There’s something a little stirring about the president of the United States praising your efforts. It’s particularly heartwarming when he does it before a national audience and a gathering of all the key federal policymakers. So there were understandable cheers among clean energy advocates when President Obama embraced industrial energy efficiency in his State of the Union Address.

Here’s the actual quote, delivered from the podium before a joint session of Congress:

“Of course, the easiest way to save money is to waste less energy. So here’s another proposal: Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings. Their energy bills will be $100 billion lower over the next decade, and America will have less pollution, more manufacturing, and more jobs for construction workers who need them. Send me a bill that creates these jobs.”

Pundits, of course, have suggested several of the president’s proposals are not Republican favorites. Yet enhancing manufacturing efficiency and productivity is as bipartisan as you can get. Which party would ever be in favor of energy waste?

The challenge, of course, is having the two parties act together. Opportunities abound, including an extension of the Treasury grant program, expansion of the combined heat and power (CHP) tax credit, and a clean energy standard that highlights efficient CHP and clean waste heat recovery.

More than 200 companies signed a full-page advertisement placed in three Capitol Hill newspapers declaring industrial energy efficiency will put a million Americans to work. The ad, coordinated by The Pew Charitable Trusts, explains that U.S. utilities and factories send enough heat up their chimneys to power all of Japan. But with existing, proven technologies, we can harness that wasted energy, dramatically cut electricity costs, and make our manufacturers more competitive.

The print ad references the Oak Ridge National Laboratory study explaining how increased use of combined heat and power would “spur more than $200 billion in new private investment in the U.S., and create up to 1,000,000 jobs.”

Signers include major corporations like DuPont and Dow Chemical Company, labor unions like Sheet Metal Workers’ International Association and United Steelworkers, trade associations like the American Gas Association, environmental groups like the Union of Concerned Scientists, and small firms like Recycled Energy Development.

Learn more about industrial energy efficiency here.

In this politically partisan era, it’s refreshing to see the liberal Brookings Institution and the conservative Hoover Institution agree on something. That something, in the wonky words of such policy reports, is: distributed power systems (DPS) have “the potential to make a significant positive contribution to the U.S. power system.” The two think-tank behemoths also found “a strong case for DPS as a resource for the defensive and offensive operations of the U.S. military.”

The report pays particular attention to combined heat and power, lamenting that CHP is “homeless” since energy efficiency advocates think it will detract from their preferred lighting and appliance standards, renewable energy advocates argue it will divert benefits from solar collectors and wind turbines, and utility lobbyists worry independent cogenerators will take away their load and customers.

The report, in contrast, argues CHP needs a home in the minds of all policymakers, since cogeneration offers environmental benefits as well as “the added security benefit of being able to operate independently of the grid and greatly superior efficiency.”

Of note, the bipartisan researchers call for placing a price on carbon, either through a tax or a cap-and-trade system, as well as a fund, such as the proposed Clean Energy Development Authority (CEDA), that finances the development and deployment of innovative technologies. The researchers also want to extend Section 1603, which provides greater access to financing for clean energy projects; that cash-grant initiative, they say, has been successful and much less expensive that a tax-equity approach.

Let’s hope congressional leaders read about the energy policies on which conservatives and liberals agree.

The Alliance for Industrial Efficiency recently submitted comments to the Environmental Protection Agency (EPA) on its “Boiler MACT,” a set of rules to reduce hazardous air pollutants from the nation’s industrial boilers. (MACT stands for the “maximum available control technology” standards that must be met by these boilers.) The Alliance views the rules as an important means to enhance industrial efficiency, especially through the use of waste heat recovery (WHR) and combined heat and power (CHP) projects.

Among the Alliance’s comments are:

• EPA should clarify that coal-fired facilities seeking to incorporate clean and efficient combined heat and power or waste heat recovery are eligible for a one-year compliance extension.
• EPA should modify the output-based alternative compliance mechanism to allow more facilities to benefit.
• EPA should clarify that facilities may simultaneously adopt the alternative output-based compliance standard and average emissions.
• EPA should preserve the energy assessment requirement, but make this requirement more robust by expanding the definition of cost-effective energy efficiency improvements.
• EPA should refine its engineering cost analysis to account for savings identified in the energy assessment.

The comments were submitted on behalf of the U.S. Clean Heat and Power Association, Avalon Consulting, Cummins Power Generation, DCO Energy, Enercon Engineering, Energenic, Mechanical Contractors Association of America, National Electrical Contractors Association, Ohio Business Council for a Clean Energy, Recycled Energy Development, Sheet Metal and Air Conditioning Contractors’ National Association, Texas CHP Initiative, The Association of Union Constructors, and Veolia Energy North America.

On a separate but related issue – this time on hazardous air pollutants from larger, utility-scale boilers – RED’s Melissa Mullarkey delivered testimony at an EPA hearing in Chicago. Among Melissa’s key points:

• The final Utility MACT rule should provide a benefit greater than 5 percent for CHP’s avoidance of transmission and distribution losses.
• EPA should clarify that facilities seeking to incorporate clean and efficient CHP are eligible for a one-year compliance extension.

Should the EPA adopt these suggestions, U.S. industry will become more productive and competitive, create jobs, as well as reduce pollution.

RED and the Alliance for Industrial Efficiency have submitted comments to the Federal Energy Regulatory Commission on how CHP and waste heat recovery (WHR) projects should be compensated for the reliability and stabilization benefits they provide to the electric grid. (See also the Alliance’s comments to FERC).

FERC can simultaneously foster grid reliability and industrial efficiency. At the moment, such reliability is generally supplied by inefficient single-cycle gas turbines. WHR and CHP provide superior alternatives. Grid operators could encourage these investments by offering long-term contracts that compensate CHP and WHR project owners for the frequency regulation benefits supplied by their installations at industrial sites. Such long-term contracts are needed because CHP and WHR units require major capital investments. By compensating these distributed projects for their local power-factor support, grid operators could both balance reactive power throughout the transmission and distribution system as well as reduce line losses. At the same time, such distributed power projects would improve energy efficiency and manufacturing productivity.

The potential for WER and CHP to enhance frequency regulation is vast. The Oak Ridge National Laboratory found that efficient CHP and clean WHR can produce 156 gigawatts of new power by 2030 – equal to the capacity of more than 300 conventional power plants (assuming a conventional power plant generates 500 MW). FERC can encourage this investment by having its frequency rulemaking send appropriate price signals to WHR and CHP developers.

CHP and WHR projects, which can provide active power-factor support controlled by grid operators, could increase frequency control and grid reliability. The groups encourage the Commission and grid operators to offer long-term contracts for the grid benefits supplied by distributed CHP and WHR installations.

December was a great month for those of us who get excited when energy recycling gets the attention it deserves. First, Congress passed the bipartisan tax bill, and it included the extension of the Treasury Grant Program for combined heat and power (CHP). Then, McClatchy Newspapers ran an outstanding article on the economic and environmental benefits of energy recycling.

The article appeared in a whole slew of papers and websites across the country, from Northern California to North Carolina, and featured RED CEO Sean Casten. Sean highlighted RED’s work to make American manufacturers more energy efficient, and noted that it’s imprudent for our country to continue wasting such massive amounts of energy.

The article also quotes Rob Thornton of the International District Energy Association, who explained that most American power plants are only 33 percent efficient, meaning that most of the energy is wasted as heat and only a third is converted to useful electricity. That, as Thornton said, “is like buying a six-pack and the guy smashes four bottles before he hands it back to you.”

Anyone who reads this article will be glad, then, to learn that policymakers are catching on to the importance of energy recycling and have extended the Treasury Grant Program for CHP through the end of 2011. This is good news for the economy and the environment.

Prior to the financial crisis, many clean energy projects relied upon private sources of capital to get off the ground. The economic downturn dramatically reduced the availability of private financing, severely limiting the funding sources for renewable energy projects. Created in 2009, the Treasury Grant Program defrays some of the cost of constructing a CHP facility by allowing companies without taxable income to instead take approved tax credits as grants.

The program is needed because many CHP developers have little or no tax liability and therefore wouldn’t receive the benefits of a traditional tax credit. It will help more CHP projects get going, which will lead to improved energy efficiency, economic growth and a cleaner environment.

So, we’re closing out 2010 with some really good news. May 2011 bring even more.

Meta Desc

A growing coalition of business, labor, and environmental groups has rallied together to support investment tax credits for combined heat and power and energy recycling projects. The Alliance for Industrial Efficiency sent letters to the Senate Finance Committee and House Ways and Means Committee, urging them to include an industrial energy efficiency provision in their final tax packages.

Since I last wrote about this effort, the coalition has grown to 122, and now includes such new notables as the United Steelworkers, The Pew Environment Group and ArcelorMittal.

Why are organizations with such varied interests uniting on this issue? Because energy recycling dramatically improves industrial energy efficiency, and therefore increases manufacturing competitiveness and creates jobs — all while reducing pollution.

As our own Tom Casten put it, “The industrial sector is a huge consumer of power, yet it’s often overlooked in the quest for energy efficiency. Manufacturers that recycle their waste energy can typically cut energy expenses by 20 percent, making them more competitive while slashing carbon emissions. Companies can then reinvest those savings in hiring more workers and expanding production.…

The industrial energy provision can already be found in S. 1639 (sponsored by Sens. Jeff Bingaman, D-NM and Olympia Snowe, R-ME), H.R. 4751 (sponsored by Reps. Paul Tonko, D-NY and Dean Heller, R-NV), and in the House Ways and Means Committee’s draft energy tax package. If enacted, the bipartisan provision would create and preserve jobs within the industrial sector, including for the manufacture, installation, and operation of combined heat and power and waste energy recovery equipment.

Recycled energy, which captures waste energy from industrial facilities, now receives no tax benefits. Combined heat and power, a highly efficient process that generates both electricity and heat on site (also known as cogeneration or CHP), currently obtains only a 10 percent investment tax credit for the first 15 megawatts of a project limited to 50 megawatts in size. The legislative proposals in the House and Senate would encourage more large-scale projects by removing the cap, applying the tax credit to a project’s first 25 megawatts, and adding a 30 percent tax credit for recycled energy and combined heat and power projects with efficiencies above 70 percent. For comparison, the average U.S. power plant is only 33 percent efficient.

At the end of the day, it’s a small change to the tax code that can make a very big difference for our economy and the planet. Let’s hope our elected leaders are listening.

The Industrial Energy Consumers of America (IECA) just released the results of a comprehensive study on how to improve industrial energy efficiency. It makes an important point: it pays to invest in recycled energy.

Conducted by Keybridge Research and the University of Maryland’s Inforum Modeling Project, the study looked at IECA’s Sustainable Manufacturing & Growth Initiative policy recommendations, which include investment tax credits for combined heat and power (CHP) and recycled energy, a Clean Energy Standard Offer Program (CESOP) and other proposals. The researchers found that implementing IECA’s recommendations would dramatically improve American manufacturing competitiveness and:

• Increase real GDP by $77 billion in 2020.
• Increase cumulative employment by 9.4 million job-years in 2010-2030.
• Increase cumulative private investment by more than $1 trillion in 2010-2030.
• Increase family income by an average of $788 (0.68%) in 2020.
• Increase cumulative net exports by $392 billion in 2010-2030.
• Reduce energy-related GHG emissions by 13% in 2020.

The study goes on to say that “the net fiscal cost associated with the IECA recommendations would be less than 0.1% of discretionary government spending between 2011-2030, and would result in a cumulative increase in real GDP growth that is approximately 20 times greater than the cumulative net fiscal cost — providing U.S. taxpayers with significant ‘bang for the buck.’”

When you’ve got Dow Chemical, the Sierra Club, and the Sheet Metal Workers union agreeing on something, you know it’s got to be good.

A slew of organizations have signed a letter urging Congress to pass bills that would promote energy recycling at industrial facilities. These organizations range from environmentalists to manufacturers to unions to contractors.

What’s this eclectic bunch pushing for? We want investment tax credits to encourage combined heat and power (CHP) and waste energy recovery, probably the best ways to slash greenhouse gas emissions and power costs simultaneously. The specific bills include:

• S. 1639, sponsored by Senators Jeff Bingaman (D-NM) and Olympia Snowe (R-ME)
• H.R. 4144, sponsored by Rep. Jay Inslee (D-WA)
• H.R. 4751, sponsored by Rep. Paul Tonko (D-NY)
• H.R. 4455 sponsored by Representatives Mike Thompson (D-CA) and John Linder (R-GA)

These bills would encourage near-term, shovel-ready projects that will create and maintain thousands of jobs. Moreover, as I pointed out in a recent E&E TV interview, energy costs would fall through increased efficiency. Not bad.

Experts on technology and the environment gathered in New York last week to save the world. In a daylong summit hosted by TIME Magazine and the World Technology Network, various clean energy gurus “explored long-term, short-term and game-changing technologies and strategies that can re-shape our lives, our businesses, our policies, our planet, our future.” The theme? “Reality check: Technologies Putting Us on the Path to Sustainability.”

Reality-based thinking may seem novel these days, but it was in abundance at this summit. Our own Tom Casten joined a panel on alternative energies moderated by TIME’s Bryan Walsh. Although Tom’s beat is combined heat and power, improving our world’s energy predicament will require creative solutions from all quarters. It needs them urgently.