German engineering companies are leaders in energy efficiency

• Broad-based survey of German engineering companies and interviews with experts and customer focus groups
• The engineered products sector makes a large contribution to saving energy, thereby protecting the climate
• The use of efficient technologies by the industry's customers will rise from an average of 40% to 67% over the next decade
• Total annual savings already achieved and still possible: Just under 1800 petajoules – equivalent to the electricity consumption of 80% of Western European households
• Energy-efficient machines can help reduce Germany's annual carbon emissions by around 25% between now and 2020

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 on behalf of VDMA, the German association of engineering companies, and has produced a study entitled "How the engineering sector contributes to energy efficiency". 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 1800 petajoules per year. This is equivalent to the electricity needs of 138 million households – 80% of all households in Western Europe. At the same time, energy-efficient plant and machinery can reduce Germany's annual carbon emissions by around 25% 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." In the study "How the engineering sector contributes to energy efficiency", produced by Roland Berger Strategy Consultants for VDMA, experts determined that the efficient technologies used in engineering over the past decade now save around 630 petajoules of energy per year. This is equivalent to reducing energy costs by EUR 6.7 billion. Over the next decade, further savings of just under 1200 petajoules per year will be added, making a total of 1800 petajoules per year within just 20 years. This volume of energy could provide 138 million households (around 80% of households in Western Europe) with electricity every year.

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 67%. 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 plants in Germany today already emit 71 million tons less carbon dioxide than ten years ago. Over the next ten years, an extra 198 million tons of carbon emissions can be avoided – around 25% of Germany's 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, "If we extrapolate the figures to a European level, we estimate the savings to be five times more than in Germany." To sum up, energy is a "triple win" business: the winners are the engineering sector, the customers, and the environment and climate.