As of last fall, the Ladner group is collaborating with Elizabeth Carraway, Cindy Lee, and Tom Owino on a sustainability project funded by the Environmental Protection Agency (EPA). This is a partnership with Duke Energy, who provided matching funds. The project, called South Carolina E3 (or SCE3), has the goal of assisting manufacturers in South Carolina and helping them thrive in a new business era focused on sustainability. E3 stands for Economy – Energy – Environment. More information about this initiative and its history can be found at the US EPA E3 Website.
Here we wanted to highlight one aspect of the project: its focus on small to medium-sized companies. Much of the information that follows is based on a report called “One Small Step for Energy Efficiency: Targeting Small and Medium-Sized Manufacturers,” written by Daniel Trombay in 2014.
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Energy efficiency is not only more sustainable, but can also be very cost-effective. The cost savings, which help boost competitiveness, are a main reason why many manufacturers are heading towards energy efficient options in their facilities. What some may not realize, however, is that this movement is also beneficial for a number of other reasons.
In economic terms, energy efficiency is wonderful because it creates and saves jobs, saves money (investing in efficiency costs less than investing in new generation and transmission), and spurs innovation leading to development of efficient products that will help our world continue to progress towards a more efficient and sustainable future (1, 2). Environmentally speaking, the development and use of energy efficient products can reduce greenhouse gas emissions and water use – an essential benefit as we continue to experience droughts in some parts of the United States (1). Finally, energy efficiency improves national security. If we can decrease our energy demand, we will also decrease our reliance on importing fossil fuels and hopefully be in a position to save some of our American resources for future generations (2). All of these positives show just how important it is that the sector accounting for about 1/3 of primary energy consumed in the US – manufacturing – strive for energy efficiency (3). But, why focus on the smaller manufacturing facilities?
If we define small to medium-sized manufacturers (SMM) as having less than 500 employees (energy use would be a more appropriate metric but there is more data available for size based on employees) then we can see in Figure 1 and 2 that they account for about 90% of the manufacturing establishments in the US and about 48% of the energy consumed (3). While these facilities may be very small and will likely not see higher cost savings than a larger company when implementing energy efficiency, they can see significantly higher percentages in energy cost reduction. This is evident in Figure 3 which shows results from over 250 projects done by Southern California Edison for industrial energy efficiency. Smaller sites experience bigger impacts from energy efficient implementation, meaning that those sites which were using less energy (intuitively the smaller manufacturing facilities) saw higher percentages in savings (3).
To give an example of actual savings made by a small manufacturer who took on an efficiency program and implemented some of the practices in their facility, the case of Blue Ridge Fiberboard Inc. will be presented. This company – made up of about 85 employees – manufactures reconstituted wood products in Danville, Virginia (4). Blue Ridge Fiberboard took part in a Regional E3 (economy, energy, environment) effort sponsored by the United States Environmental Protection Agency (US EPA) which consisted of an on-site review of their operations and concluded with a report including opportunities in productivity improvement, environmental impact reduction and energy intensity reduction. After reviewing their report Blue Ridge Fiberboard invested $160,000 in energy efficient equipment and saved more than $200,000 in operational costs. They also made some changes to water treatment and have expected annual savings of $300,000 (4). This shows that implementation of efficient processes truly can make an immense difference for small manufacturers.
While the savings are obvious, the implementation of energy efficient processes and other efficient practices are easier said than done – especially for SMM. Capital is a huge barrier for SMM as they typically do not have access to capital like their larger counterparts do, making it difficult for them to invest in efficient practices (3). Another barrier is that SMM do not have the man power that larger manufacturers have. Thus, SMM cannot assign the large task of managing efficient manufacturing practices to a staffed employee. This is why it is especially important that efficiency programs target SMM – they need help with the capital (grants and loans) and also require separate efficiency assessors who can come in with their expertise. Fortunately, the energy savings and environmental benefits of efficient operations are being realized and more programs are being developed that are specific to SMM.
It is important that SMM realize the value of efficient practices and seek out programs that will benefit them. Common plant systems (motors, pump, compressed air, steam generation, and process heating) use about 80 percent of all industrial energy, as estimated by the Department of Energy, and they believe that it is possible to reduce energy use by 10 to 20 percent in these systems (5). That could have a huge impact on SMM and show large cost savings if the manufacturer is willing to understand and apply measures towards efficient production. One way for SMM to go about this is to explore the US EPA E3 website and see if there are any programs going on in a local area. The Small Business Association can also help manufacturers find programs that are constructed to help SMM specifically.
To stay competitive, SMM need to be efficient and save money. Participating in efficient operations programs and implementing efficient practices is one small step towards huge rewards.
References:
- Energy Efficiency (EE). (2015, May 19). Retrieved from EPA.gov: http://www.epa.gov/statelocalclimate/local/topics/energy-efficiency.html
- Top 5 Reasons to Be Energy Efficient. (2012, July 20). Retrieved from Alliance to Save Energy: http://www.ase.org/resources/top-5-reasons-be-energy-efficient
- Trombley, D. (2014). One Small Step for Energy Efficiency: Targeting Small and Medium-Sized Manufacturers. Washington, D.C.: American Council for an Energy-Efficient Economy.
- Blue Ridge Fiberboard Participates in Regional E3 (Economy, Energy, Environment) Project. (n.d.). Retrieved from GENEDGE: https://www.genedge.org/impact-client-successes/client-success-stories/blue-ridge-fiberboard-participates-regional-e3-economy-energy-environment-project
- Energy Management Basics for Small and Medium Sized Manufacturers. (n.d.). Retrieved from U.S. Small Business Administration: https://www.sba.gov/content/energy-management-basics-small-and-medium-sized-manufacturers