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Process Industry and Energy Savings1
Process Industry and Energy Savings
Success through cooperation in the business chain
November 2010
2 Process Industry and Energy Savings
© 2010
Copyright and disclaimer
All text, illustrations, etc. are the copyright of NAP.
No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, or be adapted in full or in part, without the prior
permission of the publisher, or in so far as permitted under applicable copyright
law. Although this publication is the result of the best efforts of the publishers
and authors, neither the publisher nor the authors guarantee the accuracy or
completeness of the information contained herein. Thus, neither the publisher
nor the authors will accept any responsibility for any damage whatsoever
resulting from actions or decisions based on the information herein. Users of
this publication are strongly advised not to use this information in isolation,
but also to rely on their professional expertise and experience and to verify any
information they intend to use.
NAP
P.O. Box 1058
3860 BB Nijkerk
the Netherlands
Tel. +31 – 33 – 247 34 60
Fax +31 – 33 – 246 04 70
E-mail info@napnetwerk.nl
www.napnetwerk.nl
ISBN/EAN: 978-90-812162-8-9
Process Industry and Energy Savings3
Preface				
			
NAP is excited to present the
final report of the Special Interest
Group Energy (SIG-E), which
has been put together over a
period of two years based on
the experience and input of 16
companies on the key question
on how the process industry can
significantly reduce its energy consumption – but more importantly significantly
reduce its carbon foot print.
Allow me to share some personal perspective and experience in this area having
been closely involved in projects and initiatives to reduce CO2 emissions.
Until some years ago, energy reduction projects in the process industry were
implemented based on a financial business case. In general our industry has
been quite effective making progress in terms of energy efficiency. Our focus
was traditionally inside our plant fences for these types of projects. We reached
a point that basically no major steps were left any more. The game changer was
the notion that we together are consuming 1.4 planets and dramatic change is
needed – also in the energy area.
Energy efficiency improvement today is not just a traditional business case game
any longer, but projects are brought forward because it is the right thing to
do: conserve energy and use green energy where possible. Only as a last resort
should we fall back on fossil fuels. Regulatory and legislative pressures help
to achieve certain goals, but at the end of the day the mind-set and culture to
conserve the earth’s resources should be with all our employees in the process
industry. Only then will we drive creativity, innovation, collaboration and will
re-invent the way we work in our industry. Only then will we think beyond the
borders of our own facilities and companies and really look for opportunities
and possibilities to move towards a zero CO2 foot print process industry. We
should do this for our existing facilities, for new facilities we will build and
we certainly need to look at shutting down facilities which no longer meet
the environmental standards of today. In new facilities we consciously need to
make decisions not only based on short term financial return, but also look at
environmental aspects of the facility which will be ours for typically the next
20 – 30 years.
4 Process Industry and Energy Savings
The report which is in front of you gives an excellent overview of what has
been achieved in recent history, where barriers and road blocks exist, but more
importantly where the opportunities are to be found. The report also includes
a number of suggestions on how the process industry chain in the Netherlands
can take a stronger stance on driving energy conservation and reducing the
CO2 foot print of our industry. I hope that reading this report will give you the
encouragement and drive to become actively involved in reducing the CO2 foot
print of the process industry. I also hope that this report will be the starting
point of next steps which we can take together like implementing energy
innovations in our facilities and actively cooperate to prove that also in this case
the process industry chain is stronger than its individual parts.
The input and dedication of project manager Edward Pfeiffer (KEMA) has
allowed SIG-E to book results within the set period. For this NAP is much
appreciative of KEMA.
Hans van Haarst, MSc	 November 2010
Chairman
Process Industry and Energy Savings5
Contents
The NAP Special Interest Group Energy............................................................................................	6
Summary..................................................................................................................................................................	7
1.	Introduction, background information.......................................................................................	11
2.	Transition in the process industry, the context.......................................................................	17
3.	Energy consumption in the Dutch process industry............................................................	21
4.	Energy and the demand side tender / pull................................................................................	25
5.	Interviews about doing more with energy...............................................................................	31
	5.1	 Motives..................................................................................................................................................	31
	 5.2	 Project cycle........................................................................................................................................	32
	 5.3	 Tender types.......................................................................................................................................	33
	 5.4	 How can NAP contribute in the energy domain?...................................................	33
6.	Energy and the supply side tender /push...................................................................................	35
7.	Conclusions and recommendations................................................................................................	43
	 7.1	 Context, cause and necessity.................................................................................................	43
	 7.2	 Approach to energy consumption outlined...............................................................	43
	 7.3	 Action in the process industry	 Demand side...........................................................	45
	 7.4	 Action in the chain	 Demand/supply interaction..........................	45
	 7.5	 Suppliers’ actions	 Supply side...............................................................	47
	 7.6	 Interaction with the environment.....................................................................................	48
ANNEX 1...................................................................................................................................................................	51
ANNEX 2...................................................................................................................................................................	52
ANNEX 3...................................................................................................................................................................	53
Also published by NAP...................................................................................................................................	56
6 Process Industry and Energy Savings
The NAP Special Interest Group Energy
The report of the Special Interest Group Energy (SIG-E) is about finding a way
to allow the process industry to operate in a more energy-friendly manner. A
journey of an expedition team consisting of representatives of 16 companies
actively involved in the value chain. One of the recurring themes was how
companies (the links of that chain) can deal with each other differently in
using energy-related capabilities more efficiently. Innovations are available and
the tool box is brimming with best practices and best available technologies.
Nevertheless, daily practice confirms that this does not guarantee the prompt
acceptance of solutions and products which supply companies offer to end
users. Any market introduction remains restricted to a niche while intensive
application is a long time coming.
The SIG-E report provides an insight into the working method and the
discoveries of the past two years. The report discusses the changing horizon;
reduced energy consumption is no longer only a matter of an environmental
measure imposed by the government or cost reduction. Energy consumption
should be reduced drastically for a company to have a future perspective,
to make sustainable entrepreneurship possible and to protect and increase
shareholders’ value. Now more than ever energy is becoming an integral part of
enterprising within the process industry.
The key to breakthroughs in the energy domain is that of companies joining
hands within the chain at an early stage of the development process and the
correct distribution of risks across the chain. Companies should give ever more
priority to ‘energy’.
To all companies and the SIG-E members, we say thank you for your input in
the past two years. Thanks to your help and dedication we are able to offer this
result.
Edward Pfeiffer	 Robert Claasen
Project Manager NAP SIG-E	 On behalf of NAP’s board of directors
Process Industry and Energy Savings7
Summary
Over a period of two years the NAP’s Special Interest Group Energy (SIG-E) has
dedicated itself to studying the way in which the process industry and its supply
chain has been dealing with energy as a theme. In the past it was strongly
believed that many opportunities were left unused and that different forms
of cooperation inside the chain should contribute to accelerated improvement
of energy efficiency in the process industry. Sixteen companies that are
actively involved in the entire value chain have scrutinised their daily situation
wondering how to operate more successfully. With approximately one quarter
of total energy consumption the Dutch process industry is a major player in
reaching national energy and climate objectives by 2020. The objective (improve
energy efficiency by 2% annually) is as ambitious as that ‘business as usual’ is
insufficient. A drastic change in how matters are approached is thus essential.
The question is: how to proceed?
By analysing energy projects, in-depth interviews with decision makers in
the industry, through literature searches and by organising lectures inside
and outside the sector, SIG-E has been able to develop a true picture of the
mechanisms concerning energy-related investments. Two major points of
interest have been energy-oriented tendering (demand side) and the market
introduction of innovations (supply side).
The main problem of “how to do more in the energy domain” is this:
–	 The process industry is insufficiently familiar with the capabilities of the
supply chain.
–	 The supply chain is insufficiently aware of the questions that exist in the
process industry.
Therefore, the links in the value chain understand each other poorly. The answer
to this problem is compound and consists of more interaction between the
process industry and the supply chain (machine constructors, engineering firms
and consultancies, education and research).
As for the process industry:
–	 Make improved energy efficiency an integral part of corporate strategy.
–	 Wherever possible opt for functional tendering, which should challenge
suppliers.
–	 Make sure investment decisions are based on life cycle costing.
8 Process Industry and Energy Savings
As for interaction between the process industry and the supply chain:
–	 Make sure the supply chain is involved at an early stage in the project
development cycle.
–	 Make sure risks are suitably distributed across the chain, including smart
financing.
As for the supply chain:
–	 Provide insight into the pros and cons of an energy-related measure.
–	 Map risks and uncertainties.
–	 Sufficiently supervise the right level at market launching.
Implementing energy measures in the process industry should increasingly
become a coproduction of companies that are actively involved in the value
chain. This is the only way to help innovations travel fast towards the market
and have breakthroughs in pushing back the energy consumption level in the
process industry. The message to the value chain is this: venture coproduction,
give creativity a serious chance and push out frontiers. A more sustainable
society will be the result; companies that are involved in and around the process
industry will be able to improve their competitiveness.
Process Industry and Energy Savings9
10 Process Industry and Energy Savings
Process Industry and Energy Savings11
1. Introduction, background information
Energy is vital to the process industry. It is indispensable and exists throughout
the industry. Energy is the engine converting raw materials into a wide range
of semi-manufactures and end products. The process industry cannot operate
without energy. Society is dominated by the process industry (see figure 1). It
allows our society to function at today’s high speed and prosperous level.
Figure 1: The process industry serves modern society with countless products
Drastically reduced energy consumption is required
Until recently we strongly believed that fossil sources of energy were unfailing
and that we were allowed to continue to use them unpunished. We know
better now. Increasing scarcity is expected to be followed by soaring prices. Also,
our environment is becoming overburdened. We dealt with acidification in the
1980s, damage to the ozone layer in the 90s, and today the greenhouse effect is
our main concern. Preventing far-reaching global warming will strain us to the
limit. The citizen will expect our government to come up with a consistent and
ambitious climate and energy policy, see text frame “Dutch energy and climate
objectives”. We will expect the manufacturing industry to invest best efforts to
turn ambitious objectives into actions. Managing CO2 emissions is one of the
main spearheads at this moment. CO2 is inextricably bound up with use of fossil
fuels for generating electricity, producing process steam, shipping goods and for
heating or cooling purposes. All of these forms of energy matter to the process
industry. Society will need to make less use of fossil energy carriers. Bearing size
in mind, the process industry will have a major share in this. In absolute terms
this will soon mean pushing energy consumption down by half. Already in 1998
the council for Housing, Spatial Planning and the Environment (VROM) referred
to this matter, see text frame “Transition into a low-carbon energy household”.
12 Process Industry and Energy Savings
Picking the low hanging fruit
The process industry is a large-scale consumer of energy which means it has
a crucial role in reducing energy consumption in the Netherlands. It should
not come as a surprise that government and industry have been joining
hands on energy since the very first long-term agreement (MJA) back in 1989.
By means of subsidy programmes and fiscal measures, the government has
Dutch energy and climate objectives, including EU frame:
EU energy and climate package dated 23 January 2008:	 Europe
- 30% CO2 emission reduction in 2020 compared to 1990	 Ambition
- 20% CO2 emission reduction in 2020 compared to 1990	 Promise
- 20% more energy efficiency in 2020 compared to 2005
- 20% share of renewable energy in energy consumption in 2020.
Netherlands coalition agreement dated 7 February 2007:	 Netherlands
- 30% CO2 emission reduction in 2020 compared to 1990
- 20% sustainable energy in 2020
- Average energy saving speed 2% annually from 2011 to 2020.
Consequence for the industry has been laid down in the Sustainability
Agreement of 1 November 2007 and the Industry Sector Agreement of 1
July 2008. Result: Long-term Agreement (in Dutch also referred to as MJA) 3
Industry and for ETS enterprises the MEE agreements (2 October 2009). Key
elements of the agreements:
- Observe the CO2 emission reduction commitment, only valid for ETS
enterprises
- Prepare and carry out Energy Efficiency Plan (EEP) prior to 1 January 2010
- Measures with payback period up to 6 years or IRR up to 15% must be
carried out
- Improved chain efficiency is part of the agreements
- Develop route map for 50% improved energy efficiency in 2030 compared
to 2005.
Transition into a low-carbon energy household, 2 recommendations:
- To remain in control of the climate change caused by human beings, discharge level
of greenhouse gasses should be pushed down by half worldwide at the end of the
21st century. To the industrialised countries this means an 80% reduction. This great
challenge can only be realised provided society is sufficiently aware of the problem and
is seriously supporting policy.
- The intended reduction not only requires further and accelerated development and
use of options to save on energy and material. Also, fossil fuels will need to be used as
such pushing down their CO2 emission level. (VROM council, 1998)
Process Industry and Energy Savings13
successfully encouraged industry to take measures. From 1989 to 2000 energy
efficiency has improved by 22%. So far it is the low hanging fruit that has
been picked. However, for the period 2000-2020 the energy consumption level
must be reduced by another 30% to meet the agreement that exists between
government and market. Reaching this objective will be a tremendous challenge
and will involve drastic measures across the industry. Should the industry
proceed at its current level, objectives will most certainly not be reached. The
challenge is of a different nature and requires creative and unconventional
solutions. A transition in thinking and action is required. NAP’s participants are
perfectly aware of this which is why in the summer of 2008 the very first ideas
for the Special Interest Group Energy (SIG-E) came into existence.
NAP accepting the challenge
Under the management of NAP’s board of directors the first thoughts were
committed to paper during discussions between KEMA, ABB and AkzoNobel.
Aiming higher in terms of energy by using the options which the value chain
is offering ... that was the motto, see text frame “Value chain of the process
industry”.
Value chain of the process industry
The value chain consists of all companies making a modern and competitive
process industry possible, including the process industry itself. NAP
represents this value chain. The links are academies and universities,
machine constructors and the supply industry, engineers and consultancies
(also referred to as the vertical industrial column). On the opposite side is
the production chain (also called the horizontal industrial column). Here the
chain consists of companies starting with raw materials and ending with the
final user of products from the process industry.
Discussions with the NAP’s directors and participants confirmed that developing
a new impulse in order to push down the energy consumption level in the
industry would not be an easy task. For years energy as a theme had been
on the discussion table of the companies involved, what could a study group
possibly add? NAP, however, was aware of the urgency to find new ways of
attacking this sometimes recalcitrant theme in the process industry. Eventually,
knowing for sure that the unique composition of the NAP-related companies
would lead to new approaches was the key factor in NAP’s decision to proceed.
Sixteen companies involved in different sectors (education, research, machine
construction, engineering and consultancy services) including the process
industry itself took up the challenge.
14 Process Industry and Energy Savings
SIG-E, NAP takes off
The first step was to prepare a programme of activities. This was done in
autumn 2008. The idea was to have themes that should lead to practical
recommendations feasible in the short term. On 15 January 2009 NAP agreed
the following themes:
–	 Explore the limits of an energy-efficient process industry	 context	 (2)
–	 Energy-tuned invitation to tender	 demand side	 (3)
–	 Speed up innovation and intensify market introduction	 supply side	 (4)
On 3 March 2009 SIG-E had its first meeting. For each theme a study group was
created and a coordinator was assigned. For SIG-E as a whole a project manager
was appointed who would be managing SIG-E working closely together with
NAP’s management and the principal from NAP’s board of directors. Activities
were completed and the report was ready after seven meetings.
Defining the work
The risk of getting started with ‘energy in the process industry’ as a theme
is that the field of action can soon become too general and no longer
controllable. Which is why SIG-E’s work was defined with the main aspects being
the following:
–	 Focus on here and now, no long-term approach
–	 Aim at practical results, applicable in the process industry
–	 Must dovetail with the daily practice of SIG-E’s participants
–	 Must be feasible in terms of time effort
–	 Avoid repeated work
–	 Results should be available before year-end 2010.
Energy consumption can be reduced in many ways:
–	 Develop products that should ensure energy savings
–	 Improve energy efficiency in the production chain (chain efficiency)
–	 Produce energy more efficiently, upgrade production processes	
–	 Use renewable sources of energy (e.g. wind, sun and biomass).
SIG-E focused primarily on more efficient production of energy as NAP already
has long experience in this field. Examples include improvement of the existing
processes, introducing new technologies and processes, and integrating
processes (co-siting), see also figure 2.
Process Industry and Energy Savings15
Figure 2: Field of interest for SIG-E, scope 1, the production process [AkzoNobel, 2010]
			
SIG-E’s objective
Learning to better understand trade mechanisms that lead to the stagnated
reduction of energy consumption, inside and between companies operating
within the value chain of the process industry. This understanding is followed
by recommendations that ensure progress, new opportunities and working
methods in terms of reduced energy consumption.
16 Process Industry and Energy Savings
Process Industry and Energy Savings17
2. Transition in the process industry, the context
The Dutch process industry is used to saving on energy. The 1973 oil crisis
emphasised that fossil sources of energy are anything but free and also that
they were not always sufficiently available. In 1989 the process industry was
introduced to Long-term Agreements (in Dutch referred to as MJAs) in which
government and industry join hands to improve energy efficiency. Two motives
were pivotal: saving costs and legislation.
Positive image and sustainability becoming more important
In recent years a third motive was added which might well develop a key role:
sustainability. Companies are realising that a “license to operate” goes beyond
a governmental permit and is increasingly determined by public opinion on
how companies should operate and which products should be considered
socially responsible. Today countless examples confirm the effect on the value
and even the continued existence of companies. A good example is the Shell
Brent Spar affair back in 1991 and more recently the BP oil disaster in the Gulf
of Mexico. Other examples include the now discontinued import of palm sugar
for the production of sustainable electricity in the Netherlands and the recent
commotion concerning the working conditions in the supply industry of famous
textile and electronics brands. A positive image, based on sustainable and
transparent entrepreneurship, is the third motive, see figure 3.
Figure 3: The three main motives for energy savings in the industry
The three Ps (people, planet, profit) today are crucial to companies’ strategies. A
case in point is the development of sustainability criteria companies voluntarily
measure up to. Shareholder value is increasingly determined by a company’s
sustainability score. To companies like Shell, Unilever, Philips, AkzoNobel and
1. Cost Savings
2. Meet legislation3. Positive image
18 Process Industry and Energy Savings
DSM doing well on the Down Jones Sustainability Index (DJSI) is a matter of life
and death. It is the only way to gain shareholders’ long-term trust and make
continued profitability possible.
Where does the Dutch industry stand today?
According to research conducted by PDC, see figure 4, energy consumption
in Dutch industry is 59% higher than would have been the case if only best
practice techniques were used. Internationally the Dutch industry is doing well.
But … is this enough?
Figure 4: Aggregated energy benchmark, achievement with regard to best practice
To reach the best practice level, energy consumption must drop by 37%. In
actual practice it means that many organisations need to be reconstructed in
line with the latest insights. This cannot be done in 10 years. According to the
PDC’s investigation (2009) into realistic energy saving options the following
should be feasible:
–	 10% energy savings through 	  5 year payback projects
–	 12% energy saving through	  6 year payback projects
–	 16% energy savings through	  15 year payback project.
A justified conclusion seems to be the following: savings considered to be
realistically feasible are insufficient for ensuring 2% energy savings annually
until 2020. New best practices are needed, innovation is required and frontiers
are to be extended. Should new technologies that are now being developed
be successfully introduced  50% savings might well be possible [ECN, PDC].
In short, the transition required should be beyond what is considered possible
based on autonomous developments.
Process Industry and Energy Savings19
Barriers frustrating improvements
Theoretically a lot can be done; however daily practice confirms that energy-
related measures cannot necessarily be introduced at length. Barriers can
present themselves at these levels [PDC]:
–	 Finance, funds are nonexistent or external financing is impossible
–	 Corporate policy and priority, energy is not a key activity
–	 Technical complexity, interaction with process and energy infrastructure
–	 Non-implementable within an existing installation or involving additional
costs
–	 Uncertain technical and economic feasibility, operational safety.
Besides technical difficulties the main reason not to launch an energy-related
measure concerns the balance between the (supposed) risk and the expected
benefit in terms of dovetailing with the motives of energy projects. Solutions for
removing these barriers must be addressed by:
–	 Highlighting risks and correctly distributing these over the value chain
–	 Clarifying end users’ advantages.
SIG-E has tried to eliminate these barriers. To this purpose companies in the
supply chain must interact differently to what is now usually the case.
20 Process Industry and Energy Savings
Process Industry and Energy Savings21
3. Energy consumption in the Dutch process industry
Annual energy consumption in the Dutch process industry is 752 PJ, equal to
23.7 billion m3 of natural gas. Total energy consumption in 2006 amounted to
3.323 PJ. This means that the industry is responsible for 23% of the total Dutch
output. Including the use of coal, petroleum and natural gas as a raw material
this share reaches 40% (1.331 PJ annually). The energy consumption level is
substantial however at worldwide level the Netherlands is but a small player, see
text frame “Energy consumption in perspective”.
Energy consumption in perspective	 1 EJ = 1.000 PJ = 23.9 million TOE
International energy consumption: 	 500 EJ in 2010, 900 EJ in 2050
Use of energy carriers in the Netherlands	 3.32 EJ in 2006	 6.6 ‰
Use of energy carriers in the industry	 1.33 EJ in 2006 	 2.6 ‰
Energy consumption in the Dutch industry	 0.75 EJ in 2006	 1.5 ‰
Source: CBS, IEA
Table 1 outlines how energy consumption is distributed according to energy
carrier.
Petroleum, natural gas and electricity are the most common energy carriers.
Coal, incl. brown coal 27 PJ/jr (4%)
Oil 241 PJ/jr (32%)
Natural gas 300 PJ/jr (40%)
Electricity 102 PJ/jr (14%)
Heat, biomass and waste 82 PJ/jr (11%)
Total 752 PJ/jr
	
Table 1: Energy consumption in the industry 2006, according to energy carrier [PDC, 2009,
page 9]
22 Process Industry and Energy Savings
Figure 5 outlines how energy consumption is distributed in the industry
according to sectors. Within industry chemicals, the metal working industry,
refining and (luxury) foods are the main energy consumers (638 PJ annually;
share 86%). Breakthroughs in reducing energy consumption are required in
these sectors in particular.
Figure 5: Energy consumption in the industry 2006, according to sectors [PDC, 2009, page 9]
Rubber and synthetics, 10 PJ/jr, 1%
Textile and leather, 5 PJ/jr, 1%
Miscellaneous, 25 PJ/jr, 3%
Chemicals, 239 PJ/jr, 33%
Metals, 157 PJ/jr, 21%
Refinement, 154 PJ/jr, 20%
Food, 88 PJ/jr, 12%
Wood, paper and board, 41 PJ/jr, 5%
Building materials, 34 PJ/jr, 4%
Chemicals
Metals
Refinement
Food
Process Industry and Energy Savings23
24 Process Industry and Energy Savings
Process Industry and Energy Savings25
4. Energy and the demand side tender / pull
Energy and the demand side here focuses primarily on the process industry.
The question is this: how does the process industry feel about the possible
introduction of energy saving measures. How is this translated at the
organisation and how can the process industry operate without losing serious
chances of improvement?
The theory is the following: if energy as a theme is given prominent attention
while outsourcing products, systems, installations and services, energy measures
will follow almost automatically. Recommendations on how to tender in an
energy-tuned manner are desired.
SIG-E investigated the tendering of four cases in which energy-related aspects
had a key role. Three cases were implemented successfully. They involved:
–	 Using low-grade heat intercooler (Tata Steel)				
Successful
–	 Maximised use of gas pressure energy from blast furnaces (Tata Steel)	
Unsuccessful
–	 Apply mechanical vapour recompression (AkzoNobel)			
Successful
–	 Heat recovery from hot drain (AkzoNobel)				
Successful
During investigation the cases were tested according to three criteria which
determined whether the successful adoption of the measure is indeed possible,
see figure 6.
Figure 6: Categories of factors that interfere with the successful adoption of measures
Characteristics of
an innovation
Environmental
impact
Successful
adoption
Characteristics of
the company
26 Process Industry and Energy Savings
Studying the cases the following question was posed: what are the success
factors that determine the introduction of energy saving measures? The main
influence factors are the following:
–	 Conviction of financial benefit	 Innovation
–	 Dovetailing with current behaviour and approach	 Company
–	 Availability of sufficient budget	 Company
–	 Dovetail with existing knowledge	 Company
The corporate culture determines the innovation level
The influence factor which determines the final decision is the current behaviour
and approach of persons/departments at the organisation. In general this is a
risk avoiding behaviour. If an organisation does not clearly need to innovate,
innovation will be out of the question. The invitation for tender is the upshot of
sometimes sizeable industrial operations that precede this. It is the final station
of action (see figure 7).
Figure 7: Life cycle project, tender follows go / no-go
This figure confirms that the company’s strategy, developed and propagated by
the directors, is the basis of the behavioural change. In order to be successful
an energy saving programme should be launched at the highest level of the
organisation. The objective must be ambitious and realistic at the same time.
The role and responsibility of each layer within the organisation must be
crystal-clear. Mechanisms need to be included; parties involved must be judged
Process Industry and Energy Savings27
by success. This helps ensure the necessary priority and continuity. At an early
stage of the life cycle project space should be created for innovation which is
tested against the most objective criteria without prejudice. It is the only way to
allow the process industry to be on “The Right Things” and only then will tender
lead to mind-broadening solutions that can be applied at large by the end user,
being the process industry itself.
Energy-tuned tendering
Goods and services can be tendered in many ways. In doing so it is crucial to
find out the extent to which the buyer is willing to take responsibility for the
final result. Being significantly responsible means being able to interfere at
large with goods and services. It also means taking more risks. As long as goods/
services concern the key processes within the process industry, problems will
not exist. Things are different when it comes to energy-related matters. This
is not considered a key activity of the process industry as a result of which the
industry operates more cautiously taking fewer risks. Figure 8 represents the
responsibility level which the process industry can take and the appropriate
tender.
Figure 8: Contract types, responsibility and costs
The Build, Operate and Transfer (BOT) contract form is suitable in case the
process industry wants to take as little responsibility as possible. In this case
the supplier will carry the responsibility which will involve relatively high costs.
One good example is the construction of a CHP plant to be run by the supplier
or alternatively an electricity company. The process industry only pays for the
product: electricity and steam. Maximum responsibility is involved if only services
are purchased (e.g. maintenance). The systems are the property of the process
industry and the external costs are minimised. The fixed costs however are high
and most risks are with the process industry itself.
Energy-adapted tendering is possible with BOT, turnkey and EPCM contract
types, whereby the EMPT method is the most obvious one, see text frame
“Economically most profitable tender.”
28 Process Industry and Energy Savings
Functional tendering is preferable to tenders based only on technical
specifications. This leads to better solutions, however it does require more
attention when defining the right criteria and quality check. High-value project
management, see figure 7, is required to realise a project in “The Right Way”.
Alliance also provides the perfect opportunity to introduce more complicated
energy-related innovations in the process industry, see text frame Infrastructure
Industry.
Economically most profitable tender (EMPT):
–	 Ensures optimal value / price ratio
–	 In addition to the tender price other criteria are also included to determine
the winning tender
–	 The EMPT value of each criterion is eventually presented in €
–	 The total EMPT value of a tender is presented with a fictive tender price
–	 The offer with the lowest tender price will be granted the assignment.
Tender tuned to innovation and quality, in the Infrastructure Industry
Pim van Schaijk at Reef Infra, previously employed at the Directorate-General
for Public Works and Water Management (Rijkswaterstaat) has experience
with tendering complicated infrastructural projects. What can we learn from
this in terms of “energy-adapted tendering”?
The call for tenders is the foundation of a project and nothing is harder
than describing what it is that you need in the tender documents. When
providing a detailed description of the work including all related instructions,
price is the only thing that matters, newcomers are excluded and the supply
parties are given a hard time confirming their added value in the form of
smart solutions for example. Today functional projects are preferred, which
means freedom of design and in general better solutions. The quality of the
solution becomes an increasingly important criterion; price only does not
mean universal happiness. The way in which project risks are divided over the
parties involved and how they are controlled is also becoming an increasingly
important aspect during calls for tenders. Sustainability is also becoming
increasingly relevant. In 2010 government is expected to base 80% of its
purchases on sustainability criteria.
Process Industry and Energy Savings29
Figure 9: Renovating Hollandse Brug (Dutch Bridge), an alliance project of RWS with mar-
ket parties
The functional call for tender involves the quality check of the work involved,
which is not easy to determine in advance. Innovation can be encouraged by
steering towards project alliances. Transparent tender processes andalliances
are thus essential. The conclusion is this: quality and innovation are pivotal
when tenders are involved. During the tender process attention should be
paid to the dominant culture in the links of the chain. Parties will have to
become used to different types of tenders. Risk management is more than
ever an integral part of the tender project; each link will have to take its
responsibility otherwise progress will be out of the question.
30 Process Industry and Energy Savings
Process Industry and Energy Savings31
5.	 Interviews about doing more with energy
In the summer of 2010 in-depth interviews were held at four companies by
members of SIG-E to better understand companies’ operations with regard to
energy in the value chain of the process industry. Interviews were held with:
- 	 Bas Kikkert, Strategy Advisor CO2, Shell
- 	 André Veneman, Corporate Director Sustainability, AkzoNobel
- 	 Robert Claasen, Director Corporate Manufacturing, DSM
- 	 Sjaak Remmerswaal, Managing Director and Johan van der Kamp, Chief
Design Engineer, Bronswerk Heat Transfer
Companies were asked about how energy as a theme is connected to their
motives, the project cycle (figure 7) and the tender approach. Also, careful
attention was dedicated to the role which NAP can have in steering matters in
the right direction.
5.1 Motives
During the interviews most parties confirmed that “the process industry will
only introduce energy-efficient techniques provided it can save on energy
costs”. Here are some of the reactions:
–	 “Energy costs can sometimes reach 60% of total costs. Cost savings are thus
important in saving energy.”
–	 “Convenience, loyalty and price are the main factors on which our clients
make a choice. To buyers energy efficiency is the most important factor.”
–	 To produce certain raw materials a lot of energy is required. Rising energy
costs means it is worth buying elsewhere or finding alternatives instead. In
other words, consider the entire product life cycle.”
–	 “In most cases the process industry will not yet be steered by better energy
output of products. It is primarily about the cost/benefit of provided
solutions.”
–	 ”Sustainability must be converted into a “selling point” that ensures reduced
energy costs. Sustainable high-quality products usually means they are
efficient, economical, flexible, cheaper and reliable.”
Bas Kikkert André Veneman Robert Claasen Sjaak Remmerswaal (left)
and Johan van der Kamp
32 Process Industry and Energy Savings
–	 “You must not judge the purchaser by price only, neither the plant operator
by output, other aspects also matter to allow energy to have a more
prominent role in the process industry”.
5.2 Project cycle
During the interviews parties confirmed that “energy measures only stand
a chance provided they are included in the initial phase of the project
development (concept, feasibility). Here are some of the reactions:
–	 “Five years ago a programme was launched that involved short-term
and long-term objectives. The programme was partly a success because
the company’s top management decided to carry out the investment
programme.”
–	 “It is our ambition to reduce greenhouse gas emissions by 25% in 2015.
Serious measures are thus required. Switching lights off and driving efficient
lease cars will not suffice. It is about making choices that concern complicated
energy processes.”
–	 “Our target is a 20% reduction in 2020 compared to 2008. It is an ambitious
target which is being endorsed by the company’s top management. Simple
energy measures won’t get us anywhere, what we need are complex process
improvements.”
–	 ”When it comes to innovative operation small companies are more
courageous than the large multinational process industry. They are often the
launch customer despite the fact that they are less able to carry the risks.”
–	 ”A modest shift is witnessed whereby suppliers are involved at an earlier
stage than used to be the case when developing low-energy solutions. This
also requires a different contract form. BOT could be the right solution.”
–	 ”Customers involving suppliers at an early stage of project development say
they are better off. You need to talk to each other before having a FEED.”
–	 ”Contractors and engineering firms must be open-minded and invest efforts
in creating space in the project development cycle to appreciate suppliers for
providing optimal solutions.”
–	 ”Energy measures that lead to a breakthrough come about in a RD
environment rather than the project cycle and through tenders. To give RD a
chance good cooperation and having an open relationship in the value chain
is required.”
Reactions referred to under 5.1 and 5.2 seem to be inconsistent. On the one
hand the cost /benefit determines the execution of measures. On the other hand
ambitious objectives have been formulated which require drastic and probably
less profitable energy measures. A suitable financial consideration framework
based on a long-term vision makes this consistent.
Process Industry and Energy Savings33
5.3 Tender types
During the interviews parties confirmed that “Suppliers’ freedom to consider
energy-efficient measures is often too limited,” although things have been
changing lately. Here are some of the reactions:
–	 “We would like suppliers to come up with solutions instead of equipment.
A joint offer of energy suppliers and machine constructors is also a unique
thing.”
–	 “Total Costs of Ownership is basically included in the research, essentially
because usually some data are not available. This is particularly a difficult
issue with new technologies.”
–	 “Energy production is not a part of our key process. Integrated contract types
could help out because then we would not have to invest in advance and
because suppliers probably know more about energy production than we
do.”
–	 “The Total Cost of Ownership approach is starting to become increasingly
significant, which is encouraging the use of innovative and low-energy
products.”
–	 “Sometimes the process industry suffers a limited budget, which usually
interferes with the possibility to offer low-energy solutions.”
–	 “Use functional specifications for tenders; it is your guarantee for having the
most optimal energy solutions”.
5.4 How can NAP contribute in the energy domain?
The answer to this question was the following:
–	 “NAP is a knowledge platform in which companies are willing to share their
vision and knowledge (to a certain level) to ensure having a value chain in
which the links are perfectly tuned. NAP is characterised by very different
companies. Large companies are able to help small ones. New ideas provided
by small companies can be picked up by large ones. This certainly applies to
energy, a basic facility that matters to all companies.”
–	 ”NAP is perfectly capable of addressing latent problems in the process
industry and initiating the approach to these problems. This is possible within
NAP but also with the authorities or other organisations. This energy project
is a good example.”
–	 ”NAP is a meeting platform for the value chain that can contribute to the
development of this chain by recognising trends. NAP exists by the grace of
participants who are willing to provide and share information.”
34 Process Industry and Energy Savings
Process Industry and Energy Savings35
6. Energy and the supply side tender /push
Energy and the supply side focuses primarily on companies providing services,
knowledge, products or systems to the process industry, in other words the
supply chain. The question is how does the supply chain draw the process
industry’s attention to energy measures? How can this be done more effectively
to leave no alternative unused?
Action is tuned to sales. As long as the process industry’s famous ready-to-use
products are involved which typify the process industry, it is a simple action. The
purchase department makes sure the existing pumps are replaced. It is up to the
supply companies to confirm that the pump meets the requirements against a
competitive price (investment or cost over life time). This approach is inadequate
for successfully facing the energy challenge in the years to come. It requires
more high-quality interaction between supply and demand at an early stage of
the project/purchase cycle, see text frame below. In other words: innovation.
In the field of innovation parties involved are facing the following obstacles:
–	 Uncertainty about possible cost reduction and the financial benefit in the end
–	 Uncertainty about duration and the costs which the innovation project
involves
–	 The operational risks of innovation
–	 Uncertainty about how innovation should best be integrated in the existing
situation
–	 Mutual unfamiliarity with possibilities and preconditions.
The only way to overcome these obstacles is for the party developing an
innovation to contact launching customers at an early stage. The customer’s
need is thus made clear also in terms of the conditions under which an
innovation is introduced to the market. Suppliers usually do not know whom
to turn to in the process industry. It is certainly not the purchasing department.
The key element of how to do more in the energy domain:
– 	The process industry is insufficiently familiar with the possibilities of the
supply chain
–	 The supply chain is insufficiently aware of the process industry’s
uncertainties.
→ NAP will be able to bridge and facilitate interaction between the
chain’s links.
36 Process Industry and Energy Savings
It is better to have the process industry facilitate matters using an innovation
manager for instance. During interaction between the process industry and
the supply chain, three levels of innovation are distinguished each requiring a
different approach:
–	 Upgrade existing systems
–	 Improve existing processes
–	 Introduce new product or process.
Improve existing system, market introduction is easy
The features of the market introduction of an upgraded existing system:
–	 Introduction involves ordinary sales channels
–	 Costs and energy savings is clearly demonstrable and easy to explain
–	 Restricted risks for the process industry
–	 Market will soon order the system.
A good example of market introduction of an upgraded existing system has
been provided in figure 10. It is about a transformer with lower losses compared
to the current generation.
Figure 10: Example of market introduction of an upgraded existing system [ABB]
Process Industry and Energy Savings37
Improve an existing process, market introduction requires more attention
A more ambitious plan to save more on energy consumption is to improve
existing processes. The features of the market introduction of an improved
existing process are the following:
–	 Introduction requires specialist technical support
–	 Experience gained with launching customers makes the basis for further
introduction
–	 Economic advantage is not known in advance
–	 The period in which result can be booked is not always clear
–	 Application is considered tricky because it interferes with the key process
–	 Market will not be inclined to request process innovations.
A good example of the market introduction of an improved existing process
is shown in figure 11. It is about optimising the production management of a
cement kiln which should push down fuel consumption and push up production
at the same time. The potential profit is greater compared to acquisition of
systems, and so is the uncertainty as to whether profit can be realised. This
innovation style is demanding on both sides. Both the process industry and the
supplier need to be transparent, willing to share information as well as the
application’s risks.
Figure 11: Example of the market introduction of an improved existing process [ABB]
38 Process Industry and Energy Savings
Introducing a new system/process, innovation means working together
The most drastic innovation is the introduction of brand-new systems or
processes. This makes serious breakthroughs possible, however it remains
to be seen whether this is possible with a reasonable amount of time and
at acceptable costs. It expects the process industry to be willing to think
differently. It expects suppliers to develop the system/process as such to make
it more accessible in an industrial environment. Correct risk allocation is a
condition for making market introduction possible. Again, just like the case with
improved existing processes, a launch customer is crucial for market acceptance.
Sponsors (authorities, sector-related companies whether or not through the
trade association, companies at different locations) can help make application
with the launching customer more acceptable. The features of the market
introduction of a new system or process are the following:
-	 Market is unfamiliar with the innovation (unknown, unloved)
-	 Advantages are recognised qualitatively, quantitatively they are uncertain
-	 Market acceptance is a long-lasting project
-	 Introduction requires specialist technical support
-	 The innovation is often considered to have a high risk profile.
One good example of the market introduction of a new system is shown in
figure 12.
Air-cooled condensers are common in the process industry and so widely used
that product improvement seems to be largely overlooked. Or is it? Bronswerk
Heat Transfer took up the challenge of redesigning the fans used in condensers.
Once they had developed the innovative concept in house, pilot projects in
industry showed the concept would work in practice. It is already clear that the
energy consumption and noise emission are reduced while the condensers also
cool much more effectively.
Figure 12: Example of market introduction of a new system [Bronswerk Heat Transfer]
Process Industry and Energy Savings39
Product innovation, the other dimension for reduced energy consumption
An entirely different dimension of innovation is the product development in
the process industry that ensures lower energy consumption in the use phase.
This helps improve chain efficiency. This new production requires new processes;
usually new construction is involved which means the perfect opportunity to
reduce energy consumption in the production phase by applying best practices
in the field of systems and processes. Figure 13 is AkzoNobel’s example. It
concerns the Foul Release Coating which is applied to ships. In addition to
superb anti-fouling features applying this coasting makes the ship’s skin less
resistant ensuring fuel saving that can reach 9%. Figure 14 is DSM’s example.
It concerns the additive Brewers Clarex ™ which can shorten the beer brewing
process and reduce water consumption. Consequently, energy consumption can
be reduced by some 8%. DSM is thus improving its chain efficiency, the brewers
the energy efficiency of the brewing process.
Figure 13: Foul Release Coating AkzoNobel, energy saving paint
40 Process Industry and Energy Savings
Figure 14: Brewers Clarex ™, additive that leads to less energy consumption in the brewing
process [DSM]
Innovation and legislation
Energy-related measures have an economic reason in the first place. Sustainable
production is also becoming increasingly important. And last but not least, it is
the government that is promoting these measures, partly to stimulate parties,
but increasingly often also because it is compelled to do so. Prior to granting an
environmental permit, the competent authority verifies whether Best Available
Technology (BAT) is involved, see text frame “Terminology for energy-related
measures”. BATNEC or BATNEEC (BAT Not Entailing Excessive Cost) emphasises
that economic aspects also matter. This is how the bar is put higher and higher
as a result of which today’s best practice will be common property 20 years from
now. This is taking too long if the objective is to be realised on time. Promoting
innovation will thus remain necessary.
Terminology for energy-related measures
Best practices: proven techniques and working methods within a company or
sector that can be applied at a large scale.
BAT: the best practice for the industry, as laid down by the EU in BREFs. On
granting the permits the competent authority may demand that BAT be
applied.
BREF: best available technology reference document. Document describing
what the EU considers to be BAT for each sector (periodical review).
Process Industry and Energy Savings41
42 Process Industry and Energy Savings
Process Industry and Energy Savings43
7. Conclusions and recommendations
The conclusions of NAP SIG-E have been placed in a broader perspective.
Recommendations are included.
7.1 Context, cause and necessity
The reduction of energy consumption threatens to stagnate while need rises
The process industry is a large-scale user of energy in the Netherlands, a country
always seeking to reduce its “Carbon Footprint” and thus reduce use of fossil
sources of energy. So far it has been successful. Stagnation, however, is lurking
because the ripe fruit has been picked and authorities have accentuated
objectives. A different approach is required to ensure substantial reduction of
energy consumption. NAP SIG-E studied the way in which the value chain of the
process industry can make this possible.
Energy no longer a side issue
Today the way in which energy infrastructure in the process industry is carried
out and run can make the difference between profit and loss and between
being considered a company taking sustainability seriously and one that
does not. Energy is no longer a side issue and deserves serious attention.
The organisation of companies actively involved in the chain must be tuned
accordingly. An energy vision and strategy is required for each company in the
chain. Energy is no longer an issue of the day. New balance must be found in the
process industry doing justice to the increased significance of energy.
7.2 Approach to energy consumption outlined
Energy efficiency combined with use of sustainable energy is the creed
Trias Energetica is pivotal in each initiative towards a better energy
infrastructure in the process industry. Reduced energy consumption is what
matters most. The resulting need for energy is then met as much as possible
with sustainable energy (sun, wind, water, geothermal energy and bio-energy).
The need for sustainable energy can be met by realising internal capacity or
alternatively by purchasing sustainable energy. The remaining need for energy
is met with the most optimal forms of fossil generation (e.g. cogeneration).
This involves a “no regret” approach; investments in fossil generation may not
frustrate transition to sustainable energy alternatives. Trias Energetica is pivotal
regardless of a system’s life: new construction, in operation or renovation.
44 Process Industry and Energy Savings
Work inside out
First use the process industry’s options applying the “cradle to cradle” principle.
Residual flows are sources of energy. If a residual current can no loner be used
as a raw material (reuse), make it a fuel. Aim at closing cycles of raw materials,
energy flows and streams of water. Use the location’s possibilities (co-siting),
such as exchange of streams of water with the surrounding companies, solar
energy systems on the roofs, use residual heat through water pumps and
wind turbines at windy locations. The circle will expand provided the local
possibilities are used. Examples include the acquisition of (sustainable) energy
or participation in energy projects in the direct vicinity of production locations;
but also by providing residual heat flows to third parties such as houses, market
gardeners and companies. During implementation find the right partners to
divide risks optimally, so that each can do whatever he does best to ensure
project feasibility.
Bear time in mind
An energy measure that used to be impossible does not mean it is still out of
reach today. Time makes many changes possible. The technical output of an
energy measure can be improved; the price/achievement ratio can become more
reliable. The (financial) basic principles can change, and so can need. In studying
options this should be taken into serious consideration. Also, measures exist that
lead to faster depreciation of investments given the expected developments;
advanced investments can be useful. Apply a “no regret” policy. Measures
that will make the implementation of visible developments in the long term
impossible must not be introduced.
Energy approach has many faces, go for maximum effect
Of old emphasis in the process industry has been on energy efficiency. Make
sure less energy is used for the very same functions. Cogeneration, energy-
efficient equipment, reduced loss of heat through insulation and more efficient
use of heat and residual currents are fields in which success has been achieved.
Consequently, energy consumption has dropped considerably in the past 20
years (approx. 30%). Now that the easy options have been taken and focus
shifting strongly towards sustainability, other forms are appearing on the
boards. The process industry should be perfectly familiar with its portfolio of
possibilities and establish priorities by recognising the measures that ensure
maximum effect against minimal costs. These measures can also be found
outside the process industry. In fact, applying measures in the raw-material-to-
end-user chain can have major impact (chain efficiency). An integral approach is
therefore preferred.
Process Industry and Energy Savings45
7.3 Action in the process industry	 Demand side
Energy needs priority
The process industry should consider energy to be a core business in terms
of priority and attention and act accordingly. A proactive and enterprising
approach to this raw material is required to remain in control of energy costs,
improve the sustainable character of the process industry and increase its
competitive strength. Energy should be an integral part of corporate strategy.
The way in which the process industry intends to deal with energy must be
communicated internally and externally. A crystal-clear framework legitimises
working on energy and will ensure the highly necessary continuity and
involvement. Also, a crystal-clear framework will challenge the supply chain to
make a contribution. The energy strategy is required to keep the driving wheel
turning which is making energy a daily and integral part of acting in the process
industry. Reduced carbon footprint, preservation, shareholder value, socially
responsible enterprising and managing energy costs (risks, swings) are very good
reasons to prepare an explicit energy strategy.
Action in the energy domain must be tested
Recommendations, intentions and plans will only make sense if implementation
is steered, tested and judged. Daily practice demonstrates that this is the
case when energy is involved. Which is why it is important to test companies’
operational initiatives, investments and implementation at a sufficiently high
level. Matters should be steered if necessary, infrastructure to do so should
exist. It is the only way to use each opportunity to reduce and preserve energy
consumption to the fullest. The (internal and external) transparency of this
project is essential in terms of support, acceptance and persistence.
Allow life cycle costing to lead the way
Investing in high-quality and low-energy techniques is more expensive than
investing in conventional solutions. The added value involves lower energy costs,
lower operational costs, more reliability and flexibility. The life cycle costing
approach to feasibility and the tender phase will allow this added value to show
to advantage.
7.4 Action in the chain	 Demand/supply interaction
Know the possibilities and how to introduce these successfully
The process industry should have access to an adapted tool box. This box
should contain not only descriptions of energy measures (what, best techniques
available) but also descriptions of implementation methods (how). The Best
46 Process Industry and Energy Savings
Available Technology (BAT) within a certain field of the process industry should
be clear. Tools must be used to make themselves useful. The process industry
must be organised as such, at every level of the organisation, to encourage and
appreciate active use of the energy tools, while interacting optimally with the
supply companies by being transparent about what BAT is taken to mean and be
willing to continuously adjust BAT to the innovations that are developed within
the supply chain.
Innovation in the process industry also means energy innovation
Innovations are increasingly often developments that have impact at different
levels. An innovation can mean having a better product, using fewer raw
materials but at the same time reducing (indirect) energy consumption. The
process industry needs to broaden its view to include energy in product and
process innovation. An innovation in energy can have the same or greater value
than a process or product innovation.
Innovations need an implementation platform
In general the process industry is a conservative industry. Innovations offered
through the supply chain do not easily reach the market because of the
supposed additional risks on the one hand and being a priori insufficiently
familiar with the added value and/or effect on reduced energy consumption on
the other hand. The process industry’s attitude in this conflicts with a healthy
innovation culture. The supply chain’s attitude too leaves much to be desired
because the process industry’s language is not always observed. To change
matters a platform is required where innovations can be tested under practical
conditions without this involving unacceptable risks for the process industry.
The platform can be organised (innovation office/manager/budget) within the
individual companies (process industry) or alternatively at industry level. This
platform and related rules will challenge the supply chain to be on its best
behaviour.
Involve supply chain at an early stage of the project cycle
To use energy saving and cost saving options to the fullest it is important to
involve the supply chain at an early stage of the project cycle. Especially where
sizeable and complex projects are involved, interaction at concept and/or
feasibility stage of a project will ensure added value.
Control risks across the chain
One of the main reasons for the process industry to avoid less common and/
or sizeable energy measures is the expected high risks most of which end up
with the process industry. Developing projects is not so much about explaining
Process Industry and Energy Savings47
techniques or the cost/benefit in a narrow sense but rather about spotlighting
risks together and thinking about how these risks can be divided over all the
parties involved. If risks are still considered too high, involving another party
like an electricity company or an energy service company (ESCO) would be
something worth considering. Further distribution of risks will thus be possible,
and the electricity company will have different thoughts about those risks
compared to the process industry. After all, energy is its key activity. Authorities
will be able to have a more active role in managing risks, not so much based
on direct financial support, but for instance by means of a ‘revolving fund’ or
suitable fiscal policy. If the worst comes to the worst the authorities, using a
mandate or any other form of pressure, can create a situation in which the risk
must be considered a fait accompli. In a sense this is already the case with permit
granting and the BREF/BAT testing.
Functional tender
Functional project tendering is challenging the supply chain to come up with
the best solutions and allows frontiers to be pushed out. More attention must
be dedicated to the assessment criteria and quality management. This tender
approach will show energy aspects to advantage, the more so if options are
explored at the market at an early stage of the project cycle.
Smart financing
The process industry is subject to the strictest profitability requirements. Energy-
related projects are predominantly capital-intensive involving payback periods that
are much longer than the process industry is hoping for. Two possible approaches
exist. A specific financial framework can be developed which to a certain level
can be defended as the economy of “stand alone” energy products is more solid
than that of the process industry projects whereby nature and scope are uncertain
factors. An alternative is to use external financers using different criteria. Examples
include electricity companies, ESCOs, funding based on fiscal measures and so on.
7.5 Suppliers’ actions	 Supply side
As for the supply chain in the process industry, introducing less obvious or complex
energy measures means investing in the relationship with the client/user:
-	 Know their goals, be familiar with the ambitions and vision of the process industry
-	 Provide solutions, not products
-	 Get to know the investment assessment framework and act accordingly
-	 Make sure to be involved at the initial stage of project development
-	 Make risks transparent and minimise users’ risks.
48 Process Industry and Energy Savings
7.6 Interaction with the environment
Show society what you have to offer
Show the authorities the possibilities and what it takes to be successful.
The process industry is a large-scale user of energy, which is why its social
responsibility requires a proactive attitude. Measures in the process industry thus
have major impact, the more so if such can be realised with lower social costs.
Proactive positioning will increase support of the Dutch process industry making
counter funding possible. Think about preparing a suitable programme with the
authorities. Low energy consumption, a healthy process industry, a flourishing
and innovative supply chain, proper (knowledge) economy and new export
opportunities go hand in hand in this.
The 10 building blocks for more successful energy in the process industry
1.	 The energy strategy and roadmap should be an integral part of corporate
strategy
2.	 Use Trias Energetica, first energy savings, then sustainable energy, and
efficient fossil
3.	 Work inside out, seize opportunities that exist at the company before
buying energy
4.	 Make sure to have a tailored energy tool box (measures and methods)
and manpower
5.	 Use a challenging innovation platform that makes accelerated
implementation possible
6.	 Do not hesitate to use chain expertise
7.	 Spotlight cost/benefit, the implementation project and the uncertainties
8.	 Use functional specifications in a tender with energy being a criterion
9.	 Allow life cycle costing to be decisive when analysing solutions
10.	Make sure risks are distributed suitably across the chain, including smart
funding.
Process Industry and Energy Savings49
50 Process Industry and Energy Savings
Process Industry and Energy Savings51
ANNEX 1
Terms and abbreviations
BAT	 Best Available Technology
BOT	 Build Own Transfer
BREF	 BAT REFerence document
DSJI	 Dow Jones Sustainability Index
EEP	 Energy Efficiency Plan
EMVI	 Economisch Meest Voordelige Inschrijving (economically most profitable
tender/quote)
EPCM	 Engineering Procurement Construction Manufacturing
ESCO	 Energy Service Company
ETS	 Emission Trading Scheme
FEED	 Front End Engineering  Design
MJA	 Meerjarenafspraak (long term agreement)
MEE	 Meerjarenafspraak Energie-efficiëntie ETS ondernemingen (MJA energy
efficiency of ETS companies)
52 Process Industry and Energy Savings
ANNEX 2
Further reading
Mogelijkheden tot energiebesparing in de Nederlandse energie-intensieve
industrie
PDC, 25 februari 2009, Dr. H. Vleeming et all, i.o.v. Platform Ketenefficiency,
AgentschapNL
Centraal Bureau voor de Statistiek, statline databank, http://statline.cbs.nl/
S. Spoelstra, De Nederlandse en industriële energiehuishouding van 2000 tot en
met 2006, ECN rapport E--08-065, 21 oktober 2008.
De ketenwijzer, een handleiding voor het opzetten van samenwerkingsprojecten
in de keten, SenterNovem, programma MJA-facilitering
Meerjarenafspraak Energie-efficiëntie ETS- ondernemingen (MEE), Den Haag, 2
oktober 2009
Transitie naar een koolstofarme energiehuishouding, advies t.b.v. de
Uitvoeringsnota Klimaatbeleid, VROM-raad, Den Haag, 1998
Your choice for projects, twice as cost effective, twice as fast, NAP, Nijkerk, 2002
Alliance Roadmap. Project alliances in the process industry, NAP, Nijkerk 2007
Process Industry and Energy Savings53
ANNEX 3
SIG-E’s working method
Structure
Sixteen companies are members of SIG-E. Three of these supplied two members
each. Companies were divided as follows over the links in the value chain:
–	 Process industry	 3 companies
–	 Supply industry, machine construction	 4 companies
–	 Engineering firms and consultancies	 5 companies
–	 Research institutes and education	 4 companies
Company Member SIG-E
Martin Borsje
Robert Claasen
Lothar Schuh
Sjaak Remmerswaal
Johan van der Kamp
Frans de Jong
Auke de Leeuw
Frank Dikmans
Ton Jansen
Erik van Weerdhuizen
Arij van Berkel
Art de Boo
Loes Jansen
Jeroen den Breems
Peter Alderliesten
Kees Tromp
Edward Pfeiffer
54 Process Industry and Energy Savings
Project manager Edward Pfeiffer, KEMA
Project assistant Jules Smeets, KEMA
Energy tuned tender coordinator Erik van Weerdehuizen,
Movares
Market introduction and innovation
coordinator
Frans de Jong, HAN
Future exploration coordinator Arij van Berkel, TNO
Meetings
SIG-E had seven meetings in 2009 and 2010. A report was prepared of these
meetings. Meetings were held at a different location each time to fully
understand what it means to be targeting a low-energy process industry. Guest
speakers were invited to share their views and experiences in the field of energy
with the SIG-E members. Halfway through SIG-E’s term a special meeting was
held with the executives of companies that are involved in SIG-E. The first
results were communicated and discussions were held about how SIG-E should
be continued in the second year. The companies involved became even more
committed and with it the actual implementation of SIG-E’s results in practice.
Meeting Date
Location and guest
company
Kick off 3 March 2009 Oud London in Zeist
2nd meeting 3 June 2009 DSM in Delft
3rd meeting 2 September 2009 HAN in Arnhem
Meeting with senior executives 1 December 2009 KEMA in Arnhem
5th meeting 2 March 2010 Bronswerk in Nijkerk
6th meeting 3 June 2010 Movares in Utrecht
7th meeting 1 September 2010 AkzoNobel in Arnhem
Ad hoc meetings were held which were organised by those responsible for
coordinating the study groups.
Four interviews were held by members of SIG-E to better understand companies’
energy-related activities. The interviews are confidential. The report only uses
anonymous quotations.
Process Industry and Energy Savings55
Lectures
Ten special lectures were given in 2009 and 2010.
Energy and water regime at the DSM business location in Delft
Ans Ligtenbarg and Martin Borsje, DSM, 3 June 2009
Energy and preservation, strategic positioning of fields of expertise
Tinus Hammink and Frans de Jong, HAN, 2 September 2009
Tender innovations, case Hollandse Brug (Dutch Bridge)
Pim van Schaijk, Reef Infra, 2 September 2009
Innovation and market introduction, learning from the past
Kees Tromp, Essent Westland Energie, 2 September 2009
Smart grids, smarter energy consumption
Peter van de Berg ABB and Edward Pfeiffer KEMA, 1 December 2009
Energy to a higher plan, experiences at Shell
Bas Kikkert Shell, 1 December 2009
Experience with innovation and market introduction, case Whizz Wheel ®
Sjaak Remmerswaal and Johan van der Kamp, Bronswerk Heat Transfer, 2 March
2010
BAT, BREF, MEE and MJA, an introduction to the government policy on the
energy industry
Edward Pfeiffer, KEMA, 2 March 2010
Innovative entrepreneurship as an engineering firm
Herman Sibbel and Erik van Weerdhuizen, Movares, 3 June 2010
Experiences with the energy efficiency approach
Elco de Rooij, AkzoNobel, 1 September 2010
56 Process Industry and Energy Savings
Also published by NAP:
De kracht van de keten
(2010) NAPTrends 2009 NAPTrends 2008
Front-End Loading Strategy
(2008) Alliance Roadmap (2007)
Knowledge Management in
the Process Industry (2007)
Kennisnetwerken (2007)
2x2, Your choice for pro-
jects, twice as cost effective,
twice as fast (2002)
Publications by NAP may be ordered at www.napnetwerk.nl.

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1004484_NAP_KEMA_Process Industry and Energy Savings

  • 1. Process Industry and Energy Savings1 Process Industry and Energy Savings Success through cooperation in the business chain November 2010
  • 2. 2 Process Industry and Energy Savings © 2010 Copyright and disclaimer All text, illustrations, etc. are the copyright of NAP. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or be adapted in full or in part, without the prior permission of the publisher, or in so far as permitted under applicable copyright law. Although this publication is the result of the best efforts of the publishers and authors, neither the publisher nor the authors guarantee the accuracy or completeness of the information contained herein. Thus, neither the publisher nor the authors will accept any responsibility for any damage whatsoever resulting from actions or decisions based on the information herein. Users of this publication are strongly advised not to use this information in isolation, but also to rely on their professional expertise and experience and to verify any information they intend to use. NAP P.O. Box 1058 3860 BB Nijkerk the Netherlands Tel. +31 – 33 – 247 34 60 Fax +31 – 33 – 246 04 70 E-mail info@napnetwerk.nl www.napnetwerk.nl ISBN/EAN: 978-90-812162-8-9
  • 3. Process Industry and Energy Savings3 Preface NAP is excited to present the final report of the Special Interest Group Energy (SIG-E), which has been put together over a period of two years based on the experience and input of 16 companies on the key question on how the process industry can significantly reduce its energy consumption – but more importantly significantly reduce its carbon foot print. Allow me to share some personal perspective and experience in this area having been closely involved in projects and initiatives to reduce CO2 emissions. Until some years ago, energy reduction projects in the process industry were implemented based on a financial business case. In general our industry has been quite effective making progress in terms of energy efficiency. Our focus was traditionally inside our plant fences for these types of projects. We reached a point that basically no major steps were left any more. The game changer was the notion that we together are consuming 1.4 planets and dramatic change is needed – also in the energy area. Energy efficiency improvement today is not just a traditional business case game any longer, but projects are brought forward because it is the right thing to do: conserve energy and use green energy where possible. Only as a last resort should we fall back on fossil fuels. Regulatory and legislative pressures help to achieve certain goals, but at the end of the day the mind-set and culture to conserve the earth’s resources should be with all our employees in the process industry. Only then will we drive creativity, innovation, collaboration and will re-invent the way we work in our industry. Only then will we think beyond the borders of our own facilities and companies and really look for opportunities and possibilities to move towards a zero CO2 foot print process industry. We should do this for our existing facilities, for new facilities we will build and we certainly need to look at shutting down facilities which no longer meet the environmental standards of today. In new facilities we consciously need to make decisions not only based on short term financial return, but also look at environmental aspects of the facility which will be ours for typically the next 20 – 30 years.
  • 4. 4 Process Industry and Energy Savings The report which is in front of you gives an excellent overview of what has been achieved in recent history, where barriers and road blocks exist, but more importantly where the opportunities are to be found. The report also includes a number of suggestions on how the process industry chain in the Netherlands can take a stronger stance on driving energy conservation and reducing the CO2 foot print of our industry. I hope that reading this report will give you the encouragement and drive to become actively involved in reducing the CO2 foot print of the process industry. I also hope that this report will be the starting point of next steps which we can take together like implementing energy innovations in our facilities and actively cooperate to prove that also in this case the process industry chain is stronger than its individual parts. The input and dedication of project manager Edward Pfeiffer (KEMA) has allowed SIG-E to book results within the set period. For this NAP is much appreciative of KEMA. Hans van Haarst, MSc November 2010 Chairman
  • 5. Process Industry and Energy Savings5 Contents The NAP Special Interest Group Energy............................................................................................ 6 Summary.................................................................................................................................................................. 7 1. Introduction, background information....................................................................................... 11 2. Transition in the process industry, the context....................................................................... 17 3. Energy consumption in the Dutch process industry............................................................ 21 4. Energy and the demand side tender / pull................................................................................ 25 5. Interviews about doing more with energy............................................................................... 31 5.1 Motives.................................................................................................................................................. 31 5.2 Project cycle........................................................................................................................................ 32 5.3 Tender types....................................................................................................................................... 33 5.4 How can NAP contribute in the energy domain?................................................... 33 6. Energy and the supply side tender /push................................................................................... 35 7. Conclusions and recommendations................................................................................................ 43 7.1 Context, cause and necessity................................................................................................. 43 7.2 Approach to energy consumption outlined............................................................... 43 7.3 Action in the process industry Demand side........................................................... 45 7.4 Action in the chain Demand/supply interaction.......................... 45 7.5 Suppliers’ actions Supply side............................................................... 47 7.6 Interaction with the environment..................................................................................... 48 ANNEX 1................................................................................................................................................................... 51 ANNEX 2................................................................................................................................................................... 52 ANNEX 3................................................................................................................................................................... 53 Also published by NAP................................................................................................................................... 56
  • 6. 6 Process Industry and Energy Savings The NAP Special Interest Group Energy The report of the Special Interest Group Energy (SIG-E) is about finding a way to allow the process industry to operate in a more energy-friendly manner. A journey of an expedition team consisting of representatives of 16 companies actively involved in the value chain. One of the recurring themes was how companies (the links of that chain) can deal with each other differently in using energy-related capabilities more efficiently. Innovations are available and the tool box is brimming with best practices and best available technologies. Nevertheless, daily practice confirms that this does not guarantee the prompt acceptance of solutions and products which supply companies offer to end users. Any market introduction remains restricted to a niche while intensive application is a long time coming. The SIG-E report provides an insight into the working method and the discoveries of the past two years. The report discusses the changing horizon; reduced energy consumption is no longer only a matter of an environmental measure imposed by the government or cost reduction. Energy consumption should be reduced drastically for a company to have a future perspective, to make sustainable entrepreneurship possible and to protect and increase shareholders’ value. Now more than ever energy is becoming an integral part of enterprising within the process industry. The key to breakthroughs in the energy domain is that of companies joining hands within the chain at an early stage of the development process and the correct distribution of risks across the chain. Companies should give ever more priority to ‘energy’. To all companies and the SIG-E members, we say thank you for your input in the past two years. Thanks to your help and dedication we are able to offer this result. Edward Pfeiffer Robert Claasen Project Manager NAP SIG-E On behalf of NAP’s board of directors
  • 7. Process Industry and Energy Savings7 Summary Over a period of two years the NAP’s Special Interest Group Energy (SIG-E) has dedicated itself to studying the way in which the process industry and its supply chain has been dealing with energy as a theme. In the past it was strongly believed that many opportunities were left unused and that different forms of cooperation inside the chain should contribute to accelerated improvement of energy efficiency in the process industry. Sixteen companies that are actively involved in the entire value chain have scrutinised their daily situation wondering how to operate more successfully. With approximately one quarter of total energy consumption the Dutch process industry is a major player in reaching national energy and climate objectives by 2020. The objective (improve energy efficiency by 2% annually) is as ambitious as that ‘business as usual’ is insufficient. A drastic change in how matters are approached is thus essential. The question is: how to proceed? By analysing energy projects, in-depth interviews with decision makers in the industry, through literature searches and by organising lectures inside and outside the sector, SIG-E has been able to develop a true picture of the mechanisms concerning energy-related investments. Two major points of interest have been energy-oriented tendering (demand side) and the market introduction of innovations (supply side). The main problem of “how to do more in the energy domain” is this: – The process industry is insufficiently familiar with the capabilities of the supply chain. – The supply chain is insufficiently aware of the questions that exist in the process industry. Therefore, the links in the value chain understand each other poorly. The answer to this problem is compound and consists of more interaction between the process industry and the supply chain (machine constructors, engineering firms and consultancies, education and research). As for the process industry: – Make improved energy efficiency an integral part of corporate strategy. – Wherever possible opt for functional tendering, which should challenge suppliers. – Make sure investment decisions are based on life cycle costing.
  • 8. 8 Process Industry and Energy Savings As for interaction between the process industry and the supply chain: – Make sure the supply chain is involved at an early stage in the project development cycle. – Make sure risks are suitably distributed across the chain, including smart financing. As for the supply chain: – Provide insight into the pros and cons of an energy-related measure. – Map risks and uncertainties. – Sufficiently supervise the right level at market launching. Implementing energy measures in the process industry should increasingly become a coproduction of companies that are actively involved in the value chain. This is the only way to help innovations travel fast towards the market and have breakthroughs in pushing back the energy consumption level in the process industry. The message to the value chain is this: venture coproduction, give creativity a serious chance and push out frontiers. A more sustainable society will be the result; companies that are involved in and around the process industry will be able to improve their competitiveness.
  • 9. Process Industry and Energy Savings9
  • 10. 10 Process Industry and Energy Savings
  • 11. Process Industry and Energy Savings11 1. Introduction, background information Energy is vital to the process industry. It is indispensable and exists throughout the industry. Energy is the engine converting raw materials into a wide range of semi-manufactures and end products. The process industry cannot operate without energy. Society is dominated by the process industry (see figure 1). It allows our society to function at today’s high speed and prosperous level. Figure 1: The process industry serves modern society with countless products Drastically reduced energy consumption is required Until recently we strongly believed that fossil sources of energy were unfailing and that we were allowed to continue to use them unpunished. We know better now. Increasing scarcity is expected to be followed by soaring prices. Also, our environment is becoming overburdened. We dealt with acidification in the 1980s, damage to the ozone layer in the 90s, and today the greenhouse effect is our main concern. Preventing far-reaching global warming will strain us to the limit. The citizen will expect our government to come up with a consistent and ambitious climate and energy policy, see text frame “Dutch energy and climate objectives”. We will expect the manufacturing industry to invest best efforts to turn ambitious objectives into actions. Managing CO2 emissions is one of the main spearheads at this moment. CO2 is inextricably bound up with use of fossil fuels for generating electricity, producing process steam, shipping goods and for heating or cooling purposes. All of these forms of energy matter to the process industry. Society will need to make less use of fossil energy carriers. Bearing size in mind, the process industry will have a major share in this. In absolute terms this will soon mean pushing energy consumption down by half. Already in 1998 the council for Housing, Spatial Planning and the Environment (VROM) referred to this matter, see text frame “Transition into a low-carbon energy household”.
  • 12. 12 Process Industry and Energy Savings Picking the low hanging fruit The process industry is a large-scale consumer of energy which means it has a crucial role in reducing energy consumption in the Netherlands. It should not come as a surprise that government and industry have been joining hands on energy since the very first long-term agreement (MJA) back in 1989. By means of subsidy programmes and fiscal measures, the government has Dutch energy and climate objectives, including EU frame: EU energy and climate package dated 23 January 2008: Europe - 30% CO2 emission reduction in 2020 compared to 1990 Ambition - 20% CO2 emission reduction in 2020 compared to 1990 Promise - 20% more energy efficiency in 2020 compared to 2005 - 20% share of renewable energy in energy consumption in 2020. Netherlands coalition agreement dated 7 February 2007: Netherlands - 30% CO2 emission reduction in 2020 compared to 1990 - 20% sustainable energy in 2020 - Average energy saving speed 2% annually from 2011 to 2020. Consequence for the industry has been laid down in the Sustainability Agreement of 1 November 2007 and the Industry Sector Agreement of 1 July 2008. Result: Long-term Agreement (in Dutch also referred to as MJA) 3 Industry and for ETS enterprises the MEE agreements (2 October 2009). Key elements of the agreements: - Observe the CO2 emission reduction commitment, only valid for ETS enterprises - Prepare and carry out Energy Efficiency Plan (EEP) prior to 1 January 2010 - Measures with payback period up to 6 years or IRR up to 15% must be carried out - Improved chain efficiency is part of the agreements - Develop route map for 50% improved energy efficiency in 2030 compared to 2005. Transition into a low-carbon energy household, 2 recommendations: - To remain in control of the climate change caused by human beings, discharge level of greenhouse gasses should be pushed down by half worldwide at the end of the 21st century. To the industrialised countries this means an 80% reduction. This great challenge can only be realised provided society is sufficiently aware of the problem and is seriously supporting policy. - The intended reduction not only requires further and accelerated development and use of options to save on energy and material. Also, fossil fuels will need to be used as such pushing down their CO2 emission level. (VROM council, 1998)
  • 13. Process Industry and Energy Savings13 successfully encouraged industry to take measures. From 1989 to 2000 energy efficiency has improved by 22%. So far it is the low hanging fruit that has been picked. However, for the period 2000-2020 the energy consumption level must be reduced by another 30% to meet the agreement that exists between government and market. Reaching this objective will be a tremendous challenge and will involve drastic measures across the industry. Should the industry proceed at its current level, objectives will most certainly not be reached. The challenge is of a different nature and requires creative and unconventional solutions. A transition in thinking and action is required. NAP’s participants are perfectly aware of this which is why in the summer of 2008 the very first ideas for the Special Interest Group Energy (SIG-E) came into existence. NAP accepting the challenge Under the management of NAP’s board of directors the first thoughts were committed to paper during discussions between KEMA, ABB and AkzoNobel. Aiming higher in terms of energy by using the options which the value chain is offering ... that was the motto, see text frame “Value chain of the process industry”. Value chain of the process industry The value chain consists of all companies making a modern and competitive process industry possible, including the process industry itself. NAP represents this value chain. The links are academies and universities, machine constructors and the supply industry, engineers and consultancies (also referred to as the vertical industrial column). On the opposite side is the production chain (also called the horizontal industrial column). Here the chain consists of companies starting with raw materials and ending with the final user of products from the process industry. Discussions with the NAP’s directors and participants confirmed that developing a new impulse in order to push down the energy consumption level in the industry would not be an easy task. For years energy as a theme had been on the discussion table of the companies involved, what could a study group possibly add? NAP, however, was aware of the urgency to find new ways of attacking this sometimes recalcitrant theme in the process industry. Eventually, knowing for sure that the unique composition of the NAP-related companies would lead to new approaches was the key factor in NAP’s decision to proceed. Sixteen companies involved in different sectors (education, research, machine construction, engineering and consultancy services) including the process industry itself took up the challenge.
  • 14. 14 Process Industry and Energy Savings SIG-E, NAP takes off The first step was to prepare a programme of activities. This was done in autumn 2008. The idea was to have themes that should lead to practical recommendations feasible in the short term. On 15 January 2009 NAP agreed the following themes: – Explore the limits of an energy-efficient process industry context (2) – Energy-tuned invitation to tender demand side (3) – Speed up innovation and intensify market introduction supply side (4) On 3 March 2009 SIG-E had its first meeting. For each theme a study group was created and a coordinator was assigned. For SIG-E as a whole a project manager was appointed who would be managing SIG-E working closely together with NAP’s management and the principal from NAP’s board of directors. Activities were completed and the report was ready after seven meetings. Defining the work The risk of getting started with ‘energy in the process industry’ as a theme is that the field of action can soon become too general and no longer controllable. Which is why SIG-E’s work was defined with the main aspects being the following: – Focus on here and now, no long-term approach – Aim at practical results, applicable in the process industry – Must dovetail with the daily practice of SIG-E’s participants – Must be feasible in terms of time effort – Avoid repeated work – Results should be available before year-end 2010. Energy consumption can be reduced in many ways: – Develop products that should ensure energy savings – Improve energy efficiency in the production chain (chain efficiency) – Produce energy more efficiently, upgrade production processes – Use renewable sources of energy (e.g. wind, sun and biomass). SIG-E focused primarily on more efficient production of energy as NAP already has long experience in this field. Examples include improvement of the existing processes, introducing new technologies and processes, and integrating processes (co-siting), see also figure 2.
  • 15. Process Industry and Energy Savings15 Figure 2: Field of interest for SIG-E, scope 1, the production process [AkzoNobel, 2010] SIG-E’s objective Learning to better understand trade mechanisms that lead to the stagnated reduction of energy consumption, inside and between companies operating within the value chain of the process industry. This understanding is followed by recommendations that ensure progress, new opportunities and working methods in terms of reduced energy consumption.
  • 16. 16 Process Industry and Energy Savings
  • 17. Process Industry and Energy Savings17 2. Transition in the process industry, the context The Dutch process industry is used to saving on energy. The 1973 oil crisis emphasised that fossil sources of energy are anything but free and also that they were not always sufficiently available. In 1989 the process industry was introduced to Long-term Agreements (in Dutch referred to as MJAs) in which government and industry join hands to improve energy efficiency. Two motives were pivotal: saving costs and legislation. Positive image and sustainability becoming more important In recent years a third motive was added which might well develop a key role: sustainability. Companies are realising that a “license to operate” goes beyond a governmental permit and is increasingly determined by public opinion on how companies should operate and which products should be considered socially responsible. Today countless examples confirm the effect on the value and even the continued existence of companies. A good example is the Shell Brent Spar affair back in 1991 and more recently the BP oil disaster in the Gulf of Mexico. Other examples include the now discontinued import of palm sugar for the production of sustainable electricity in the Netherlands and the recent commotion concerning the working conditions in the supply industry of famous textile and electronics brands. A positive image, based on sustainable and transparent entrepreneurship, is the third motive, see figure 3. Figure 3: The three main motives for energy savings in the industry The three Ps (people, planet, profit) today are crucial to companies’ strategies. A case in point is the development of sustainability criteria companies voluntarily measure up to. Shareholder value is increasingly determined by a company’s sustainability score. To companies like Shell, Unilever, Philips, AkzoNobel and 1. Cost Savings 2. Meet legislation3. Positive image
  • 18. 18 Process Industry and Energy Savings DSM doing well on the Down Jones Sustainability Index (DJSI) is a matter of life and death. It is the only way to gain shareholders’ long-term trust and make continued profitability possible. Where does the Dutch industry stand today? According to research conducted by PDC, see figure 4, energy consumption in Dutch industry is 59% higher than would have been the case if only best practice techniques were used. Internationally the Dutch industry is doing well. But … is this enough? Figure 4: Aggregated energy benchmark, achievement with regard to best practice To reach the best practice level, energy consumption must drop by 37%. In actual practice it means that many organisations need to be reconstructed in line with the latest insights. This cannot be done in 10 years. According to the PDC’s investigation (2009) into realistic energy saving options the following should be feasible: – 10% energy savings through 5 year payback projects – 12% energy saving through 6 year payback projects – 16% energy savings through 15 year payback project. A justified conclusion seems to be the following: savings considered to be realistically feasible are insufficient for ensuring 2% energy savings annually until 2020. New best practices are needed, innovation is required and frontiers are to be extended. Should new technologies that are now being developed be successfully introduced 50% savings might well be possible [ECN, PDC]. In short, the transition required should be beyond what is considered possible based on autonomous developments.
  • 19. Process Industry and Energy Savings19 Barriers frustrating improvements Theoretically a lot can be done; however daily practice confirms that energy- related measures cannot necessarily be introduced at length. Barriers can present themselves at these levels [PDC]: – Finance, funds are nonexistent or external financing is impossible – Corporate policy and priority, energy is not a key activity – Technical complexity, interaction with process and energy infrastructure – Non-implementable within an existing installation or involving additional costs – Uncertain technical and economic feasibility, operational safety. Besides technical difficulties the main reason not to launch an energy-related measure concerns the balance between the (supposed) risk and the expected benefit in terms of dovetailing with the motives of energy projects. Solutions for removing these barriers must be addressed by: – Highlighting risks and correctly distributing these over the value chain – Clarifying end users’ advantages. SIG-E has tried to eliminate these barriers. To this purpose companies in the supply chain must interact differently to what is now usually the case.
  • 20. 20 Process Industry and Energy Savings
  • 21. Process Industry and Energy Savings21 3. Energy consumption in the Dutch process industry Annual energy consumption in the Dutch process industry is 752 PJ, equal to 23.7 billion m3 of natural gas. Total energy consumption in 2006 amounted to 3.323 PJ. This means that the industry is responsible for 23% of the total Dutch output. Including the use of coal, petroleum and natural gas as a raw material this share reaches 40% (1.331 PJ annually). The energy consumption level is substantial however at worldwide level the Netherlands is but a small player, see text frame “Energy consumption in perspective”. Energy consumption in perspective 1 EJ = 1.000 PJ = 23.9 million TOE International energy consumption: 500 EJ in 2010, 900 EJ in 2050 Use of energy carriers in the Netherlands 3.32 EJ in 2006 6.6 ‰ Use of energy carriers in the industry 1.33 EJ in 2006 2.6 ‰ Energy consumption in the Dutch industry 0.75 EJ in 2006 1.5 ‰ Source: CBS, IEA Table 1 outlines how energy consumption is distributed according to energy carrier. Petroleum, natural gas and electricity are the most common energy carriers. Coal, incl. brown coal 27 PJ/jr (4%) Oil 241 PJ/jr (32%) Natural gas 300 PJ/jr (40%) Electricity 102 PJ/jr (14%) Heat, biomass and waste 82 PJ/jr (11%) Total 752 PJ/jr Table 1: Energy consumption in the industry 2006, according to energy carrier [PDC, 2009, page 9]
  • 22. 22 Process Industry and Energy Savings Figure 5 outlines how energy consumption is distributed in the industry according to sectors. Within industry chemicals, the metal working industry, refining and (luxury) foods are the main energy consumers (638 PJ annually; share 86%). Breakthroughs in reducing energy consumption are required in these sectors in particular. Figure 5: Energy consumption in the industry 2006, according to sectors [PDC, 2009, page 9] Rubber and synthetics, 10 PJ/jr, 1% Textile and leather, 5 PJ/jr, 1% Miscellaneous, 25 PJ/jr, 3% Chemicals, 239 PJ/jr, 33% Metals, 157 PJ/jr, 21% Refinement, 154 PJ/jr, 20% Food, 88 PJ/jr, 12% Wood, paper and board, 41 PJ/jr, 5% Building materials, 34 PJ/jr, 4% Chemicals Metals Refinement Food
  • 23. Process Industry and Energy Savings23
  • 24. 24 Process Industry and Energy Savings
  • 25. Process Industry and Energy Savings25 4. Energy and the demand side tender / pull Energy and the demand side here focuses primarily on the process industry. The question is this: how does the process industry feel about the possible introduction of energy saving measures. How is this translated at the organisation and how can the process industry operate without losing serious chances of improvement? The theory is the following: if energy as a theme is given prominent attention while outsourcing products, systems, installations and services, energy measures will follow almost automatically. Recommendations on how to tender in an energy-tuned manner are desired. SIG-E investigated the tendering of four cases in which energy-related aspects had a key role. Three cases were implemented successfully. They involved: – Using low-grade heat intercooler (Tata Steel) Successful – Maximised use of gas pressure energy from blast furnaces (Tata Steel) Unsuccessful – Apply mechanical vapour recompression (AkzoNobel) Successful – Heat recovery from hot drain (AkzoNobel) Successful During investigation the cases were tested according to three criteria which determined whether the successful adoption of the measure is indeed possible, see figure 6. Figure 6: Categories of factors that interfere with the successful adoption of measures Characteristics of an innovation Environmental impact Successful adoption Characteristics of the company
  • 26. 26 Process Industry and Energy Savings Studying the cases the following question was posed: what are the success factors that determine the introduction of energy saving measures? The main influence factors are the following: – Conviction of financial benefit Innovation – Dovetailing with current behaviour and approach Company – Availability of sufficient budget Company – Dovetail with existing knowledge Company The corporate culture determines the innovation level The influence factor which determines the final decision is the current behaviour and approach of persons/departments at the organisation. In general this is a risk avoiding behaviour. If an organisation does not clearly need to innovate, innovation will be out of the question. The invitation for tender is the upshot of sometimes sizeable industrial operations that precede this. It is the final station of action (see figure 7). Figure 7: Life cycle project, tender follows go / no-go This figure confirms that the company’s strategy, developed and propagated by the directors, is the basis of the behavioural change. In order to be successful an energy saving programme should be launched at the highest level of the organisation. The objective must be ambitious and realistic at the same time. The role and responsibility of each layer within the organisation must be crystal-clear. Mechanisms need to be included; parties involved must be judged
  • 27. Process Industry and Energy Savings27 by success. This helps ensure the necessary priority and continuity. At an early stage of the life cycle project space should be created for innovation which is tested against the most objective criteria without prejudice. It is the only way to allow the process industry to be on “The Right Things” and only then will tender lead to mind-broadening solutions that can be applied at large by the end user, being the process industry itself. Energy-tuned tendering Goods and services can be tendered in many ways. In doing so it is crucial to find out the extent to which the buyer is willing to take responsibility for the final result. Being significantly responsible means being able to interfere at large with goods and services. It also means taking more risks. As long as goods/ services concern the key processes within the process industry, problems will not exist. Things are different when it comes to energy-related matters. This is not considered a key activity of the process industry as a result of which the industry operates more cautiously taking fewer risks. Figure 8 represents the responsibility level which the process industry can take and the appropriate tender. Figure 8: Contract types, responsibility and costs The Build, Operate and Transfer (BOT) contract form is suitable in case the process industry wants to take as little responsibility as possible. In this case the supplier will carry the responsibility which will involve relatively high costs. One good example is the construction of a CHP plant to be run by the supplier or alternatively an electricity company. The process industry only pays for the product: electricity and steam. Maximum responsibility is involved if only services are purchased (e.g. maintenance). The systems are the property of the process industry and the external costs are minimised. The fixed costs however are high and most risks are with the process industry itself. Energy-adapted tendering is possible with BOT, turnkey and EPCM contract types, whereby the EMPT method is the most obvious one, see text frame “Economically most profitable tender.”
  • 28. 28 Process Industry and Energy Savings Functional tendering is preferable to tenders based only on technical specifications. This leads to better solutions, however it does require more attention when defining the right criteria and quality check. High-value project management, see figure 7, is required to realise a project in “The Right Way”. Alliance also provides the perfect opportunity to introduce more complicated energy-related innovations in the process industry, see text frame Infrastructure Industry. Economically most profitable tender (EMPT): – Ensures optimal value / price ratio – In addition to the tender price other criteria are also included to determine the winning tender – The EMPT value of each criterion is eventually presented in € – The total EMPT value of a tender is presented with a fictive tender price – The offer with the lowest tender price will be granted the assignment. Tender tuned to innovation and quality, in the Infrastructure Industry Pim van Schaijk at Reef Infra, previously employed at the Directorate-General for Public Works and Water Management (Rijkswaterstaat) has experience with tendering complicated infrastructural projects. What can we learn from this in terms of “energy-adapted tendering”? The call for tenders is the foundation of a project and nothing is harder than describing what it is that you need in the tender documents. When providing a detailed description of the work including all related instructions, price is the only thing that matters, newcomers are excluded and the supply parties are given a hard time confirming their added value in the form of smart solutions for example. Today functional projects are preferred, which means freedom of design and in general better solutions. The quality of the solution becomes an increasingly important criterion; price only does not mean universal happiness. The way in which project risks are divided over the parties involved and how they are controlled is also becoming an increasingly important aspect during calls for tenders. Sustainability is also becoming increasingly relevant. In 2010 government is expected to base 80% of its purchases on sustainability criteria.
  • 29. Process Industry and Energy Savings29 Figure 9: Renovating Hollandse Brug (Dutch Bridge), an alliance project of RWS with mar- ket parties The functional call for tender involves the quality check of the work involved, which is not easy to determine in advance. Innovation can be encouraged by steering towards project alliances. Transparent tender processes andalliances are thus essential. The conclusion is this: quality and innovation are pivotal when tenders are involved. During the tender process attention should be paid to the dominant culture in the links of the chain. Parties will have to become used to different types of tenders. Risk management is more than ever an integral part of the tender project; each link will have to take its responsibility otherwise progress will be out of the question.
  • 30. 30 Process Industry and Energy Savings
  • 31. Process Industry and Energy Savings31 5. Interviews about doing more with energy In the summer of 2010 in-depth interviews were held at four companies by members of SIG-E to better understand companies’ operations with regard to energy in the value chain of the process industry. Interviews were held with: - Bas Kikkert, Strategy Advisor CO2, Shell - André Veneman, Corporate Director Sustainability, AkzoNobel - Robert Claasen, Director Corporate Manufacturing, DSM - Sjaak Remmerswaal, Managing Director and Johan van der Kamp, Chief Design Engineer, Bronswerk Heat Transfer Companies were asked about how energy as a theme is connected to their motives, the project cycle (figure 7) and the tender approach. Also, careful attention was dedicated to the role which NAP can have in steering matters in the right direction. 5.1 Motives During the interviews most parties confirmed that “the process industry will only introduce energy-efficient techniques provided it can save on energy costs”. Here are some of the reactions: – “Energy costs can sometimes reach 60% of total costs. Cost savings are thus important in saving energy.” – “Convenience, loyalty and price are the main factors on which our clients make a choice. To buyers energy efficiency is the most important factor.” – To produce certain raw materials a lot of energy is required. Rising energy costs means it is worth buying elsewhere or finding alternatives instead. In other words, consider the entire product life cycle.” – “In most cases the process industry will not yet be steered by better energy output of products. It is primarily about the cost/benefit of provided solutions.” – ”Sustainability must be converted into a “selling point” that ensures reduced energy costs. Sustainable high-quality products usually means they are efficient, economical, flexible, cheaper and reliable.” Bas Kikkert André Veneman Robert Claasen Sjaak Remmerswaal (left) and Johan van der Kamp
  • 32. 32 Process Industry and Energy Savings – “You must not judge the purchaser by price only, neither the plant operator by output, other aspects also matter to allow energy to have a more prominent role in the process industry”. 5.2 Project cycle During the interviews parties confirmed that “energy measures only stand a chance provided they are included in the initial phase of the project development (concept, feasibility). Here are some of the reactions: – “Five years ago a programme was launched that involved short-term and long-term objectives. The programme was partly a success because the company’s top management decided to carry out the investment programme.” – “It is our ambition to reduce greenhouse gas emissions by 25% in 2015. Serious measures are thus required. Switching lights off and driving efficient lease cars will not suffice. It is about making choices that concern complicated energy processes.” – “Our target is a 20% reduction in 2020 compared to 2008. It is an ambitious target which is being endorsed by the company’s top management. Simple energy measures won’t get us anywhere, what we need are complex process improvements.” – ”When it comes to innovative operation small companies are more courageous than the large multinational process industry. They are often the launch customer despite the fact that they are less able to carry the risks.” – ”A modest shift is witnessed whereby suppliers are involved at an earlier stage than used to be the case when developing low-energy solutions. This also requires a different contract form. BOT could be the right solution.” – ”Customers involving suppliers at an early stage of project development say they are better off. You need to talk to each other before having a FEED.” – ”Contractors and engineering firms must be open-minded and invest efforts in creating space in the project development cycle to appreciate suppliers for providing optimal solutions.” – ”Energy measures that lead to a breakthrough come about in a RD environment rather than the project cycle and through tenders. To give RD a chance good cooperation and having an open relationship in the value chain is required.” Reactions referred to under 5.1 and 5.2 seem to be inconsistent. On the one hand the cost /benefit determines the execution of measures. On the other hand ambitious objectives have been formulated which require drastic and probably less profitable energy measures. A suitable financial consideration framework based on a long-term vision makes this consistent.
  • 33. Process Industry and Energy Savings33 5.3 Tender types During the interviews parties confirmed that “Suppliers’ freedom to consider energy-efficient measures is often too limited,” although things have been changing lately. Here are some of the reactions: – “We would like suppliers to come up with solutions instead of equipment. A joint offer of energy suppliers and machine constructors is also a unique thing.” – “Total Costs of Ownership is basically included in the research, essentially because usually some data are not available. This is particularly a difficult issue with new technologies.” – “Energy production is not a part of our key process. Integrated contract types could help out because then we would not have to invest in advance and because suppliers probably know more about energy production than we do.” – “The Total Cost of Ownership approach is starting to become increasingly significant, which is encouraging the use of innovative and low-energy products.” – “Sometimes the process industry suffers a limited budget, which usually interferes with the possibility to offer low-energy solutions.” – “Use functional specifications for tenders; it is your guarantee for having the most optimal energy solutions”. 5.4 How can NAP contribute in the energy domain? The answer to this question was the following: – “NAP is a knowledge platform in which companies are willing to share their vision and knowledge (to a certain level) to ensure having a value chain in which the links are perfectly tuned. NAP is characterised by very different companies. Large companies are able to help small ones. New ideas provided by small companies can be picked up by large ones. This certainly applies to energy, a basic facility that matters to all companies.” – ”NAP is perfectly capable of addressing latent problems in the process industry and initiating the approach to these problems. This is possible within NAP but also with the authorities or other organisations. This energy project is a good example.” – ”NAP is a meeting platform for the value chain that can contribute to the development of this chain by recognising trends. NAP exists by the grace of participants who are willing to provide and share information.”
  • 34. 34 Process Industry and Energy Savings
  • 35. Process Industry and Energy Savings35 6. Energy and the supply side tender /push Energy and the supply side focuses primarily on companies providing services, knowledge, products or systems to the process industry, in other words the supply chain. The question is how does the supply chain draw the process industry’s attention to energy measures? How can this be done more effectively to leave no alternative unused? Action is tuned to sales. As long as the process industry’s famous ready-to-use products are involved which typify the process industry, it is a simple action. The purchase department makes sure the existing pumps are replaced. It is up to the supply companies to confirm that the pump meets the requirements against a competitive price (investment or cost over life time). This approach is inadequate for successfully facing the energy challenge in the years to come. It requires more high-quality interaction between supply and demand at an early stage of the project/purchase cycle, see text frame below. In other words: innovation. In the field of innovation parties involved are facing the following obstacles: – Uncertainty about possible cost reduction and the financial benefit in the end – Uncertainty about duration and the costs which the innovation project involves – The operational risks of innovation – Uncertainty about how innovation should best be integrated in the existing situation – Mutual unfamiliarity with possibilities and preconditions. The only way to overcome these obstacles is for the party developing an innovation to contact launching customers at an early stage. The customer’s need is thus made clear also in terms of the conditions under which an innovation is introduced to the market. Suppliers usually do not know whom to turn to in the process industry. It is certainly not the purchasing department. The key element of how to do more in the energy domain: – The process industry is insufficiently familiar with the possibilities of the supply chain – The supply chain is insufficiently aware of the process industry’s uncertainties. → NAP will be able to bridge and facilitate interaction between the chain’s links.
  • 36. 36 Process Industry and Energy Savings It is better to have the process industry facilitate matters using an innovation manager for instance. During interaction between the process industry and the supply chain, three levels of innovation are distinguished each requiring a different approach: – Upgrade existing systems – Improve existing processes – Introduce new product or process. Improve existing system, market introduction is easy The features of the market introduction of an upgraded existing system: – Introduction involves ordinary sales channels – Costs and energy savings is clearly demonstrable and easy to explain – Restricted risks for the process industry – Market will soon order the system. A good example of market introduction of an upgraded existing system has been provided in figure 10. It is about a transformer with lower losses compared to the current generation. Figure 10: Example of market introduction of an upgraded existing system [ABB]
  • 37. Process Industry and Energy Savings37 Improve an existing process, market introduction requires more attention A more ambitious plan to save more on energy consumption is to improve existing processes. The features of the market introduction of an improved existing process are the following: – Introduction requires specialist technical support – Experience gained with launching customers makes the basis for further introduction – Economic advantage is not known in advance – The period in which result can be booked is not always clear – Application is considered tricky because it interferes with the key process – Market will not be inclined to request process innovations. A good example of the market introduction of an improved existing process is shown in figure 11. It is about optimising the production management of a cement kiln which should push down fuel consumption and push up production at the same time. The potential profit is greater compared to acquisition of systems, and so is the uncertainty as to whether profit can be realised. This innovation style is demanding on both sides. Both the process industry and the supplier need to be transparent, willing to share information as well as the application’s risks. Figure 11: Example of the market introduction of an improved existing process [ABB]
  • 38. 38 Process Industry and Energy Savings Introducing a new system/process, innovation means working together The most drastic innovation is the introduction of brand-new systems or processes. This makes serious breakthroughs possible, however it remains to be seen whether this is possible with a reasonable amount of time and at acceptable costs. It expects the process industry to be willing to think differently. It expects suppliers to develop the system/process as such to make it more accessible in an industrial environment. Correct risk allocation is a condition for making market introduction possible. Again, just like the case with improved existing processes, a launch customer is crucial for market acceptance. Sponsors (authorities, sector-related companies whether or not through the trade association, companies at different locations) can help make application with the launching customer more acceptable. The features of the market introduction of a new system or process are the following: - Market is unfamiliar with the innovation (unknown, unloved) - Advantages are recognised qualitatively, quantitatively they are uncertain - Market acceptance is a long-lasting project - Introduction requires specialist technical support - The innovation is often considered to have a high risk profile. One good example of the market introduction of a new system is shown in figure 12. Air-cooled condensers are common in the process industry and so widely used that product improvement seems to be largely overlooked. Or is it? Bronswerk Heat Transfer took up the challenge of redesigning the fans used in condensers. Once they had developed the innovative concept in house, pilot projects in industry showed the concept would work in practice. It is already clear that the energy consumption and noise emission are reduced while the condensers also cool much more effectively. Figure 12: Example of market introduction of a new system [Bronswerk Heat Transfer]
  • 39. Process Industry and Energy Savings39 Product innovation, the other dimension for reduced energy consumption An entirely different dimension of innovation is the product development in the process industry that ensures lower energy consumption in the use phase. This helps improve chain efficiency. This new production requires new processes; usually new construction is involved which means the perfect opportunity to reduce energy consumption in the production phase by applying best practices in the field of systems and processes. Figure 13 is AkzoNobel’s example. It concerns the Foul Release Coating which is applied to ships. In addition to superb anti-fouling features applying this coasting makes the ship’s skin less resistant ensuring fuel saving that can reach 9%. Figure 14 is DSM’s example. It concerns the additive Brewers Clarex ™ which can shorten the beer brewing process and reduce water consumption. Consequently, energy consumption can be reduced by some 8%. DSM is thus improving its chain efficiency, the brewers the energy efficiency of the brewing process. Figure 13: Foul Release Coating AkzoNobel, energy saving paint
  • 40. 40 Process Industry and Energy Savings Figure 14: Brewers Clarex ™, additive that leads to less energy consumption in the brewing process [DSM] Innovation and legislation Energy-related measures have an economic reason in the first place. Sustainable production is also becoming increasingly important. And last but not least, it is the government that is promoting these measures, partly to stimulate parties, but increasingly often also because it is compelled to do so. Prior to granting an environmental permit, the competent authority verifies whether Best Available Technology (BAT) is involved, see text frame “Terminology for energy-related measures”. BATNEC or BATNEEC (BAT Not Entailing Excessive Cost) emphasises that economic aspects also matter. This is how the bar is put higher and higher as a result of which today’s best practice will be common property 20 years from now. This is taking too long if the objective is to be realised on time. Promoting innovation will thus remain necessary. Terminology for energy-related measures Best practices: proven techniques and working methods within a company or sector that can be applied at a large scale. BAT: the best practice for the industry, as laid down by the EU in BREFs. On granting the permits the competent authority may demand that BAT be applied. BREF: best available technology reference document. Document describing what the EU considers to be BAT for each sector (periodical review).
  • 41. Process Industry and Energy Savings41
  • 42. 42 Process Industry and Energy Savings
  • 43. Process Industry and Energy Savings43 7. Conclusions and recommendations The conclusions of NAP SIG-E have been placed in a broader perspective. Recommendations are included. 7.1 Context, cause and necessity The reduction of energy consumption threatens to stagnate while need rises The process industry is a large-scale user of energy in the Netherlands, a country always seeking to reduce its “Carbon Footprint” and thus reduce use of fossil sources of energy. So far it has been successful. Stagnation, however, is lurking because the ripe fruit has been picked and authorities have accentuated objectives. A different approach is required to ensure substantial reduction of energy consumption. NAP SIG-E studied the way in which the value chain of the process industry can make this possible. Energy no longer a side issue Today the way in which energy infrastructure in the process industry is carried out and run can make the difference between profit and loss and between being considered a company taking sustainability seriously and one that does not. Energy is no longer a side issue and deserves serious attention. The organisation of companies actively involved in the chain must be tuned accordingly. An energy vision and strategy is required for each company in the chain. Energy is no longer an issue of the day. New balance must be found in the process industry doing justice to the increased significance of energy. 7.2 Approach to energy consumption outlined Energy efficiency combined with use of sustainable energy is the creed Trias Energetica is pivotal in each initiative towards a better energy infrastructure in the process industry. Reduced energy consumption is what matters most. The resulting need for energy is then met as much as possible with sustainable energy (sun, wind, water, geothermal energy and bio-energy). The need for sustainable energy can be met by realising internal capacity or alternatively by purchasing sustainable energy. The remaining need for energy is met with the most optimal forms of fossil generation (e.g. cogeneration). This involves a “no regret” approach; investments in fossil generation may not frustrate transition to sustainable energy alternatives. Trias Energetica is pivotal regardless of a system’s life: new construction, in operation or renovation.
  • 44. 44 Process Industry and Energy Savings Work inside out First use the process industry’s options applying the “cradle to cradle” principle. Residual flows are sources of energy. If a residual current can no loner be used as a raw material (reuse), make it a fuel. Aim at closing cycles of raw materials, energy flows and streams of water. Use the location’s possibilities (co-siting), such as exchange of streams of water with the surrounding companies, solar energy systems on the roofs, use residual heat through water pumps and wind turbines at windy locations. The circle will expand provided the local possibilities are used. Examples include the acquisition of (sustainable) energy or participation in energy projects in the direct vicinity of production locations; but also by providing residual heat flows to third parties such as houses, market gardeners and companies. During implementation find the right partners to divide risks optimally, so that each can do whatever he does best to ensure project feasibility. Bear time in mind An energy measure that used to be impossible does not mean it is still out of reach today. Time makes many changes possible. The technical output of an energy measure can be improved; the price/achievement ratio can become more reliable. The (financial) basic principles can change, and so can need. In studying options this should be taken into serious consideration. Also, measures exist that lead to faster depreciation of investments given the expected developments; advanced investments can be useful. Apply a “no regret” policy. Measures that will make the implementation of visible developments in the long term impossible must not be introduced. Energy approach has many faces, go for maximum effect Of old emphasis in the process industry has been on energy efficiency. Make sure less energy is used for the very same functions. Cogeneration, energy- efficient equipment, reduced loss of heat through insulation and more efficient use of heat and residual currents are fields in which success has been achieved. Consequently, energy consumption has dropped considerably in the past 20 years (approx. 30%). Now that the easy options have been taken and focus shifting strongly towards sustainability, other forms are appearing on the boards. The process industry should be perfectly familiar with its portfolio of possibilities and establish priorities by recognising the measures that ensure maximum effect against minimal costs. These measures can also be found outside the process industry. In fact, applying measures in the raw-material-to- end-user chain can have major impact (chain efficiency). An integral approach is therefore preferred.
  • 45. Process Industry and Energy Savings45 7.3 Action in the process industry Demand side Energy needs priority The process industry should consider energy to be a core business in terms of priority and attention and act accordingly. A proactive and enterprising approach to this raw material is required to remain in control of energy costs, improve the sustainable character of the process industry and increase its competitive strength. Energy should be an integral part of corporate strategy. The way in which the process industry intends to deal with energy must be communicated internally and externally. A crystal-clear framework legitimises working on energy and will ensure the highly necessary continuity and involvement. Also, a crystal-clear framework will challenge the supply chain to make a contribution. The energy strategy is required to keep the driving wheel turning which is making energy a daily and integral part of acting in the process industry. Reduced carbon footprint, preservation, shareholder value, socially responsible enterprising and managing energy costs (risks, swings) are very good reasons to prepare an explicit energy strategy. Action in the energy domain must be tested Recommendations, intentions and plans will only make sense if implementation is steered, tested and judged. Daily practice demonstrates that this is the case when energy is involved. Which is why it is important to test companies’ operational initiatives, investments and implementation at a sufficiently high level. Matters should be steered if necessary, infrastructure to do so should exist. It is the only way to use each opportunity to reduce and preserve energy consumption to the fullest. The (internal and external) transparency of this project is essential in terms of support, acceptance and persistence. Allow life cycle costing to lead the way Investing in high-quality and low-energy techniques is more expensive than investing in conventional solutions. The added value involves lower energy costs, lower operational costs, more reliability and flexibility. The life cycle costing approach to feasibility and the tender phase will allow this added value to show to advantage. 7.4 Action in the chain Demand/supply interaction Know the possibilities and how to introduce these successfully The process industry should have access to an adapted tool box. This box should contain not only descriptions of energy measures (what, best techniques available) but also descriptions of implementation methods (how). The Best
  • 46. 46 Process Industry and Energy Savings Available Technology (BAT) within a certain field of the process industry should be clear. Tools must be used to make themselves useful. The process industry must be organised as such, at every level of the organisation, to encourage and appreciate active use of the energy tools, while interacting optimally with the supply companies by being transparent about what BAT is taken to mean and be willing to continuously adjust BAT to the innovations that are developed within the supply chain. Innovation in the process industry also means energy innovation Innovations are increasingly often developments that have impact at different levels. An innovation can mean having a better product, using fewer raw materials but at the same time reducing (indirect) energy consumption. The process industry needs to broaden its view to include energy in product and process innovation. An innovation in energy can have the same or greater value than a process or product innovation. Innovations need an implementation platform In general the process industry is a conservative industry. Innovations offered through the supply chain do not easily reach the market because of the supposed additional risks on the one hand and being a priori insufficiently familiar with the added value and/or effect on reduced energy consumption on the other hand. The process industry’s attitude in this conflicts with a healthy innovation culture. The supply chain’s attitude too leaves much to be desired because the process industry’s language is not always observed. To change matters a platform is required where innovations can be tested under practical conditions without this involving unacceptable risks for the process industry. The platform can be organised (innovation office/manager/budget) within the individual companies (process industry) or alternatively at industry level. This platform and related rules will challenge the supply chain to be on its best behaviour. Involve supply chain at an early stage of the project cycle To use energy saving and cost saving options to the fullest it is important to involve the supply chain at an early stage of the project cycle. Especially where sizeable and complex projects are involved, interaction at concept and/or feasibility stage of a project will ensure added value. Control risks across the chain One of the main reasons for the process industry to avoid less common and/ or sizeable energy measures is the expected high risks most of which end up with the process industry. Developing projects is not so much about explaining
  • 47. Process Industry and Energy Savings47 techniques or the cost/benefit in a narrow sense but rather about spotlighting risks together and thinking about how these risks can be divided over all the parties involved. If risks are still considered too high, involving another party like an electricity company or an energy service company (ESCO) would be something worth considering. Further distribution of risks will thus be possible, and the electricity company will have different thoughts about those risks compared to the process industry. After all, energy is its key activity. Authorities will be able to have a more active role in managing risks, not so much based on direct financial support, but for instance by means of a ‘revolving fund’ or suitable fiscal policy. If the worst comes to the worst the authorities, using a mandate or any other form of pressure, can create a situation in which the risk must be considered a fait accompli. In a sense this is already the case with permit granting and the BREF/BAT testing. Functional tender Functional project tendering is challenging the supply chain to come up with the best solutions and allows frontiers to be pushed out. More attention must be dedicated to the assessment criteria and quality management. This tender approach will show energy aspects to advantage, the more so if options are explored at the market at an early stage of the project cycle. Smart financing The process industry is subject to the strictest profitability requirements. Energy- related projects are predominantly capital-intensive involving payback periods that are much longer than the process industry is hoping for. Two possible approaches exist. A specific financial framework can be developed which to a certain level can be defended as the economy of “stand alone” energy products is more solid than that of the process industry projects whereby nature and scope are uncertain factors. An alternative is to use external financers using different criteria. Examples include electricity companies, ESCOs, funding based on fiscal measures and so on. 7.5 Suppliers’ actions Supply side As for the supply chain in the process industry, introducing less obvious or complex energy measures means investing in the relationship with the client/user: - Know their goals, be familiar with the ambitions and vision of the process industry - Provide solutions, not products - Get to know the investment assessment framework and act accordingly - Make sure to be involved at the initial stage of project development - Make risks transparent and minimise users’ risks.
  • 48. 48 Process Industry and Energy Savings 7.6 Interaction with the environment Show society what you have to offer Show the authorities the possibilities and what it takes to be successful. The process industry is a large-scale user of energy, which is why its social responsibility requires a proactive attitude. Measures in the process industry thus have major impact, the more so if such can be realised with lower social costs. Proactive positioning will increase support of the Dutch process industry making counter funding possible. Think about preparing a suitable programme with the authorities. Low energy consumption, a healthy process industry, a flourishing and innovative supply chain, proper (knowledge) economy and new export opportunities go hand in hand in this. The 10 building blocks for more successful energy in the process industry 1. The energy strategy and roadmap should be an integral part of corporate strategy 2. Use Trias Energetica, first energy savings, then sustainable energy, and efficient fossil 3. Work inside out, seize opportunities that exist at the company before buying energy 4. Make sure to have a tailored energy tool box (measures and methods) and manpower 5. Use a challenging innovation platform that makes accelerated implementation possible 6. Do not hesitate to use chain expertise 7. Spotlight cost/benefit, the implementation project and the uncertainties 8. Use functional specifications in a tender with energy being a criterion 9. Allow life cycle costing to be decisive when analysing solutions 10. Make sure risks are distributed suitably across the chain, including smart funding.
  • 49. Process Industry and Energy Savings49
  • 50. 50 Process Industry and Energy Savings
  • 51. Process Industry and Energy Savings51 ANNEX 1 Terms and abbreviations BAT Best Available Technology BOT Build Own Transfer BREF BAT REFerence document DSJI Dow Jones Sustainability Index EEP Energy Efficiency Plan EMVI Economisch Meest Voordelige Inschrijving (economically most profitable tender/quote) EPCM Engineering Procurement Construction Manufacturing ESCO Energy Service Company ETS Emission Trading Scheme FEED Front End Engineering Design MJA Meerjarenafspraak (long term agreement) MEE Meerjarenafspraak Energie-efficiëntie ETS ondernemingen (MJA energy efficiency of ETS companies)
  • 52. 52 Process Industry and Energy Savings ANNEX 2 Further reading Mogelijkheden tot energiebesparing in de Nederlandse energie-intensieve industrie PDC, 25 februari 2009, Dr. H. Vleeming et all, i.o.v. Platform Ketenefficiency, AgentschapNL Centraal Bureau voor de Statistiek, statline databank, http://statline.cbs.nl/ S. Spoelstra, De Nederlandse en industriële energiehuishouding van 2000 tot en met 2006, ECN rapport E--08-065, 21 oktober 2008. De ketenwijzer, een handleiding voor het opzetten van samenwerkingsprojecten in de keten, SenterNovem, programma MJA-facilitering Meerjarenafspraak Energie-efficiëntie ETS- ondernemingen (MEE), Den Haag, 2 oktober 2009 Transitie naar een koolstofarme energiehuishouding, advies t.b.v. de Uitvoeringsnota Klimaatbeleid, VROM-raad, Den Haag, 1998 Your choice for projects, twice as cost effective, twice as fast, NAP, Nijkerk, 2002 Alliance Roadmap. Project alliances in the process industry, NAP, Nijkerk 2007
  • 53. Process Industry and Energy Savings53 ANNEX 3 SIG-E’s working method Structure Sixteen companies are members of SIG-E. Three of these supplied two members each. Companies were divided as follows over the links in the value chain: – Process industry 3 companies – Supply industry, machine construction 4 companies – Engineering firms and consultancies 5 companies – Research institutes and education 4 companies Company Member SIG-E Martin Borsje Robert Claasen Lothar Schuh Sjaak Remmerswaal Johan van der Kamp Frans de Jong Auke de Leeuw Frank Dikmans Ton Jansen Erik van Weerdhuizen Arij van Berkel Art de Boo Loes Jansen Jeroen den Breems Peter Alderliesten Kees Tromp Edward Pfeiffer
  • 54. 54 Process Industry and Energy Savings Project manager Edward Pfeiffer, KEMA Project assistant Jules Smeets, KEMA Energy tuned tender coordinator Erik van Weerdehuizen, Movares Market introduction and innovation coordinator Frans de Jong, HAN Future exploration coordinator Arij van Berkel, TNO Meetings SIG-E had seven meetings in 2009 and 2010. A report was prepared of these meetings. Meetings were held at a different location each time to fully understand what it means to be targeting a low-energy process industry. Guest speakers were invited to share their views and experiences in the field of energy with the SIG-E members. Halfway through SIG-E’s term a special meeting was held with the executives of companies that are involved in SIG-E. The first results were communicated and discussions were held about how SIG-E should be continued in the second year. The companies involved became even more committed and with it the actual implementation of SIG-E’s results in practice. Meeting Date Location and guest company Kick off 3 March 2009 Oud London in Zeist 2nd meeting 3 June 2009 DSM in Delft 3rd meeting 2 September 2009 HAN in Arnhem Meeting with senior executives 1 December 2009 KEMA in Arnhem 5th meeting 2 March 2010 Bronswerk in Nijkerk 6th meeting 3 June 2010 Movares in Utrecht 7th meeting 1 September 2010 AkzoNobel in Arnhem Ad hoc meetings were held which were organised by those responsible for coordinating the study groups. Four interviews were held by members of SIG-E to better understand companies’ energy-related activities. The interviews are confidential. The report only uses anonymous quotations.
  • 55. Process Industry and Energy Savings55 Lectures Ten special lectures were given in 2009 and 2010. Energy and water regime at the DSM business location in Delft Ans Ligtenbarg and Martin Borsje, DSM, 3 June 2009 Energy and preservation, strategic positioning of fields of expertise Tinus Hammink and Frans de Jong, HAN, 2 September 2009 Tender innovations, case Hollandse Brug (Dutch Bridge) Pim van Schaijk, Reef Infra, 2 September 2009 Innovation and market introduction, learning from the past Kees Tromp, Essent Westland Energie, 2 September 2009 Smart grids, smarter energy consumption Peter van de Berg ABB and Edward Pfeiffer KEMA, 1 December 2009 Energy to a higher plan, experiences at Shell Bas Kikkert Shell, 1 December 2009 Experience with innovation and market introduction, case Whizz Wheel ® Sjaak Remmerswaal and Johan van der Kamp, Bronswerk Heat Transfer, 2 March 2010 BAT, BREF, MEE and MJA, an introduction to the government policy on the energy industry Edward Pfeiffer, KEMA, 2 March 2010 Innovative entrepreneurship as an engineering firm Herman Sibbel and Erik van Weerdhuizen, Movares, 3 June 2010 Experiences with the energy efficiency approach Elco de Rooij, AkzoNobel, 1 September 2010
  • 56. 56 Process Industry and Energy Savings Also published by NAP: De kracht van de keten (2010) NAPTrends 2009 NAPTrends 2008 Front-End Loading Strategy (2008) Alliance Roadmap (2007) Knowledge Management in the Process Industry (2007) Kennisnetwerken (2007) 2x2, Your choice for pro- jects, twice as cost effective, twice as fast (2002) Publications by NAP may be ordered at www.napnetwerk.nl.