Policy Solutions

Energy & Material Efficiency

US Federal
Manufacturing

Research and Development

Federal investment in research and development (R&D) supports economic growth, drives down costs for key technologies that can be used domestically and exported abroad, and promotes U.S. leadership on clean energy and climate. Investment in R&D for industrial efficiency technologies is driven primarily by the U.S. Department of Energy’s (DOE’s) Office of Energy Efficiency and Renewable Energy (EERE). Further R&D for industrial energy efficiency comes from DOE’s National Labs and Advanced Research Projects Agency-Energy (ARPA-E). 

Federal policymakers should increase investment and enact programmatic reforms to ensure DOE focuses on advancing R&D for:

  • Alternative binding materials for cement production;
  • Deep eutectic solvents and black liquor gasification for pulp and paper production;
  • Inert anodes and multi-polar cells for aluminum smelting;
  • Improved combustion;
  • Improvements to materials recycling.

Validation and Early Deployment

Fiscal Incentives

Without targeted policies to promote early-stage deployment, producers often do not have the incentive to develop new technologies and consumers tend to shy away from using emerging products. Tax credits, loan guarantees, and other fiscal incentives targeted at the next generation of manufacturing efficiency technologies can reduce the green premium and drive private sector demand. Well-designed tax incentives must be technology neutral, predictable, flexible, and accessible to all.

Buy Clean

Buy Clean procurement aims to reduce carbon emissions by focusing on incentives and requirements for lower-carbon infrastructure and building materials. This policy approach uses the carbon intensity of materials, or the lifecycle GHG emissions involved in their production or use, as a key criterion for procurement decisions for publicly funded projects. Buy Clean sets allowable carbon-intensity performance thresholds that decrease over time. This encourages the disclosure of emissions data via environmental product declarations (EPDs), creates a market for low-GHG materials, often lowers financing costs, and reduces harmful emissions from manufacturing.

Rapid, Large Scale Deployment

Carbon Pricing

Carbon pricing, whether through a carbon tax or a cap-and-trade system, would strongly encourage carbon-intensive manufacturers towards industrial energy efficiency by incorporating the true economic and environmental costs of coal, oil and natural gas. The manufacturing sector is highly responsive to such price signals. Carbon pricing policies must include equity considerations to ensure that historically disadvantaged communities see direct benefits such as reduced pollution or rebates on energy bills. Design elements requiring on-site GHG reductions and reductions in air pollution should be included in any carbon pricing measures. A carbon price should also include competitiveness protections such as border-adjustment tariffs and carbon price exemptions for exported goods. In the manufacturing sector, carbon pricing can also be coupled with other deployment policies such as a clean product standard to potentially achieve deeper levels of decarbonization.

Clean Product Standard

A clean product standard (CPS) is a technology neutral approach to reducing emissions from the manufacturing of industrial products. In this approach, the government sets a target for the GHG intensity of a set of basic manufactured products and allows flexibility in how to meet that target—including the potential to trade with other producers. A CPS will facilitate cost-effective, market-based systems that can drive down the average GHG intensity of key manufactured goods like steel or cement.

A CPS offers an alternative or complementary approach to a carbon price for the industrial sector. 

Technology-Neutral Deployment Tax Credit

Tax credits have already successfully enabled the deployment of clean energy technologies—especially wind and solar power. A technology-neutral refundable tax credit for more efficient manufacturing technologies can spur open-ended innovation and accelerate the transition to net-zero emissions.

Technology-neutral deployment tax credits offer an alternative to a CPS or carbon pricing. This mechanism is less economically efficient than a carbon price or a CPS and would be more effective if paired with regulatory carbon pollution standards to ensure emissions reductions.

Minimum Efficiency Standards

The federal government can establish minimum energy performance standards for industrial equipment like motors, lighting, and other types of small industrial equipment. Though these technologies account for a relatively small share of overall energy use in manufacturing, efficiency standards have a successful track record of delivering energy savings and emissions reductions and should not be overlooked. EPA and DOE play critical leadership roles in advancing complementary policies for manufacturing efficiency.

Additional Manufacturing Policies