The industrial sector is one of the most significant contributors to energy use and consumption in the global energy economy. Driven by its vast array of operations and machinery ranging from manufacturing and processing to mining and transportation, the industrial energy sector is at the forefront of business energy consumption. As industries face energy challenges meeting their growing demand for fossil fuels, the question of energy efficiency and sustainability is ever-present. Today, the industrial sector needs to be more cognizant than ever of the global energy transition and energy industry trends in 2024 and the future.
This article delves into the intricate world of industrial energy use, shedding light on the ways energy is consumed inside of industrial and commercial buildings. We will explore the equipment that is burning the most energy, identify industries that are most energy-demanding, and the ways that industrial customers are facing energy industry policies and regulations.
What Is Industrial Energy Use?
Industrial energy use refers to energy consumption that takes place in industrial settings, which can encompass a wide range of activities from manufacturing and production to mining and processing. According to the International Energy Agency (IEA), in 2023, the industrial sector accounted for 37% of global energy use. In the industrial sector, electricity, natural gas, and other fossil fuels are used for powering machinery, heating, cooling, lighting, and other energy-intensive processes.
Industrial energy use differs greatly from commercial and residential energy use mainly due to peak energy demand. In commercial and residential, energy is mainly used for lighting and to heat and cool spaces. The industrial sector, however, has many other energy needs for industrial processes. These processes require thermal, mechanical, or chemical energy to transform raw materials into finished products. Due to the motors and machinery used in these processes, the peak demand for energy far outweighs that in the commercial and residential sectors.
Four Major Sectors Of Energy Consumption
When looking at energy price trends for 2024, one can’t help but to notice the major sectors driving energy demand. The four major sectors of energy consumption include transportation, industrial, commercial, and residential. Let’s look at these energy sectors in more detail below.
Transportation Energy Consumption
The transportation sector includes all modes of vehicles that are used to move people and goods from one place to another. This includes cars, electric vehicles, trucks, buses, motorcycles, trains, subways, rail vehicles, airplanes, ships and barges. While electricity and natural gas are only used in a handful of these applications (EV charging and natural gas powered vehicles), the remaining transportation sector places heavy demand on other fossil fuels such as oil and petroleum.
Industrial Energy Consumption
In addition to the aforementioned, the energy use in this sector is primarily used for process heating and cooling and for running industrial motors, while lesser amounts are used for air conditioning and lighting. Fossil fuels are also used in industrial processes as raw material inputs. Typical industrial applications include steel mills, plastics manufacturers, rock quarries, and refineries.
Commercial Energy Consumption
The commercial sector is defined as the end-use sector comprising facilities and equipment used by businesses, government entities, and non profit organizations. Energy consumption within the commercial sector is primarily used for heating and cooling spaces, lighting, refrigeration, cooking, and operating other equipment in the business. Applications in this sector include restaurants, hotels, assisted living facilities, warehousing, retail stores, churches, water and sewer authorities, office buildings, and more.
Residential Energy Consumption
The residential sector includes all forms of residential living, covering apartments, single family homes, and multi-family applications. This sector’s energy consumption primarily goes towards heating and cooling spaces, heating water, lighting, refrigeration, cooking, and powering various household appliances.
The Top Ten Most Energy-Demanding Industries
1. Chemical Manufacturing
This includes the production of petrochemicals, fertilizers, and pharmaceuticals. The chemical manufacturing industry is highly energy-intensive due to the need for heat and power in chemical reactions and manufacturing processes.
2. Steel Manufacturing
The production of steel from iron ore requires a significant amount of electricity and/or natural gas, primarily for melting and shaping the metal.
3. Aluminum Production
Similar to the steel industry, aluminum production involves electrolysis and smelting, which are processes that consume a significant amount of power.
4. Cement Manufacturing
The calcination stage of cement production is particularly energy-intensive due to the high temperatures needed to transform raw materials into cement.
5. Petroleum Refining
The processes of distillation and chemical conversion are used to refine crude oil into various petroleum products. These are very energy-intensive industrial processes.
6. Paper and Pulp Industry
This sector’s energy demand stems from the industrial processes needed to convert wood and recycled paper into pulp and eventually paper products.
7. Glass Manufacturing
Producing glass involves melting sand and other raw materials to make glass. This involves high temperatures and lots of energy.
8. Food Processing
Various industrial processes are used in food processes including cooking, refrigeration, and freezing, to preserve and prepare food products. These can all be highly energy demanding systems.
9. Textile Industry
Textile manufacturing involves numerous energy-intensive processes. This sector includes machines that spin raw materials to produce end products.
10. Mining and Quarrying
Significant drilling and material transportation take place in the mining sector when extracting raw materials from the earth. The entire process is very energy intensive.
Need Help Deciphering Your Industrial Energy Use?
Our team of energy experts helps our industrial customers to evaluate industrial energy consumption on a daily basis. Whether you are thinking about developing an energy efficiency strategy for your business or you are pricing out a retail energy contract, understanding how you consume energy and at what times is critical to your success. We can help you download historical energy usage data from the utility company to begin the analysis. Contact us today to learn more.
