Last week, US Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM), introduced a bipartisan bill aimed at creating incentives for the nation’s industrial sector to encourage end-use energy efficiency and water efficiency. The Bill—S. 3352, the Expanding Industrial Energy and Water Efficiency Incentives Act—awards incentives to industrial and manufacturing facilities who employ the following methods and equipment: water reuse, thermal biomass, combined heat and power systems, and advanced motors with adjustable speed drives (for easy connection to the Smart Grid). The hope is that the bill will exponentially improve industrial energy efficiency while also saving billions of dollars annually.
“A major study on energy efficiency found that the industrial sector represents the largest potential for increasing energy efficiency in the country,” Senator Bingaman said in a statement. “Such improvements could save $47 billion annually.”
The industrial sector provides fertile ground for efficiency improvements, due in part to the ability to quickly enhance facility performance by replacing and retrofitting existing equipment. For example, industrial motors account for up to two-thirds of the industry’s energy use, and the $120 per horsepower tax credit could encourage manufacturers to “incorporate advanced motor systems—those that offer variable or multiple speed operation and use a set of approved technologies—into new or redesigned appliances, machines, or equipment” (www.sustainableplant.com/2012/07/bipartisan-bill-to-incentivize-u-s-industrial-energy-water-efficiency/). The variable speed motor systems can help a facility adjust energy use based on demand and will also ease connection into a future Smart Grid.
The bill also creates an Industrial Process Water use Project Credit to spur investment in water reuse, recycling, and efficiency in the industrial and manufacturing sector. The credit is tiered, with incentives up 30% for the highest water use reductions.
The bill also provides incentives to replace old chillers and provides credit for the incorporation of combined heat and power systems. Finally, S. 3352 “creates a tiered investment tax credit for highly efficient thermal biomass incentives: 15% for systems that achieve 65% or greater efficiency and 30% for systems that achieve 80% or greater efficiency.” These incentives would be a first for thermal-only biomass use in commercial and industrial applications.
The bill has been greeted with support by a variety of industry stakeholders including National Electrical Manufacturers Association (NEMA), the US Combined Heat and Power Association, the Air Conditioning Heating and Refrigeration Institute, the Alliance to Save Energy, the Biomass Thermal Energy Council, the American Council for an Energy Efficient Economy, and the Alliance for Industrial Efficiency.
The hope is that the incentives proposed in the bill will invigorate the industrial sector and spur a new era of increased efficiency and productivity. Along with the added benefits of GHG emission reduction and reduced energy demand, many feel the bill will provide a catalyst for new energy efficiency technologies and trigger new jobs and new economic opportunity.
In a statement about the bill, co-author Diane Fienstein laid out her hopes for S. 3351:
“This bill will help California businesses be more energy efficient and increase their productivity. The bill uses efficiency measures to reduce energy consumption of industrial motors by up to 2.3 billion kilowatt-hours annually just in California, saving our industrial sector more than $200 million each year. The bill also includes a unique tax credit to reduce water consumption in the desert Southwest—the sort of policy we desperately need to reduce water waste while supporting our industrial base.”
Currently, the bill is awaiting review by the Senate Finance Committee, and a section-by-section breakdown of the bill can be found here.
So what do you think? Will these incentives work? Is reducing energy use and decreasing energy costs enough to convince manufacturers to invest in facility retrofits and overhauls? And do these incentives go far enough to encourage water efficiency and reduced energy use?