite the growing concern about resources depletion, there was no major step taken to curb the possible effect that inefficient energy use posed to the world population (Silv?rio & Szklo, n.d.). A decade later, the world was hit hard by the reality of resource unavailability to sustain an already energy dependent world. During this time, two oil embargoes resulted in high cost of energy and in less than ten years, the cost of crude oil shot up by ten times. World leaders and several energy stakeholders came together to determine the constituents that contribute to the high-energy cost. There was a consensus that uneven distribution of oil and other resources, the exponential population growth, increased industrialization, and overall fuel consumption were the major factors that increased the cost of energy and led to energy resource depletion.
The lessons learnt from the energy crisis while this era led to a certain resolution that aimed to reduce the rate of fossil fuel consumption. To achieve the goal, steps had to be taken to increase energy management efforts and reduce consumption for a given quantity of energy output. Another step was for the energy sector to redesign the whole aspect of energy production by looking into alternative ways of energy production (Jacobsson, n.d.). Energy intensive process had to be reduced to achieve efficient energy use. However, the use of alternative energy presented both cost and technological hitches since it was very expensive to develop an alternative form of energy, and the technological advancement at the time did not allow for such a move (Silv?rio & Szklo). Most of technological development were still on the inception stage and thus could not sustain the demands as presented. Further, shutting down all energy-intensive firms to reduce energy consumption proved viable only on paper but presented difficulty in reality. Shut down was not considered economically viable (Silv?rio & Szklo, n.d.).
From all the proposals, efficient energy management on the side of the user proved to be most viable and responsible approach in terms of fuel conservation and reduced environmental impacts. Efficient management also proved not to stress the economic development of most countries (Teske et al., n.d.). Reduced fuel consumption influences positively the operation cost, pollution costs, and increased competitiveness of the industry. It allows for much more independence from external energy supplies; thus, it releases international tensions.
Industries are the largest users of energy in the world. The United States of America alone accounts for thirty-seven percent (37%) of total energy consumption, while the other countries share the remaining sixty-three per cent (63%) of the energy consumption. The largest consumer of energy is the transportation sector that accounts for twenty-seven per cent (27%) of the total consumption. From this concept, managing energy consumption can be made a reality from the industrial energy management viewpoint as a matter of first instance. Developing and implementing industrial energy efficiency measures has a significant potential for achieving global energy savings. Industrial efficiency measures aim to increase sustainability through various ways such as increased recovery of waste energy and materials, improved thermodynamics efficiencies and increased utilization of renewable resources (Teske et al., n.d.). Energy efficiency transformation presents a difficult task to the world due to the various decisional challenges that have been facing the society at all levels. However, the transformation of energy use to the positive level will require the society to create long-term sustainable energy systems.
The energy resources can be classified into two types. The first is the primary energy resource that consists of fossil fuels such as coal, oil, and natural gas as well as thermonuclear and nuclear fuels such as uranium and thorium. Secondary energy resource forms the next class. Secondary energy is the useful forms of primary energy that have been transformed. The paper discusses energy management best practices in the sector of industries in general. The paper shall give specific and general examples about relevant industrial fields. The -problems that face and impede the development of efficient management of energy are also discussed. The paper also discusses goals of efficient energy management in relation to the industrial development.
Importance of Energy
Energy centers on the economic, environmental, and developmental issues that the world experiences now. The consensus of the worldview is that clean, efficient, affordable, and reliable energy cannot be dispensed with in achieving the objectives of world prosperity. The modern world economies are energy dependent, and energy consumption has been used to define a country’s modernization and progress. Most countries that use a large volume of energy are normally considered developed. For instance, the world considers the United States of America as the leading country in terms of economic development. In the same line, countries that use a lot of energy in production have been faulted for the on-going environmental effects and global warming that has hit the world in modern years. Consultative and inclusive efforts that bring together the industrialized countries and the developing countries have been encouraged to allow for international measure that can help both the developed and developing countries.
In the developing countries perspective, the energy sector is needed in expanding the modern energy services with the aim of reducing poverty and improving health of their citizens. Efficient use of energy in the third world has enabled them to improve their market competitiveness and promoting economic growth. However, despite the steps taken by both the developed and the developing countries, there are setbacks in attaining the efficient use of energy since the current energy systems are inadequate to meet the world’s demands, especially in respect to the world’s poor. However, there have been reports of increasing living standards in the developing countries due to small input of energy.
Energy efficiency can be defined as the process in which energy resources become converted into usable work. Efficiency is measured using thermal efficiency in the case of heaters, steam systems, engines, and power generators. Thermal efficiency is the ratio of the efficiency and the completeness of fuel combustion. Thus, it takes the ratio of network supplied to the combusted heat. The main purpose of an efficient energy uses borders on cost reduction that is aimed to diminish the use of feedstock energy through greater returns that allow for more production of products.
Discussions on the perspective of the energy system are often accompanied by the defined system boundaries. The two aspects normally influence any discussion in relation to energy. The two matters defined the right and wrong actions that should be taken and not taken by the energy stakeholders respectively. Energy perspective can be put into various groups since almost every sector of human survival requires energy. The paper discusses the perspective of the government and the industry since they are the big players in the energy sector.
From the position of the world authorities, the energy efficiency presents different views. The first view is that the energy can be viewed as a commodity. The next view borders on energy as ecological resource, while the third and major perspective of energy views it as a social necessity. From the perspective of social necessity, consumers are said to have the right to energy supply. The fourth perspective of the energy view takes it a factor that constitutes a strategic material or resource. As a strategic material resource, energy becomes susceptible to depletion. As a commodity, the energy becomes a necessity in the day-to-day activities of the individuals and running of the companies and big manufacturing industries.
The view of industrial company presents a different but related view of the energy supply. However, the industrial sector does not give much attention to energy supply, energy security and threats that energy use brings to the world in terms of increased global warming. However, energy perspective in this sector border on profitability, productivity, safety, and indoor environment. However, despite the concentration and views on energy supply, most small sized industries have not developed measures aimed to achieve efficient energy use. To properly understand the efficiency in the industry, it is important to develop an interdisciplinary approach. The interdisciplinary approach reviews the relationship between various fields and how they affect each other and eventual energy efficiency measures. In this piece, the interdisciplinary approach will not from the basis of the study.
Improving Energy Efficiency
Improving energy efficiency takes different forms. The first form is an innovation that can lead to equal or greater output with less energy. The second form involves cutting out the energy that go to waste. Cutting out energy that goes to waste reduces energy needed for industrial purposes while maintaining the same level of output. The third is employing heating technologies that can deliver greater output for minimal supplier energy. The creation of innovative investment mechanism allows for accelerated technology deployment. Innovative ideas have been implemented through network of regional cleaning energy technology centers to hasten the spread of locally appropriate energy technologies.
Managing through best practices can also improve energy efficiency if the top management of the firm incorporates the goals of the firm that relate to efficient energy use into the strategic business plan. The current business atmosphere that enhances principle of downsizing and reduction of capital expenditure provides a good basis for efficient energy management. Senior managers concern themselves with ensuring maximizing the return on investment. The focus presents the energy managers with an opportunity to demonstrate energy efficiency as a factor that can contribute to maximizing the return on investment. Efficiency can be achieved when the energy managers gain the attention of the top management and make them understand that an efficient operation should form part of asset management in order to reduce the operating cost.
Further, the firm must develop an energy management plan. The plan must incorporate energy efficient operation as a primary component. Therefore, the firm will run an energy-consuming device to use as much energy as necessary to fulfill the intended function. Management must ensure that the use of energy does not lead to uncomfortable and unsafe environment. To achieve efficient energy planning, the firm must buy clean and reliable energy at the lowest cost, replacing the old equipment with the new one, and ensuring that the equipment is operated in an efficient manner.
Energy accounting is also one of the limbs of best practices in enhancing efficient energy use. The firm seeking to achieve efficient energy use must create an accounting system in which it can use to locate savings, opportunities and to track and measure the success of the energy efficient practices. In the management plan, energy accounting is a very important component. It allows the firm to keep records of its past and current state on energy use. The information enables the energy manager to communicate in a measurable way about the development of the energy management within the firm. The main purpose of energy accounting is that it provides a foundation for strong energy administration plan; records and tracks the progress of energy saving strategies and provides a platform for setting realistic energy savings. Energy accounting allows the firm to record possible areas that need improvement in the future.
The person in charge of the control of the industrial plant energy sector must ensure that he or she undertakes certain general practices that will promote energy efficiency promotion. Therefore, he or she must ensure that regular audits are taken from the condition of the plant and regular reports are made accordingly.
Principles of Implementation
Effective implementation of the energy efficiency programs requires certain candid consideration to the implementation guiding principles. These principles provide a process-like-approach that industries willing to manage the use of energy should adopt in order to achieve greater efficiency. The first step is to integrate key processes to promote the implementation of identified saving opportunities. In participating in the assessment processes, the personnel must be ready for the project implementation.
The second step is to assign the completion of a specific project to specific individuals. The assigning of roles must take place after an internal approval has been conducted for each participating individual. Internal approval gives an assurance that the persons selected shall commit themselves fully to the demand of the project. The implementation requires that participating people are assigned specific duty and accorded specific role. Understanding the project expectation is important for the participant since it allows for the participation to the highest level. To achieve the required level of involvement, the participants must be given handouts to act as reference documents. Energy managers, plant managers, and other staff included in the process must be conscious of each person’s role and the way they fit into the overall demands of the project.
The third principle demands that the implications and performance of the project assessment are communicated clearly and comprehensively to the people involved. Business case for implementation must be set from the onset of the planning process. Information that can help in strengthening the business case such as value improved energy efficiency, increased process efficiency, improved output on the environment, potential cost savings and improved energy management can help in developing the business case.
The company conducting the assessment must be well known to the plant managers. It is essential to establish the credibility of the company conducting the assessment. The plant managers can determine the quality of its reports, identifying the assessment areas in which the organization specializes. The contract between the plant and the assessing company must define clear terms based on component of the assessment. They should create a cooperative approach towards making the assessments. The assessing company must ensure that it understands the motivational aspect that drives the company in striving to make efficient use of the energy.
The fifth principle demands that the plant must demonstrate greater commitment towards attaining the stated goal. The plant must welcome the assessment and show willingness in practice to further the project. The sixth principle involves promotion of successful identification process for opportunities. The next principle concentrates on ensuring that the identified opportunity meets the organizational rates in terms of facilities available. It points to a smooth transition from assessment to implementation. The organization can transition smoothly only when the process is accorded the needed support by the project manager and financial managers.
Principle 8 ensures that there is a continued momentum from the assessment to the implementation of the approved energy saving projects. To achieve this, it is imperative to minimize risks that might hamper the implementation process. Financial risks must be evaluated and understood in order to avoid negative impacts on energy project on production. There must be constant supplies of funding to guarantee full project implementation.
The ninth principle requires that after successful implementation, the management must quantify the energy savings benefits. The principle promotes matters of tracking the approved energy projects. It also promotes accountability by ensuring that every individual assigned a specific function is, in fact, doing so. The outcome of the project must be publicized and persons involved must be recognized. The purpose of the eleventh principle is to ensure that the people involved remained motivated and committed to the sustainability of the plan and any other future project that may arise.
In this respect, the tenth principle promotes celebrating the accomplishments with all stakeholders. Stakeholders include shareholders, boards of directors and any other group of vested interest in the firm. It is important that the success of the projects is communicated to these classes of stakeholders, and they become aware of the energy and cost saving accomplished. The final principle denotes that the lessons learnt from the project must be taken into account in order to ensure future success. A post mortem assessment should be conducted at the end of the implementation process to ascertain aspects of the projects that has worked successfully.
Barriers for Energy Efficiency
A barrier for energy efficiency can be defined as a hypothesized mechanism that precludes the investments in technologies that are energy and economically efficient. The barriers have formed the subject of discussion and investigations since the late 1980s. It has been recognized that even the best practices that were forwarded to promote efficient energy use still fail to in practical application to attain the set goals of energy conservation. Energy barriers affect the goals laid for energy efficiency programs. These barriers can be internal and external in nature and thus can be controlled when early identification and analysis are conducted to assess the importance and long-term goals of the plant.
The heterogeneity of the best practice measures in some instances fails to turn out to be cost effective in certain cases. Heterogeneity denotes the general take of a particular technology taken to promote energy efficiency. In this respect, enforcers of the technological framework should ensure that proper assessment is conducted to ascertain that the proposed framework provides that best form of energy efficiency in theory and practice. In this respect, the principles of energy efficiency improvement must take center stage.
The next barrier to energy efficiency revolves around hidden costs. Hidden costs include the costs that relate to collecting and analyzing information. They may also include productions disruptions and other inconvenience that have not been contemplated within the laid down budget (Silv?rio & Szklo, n.d.). Hidden costs take a monetary value approach and thus can be avoided by proper budgeting and making miscellaneous allocations be used to cover any form of eventuality. In developing the budgets, the financial department must consider the aspect of energy efficiency in the overall goals of the organization (Silv?rio, & Szklo, n.d.).
Access to capital risk also presents a monetary value perspective. Like the first two barriers, it presents impediments to energy efficiency when its availability is limited. It mainly hampers the implementation of measures aimed at making energy use and supply more efficient. For purposes of risk aversion, energy efficiency measures are constrained by short payback criteria. Most industries lack the capital that can sustain the efficiency measures since they are expensive to acquire and maintain (Silv?rio & Szklo, n.d.). However, the long-term effects of the efficiency practices in the energy sector give the company good profitable base.
Adverse selection presents another barrier to the energy efficiency. This can be classified as a type of asymmetric information. It arises when producers of energy efficient technologies are informed about the characteristics and the performance of the technologies better than the potential buyers are. The information that both parties possess regarding the equipment is considered asymmetric in this respect. Asymmetric information is a form of market failure.
Principal-Agent relationship also threatens the efficient technologies from taking effect. The main actor that underlies principal-agent relationship is the lack of trust that shows in different levels of engagement. For instance, a company owner, who may not be well informed about the specific criteria regarding energy efficiency investments as the Chief Executive officer, may demand short payback rates for any such investments for lack of trust in the CEO. Such a mistrust may lead to neglect of cost-effective energy efficiency investments (Thollander et al., n.d.).
Lack and unavailability of information may lead to the missing of cost effective measures. As a matter of principle, all information must be communicated prior and during the course of the project to promote proper cohesion and knowledge of the facts. However, there may be laid down framework for passing on the relevant information to the concerned department, but achieving the goals of energy efficiency may still fail. The failure may crop up from the split incentive, in which certain departments fail to demonstrate proper commitment toward a common goal due to the limited gain, or value the accomplishment might add to his or her department (Thollander et al., n.d.). Credibility and trust accorded to the information source should be strong in order to remove any form of barriers. In a situation where the source of information regarding energy efficiency measures is not trusted and credible in the view of stakeholders, its implementation may be hampered, resulting into inefficient choices being adopted.
Another factor borders on personal and human commitment to the projects aimed at ensuring that efficient measures are adopted. Where the organization lacks real ambition from within the ranks of its human resource, adoption of measures to reduce the cost of energy use might prove hard (Rosana). Consequently, individuals who are committed to status quo of the firm, may find it difficult adjusting to the new developments of energy efficiency. It can take the form of overlooking the laid down measures or frustrating their implementation for fear of change. Human barrier cuts across both ends since it can also work to attain the heights laid down when the attitude of the employees and the top management have been positively set towards achieving efficient energy use.
Low status of the department of energy within the organization may also hamper the development of efficient measures to limit energy use. Low status may lead to lower priority and, thus, making any ideas that they might propose to the top management have low possibility of success.
Factors influencing Energy Efficiency Differences
The intensities of energy are expressed in energy use per monetary unit. Energy intensity differs considerably in different sectors. The intensity applied to produce a similar product by different plants in different countries may differ tremendously due to a range of factors as discussed below.
Access to energy resources contributes to differences in energy efficiency in different firms and countries. For many energy intensive products such as steel and cement, access to quality raw materials and feedstock play a big role in energy intensity production. Local factors equipment import policies, local suppliers’ strategies, and limited available expertise can prevent high uptake of more energy-efficient technologies. Further, capital cost in view of energy efficient equipment. Most part of the energy efficient equipment costs more compared to the one that is inefficient (Kromer, n.d.).
Plant size and age of the capital stock also contribute to the difference in energy efficiency programs. Older plants tend to be smaller, thus making them less efficient due to the old technologies that they still employ. Bigger firms that use modern technologies are more efficient (Kromer, n.d.). However, investing into new plants and more efficient technologies does not offer a viable economic option due to the fact that marginal production cost is smaller than they would be from the new firm.
In a bid to attain energy efficiency practices, the industries stand at a risk of experiencing a rebound effect. Cost effective energy efficiencies strengthen competitiveness by enhancing lower productions costs. The overall result of efficient energy practice is a prosperous economy for the bigger picture. In the backdrop of this popular belief, there is no certainty of positive results. The main idea is that getting the industrial companies to economize with the energy can offset the expected beneficial effects (Bulu?, n.d.).
The rebound might come from the behavioral response to the induction of modern technologies or measures in the production system. The rebound effect can be presented into two forms. The first is the direct rebound effect in which the new technology increases energy efficiency corresponding to a reduction in the price of energy service that would eventually lead to an increased demand for energy. The second from is the indirect rebound effect that means that the overall energy cost is lowered by the energy efficiency technology leading to extra money left in the hands of consumers to spend on other goods and services (Bulu?, n.d).
Policies Promoting Energy Efficiency
Governments control the use of energy through developing policies that outline energy related targets and goals. Government policies take several forms (Thollander et al., n.d.). For instance, the government might decide to increase the share on renewable energy source within the energy sector in order to improve energy efficiency and reduce carbon dioxide emissions from big industries. In certain instances, government can adopt regulations that seek to control the import of oil imports to its jurisdiction, improve energy reliability, and reduce air pollution (Yang, n.d.). Energy policies developed have been emphasized as an important factor in tackling climate change.
Governments seek to develop controlling and policy measures with the view of achieving sustainable development. From this respect, the policies and regulations developed and adopted must consider the symbiotic nature of the relationship between ecology and the economy (Horowitz, n.d.). The two aspects define each other in a great extent when it comes to sustainable development. Sustainable growth can only be achieved if the economic capacity of the country is in cohesion with the ecological demands (Wada, n.d.). Achieving the cohesion requires proper policy developments that can enable the achievement of the goal to be competitively and advantageous as possible. Ecological modernization concept captures the trend, whereby societies concurrently generate business competitiveness and environmental sustainability within the existing liberal market (Rosen, n.d.). The concept involves the changing technological devices and improved innovation that the contemporary industries have undergone in the past half a century. The idea of developing regulatory policies aims to enhance green technology but to maintain the profitability of the country while befitting the environment. Ecological modernization concept serves the interest of the following groups (Rosen, n.d.). The interest of the government is covered since it spells low electoral risk. Industries interests are also protected since it means incremental reform in terms of low costs of production and high output thus high profitability, and for the society since it contain costs and creates opportunities (Delina, n.d.).
The country is the dominant actor in the ecological modernization while industries and the society play a secondary role. As the regulator of the market, the government plays the role of an “enabler” of the development of the green market (Horowitz, n.d.). As an enabler, the government oversees the enforcement of the policies and regulations and sets standards that should be met by the industries through the national energy department. However, in developing policies the industrial companies must participate in the policy development processes (Delina, n.d.).
The paper has dealt with various areas that threaten the efficiency and those that promote the energy efficiency. Energy stakeholders must ensure that policies and regulations that the government provides are aligned with the industry goals in view of energy efficient use. Achieving energy efficiency must be attained in a sustainable manner, in which proper consultative engagement is enhanced to promote greater involvement. Due to the globalization brought by technological development, efforts to conserve energy must go beyond the boundaries of the particular countries. They must involve the international community through international forums, in which effective ways to promote efficiency are discussed in an elaborate way. Engineering practices should be developed to meet the current demand of energy needs of the industries and the needs of the population at large with a view of creating new and efficient practices. The focus should be put in the area of innovation that can assure of the manufacturing of good and reliable machines that can effectively achieve proper energy management. Managing energy efficiently requires that a positive attitude be developed within the ranks of energy stakeholders. It is important that every industry and every individual understand that energy management standards are aimed to provide guidance and not to defeat the economic advancement of the industrial institutions. Every facility must ensure that it develops energy management plan within its business plan in order to allow for future consideration and improvement since it forms part of the greater business project.
In firms where energy plans have not been laid into the business plan, commitment to the energy regulations, policies, and efficiency measures is normally viewed in contempt and thus presents a barrier to energy efficiency. The management standards should be coherent in nature and give the true reflection of the industrial plant in terms of financial commitment and good will. Accountability measures should also be adopted to promote transparency in the energy management sector within the firm. Accountability enables external stakeholders like the government to access operations of the company and, thus, puts it in a good position to make a clear and believable report on the energy sector within the country. The government and the energy industries should develop structures that allow for capacity building. A careful, organized training program can attain significant goals in according engineers the needed knowledge and skill in energy optimization techniques. Procedures for the selection of engineers for the specific trainings should be properly laid down in a transparent manner to avoid any corrupt practices. Experts for these training may come from government sponsored energy centers, factories, and consulting companies as well as equipment manufacturing engineering companies.