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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