Exploring New Ways to Classify Industries for Energy Analysis and Modeling

Abstract

As the US moves closer to embracing a net zero greenhouse gas emissions position, combustion processes outside the power sector are becoming urgent concerns. Industry is an important end user of energy and relies on fossil fuels used directly for process heating and as feedstocks for a diverse range of applications. Fuel and energy use by industry is heterogeneous, meaning that even a single product group can vary broadly in its production routes and associated energy usage. In the US, the North American Industry Classification System (NAICS) serves as the basis for data collection and reporting. In turn, data based on NAICS is the foundation of most US energy modeling. Thus, the effectiveness of NAICS at representing energy use is a limiting condition for plans to improve energy efficiency and alternatives to fossil fuels in industry. Facility-level data to build more detail into heterogeneous sectors is scarce. This work explores alternative classification schemes for industry based on energy use characteristics, and provides a validation of an approach to make facility-level energy use estimates based on publicly available data from the greenhouse gas reporting program. First, several approaches to industrial taxonomies and their usefulness for industrial energy modeling are summarized. Data from Industrial Assessment Centers is analyzed using unsupervised machine learning techniques to detect clusters. Cladistics, an approach from biology, is adapted to energy and process characteristics of industries. A cladogram is presented for evolutionary directions in the iron and steel sector. Cladograms are a promising tool for constructing scenarios and summarizing directions of sectoral innovation. Finally, validation is performed for facility-level energy estimates from the US EPA Greenhouse Gas Reporting Program. This validation assists in making this data source available for use in energy modeling. Together, this work explores alternative approaches for categorizing industries in a way that aids understanding energy use, and presenting pathways for the future.