Mechanisms for Industrial Energy Management

1. Mechanisms for Industrial Energy Management Rio de Janeiro, Brazil August 10, 2011 Michaela Martin, Oak Ridge National Lab James Quinn, U.S. Dept. of Energy

2. What is Energy Management? Energy Management • Is a framework for integrating energy into the existing management practices of an organization • Can be based on a national, or international standard such as ISO 50001- Energy management systems • It requires that: • Top management of an organization make a commitment to continual improvement of their energy performance • Energy performance improvements are measured and documented against a baseline

3. Ad hoc Approach to Energy Management… Source: UNIDO 2010

4. Structured Approach Senior management commit to program Initial savings sustained +5% 0 Costs -5% Housekeeping first – then investment -10% -15% Becomes company culture -20% -25% Investment Source: UNIDO 2010 0 Years 3

5. Benefits of Energy Management Much of the energy efficiency in existing facilities can be achieved through changes in how energy is managed, rather than through installation of new technologies Effective energy management also provides a context for management to assess the applicability of new technologies Energy management requires an organization tocomprehensively examine its energy use and consumptionand to develop a framework tosustain the change facilities equipment personnel systems processes Scope of an energy management system

6. Building the Case for Energy Management • Develop a risk response • What are the most common barriers to long-term programs? • Who in the organization is likely to oppose this process? • Are there resource conflicts? • What are the competing priorities? • Identify Champions: • Who are the key person(s) that control needed resources? • Who is respected by staff within the organization? • Who can help you achieve this as a priority? • Identify key persons • Who know the processes • Who know the facilities • Who know equipment • Who know how to help team with documents, records, and other management system issues

7. Energy Management Efforts U.S. DOE Efforts to Support Energy Management • The U.S. DOE has supported a series of domestic and international efforts to help end-users and their organizations manage energy. • ISO 50001 Energy Management Standard • ASME System Assessment Standards • Resources for Supporting Energy Management • Superior Energy Performance Program • Global Superior Energy Performance (GSEP) Partnership

8. Requires organization to establish a baseline, metrics, energy management team, and system—enabling systematicachievement of continuousimprovement in energy performance. New ISO 50001 Standard ISO 50001 Energy Management Standard • Designed to be used independently, yet can be aligned or integratedwith other management systems (e.g., ISO 9001 and ISO 14001). • Applicable to all organizations that use energy, including industrialplants, buildings and other facilities, entire organizations. • Does not prescribe specific energy performance criteria.

9. ISO 50001: Energy Management System Standard ISO 50001 provides a framework for industrial and commercial facilities and organizations to manage their energy use. • Potential impacts: • Could influence up to 60% of the world’s energy use across many economic sectors • Uptake of ISO 50001 will be driven by companies seeking an internationally recognized response to: • Corporate sustainability programs • Energy cost reduction initiatives • Demand created along the manufacturing supply chain • Future national cap and trade programs; carbon or energy taxes; increasing market value of “green manufacturing” / reduced carbon footprint • International climate agreements • ISO 50001 Launched • Developed by ISO Project Committee 242; United States and Brazil led effort with the United Kingdom and China • 56 countries participated, 13 as observers • Final Draft International Standard (FDIS) released March 2011 • Final standard published in June 2011.

10. What’s Different About ISO 50001? Addresses some practical realities: Energy efficiency is not a core business of most organizations. Personnel and business priorities change over time. As a result, energy efficiency improvements may not be sustained. ISO 50001 prepares an organization to: Manage future organizational changes in an energy-efficient manner, while preserving profitability/effective operations Evaluate what works for the organization based on hard data and build on it Provide a structure and framework for communicating results both internally and externally Integrate an energy management system into existing management programs

11. Components of an Energy Management Standard Typical features include: • Energy policy:top management’s official statement of the organization’s commitment to managing energy • Cross-divisional management team led by a representative who reports directly to management and is responsible for overseeing implementation of the energy management system • Energy review to assess current and planned energy use, energy sources, and consumption and identify opportunities for improvement • Baseline of the organization’s energy use • Energy performance indicators (EnPIs) that are unique to the company and are tracked to measure progress

12. Components of an Energy Management Standard • Energy objectives and targets for energy performance improvement at relevant functions, levels, processes, or facilities within an organization • Action plans to meet those targets and objectives • Operating controls and procedures for significant energy uses • Measurement, management, and documentation for continuous improvement for energy efficiency • Internal audit of progress to management based on these measurements

13. ISO 50001 Energy Management (EnMS) ISO FDIS 50001

14. Applying ISO 50001 • Applies to all factors that can be monitored and influenced by the organization to affect energy use • Designed to be used independently, yet can be aligned or integrated with other management systems (e.g., ISO 9001 and ISO 14001). Applicable to all organizations that use energy • Can be implemented at the corporate or facility level • Does not prescribe specific performance criteria or resultswith respect to energy • Needs enabling policies and programs to realize its global potential • Superior Energy Performance is such an enabling program 14

15. What is Superior Energy Performance? A market-based, ANSI/ANAB-accredited certification program that provides industrial and commercial facilities with a roadmap for achieving continual improvement in energy efficiency while boosting competitiveness. • Goals: • Drive continual improvement in energy performance • Develop a transparent systemto validate energy performance improvements and management practices • Encourage broad participation throughout industry • Support and build the energy efficiency market and workforce Superior Energy Performance for industry will be launched in the U.S. in 2012.

16. Foster a corporate culture of continuous improvementin energy efficiency Use ISO 50001 standard as foundational tool for energy management Establish a tiered program that provides an entry point for companies at all levels of experience with energy management Create a verified recordof energy performance improvement. Potentially create value for corporate energy savings and carbon reductions in utility, state, regional, national, and international trading markets Superior Energy Performance Strategy

17. Getting Superior Energy Performance Certified ISO 50001 • Components in place: • Baseline • Policy • Plan • Team/Leader • Certification Requirements: • An ANSI/ANAB-accredited Verification Body will conduct a third-party audit to verify that the following requirements are met: • Energy Management System Conformance to ISO 50001 Energy Management Standard • Energy Performance Improvement Superior Energy Performance Single facility ISO 50001 conformance with validated energy performance improvement ISO 50001 is a foundational tool that any organization can use to manage energy. ISO 50001 17

18. Superior Energy Performance Program Design The two-tiered approach accommodates: Maturity of facility’s energy management program Level of external validation desired Business climate/cycle Two Program Tiers Partner Self Declaration Criteria • Conformance to ISO 50001 • Measure and audit energy performance improvement Performance Levels • Energy performance improvement required Method of Verifying Results • Self Declaration Certified Partner • ANSI/ANAB-accredited certification Criteria • Conformance to ISO 50001 • Measure, verify, and certify energy performance improvement Performance Levels • Energy performance improvement required, minimum requirements set by program • Two Pathways Available: Energy Performance or Mature Energy Method of Verifying Results • ANSI/ANAB-accredited certification with on-site visit

19. SEP Performance Criteriafor Certification Levels 19

20. Getting Superior Energy Performance Certified Resources to Help Facilities Prepare for Certification Standards & Protocols: Certified Practitioners ISO 50001 Energy Management Standard Certified Practitioner in Energy Management Systems System Assessment Standards Certified Practitioners in [Type] System Measurement & Verification Protocol SEP Lead Auditors SEP Performance Verifiers

21. System Assessment Standards • Available Standards: • Pumping • Compressed Air • Steam • Process Heating Assessment standards for specific energy systems provide immediate opportunities for energy performance improvement in many facilities. Use of the standards is not required for certification but will help plants define a pathway for achieving energy savings. • Standards cover: • Organizing an assessment • Conducting an assessment • Analyzing the data collected and developing • efficiency recommendations • Reporting and documentation • Purchase standards and guidance documents from ASME for $35 (print or digital): • http://www.asme.org/kb/standards#des=EA

22. Roles within Superior Energy Performance Industry Drives strategy through U.S. Council for Energy Efficient Manufacturing Pilots elements of Superior Energy Performance prior to program launch Adopts the Superior Energy Performance program by getting plants certified to ANSI/ANAB-accredited Superior Energy Performance program Government Facilitates industry collaboration to develop Superior Energy Performance program: fund program development activities (e.g., standards development, pilot projects) Cost shares Superior Energy Performance program start-up Leverages Superior Energy Performance program to deploy federal energy programs (e.g., Save Energy Now LEADER)

23. U.S. Council for Energy-Efficient Manufacturing • Acts as champion of U.S. industry in pursuing national energy efficiency goals. • Seeks to improve the energy intensity of U.S. manufacturing through a series of initiatives. • Guides development of Superior Energy Performance.

24. Benefits to Companies • Recognition • Publicly recognized as leader in sustainable use of energy resources (local and financial community) • Customers may grant preferred supplier status • External financial incentives • Energy efficiency credits (electric utility & others) • Potential carbon credits (state, region, and national) • Systematic framework for continuous improvement • Consistent with ISO 50001 energy management and ASME system assessment standards • Provides tools and resources to assist implementation and validation of sustained energy performance improvement Industry and Construction stock CD 01030FRL Creatas Power & Energy CD 005776

25. Market Benefits Benefits in the Industrial and Commercial Energy Efficiency Market • Utilities • Empowers a facility-wide, systems-oriented approach • Helps justify industrial and commercial energy efficiency program investments, including permanent operational changes, to public utility commissions • ESCOs • Builds greater credibility with industrial and commercial customers and a stronger business case for providing third-party energy efficiency services and off-balance sheet capital investments • Supply Chains • Provides a proactive turn-key program for major OEMs and retailers to request their suppliers to meet the program requirements

26. Energy Management Demonstration Projects Kick-Off Dates 2009: Northwest region 2010: Southeast, Midwest, and Mid-Atlantic regions 2011: California, Colorado, and Texas (second round) and Northwest region DOE’s Industrial Technologies Program is conducting State/Regional Energy Management Demonstration Projects. ITP has funded 23 state awards starting in 2009 to help industry save energy. • Energy Management Demonstration Goals: • Provide Save Energy Now LEADER Companies with a roadmap to achieve ambitious goals to reduce industrial energy intensity. • Test the elements of Superior Energy Performance. • Build energy management expertise at the regional, state, and plant level by showcasing lessons learned and best practices. • Broaden energy savings throughout the nation. www.eere.energy.gov/industry/energymanagementdemonstrations/

27. Demonstrations The state or region identifies an appropriate demonstration plant based on provided guidelines Facility and consultants receive three face-to-face training sessions Consultants receive monthly training (15-month implementation schedule) Consultants coach facility to implement energy management system in conformance with ISO 50001 Facility and consultants hold quarterly review with facility management and Energy Management Demo team lead Facility applies for Superior Energy Performance as early as 18 months after initial training. Demonstration Approach • 3M • Alcoa • Allsteel • Amcor PET • Bridgestone Tire • Cook Composites & Polymers • Cooper Tire • Didion Milling, Inc • Dow Chemical • Eaton • General Dynamics • Gray Harbor Paper • Haynes International • JR Simplot • Kenworth Trucks • Neenah Foundry Company • Nissan • Schneider Electric • Spirax Sarco • Traco • Volvo • World Kitchen P A R T I C I P A N T S

28. Texas Pilot Project, 2008-2010 • DOE worked with the University of Texas at Austin to pilot Superior Energy Performance in Texas facilities: • Field tested elements of Superior Energy Performance • Conducted audits using ANSI MSE and M&V Protocol • Established the first ANSI/ANAB-accredited Verification Body for Superior Energy Performance • Certified the first plants to Superior Energy Performance

29. Value of Superior Energy Performance Superior Energy Performance provides… • A facility-wide strategic approach to continual energy performance improvement. • Market-recognized validation of effective energy management. Third-party transparency validates energy performance improvement. • SEP M&V Protocol • Offers a standardized methodology for validatingenergy performance improvements. • Supports project-level M&V. • Supports a more flexible approach by public utilitycommissions in validating expenditure of rate payer funds. SEP builds energy management expertise in the workforce. • Certified Practitioner credentialing offers an opportunity for states and utility representatives to increase energy management expertise. • Prepares states and utilities to respond to growing interest in energy management.

30. Energy Management System Toolkit • Framework for implementing a comprehensive energy management system • Step-by-step implementation guidance with tools • Web-based and self-paced The Self-Paced Module is located at: https://save-energy-now.org

31. Energy Management System Toolkit • DOE will work with utilities and other partners to deliver energy management training to end-users. • Four-Part Energy Management Webinar Training series • Helps facilities implement ISO 50001 and Superior Energy Performance requirements. • Supports ITP Energy Management Tool Suite. • Available in October 2011. • ITP Energy Management Tool Suite • Identifies savings opportunities and tracks implementation • Tools include: • Quick PEP • Self-Paced Module • Project Savings Tracker Module • Carbon Footprint Calculator • Basic and advanced levels: • Steam • Process Heating • Pumps • Fans • Compressed Air • Motors

32. Global Superior Energy Performance (GSEP) GSEP is conceived as an international network of national government agencies, national-level certification programs, and other public/private sector organizations that will catalyze continuous energy performance improvements in commercial buildings and industrial facilities of all performance levels. The GSEP partnership includes Canada, the European Commission, France, India, Japan, Korea, Mexico, Russia, South Africa, Sweden, and the United States. GSEP was announced in July 2010 at the Clean Energy Ministerial, which convened 25 energy ministers from 20 countries and the European Commission. Clean Energy Ministerial provided a forum for like-minded countries to take specific steps forward to promote clean energy technologies. See www.cleanenergyministerial.org/gsep

33. GSEP Objective and Organizational Structure • GSEP objective is to reduce global energy use by: • Encouraging industrial facilities and commercial buildings to pursue continuous improvements in energy efficiency • Promoting public‐private partnership GSEP CERTIFICATION WORKING GROUP (Lead: U.S.) POWER WORKING GROUP (Lead: Japan (P)) CHP WORKING GROUP (Lead: Finland) STEEL WORKING GROUP (Lead: Japan) COOL ROOFS WORKING GROUP (Lead: U.S.) CEMENT WORKING GROUP (Lead: Japan)

34. GSEP Partner Countries

35. Certification Working Group The Certification Working Group is developing a network of coordinated, national‐level certification programs to encourage public, educational, and industrial facilities and commercial buildings to pursue continuous improvements in energy efficiency. The GSEP certification process will recognize facilities that meet three main criteria: (1) adoption of an energy management system that conforms with the forthcoming ISO 50001 standard, (2) achievement of a designated minimum rate of energy performance improvement and (3) receipt of third‐party validation of energy performance improvementand conformance to ISO 50001. Industrial GSEP Pilot Participants: 3M, Nissan, Dow Chemical Commercial GSEP Pilot Participants: Cleveland Clinic, Grubb & Ellis Company, Marriott, Target Corp., Walmart

36. Draft GSEP CertificationStrategic Objectives, June 2011 Shared Strategic Objectives Defined During GSEP Meeting, 6/20/2011 • Energy Management. Increase the implementation of energy management in the industrial and buildings sectors to improve energy efficiency and energy performance on an ongoing basis. • Measurement and Verification. Measure and verify energy performance improvements on a consistent basis. • Qualified Workforce. Build a qualified workforce of professionals with expertise in the fields of energy management, energy efficiency, and measurement and verification.

37. Thank you James Quinn U.S. Dept. of Energy Michaela Martin Oak Ridge National Laboratory