How the U.S. Became More Energy Efficient : Economy: Largely forgotten amid the angst over our dependence on foreign oil is the fact that great strides have been made in saving energy. Manufacturers have led the way.
To America’s giant makers of aluminum, the story of energy savings is a tale of cans--49.4 billion of them. That’s the number that were collected, crushed, melted, pressed and reborn as finished products last year alone.
Energy savings: 95% per can. “If you want to stay competitive you keep your costs under control,” explained Barry Meyer, vice president of the Aluminum Assn. in Washington. “And when you talk about costs, you’re talking about energy conservation.”
In all the agonizing over the Persian Gulf crisis, it’s easy to overlook a notable fact: The U.S. economy is a more efficient energy user than it used to be. In large part, the greatest strides have taken place in the furnaces, mills and presses of heavy industry. Manufacturers today consume much less energy than before the 1973-74 oil shock, a 21% decline as of the late 1980s, according to a new study at Lawrence Berkeley Laboratory.
“The industrial sector has led the way,” declares H. Richard Seibert, vice president for resources and environment at the National Assn. of Manufacturers.
In varying degrees, most elements of the economy have improved their energy-use habits, experts say. But whereas such progress ebbs and flows--consumers recently have been drawn to bigger cars and higher thermostat levels--heavy industry’s gains have come in the manner of a tortoise--plodding, cumbersome and always steady. Manufacturing didn’t set out to conserve energy because of any high-minded virtue. The gains, analysts say, arise from the fact that energy savings are often a byproduct of innovation. Newer technologies tend to be more efficient overall. While some industries felt compelled to improve efficiency after the energy shocks of the ‘70s, “We were seeing improvements at a time when nobody cared about energy prices, in the 1950s and 1960s,” said Marc H. Ross, a physicist at the University of Michigan.
Today the 3M Company--a manufacturer of fiber optics, adhesives and 50,000 other items--produces twice as much as it did in 1973, but uses only 14% more energy. Gains have come in many ways, ranging from cutting the amount of cool outside air drawn into ovens to recharging forklift batteries more frugally. Countless “housekeeping” practices also have contributed, such as conserving on lights and room temperatures.
“We monitor each plant on energy efficiency,” said Lonnie Fortier, a technologist in 3M’s energy-management department at St. Paul headquarters. “It’s one of the measures of how well a plant is performing.”
By last year, the U.S. economy was able to produce goods and services with 28% less energy than would have been the case for the same goods and services in 1973, according to the U.S. Department of Energy. In total, the nation last year consumed 7% more energy than in 1973, even though the economy was 46% larger, and there were 20 million new homes and 50 million more vehicles, a 1989 study by the Energy Department found.
There is a limit to how much the United States can congratulate itself. While the United States seems to have done better than Western Europe, according to studies, Japan’s energy saving performance has been superior.
The largest overall savings in this country were made by manufacturers, particularly the energy-ravenous makers of steel, aluminum, glass, paper and other products.
Similar findings emerge in a separate study, which concludes that manufacturing reduced its energy intensity--the amount of energy needed to make something--at an annual rate of 2.7% since the early 1970s. “It’s pretty impressive, what happened in manufacturing,” said Lee Schipper, a scientist at Lawrence Berkeley Laboratory and co-author of the new report. “That’s where the biggest savings were rolled up.”
In contrast to the factories that were using 21% less energy in 1987 than in the early 1970s, trucks and other carriers of commercial freight were using 27% more, cars and other forms of passenger transportation were using 13% more, and service companies were using 5% more.
A key to manufacturing’s energy savings has been the emergence of high-tech controls that provide instant, detailed information on each step of production. As a result, workers use just the right amount of materials and waste is cut. Similar benefits may derive from the move toward lighter, stronger materials, such as new aluminums and steels.
“Many of the changes were not made in response to energy prices,” notes Ross. “They were general, technological progress.”
Take glass packaging, an energy-hungry industry that was walloped by energy shortages and price hikes in the 1970s. Glass manufacturers had realized substantial efficiency gains in the 1950s and ‘60s. But they accelerated efforts in the ‘70s. Better electronic controls were added. They also upgraded the insulation and lining inside furnaces that are heated to 2,800 degrees Fahrenheit.
The changes netted a drop in energy consumption of 20%-25% by the mid-1980s, estimated Philip Z. Ross, a vice president of Los Angeles-based Kerr Glass, and member of the Glass Packaging Institute, an industry trade association. “We don’t save energy just for the sake of energy,” he said. “What we’re also trying to do is save on costs.”
Electric utilities, for example, have saved energy as they have learned how to use and maintain their facilities more efficiently. Compared to 1970, the efficiency improvement saves rate payers $400 million a year, said Michael J. Gluckman, a technical director of the Electric Power Research Institute, a nonprofit organization in Palo Alto.
For those who look to America’s past experience with energy to gain insight into the future, the problem is complex because the U.S. economy is in a state of flux. Energy-intensive manufacturers are a smaller portion of the economy than they were in the early 1970s. Lighter, high-tech industry has grown in importance.
Steel illustrates the story. The industry has both retrenched and modernized, yielding savings on both fronts. By last year, it took 35% less energy to make and ship a ton of steel than it did in 1972. At the same time, the industry also made less steel: 97.9 million tons of raw steel in 1989 compared to 133.2 million tons before the first oil shock, according to the American Iron and Steel Institute in Washington.
“The energy savings have helped make steel that much more competitive in world markets and home markets,” said Sheldon Wesson, a spokesman for the institute.
When both of these effects are considered--improved conservation and the slightly smaller effect of the changing structure of the U.S. economy--there emerges the picture of a nation using vastly less energy than it would have without such changes. The Energy Department estimates, for example, that by 1986 these factors meant an annual savings of $179 billion.
Still, energy efficiency is more simply accomplished in some sectors than others, analysts say.
Office buildings, for example, may be leased to tenants who never actually see the bills for air conditioning and lighting. Households respond quickly to rises in home heating bills by turning down their thermostats, and motorists can buy less gasoline if prices get too high.
Consumers have helped save a large amount of energy since 1973, but may feel little incentive to keep doing so if they expect prices to remain low. There are recent signs that consumers have become less interested in energy-efficient home appliances, analysts say. Moreover, in the last two years, consumers have opted for larger, less-fuel efficient cars--reversing a trend that dates back to the early 1970s, according to a study co-authored by Michigan’s Ross.
“The tortoise kind of plods along, and the rabbit--you and I--tend to overreact,” said Barry D. McNutt, a policy analyst with the U.S. Department of Energy. “We hear a shot and run one way. We hear a shot and run the other way.”
Industry also responds to expectations about energy prices, McNutt said, but its ability to respond to ups and downs is much slower. In any case, industry is likely to improve efficiency in the future for the same reasons it always has--as a byproduct of modernization.
Long before the first oil shock, manufacturers improved energy conservation at a rate of about 2.5% a year, Schipper found. Afterwards, efforts at greater efficiency increased slightly, to 2.7%. “You could say we saved a lot of energy in manufacturing since 1973, but the rate of improvement was barely more rapid than it was before the oil crisis,” said Schipper.
In some areas, progress has been rapid, to be sure. In 1972, just 15.4% of aluminum cans were recycled. By last year, the industry was hooked on the used cans as a cheap, plentiful source of material. In 1989, 60.8% of aluminum cans were recycled--saving the energy equivalent of 20 million barrels of oil, according to the Aluminum Assn. Just two companies, Alcoa and Reynolds collected 1 billion pounds of used aluminum between them.
The total recycled has meant energy savings that, in equivalent terms, were slightly larger than the amount of oil Americans consume in a day. Moreover, “you get a hell of a lot more cans out of a pound of aluminum today than you used to,” said vice president Meyer. (Changes in can design and aluminum weights mean that 29 cans today are made from a pound of aluminum, compared to 22 cans in the early 1970s.)
Yet the recent oil shock may serve as a reminder that greater improvements are in reach--for manufacturers as well as the rest of the economy. Despite progress since the early 1970s, “Another set of gains of that scale would be quite feasible and justified with present technology,” said Michigan’s Ross.
HAS CONSERVATION PAID OFF Conservation efforts have varied in success throughout the economy. But in the 1980’s most major sectors used less energy than they would have if they had stuck with old habits. The chart below shows energy savings in 1987 compared with 1973 usage. 31%: MANUFACTURING 29%: SERVICE SECTOR 24%: HOUSEHOLDS 20%: PASSENGER TRANSPORTATION 5%: FREIGHT Source: Lawrence Berkeley Laboratory Energy use actually declined in manufacturing and households in the 1970s and 1980s, with manufacturing showing the most dramatic change. The chart below compares the change in energy consumption from 1973 to 1987 to what it would have been without conservation. MANUFACTURING: WITH CONSERVATION: -21% WITHOUT CONSERVATION: +14% HOUSEHOLDS:WITH CONSERVATION: -3% WITHOUT CONSERVATION: +28% SERVICES: WITH CONSERVATION: +5% WITHOUT CONSERVATION: +48% PASSENGER TRANSPORTATION: WITH CONSERVATION: +13% WITHOUT CONSERVATION: +41% FREIGHT: WITH CONSERVATION: +27% WITHOUT CONSERVATION: +34% Source: Lawrence Berkeley Laboratory By 1989, it took 28% less energy to produce $1 worth of economic activity in the United States than it did at the time of the first oil shock. 1973: 27,100 BTUs per $1 of GNP 1989: 19,600 BTUs per $1 of GNP
