TRIRIGA Insights

Beginning January 1, 2010, organizations will be required to track and report on greenhouse gas emissions from those facilities that fall within the EPA Mandatory GHG Reporting rule. The EPA estimates that approximately 10,000 facilities will have to report carbon emissions under this rule and approximately 30,000 facilities will need to invest time and money to evaluate their carbon emissions to determine whether they are required to report to the EPA.

As Lisa Campbell outlined in the recent TRIRIGA Learn from the Leaders webinar, Get Ready for Mandatory Reporting of GHG Emissions, many of the facilities covered by the EPA rule will be large manufacturing plants that produce carbon emissions from stationary combustions equipment such as boilers, process heaters, and central plants. For these facilities, the cost of complying with EPA Mandatory GHG Reporting rule adds an additional incentive to implement energy reduction projects that will eliminate this burden. Furthermore, although the industrial sector has made tremendous energy efficiency gains over the years, there is still a huge opportunity for industrial facilities to improve energy and environmental performance.

According to the National Association of Manufacturers (NAM) the industrial sector on average has increased energy efficiency by over 50 percent since 1970. Even with this significant improvement, NAM estimates that almost 60 percent of energy used today by industrial facilities is wasted. According to NAM, a 10 percent energy efficiency improvement across the U.S. manufacturing sector would equate to reduced energy costs of over $10 billion per year. This equates to: almost 917 million metric tons of carbon emissions avoided, or the carbon emissions from almost 10 million homes. In addition, NAM estimates the average simple payback for energy efficiency projects at industrial facilities is 2.3 years. And, when non-energy benefits such as reduced resource use and improved equipment performance were factored in, the simple payback was reduced to 1.4 years on average.

In addition to these savings, the EPA Mandatory GHG Reporting rule provides another incentive for industrial organizations to implement energy and carbon reduction measures. Facilities that reduce their annual 2010 carbon emissions below the 25,000 metric ton threshold set by the EPA will not have to report to the EPA in any year until they exceed the threshold. For future reporting years, facilities covered by the EPA rule that can reduce their emissions below 25,000 metric tons for five consecutive years, or below 15,000 metric tons for three consecutive years, will no longer be required to report carbon emissions to the EPA as long as emission remain below the threshold in subsequent years. Based on EPA estimates, facilities that eliminate their EPA carbon reporting burden will reduce environmental compliance costs by approximately $8,000 per year.

Although the potential for reducing energy use and carbon emissions in the industrial sector is substantial, facilities in this sector face challenges that facilities in other commercial sectors do not. Often, energy efficiency opportunities in industrial facilities are closely tied to production processes that are designed to operate unchanged for years. In order to effectively plan and manage energy efficiency projects in industrial facilities, managers must have an understanding of the timeline in which production processes can be upgraded with more energy efficient equipment. To effectively track and manage opportunities to reduce energy and carbon, organizations in the industrial sector require a decision support system with the tools necessary to evaluate and plan projects based on the financial and environmental return as well as the optimal timing of a particular improvement opportunity. Such a system will allow your organization to optimize the limited capital and employee hours allocated to implementing energy efficiency projects in industrial facilities.