Social Studies April 2007

Turning Lights Down, and Profits Up

To listen to many environmentalists talk, you would assume that capitalism is the enemy of conservation. They should visit Pratt & Whitney's turbine module factory.
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In 1997, the company launched a 10-year program to reduce emissions and resource use, both to clean up its environmental act (it had been hit with a federal fine) and to save money. Between then and last year, it reduced its energy consumption by almost a fifth, even as its revenues more than doubled. American manufacturing is rife with similar stories. According to the Energy Information Administration, energy use in the U.S. industrial sector in 2005 was below its 1979 level, despite a near-doubling of output.

How was it done? Set aside romantic notions of exotic fuels and technological silver bullets. "It can be as simple as filter replacement," Kopera said. Rick Bennett, United Technologies' vice president for environment, health, and safety, said: "There were hundreds of projects. We identified the big users, and we just attacked."

At Pratt & Whitney, that meant turning off machinery and lights when they weren't being used. It meant restacking production cycles to keep fewer furnaces in operation at any given moment. It meant buying new machinery and keeping older equipment in better repair. It meant measuring and charting energy use, tasking middle managers with conservation goals, and grading them on the results. It meant consolidating plants and using lean production to shrink factories; the East Hartford turbine center, for example, is less than half the size of a factory it replaced, and it produces more.

And conservation means taking the waste out of waste heat. United Technologies expects to spend $100 million over the next three years installing "co-generation" at its facilities, with the goal of doubling energy efficiency. Just what co-generation means is on display in East Hartford, at the factory's central powerhouse.

There, a gas-fired turbine generator pumps out 30 megawatts of power—and a gale of scalding exhaust air, 800 degrees Fahrenheit. Depending on the time of year, this freestanding generator can provide all or most of the plant's energy, cutting the plant loose from the electrical grid. More to the point, the turbine's hot exhaust would once have been vented into the atmosphere but now is blown through a boiler, heating water to produce 95,000 pounds an hour of steam. That steam, in turn, heats buildings in the winter, powers air conditioners in the summer, and drives air compressors.

"The goal," says Kopera, standing in the powerhouse control room, "is to use all the steam, and right now we're just about there." Unused steam, after all, is "wasted energy. If you vent it, you've had to burn BTUs to create it." This summer's cooling months, he says, will test whether the plant can economically put all of its waste heat to work.

The word "economically" is significant. If the price of natural gas spikes and the price of grid power falls, the plant can switch over to conventional utility-provided electricity. "If it makes sense to use waste steam, we can do it," Kopera says. "If it makes sense to use electricity, we can do it. It's based on an economic calculation." What the company is buying is flexibility, which, in a world of volatile energy prices, saves money.

At another plant in nearby Middletown, a co-generation system is under construction this year. When the new system is finished, the plant will derive two-thirds of its electricity and three-fourths of its steam from waste heat.

The power bill will drop by about $75,000 a week. The $13 million up-front investment will take about five years to pay for itself.

"Five years is a long number for us," Kopera says. A five-year payback is about as far as the company is willing to stretch (non-environmental investments are generally required to earn out in more like three years). But there are still some easy savings lying around to be picked up. In Middletown, Kopera displays a new tank system that evens out the flow of compressed air to the factory floor. That allows the plant's air compressors to turn on and off less often, shaving the compressors' electricity bills by 10 percent or more. Payback: 1.5 years.

"There's still a great deal of low-hanging fruit," says David, the United Technologies CEO. In a speech in Washington last fall, he announced that America, if it tried, could reduce its energy consumption by 10 percent "in one year flat." He did not appear to be on drugs at the time. One-year savings of that magnitude, he acknowledged in our subsequent interview, would be hard to repeat in subsequent years, but smaller, incremental reductions "can go on forever."

Over the past 10 years, he notes, United Technologies has reduced its energy use about 2 percent a year. Between now and 2010, it aims to reduce energy use even faster. Doing that while "maybe growing the business at 6 percent per annum is a huge goal that we don't exactly know how we're going to meet," he says.

Environmentalists will wish him luck. Next time they feel the urge to denounce globalization for (supposedly) undermining environmental regulation, they might remember that globalization means new competition, which means cutting costs, which means cutting waste, which means cutting energy use and pollution. At the plants I visited in East Hartford and Middletown, energy use is down by more than a fourth since 1997; water use by more than half; solid waste by a fifth; airborne emissions by more than a third.

Green eyeshades will wish him luck, too. By my calculations, based on company data, if United Technologies still consumed as much energy today as it did in 1997, its annual energy bills would be almost $50 million higher. If its energy use had doubled in line with its revenues since 1997, its energy costs would be almost $300 million higher.

In a long, narrow room at the plant in Middletown, a jet engine, this one destined for a military plane, waits in harness. Like every other engine assembled here, it will be tested before leaving the factory. I ask a nearby engineer if the hot exhaust from these tests will be recaptured for energy. No, comes the reply; no one has figured out how to do that efficiently.

But check back in a few years.

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Jonathan Rauch is a contributing editor of The Atlantic and National Journal and a senior fellow at the Brookings Institution.

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