First Up -- Clash of the Titans

Energy demand and climate change pose powerful challenges for industry and the world.

This month, we begin a series of five major articles all focused on the future of energy -- how it's generated, transmitted, consumed and conserved. Energy holds center stage in our Theater of Big Issues along with climate change, and there is plenty of spirited sword fighting going on in this drama. On the one hand, population growth and rising living standards in developing countries are pushing the demand for energy. Globally, ExxonMobil forecasts energy demand will increase by 30% in developing countries from 2005 to 2030, driven by a 35% increase in demand from China.

At the same time, the world faces an ongoing, though uncertain, threat from climate change, which most scientists believe is due at least in part to humans burning fossil fuels. In 2007 alone, the United States emitted 7 billion metric tons of greenhouse gases. Climate changes such as shrinking glaciers and rising sea levels are already occurring and the fear is that without massive changes toward a greener society, we will face potentially catastrophic consequences.

For most manufacturers, energy is a cost of doing business, and in an era of lean manufacturing, it makes perfect sense to treat overuse of energy as a waste and ruthlessly reduce it. For an increasing number of manufacturers, energy also represents an opportunity -- an opportunity to enter new markets, develop new technologies and more efficient products and processes, and profit from public and private incentives to go green.

A significant part of the uncertainty attending the clash of energy demand and climate change is the cost of change. Industry groups worry that current bills aimed at reducing greenhouse-gas emissions could cause serious disruptions for U.S. companies. For example, a study by the National Association of Manufacturers and the American Council for Capital Formation said the American Clean Energy and Security Act of 2009 passed by the House could result in 2.4 million jobs lost by 2030 at a cost to the gross domestic product of $3.1 trillion.

But a study by the Center for Climate Strategies looking at 54 steps recommended by a climate panel for embattled Michigan found that actions to promote renewable energy and increase energy efficiency would produce 129,000 jobs in the state and increase its gross state product by $25 billion. Along with actions already taken, the study found that greenhouse gas emissions could be reduced 20% below 1990 levels by 2025.

The Obama administration, of course, is betting heavily that investments in the green economy will not only benefit the environment but also boost U.S. manufacturing and the nation's sorry employment picture. On Jan. 8, President Obama announced $2.3 billion in tax credits for clean-energy manufacturing products. Obama said the move would help create more than 17,000 jobs.

The industrial sector in the United States consumes a little more than one-third of the nation's energy, according to the U.S. Energy Department. The most energy-intensive manufacturing industries -- bulk chemicals, refining, paper products, iron and steel, aluminum, food, glass and cement -- account for two-thirds of that total. Manufacturers have much to gain in the pursuit of a green economy, but a poorly handled transition could be devastating.

In this issue, Associate Editor Peter Alpern reports in "Emissions Regulation: A New Era Dawns," on what leading manufacturers are doing to prepare for the age of carbon reporting and regulation. In April, we'll examine energy management and the myriad tools available to companies to reduce their energy usage. In June, we'll focus on the market opportunities opening to manufacturers that are pursuing new energy technologies and the supply chains they are creating. In August, we'll examine how small and midsize manufacturers are responding to the opportunities of a green economy. And finally, in December, we'll explore the chances for the so-called "nuclear revival." Throughout the year, we'll welcome your ideas and views on The Future of Energy.

Steve Minter is IW's chief editor. He is based in Cleveland.

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