**5. Industrial cross-sectoral approach**

How should one develop a target-oriented and bottom-up approach to reduce the CO2 emissions and energy consumption of industry? First of all, what kind of tools is needed to conduct a target oriented policy? Because the problem is energy use, we should have a view on industrial energy use. What is common in general? One way is to classify and categorise the sectors and companies according to their energy use. In Aro (2009), this is done in the following way: building energy users (HVAC and lighting), process heat users, process electricity users, and direct combustion users, see table 1. This classification based on the form of energy use is useful when designing regional energy efficiency policies, since energy efficiency improvement/CO2 reduction strategies can be built specifically for each of these four categories. These policies can also be, however, applicable to several industrial sectors as long as they belong to the same category of energy use.

At local or regional levels this categorization can be used in many ways such as at company, energy utility, and zoning levels. Of course, there are no limits to use it also at national or international levels whenever it is seen to be useful.

Building energy users are good for district heating and zoning must be targeted to collecting these kinds of industries in areas where district heating is possible. Companies using heat in production are good as a part of district heating or (CHP) where they can guarantee constant heat load throughout the year and/or they are considered to be a good target for biofuel power plants. It is beneficial to locate direct combustion users near a natural gas network.


**Table 1.** Ways to use energy in industry (Aro, 2009).

Table 2 shows an example of this categorization as applied to various industries. Although the companies may belong to different industrial sectors, they may have common aspects in the ways they use energy. For this purpose, the categorisation is useful. It can be used for benchmarking and exchanging information between industries and industrial sectors. At local and regional levels, it is good to have co-operation among industries. For this, categorisation gives opportunities to build up workshops and common development projects under the same theme of energy use in spite of being from different industrial sectors.

If a cross-sectoral approach is needed among industries, the regional energy policy also needs a cross-sectoral approach between industry and other sectors of society. This approach means district heating, biofuel use, and other society-wide energy projects, where advantages are achieved if industry is involved in the projects.

#### **5.1. A company level**

294 Energy Efficiency – The Innovative Ways for Smart Energy, the Future Towards Modern Utilities

mitigation action taken by over half of the states (Lutsey and Sperling, 2008).

emissions, see for example (Worrel et al., 1997).

sectoral approach is a must.

network.

**5. Industrial cross-sectoral approach** 

as long as they belong to the same category of energy use.

international levels whenever it is seen to be useful.

results in the tackling of climate change will take place.

compared to physical data such as steel produced per consumed form of energy or per CO2

Thus far, much of the discussion on GHG mitigation has been targeted at international or national levels where sectoral approaches illuminate the origins of CO2 emissions and are useful for general industrial GHG policymaking. To achieve real results in the mitigation policy, more and more activities must be set at local or regional levels. That is where the real

In the United States, where commitment to international agreements is weak, the subnational GHG policies have developed strongly. It has been estimated that if those states, which have set their own GHG emission reduction targets, achieve those targets, nationwide US GHG emissions would be stabilized at 2010 levels by 2020. And this, without any serious

At a local or regional level, successful policy means co-operation among different industries and not only among specific industrial sectors. This is because at the local level there are many industrial sectors and one sector may have only one or very few separate companies. Furthermore, co-operation is needed between industry and other sectors of society. A cross-

How should one develop a target-oriented and bottom-up approach to reduce the CO2 emissions and energy consumption of industry? First of all, what kind of tools is needed to conduct a target oriented policy? Because the problem is energy use, we should have a view on industrial energy use. What is common in general? One way is to classify and categorise the sectors and companies according to their energy use. In Aro (2009), this is done in the following way: building energy users (HVAC and lighting), process heat users, process electricity users, and direct combustion users, see table 1. This classification based on the form of energy use is useful when designing regional energy efficiency policies, since energy efficiency improvement/CO2 reduction strategies can be built specifically for each of these four categories. These policies can also be, however, applicable to several industrial sectors

At local or regional levels this categorization can be used in many ways such as at company, energy utility, and zoning levels. Of course, there are no limits to use it also at national or

Building energy users are good for district heating and zoning must be targeted to collecting these kinds of industries in areas where district heating is possible. Companies using heat in production are good as a part of district heating or (CHP) where they can guarantee constant heat load throughout the year and/or they are considered to be a good target for biofuel power plants. It is beneficial to locate direct combustion users near a natural gas

Categorization is a tool to reduce energy use and CO2 emissions. The reductions are always realised at the company or plant levels because energy is used there.

If one sets a general target to reduce energy consumption to a certain level such as the EU target of 20%, improvements in energy efficiency, and reductions in CO2 emissions, what do the targets look like at the company level? The driving forces for a company are external and internal ones. The external ones are, for example, EU targets and the internal ones are the company's own policies to reduce CO2 emissions. Therefore, the question is how to react to the external ones. In principle, company-level energy related CO2 emissions are formed by a multiplication of the form of energy and specific CO2 emissions of the energy form. The development path of company-level CO2 emissions is a phased process where in every step the quantity of the energy form or specific emissions of the energy form or both are changed (Fig. 1).

Tools for Categorizing Industrial Energy Use and GHG Emissions 297

**Significant process heat consumption (water, steam, hot oil)**

Cooking Washing Sterilization, acid and alkali washes Pasteurization Dewatering Manufacturing of cheeses

Dye works Drying Manufacture of special textiles

Small steam generators are able to provide enough steam for pressing

temperature level water heating and leather drying

Drying Water heating

Pulp production

Drying Drying

Drying 

**Significant process direct combustion user (oil, natural gas and solid fuels)**

Baking and rising

Drying The number of factories using

direct combustion is diminishing.

**Standard Industrial Classificat ion 2002** 

**15 Manufacture of** 

**17 Manufacture of textiles** 

**18 Manufacture of** 

**of fur** 

**19 Tanning and** 

**20 Manufacture of** 

**21 Manufacture of** 

**wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting matter** 

**pulp, paper and paper products** 

**wearing apparel; dressing and dyeing** 

**dressing of leather; manufacture of luggage, handbags, saddlery, harness and footwear** 

**food products and beverages** 

**Industry Significant** 

**building energy user, typical user of the district heating** 

If the processes can be managed with electrical heating, the usage of district heating is reasonable. If a boiler is needed for the process, it is often used to heat up the buildings as well.

Typical building energy users

Typical building energy users

Typical building energy users

Building energy users. Only some of the buildings are heated.

Some paper products processors are mainly building energy user.

**Significant process electricity consumption** 

Electrical ovens Cooling Grinding machines Mixing machines Concentration plants Pumping

Drying Production machines

Machines and devices 

Wood processing Drying Sawdust removal

Processes use a significant amount of electricity: Wood

Drying Low

**Figure 1.** Development of a company's CO2 emissions path.


**Figure 1.** Development of a company's CO2 emissions path.

(Fig. 1).

If one sets a general target to reduce energy consumption to a certain level such as the EU target of 20%, improvements in energy efficiency, and reductions in CO2 emissions, what do the targets look like at the company level? The driving forces for a company are external and internal ones. The external ones are, for example, EU targets and the internal ones are the company's own policies to reduce CO2 emissions. Therefore, the question is how to react to the external ones. In principle, company-level energy related CO2 emissions are formed by a multiplication of the form of energy and specific CO2 emissions of the energy form. The development path of company-level CO2 emissions is a phased process where in every step the quantity of the energy form or specific emissions of the energy form or both are changed

Tools for Categorizing Industrial Energy Use and GHG Emissions 299

**Significant process heat consumption (water, steam, hot oil)**

Drying Thermal

**Significant process direct combustion user (oil, natural gas and solid fuels)**

treatments

**Standard Industrial Classificat ion 2002** 

**30 and 31** 

**34 and 35** 

**29 Manufacture of** 

**32 Manufacture of** 

**33 Manufacture of** 

**36 Manufacture of furniture; manufacturing** 

**n.e.c.** 

was between 4% and 25%.

**machinery and equipment n.e.c.** 

**Manufacture of office machinery and computers, electrical machinery and apparatus n.e.c.** 

**radio, television and communication equipment and apparatus** 

**medical, precision and optical instruments, watches and clocks** 

**Manufacture of motor vehicles, trailers and semitrailers, other transport equipment** 

**Industry Significant** 

**building energy user, typical user of the district heating** 

Some plants are building energy

Typical building energy users

Typical building energy users

Typical building energy users

Some plants are typical building energy users

Some plants are typical building energy users

**Table 2.** Example of energy use categorising in different industries (Aro, 2009).

users

**Significant process electricity consumption** 

Shaping Thermal treatments Surface finishing Welding

Surface finishing Welding

Surface finishing Machines

Drying

In the article (Aro, 2009), the energy consumption and CO2 emissions of 6 industrial plants located in the Pirkanmaa region, Finland is reported, see table 3. Plant number 1 is a typical building energy user and plant number 6 belongs to the category of heat in process user, see table 2. The others were in the middle. Their energy use was analysed and, on the basis of the analysis for each plant, a Sankey diagram was drawn of the origin of energy related CO2 emissions. The diagrams are shown for plants 1

energy/CO2 emission analysis. For plant 1, the economic reduction potential (payback period less than 5 years), based on energy prices only was some 15% and for plant 6 2-3 %. For the other four plants, it

and 6 in fig. 2. The potential for reduction of CO2 emissions was estimated on the basis of the

Surface finishing

Drying Surface finishing



**building energy user, typical user of the district heating** 

Small plants are typical building energy users.

Small plants are typical building energy users

Small plants are typical building energy users

Small plants are typical building energy users

Some plants are building energy

users

processing

**Significant process electricity consumption** 

Grindery Pulp and paper machines Drying Pumping

Drying 

Pumping Fans

Negative and positive pressures Heating Cooling Drying

Extruders and other melting procedures Process cooling especially in the summer time

Refiners Grinders Pumping Thermal treatments Melting processes

Processes use a significant amount of electricity: Melting Thermal treatments

Surface finishing Thermal treatments Processing and shaping Welding

Printing presses

**Significant process heat consumption (water, steam, hot oil)**

Drying 

Process heating Drying 

Process heating

Water heating Thermal treatments

Melting

Drying Thermal

**Significant process direct combustion user (oil, natural gas and solid fuels)**

Drying

Drying

Incineration Melting Thermal treatments

Thermal treatments

treatments

**Industry Significant** 

**Standard Industrial Classificat ion 2002** 

**22 Publishing, printing** 

**24 Manufacture of** 

**25 Manufacture of** 

**26 Manufacture of** 

**27 Manufacture of basic metals** 

**28 Manufacture of** 

**fabricated metal products, except machinery and equipment** 

**products** 

**and reproduction of recorded media** 

**chemicals and chemical products** 

**rubber and plastic** 

**other non-metallic mineral products** 

**Table 2.** Example of energy use categorising in different industries (Aro, 2009).

In the article (Aro, 2009), the energy consumption and CO2 emissions of 6 industrial plants located in the Pirkanmaa region, Finland is reported, see table 3. Plant number 1 is a typical building energy user and plant number 6 belongs to the category of heat in process user, see table 2. The others were in the middle. Their energy use was analysed and, on the basis of the analysis for each plant, a Sankey diagram was drawn of the origin of energy related CO2 emissions. The diagrams are shown for plants 1 and 6 in fig. 2. The potential for reduction of CO2 emissions was estimated on the basis of the energy/CO2 emission analysis. For plant 1, the economic reduction potential (payback period less than 5 years), based on energy prices only was some 15% and for plant 6 2-3 %. For the other four plants, it was between 4% and 25%.

300 Energy Efficiency – The Innovative Ways for Smart Energy, the Future Towards Modern Utilities


Tools for Categorizing Industrial Energy Use and GHG Emissions 301

What does the general target of a 20% reduction in CO2 emissions mean for the 6 plants? Only plant 6 belongs to the EU ETS. For this plant, it was possible to calculate - other than the indirect CO2 emissions - what the 20% reduction will mean for the plant economy in relation to the EU ETS allowance price (€/CO2 tonne). For the other five, the relation is only indirect (through acquired electricity and heat and fuel prices) and, therefore, hypothetical. The economic effects of the allowance price (5-40 €/CO2 tonne) for different reduction targets (5-30%) were calculated for the six plants' economy as a share of turnover. Plants 4 and 5 can even cover the 20% reduction with their own energy saving measures, but the others cannot. Except for plant 6, the burden of the reduction is not very demanding. Plant 6 has to

In interviews with the employees of the 6 plants, most of them saw that there is an opportunity to manage with a 20% reduction by 2020 at the existing production levels. However, successful business requires an increase in production. They see that this growth

Other barriers for the target are excessive outsourcing and the reduction of staff and lack of knowledge. Another barrier to rapid change is the rather slow rate in the construction of new industrial buildings comprising some 2% per year of the existing industrial building stock.

Finland's population is rather small, only 5.3 million. With an area of 340 000 sq km, Finland is the 6th largest country in Europe. Finnish industry is versatile. We have light industry like the telecommunication industry, but we also have very heavy industry like the pulp and paper and steel industry. Most of the heavy industries belong to the EU Emission Trade

In Finland, we have two schemes that promote the rational use of energy that are partly funded by the government: energy audits and energy investments regimes to improve energy efficiency and to increase the production of renewable energy. Furthermore, we have a voluntary agreement to improve energy efficiency. All these activities are applicable also

Finland consists of 15 provinces. Finnish regional energy policies have primarily focused on the promotion of biofuels. There have, however, been practically no regional activities for industry, especially as regards energy efficiency. In the past, the efforts to improve energy efficiency were mainly motivated by corporate economy and to some extent by the nation's fuel reserve supply stock. Today, because of climate change, the government of Finland is more interested in what is happening in industry. Improving energy efficiency means

In a sparsely populated country with a lot of energy intensive industry such as Finland, it is a challenge to formulate a regional energy policy with a focus on industry. If we want to

expect costs of more than 1% of turnover whereas for the others it is less than 1%.

demand will be the main threat for achieving the reduction target.

System (EU ETS), while the light industries mainly do not.

**5.2. A regional level** 

for industry.

tackling climate change.

*5.2.1. Finland and Pirkanmaa region* 

**Table 3.** Key figures of six industrial plants in the Pirkanmaa Region, Finland (Aro, 2009).

Plant no. 6

**Figure 2.** Sankey diagrams for plants 1 and 6. Origin of CO2 emissions, t CO2(Aro,2009).

What does the general target of a 20% reduction in CO2 emissions mean for the 6 plants? Only plant 6 belongs to the EU ETS. For this plant, it was possible to calculate - other than the indirect CO2 emissions - what the 20% reduction will mean for the plant economy in relation to the EU ETS allowance price (€/CO2 tonne). For the other five, the relation is only indirect (through acquired electricity and heat and fuel prices) and, therefore, hypothetical. The economic effects of the allowance price (5-40 €/CO2 tonne) for different reduction targets (5-30%) were calculated for the six plants' economy as a share of turnover. Plants 4 and 5 can even cover the 20% reduction with their own energy saving measures, but the others cannot. Except for plant 6, the burden of the reduction is not very demanding. Plant 6 has to expect costs of more than 1% of turnover whereas for the others it is less than 1%.

In interviews with the employees of the 6 plants, most of them saw that there is an opportunity to manage with a 20% reduction by 2020 at the existing production levels. However, successful business requires an increase in production. They see that this growth demand will be the main threat for achieving the reduction target.

Other barriers for the target are excessive outsourcing and the reduction of staff and lack of knowledge. Another barrier to rapid change is the rather slow rate in the construction of new industrial buildings comprising some 2% per year of the existing industrial building stock.
