Enhancing Energy Efficiency, Energy Conservation, and Productivity in the Chemical Industry of Iowa

Grant# 04-02
Principal Investigator: Rudy Pruszko
Organization: Center for Industrial Research and Service, Iowa State University
Technical Area: Energy Efficiency

The United States is the largest chemical producer in the world, accounting for 26% of world production. With revenues from chemical shipments reaching nearly $454 billion in 2001, the chemical industry provides about 2% of the total U.S. GDP and nearly 12% of the manufacturing GDP. The industry exported a record $80.2 billion in chemicals in 2001. However, the registered trade balance was only $1.3 billion in 2001, an 80% decline from the previous year. On a value- added basis, chemicals are the largest U.S. manufacturing sector. The industry continues to grow, with after-tax profits in 2001 reaching a record high of $45 billion.’

The U.S. chemical industry consumed about 6.3 quads of energy in 2001. This represents about 6% of domestic energy use and about 19% of all U.S. manufacturing energy use. Nearly 50% of the energy used is transformed into chemical products. About one-third of the electricity used by the chemical industry is produced onsite, primarily by means of cogeneration. The industry has made significant improvements in energy efficiency over the last decades, reducing energy use per unit of output by over 39% between 1974 and 1995.’ However, additional efficiencies are possible.

The state of Iowa is heavily dependent on the chemical industry. It is the third-largest manufacturing sector in Iowa as measured by Gross State Product (GSP), and the second largest “Industry of the Future,” as measured by the value of shipments. The state has approximately 330 chemical manufacturing plants that fall into NAICS code 325. These plants employ over 7,250 people. Approximately 80% of these companies produce agriculture-related chemicals, including fertilizers and pesticides. The chemical industry contributed $2.8 billion to the Gross State Product (GSP) in 2001, which is 15% of Iowa’s manufacturing GSP.

The chemical industry in Iowa is made of mainly small companies with less than 20 persons and they may have not had the resources to keep up with the nation in energy conservation. Given the size of the chemical industry, it is easy to understand its position as a major consumer of energy resources. It is, in fact, the fourth-largest energy user in Iowa. Consequently, savings in this area have broad implications for the entire manufacturing sector. In an effort to achieve these savings, the Industrial Assessment Center (IAC) and the Center for Industrial Research and Service (CIRAS) propose to assess the energy uses and productivity of targeted companies in Iowa’s chemical industry sector. CIRAS will use this information to help manufacturers develop an energy conservation and productivity plan. In addition, the research findings will be used to create a more general energy conservation document that will be of value across the chemical industry sector. This document will be sent to all chemical manufacturers in Iowa, posted on the World Wide Web, and disseminated throughout Iowa’s 99 counties by Iowa State’s Extension Service. This document will include a section identifying the vast resources available to Iowa’s chemical industry sector including the Iowa Energy Center, IAC, and best practices materials available from the Department of Energy’s Office of Industrial Technology.