European engineering companies can become leaders in energy efficiency

The engineering industry has always pursued efficiency. But the economic and environmental benefit of this pursuit of greater efficiency has long been unclear.

Roland Berger Strategy Consultants examined this issue. The findings: The energy savings achieved through engineering technology over the past decade and the possible savings in the decade to come add up to just under 7000 petajoules per year. This is equivalent to the electricity needs of 530 million households. At the same time, energy-efficient plant and machinery can reduce Europe's annual carbon emissions by around 17% between now and 2020.

"Energy efficiency is important in the engineering sector of today and tomorrow," says Torsten Henzelmann, Civil Economics expert and Partner at Roland Berger Strategy Consultants. "It gives providers and their customers a competitive edge." His team determined that the efficient technologies used in European engineering can save around 7000 petajoules of energy per year in 2020. This volume of energy could provide 530 million households with electricity every year – three times as much as the total number of the households in Western Europe.

Energy efficiency increasing in leaps and bounds

In all industry sectors that use engineered products, energy efficiency will again increase substantially compared to the past decade. This is due in part to the ongoing development of more energy-efficient technologies by engineering companies. The greater use of these products by customers and the more efficient use by end users also play a role. The use of efficient technologies among the industry's customer sectors over the next ten years will increase from 40% on average to 60%. Around half of the increase in energy efficiency will be achieved with existing technologies and half with new technologies. The three most important technology levers will remain process optimization, system control optimization and design optimization.

The energy savings in the conversion sector will more than double in the next decade compared to the last decade. Potential lies not only in more efficient products but in design optimization and increased penetration rates together with the replacement of old plant and equipment by new systems.

There are further opportunities for savings in the industry on the user side, including optimizing production processes, system control across all machines, and changing employee behavior.

Major contribution to reducing carbon emissions

"Saving energy means not only saving money, but also protecting the environment, because using less energy means lower carbon emissions," says Ralph Büchele, Principal at Roland Berger Strategy Consultants. More efficient machines and power plants in Europe can in 2020, avoid 1.090 million tons of carbon emissions per year – around 17% of the European annual carbon emissions (based on 2007 figures). Most of this figure (around 60%) comes from the power generation sector, which shows the impact both of greater efficiency and the replacement of old technology.

With strong exports and a global market share of around 20%, the German engineering sector's contribution to climate protection goes beyond national boundaries. As Henzelmann says: "To sum up, energy is a "triple win" business: the winners are the engineering sector, the customers, and the environment and climate."