Big Moves In Industrial Efficiency: White House Directive Could Stimulate $40 Billion In New Manufacturing Investments

It’s not a new solar manufacturing plant. It’s not a revolutionary wind turbine. And it’s not a fancy new electric vehicle. But a big clean energy initiative announced by the White House today may be a bigger deal than all of those combined.

Yes, the President is pursuing industrial energy efficiency — a lot of it.

Earlier today, Obama signed an Executive Order that sets a national goal of 40,000 MW of new combined heat and power (CHP) installations in the next 10 years, while directing various departments to initiate policies and technical assistance programs to help implement projects.

According to the White House, achieving these targets could bring between $40 billion and $80 billion in new capital investments to the manufacturing sector over the next decade.


CHP — a process that uses excess heat from electricity generation for air-conditioning or water heating, or uses excess heat to generate electricity — is well proven in both manufacturing and at power plants (see also “Recycled Energy — A core climate solution”). The U.S. currently has about 80,000 megawatts of electricity capacity from CHP — or about 9 percent of the nation’s overall portfolio.

However, as illustrated from the chart below put together by the Pew Environment Group, the U.S. is still far behind other nations in implementation:

The industrial sector accounts for about 30 percent of all energy use in America. So the U.S. can still do a lot more to make its industrial base more efficient — thus reducing carbon emissions, saving manufacturers money, and making them more competitive. The Obama Administration plan would increase America’s capacity of CHP by 50 percent over the next decade.

According to the Department of Energy, that could save up to $10 billion per year in energy costs and reduce annual CO2 emissions by 150 million metric tons, or the equivalent of taking 25 million cars of the road.

The announcement comes two days after the White House finalized new automobile fuel standards, which will boost the efficiency of the nation’s auto fleet to 54.5 miles per gallon by 2025 — reducing annual oil consumption by 2 million barrels a day and bringing in roughly $1.7 trillion in fuel savings for consumers.


And yesterday, the Energy Information Administration released data showing that renewable electricity from wind, solar, geothermal and biomass had doubled under the Obama Administration.

For more on why industrial efficiency is so important for reducing energy use and boosting competitiveness, check out this great primer from the Rocky Mountain Institute: