Ability to switch fuels falls in manufacturing sector

by Talk Business & Politics staff (staff2@talkbusiness.net) 38 views 

The capability of the manufacturing sector to switch the fuels it uses in furnaces, boilers and ovens has declined in recent decades, but manufacturers can take advantage of price differences and cope with supply shortages by switching fuels, according to the U.S. Energy Information Administration.

The EIA recently released a report on its 2014 Manufacturing Energy Consumption Survey, and it showed the percentage of manufacturers that could switch fuels in less than 30 days declined from 24% in 1994 to 10% in 2014. As a result, manufacturers are less capable of responding to changes in regulations and market conditions, according to the report.

The most common reason for not being able to switch fuels is that on-site equipment wouldn’t support it. This reason accounted for 78% of unswitchable natural gas consumption, 75% of unswitchable electricity usage and 62% of unswitchable coal use. Other reasons for not being able to switch fuels included lack of available alternative fuels, environmental restrictions on the fuels and restrictions of long-term contracts.

Natural gas is the most common fuel used in the manufacturing sector, and the percentage of the sector that uses the fuel rose from 35% in 2006 to 39% in 2014. The sector has shifted from coal and petroleum products as a result of increased availability and lower prices of natural gas and the ability to comply with environmental regulations using natural gas. The share of natural gas consumption in the sector that’s unswitchable has risen from 72% in 1994 to 89% in 2014.

In 2014, the five industries that consumed the largest amount of natural gas were food, paper, petroleum and coal products, chemicals and primary metals. These industries accounted for 81% of total fuel consumption in the United States and 81% of natural gas consumption in manufacturing. The chemical and primary metal industries were the least able to switch fuels, while the paper and food industries had greater ability to switch.

Industries that use natural gas as a chemical feedstock are less likely to invest in fuel-switching capabilities than those that don’t use the fuel as a feedstock. For example, natural gas is used to produce ammonia in order to make nitrogenous fertilizers, and 96% of those manufacturers don’t have the capabilities to switch fuels.