SIEMENS

An average of more than 50 percent of the inherent energy in primary fuels such as coal, oil, and gas continues to be lost as heat in the processes that convert these fuels into useful forms of energy. In other words, there is still huge potential for increasing efficiency, especially in the areas of electricity generation, industrial production, and building systems. According to a 2011 study conducted by BCC Research, the global market volume for energy-efficient technologies will increase from $200 billion in 2010 to approximately $312 billion by 2015.

Germany’s Federal Environment Agency reports that state-of-the-art coal-fired power plants currently have efficiency ratings as high as 46 percent. However, average coal power plant efficiency in all of Europe is only 36 percent, and the global figure is 33 percent. Improving efficiency by just one percentage point would lower CO₂ emissions by up to 3 percent. To put it another way, the construction of just one 500-megawatt (MW) plant with an efficiency rating of 45 percent instead of 36 percent would reduce annual CO₂ emissions by 380,000 tons. The World Coal Association reports that if coal-fired plants over 25 years old with a capacity of less than 300 MW were replaced by bigger and more modern facilities operating at over 40 percent efficiency, the CO₂ emissions generated by power plants in that range would decline by nearly 25 percent. Experts also believe that the use of technological innovations could raise the efficiency of such plants to more than 50 percent by 2020.

The potential increase in efficiency is even greater for combined cycle (gas and steam turbine) power plants. The current average efficiency rating of combined cycle power plants around the world is roughly 40 percent. But thanks to Siemens technology, the most efficient such plant at the moment was able to convert 60.75 percent of the inherent energy in natural gas into electricity in May 2011 — a new world record. This type of state-of-the-art combined cycle facility can therefore lower both gas consumption and CO₂ emissions by one third. Experts also claim that the use of improved technologies in the form of new materials, for example, could make it possible to raise efficiency levels to more than 63 percent by 2020.

Energy efficiency is becoming more and more important in industrial operations as well. According to the International Energy Agency (IEA), the five most energy-intensive industrial sectors (iron and steel, cement, chemicals and petrochemicals, paper and cellulose, and aluminum) now account for 77 percent of direct industrial CO₂ emissions, which translates into nearly 8.5 billion tons per year. Here as well, efficiency improvements can accomplish a lot. A study called “Blue Scenario” developed by the IEA calls for a 24 percent decline in industrial CO₂ emissions from 2007 levels by 2050. Analyses conducted by the IEA and the OECD in 2011 produced various reduction targets to be achieved by the energy-intensive industries mentioned above within the framework of the Blue Scenario. For example, market experts calculate that the global iron and steel industry could lower its CO₂ emissions by more than 1.5 billion tons between now and 2050 through the optimization of the smelting process, among other things. The analyses produced corresponding reduction figures of roughly 1.3 billion tons for the chemical and petrochemical industry, 0.85 billion tons for the cement industry, and 0.26 billion tons for the paper and cellulose industry. The main savings in the chemical and petrochemical industry (around 0.74 billion tons) would be achieved through energy-efficiency improvements.

According to a 2011 study conducted by Roland Berger Strategy Consultants, higher electricity prices are one of the key challenges electricity-intensive industries in Germany will face as a result of the country’s abandonment of nuclear power. They will also face rising fuel prices as the country transitions to increased use of energy from renewable sources. The transition will also necessitate the upgrading and expansion of power grids and energy storage systems. In other words, energy enhancement measures are becoming more and more important due to inevitable electricity price increases. Such measures will include the use of more efficient electric motors and the optimization of machine and production process control systems, among other things.

Buildings are another major area that offers great potential for enhancing energy efficiency. If all of the world’s office buildings, hospitals, schools, and universities were renovated in ways that resulted in energy savings of about 30 percent, total CO₂ emissions would decrease by about 500 million tons a year, according to Siemens estimates. This figure is equivalent to the total CO₂ emissions generated by the UK today. For example, savings ranging from 10 to 30 percent can be achieved through improved heating, air conditioning, and lighting systems, whereby the costs of the required measures could be recouped within six months to three years. A study commissioned by Siemens to examine ways of increasing energy efficiency in London found that building system optimization could reduce CO₂ emissions by around 1.9 kilograms per euro spent — which is five times the savings that can be achieved with external insulation measures.

Lighting accounts for around 19 percent of global electricity use. More efficient lighting technologies could reduce consumption by around one third while maintaining the same output. Lighting systems account for 1.3 billion tons of annual worldwide CO₂ emissions, which means that the decline in electricity consumption resulting from implementation of more efficient systems would reduce emissions by 450 million tons.

According to a 2011 study conducted by market consulting firm Pike Research, the global market volume for energy-efficient building technologies will probably increase from $68 billion in 2011 to $103.5 billion in 2017. Such technologies include energy-efficient heating, ventilation, and air conditioning systems, new lighting concepts, and energy-saving performance contracts that allow customers to pay for efficiency measures in installments that are financed with the guaranteed energy and operating cost savings achieved.

Government regulations will help to promote such efficiency enhancement measures in buildings. The European Commission, for example, recently adopted a new directive concerning energy efficiency in buildings that requires all new structures to be certified as “nearly zero energy buildings” by the end of 2020; their remaining low energy requirement is to be covered mostly by renewable sources.

An analysis conducted by McKinsey in 2011 found that many efficient building technologies such as heat pumps, double and triple-glazed windows, and energy-efficient lighting systems are already available. Additional potential can be tapped through systems equipped with sensors that automatically register when and where heat or air conditioning is needed at any given moment. Several other new technologies, such as active windows that block incoming light when temperatures rise and could pay for themselves in less than three years, are still being developed and might be commercially available by the end of the decade.

The good news is that China, Russia, and the U.S. have made significant initial progress in improving their energy efficiency. China, for example, succeeded in lowering its CO₂ emissions from 1.2 kilograms to 0.5 kilograms per unit of gross domestic product between 1990 and 2009. Among other things, this was accomplished by increasing the average efficiency rating of coal-fired power plants by several percentage points and improving industrial production processes. For example, energy consumption per ton of steel produced in China declined by 5 percent between 2005 and 2009, and energy consumption in the cement industry fell by 17 percent per ton of cement manufactured.