 
President's Energy Efficiency Incentive Proposal
Faces Skepticism among Industry Professionals
January 26, 2012
by Sahely Mukerji, smukerji@glass.com
In his State of the Union speech Tuesday night, President Obama
proposed
to increase the energy efficiency of the industrial sector by providing
new incentives for manufacturers to upgrade equipment to lower energy
use in their facilities. The incentives would lower their energy
bills by $100 billion over the next decade, the president said.
Seemingly, such incentives would be useful to the glass and glazing
industry, given the energy-intensive nature of glass manufacturing.
However, glass professionals remain doubtful.
"I'm skeptical that these energy-efficiency incentives will
be made in a meaningful way," says Arlene Z. Stewart, president
of AZS Consulting Inc. in Gainesville, Fla. "The devil is always
in the details.
Competitive companies have already made the
'low-hanging' energy upgrades because that's what makes economic
sense - not wasting their profits is one of the things that keep
them competitive. What they really need is a boost to make comprehensive
deep energy upgrades that have longer payback periods. Remember,
the glazing industry uses facilities that stay on for 15 years at
a time - that's an eternity compared to a Wall Street quarter."
Unfortunately, Congress has not traditionally funded those because
of their big price tag, Stewart says. "Instead they fund small
'Band-Aid' amounts that go to companies [that] arguably should have
made the same changes their competitors did - so we reward companies
for being slow and backward, something completely antithetical to
a free and fair market," she says. "Alternatively, the
economy has already weeded out a lot of marginal companies, so Congress
could allocate funds that can't be spent because the companies already
bought the Band-Aid, but they can tell their voters they did something
for business. Either way, it's governmental deus ex machine."
Earnest Thompson, director of corporate marketing and brand management
at Guardian Industries in Auburn Hills, Mich., also is on the skepticism
bandwagon. "This new proposal for incentives and breaking down
regulatory barriers is certainly welcome," he says. "The
devil is in the details -- at least, that's how the old adage goes
-- so we need to hear a lot more about what this really means.
It is also worth noting that glass products are more and more energy-efficient
in performance every year. That's a nontrivial element to this discussion
that shouldn't be overlooked."
Approximately 35 percent of the energy used to create flat glass
is lost as flue gasses, says Robert Weisenburger Lipetz, executive
director of Glass Manufacturing Industry Council in Westerville,
Ohio. "This points to the opportunities present in combined
heat and power (CHP) and waste heat recovery (WHR) support,"
he says. "For a variety of reasons, there has been almost no
new industrial CHP since 2005. WHR remains one of the greatest financial
opportunities for efficiency increases, but there are sometimes
legal speed bumps that trigger the application of more strict environmental
regulations to host heat-generating processes when such equipment
is installed."
The cost of energy is the second largest expense item that glass
manufacturers incur to operate glass melting furnaces, Lipetz says.
"This is second only to the cost of depreciating the enormous
capital investments. Federal policies that incentivize investment
in more energy-efficient technologies and reduce the regulatory
barriers will pay large dividends in increased domestic productivity,
jobs and reduced energy consumption."
Michael P. O'Brien, president and CEO of the Window & Door
Manufacturers Association (WDMA) in Washington, D.C., says WDMA
welcomes incentives for manufacturers to make energy upgrades in
the their facilities, "but, more importantly, we hope that
there is a recognition that creating 'clean energy jobs' includes
the production of energy-efficient windows, doors and skylights,
which can make a huge impact on reducing energy consumption in the
U.S. and our dependence on foreign sources of oil."
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