As the manufacturing sector continues to capture many of the low- and no-cost energy improvement opportunities, future improvements will be increasingly linked to industry’s capital investment activity, according to the American Council for an Energy-Efficient Economy (ACEEE) report “Understanding Industrial Investment Decisions.”
Industrial energy program administrators will need a better understanding of capital investment processes as these vary by industry. By influencing capital investment decisions, the next generation of energy efficiency programs can affect industrial energy use for years to come.
Although the manufacturing sector struggled during the past decade, the research found all industries boosted their productivity during this time period, due in part to the closure of older, less efficient facilities. In the short run, this leads to higher capacity utilization as surviving production facilities take up the slack.
In addition, the research notes a new trend of companies bringing their foreign production facilities back to the US. And with the $2.2 trillion cash balances accumulated by public corporations over the past decade, it’s likely to drive capital investment in new, domestic manufacturing production facilities.
This industrial renewal is an opportunity to lock in energy savings for a generation for the U.S., and should be taken advantage of by state and utility energy programs, said Christopher Russell, co-author of the report. A strategic approach would fold energy efficiency into the design and construction of new production facilities and modernization of existing plants.