Best Practices Can Close Energy Gap and Accelerate Industrial Sustainability Goals

A University of Cambridge study finds that industrial firms using management-based best practices achieve over twice the energy efficiency gains of the sector average. These practices offer a low-cost, scalable solution to accelerate decarbonization alongside high-tech innovations.

In a groundbreaking study from the Institute for Manufacturing at the University of Cambridge, researchers Mohammed Ali and Steve Evans shine a spotlight on the transformative power of management-based best practices in driving industrial energy efficiency. Published in Energy Policy, their work challenges conventional approaches to industrial decarbonization, which typically center on capital-intensive technologies like carbon capture, electrification, and hydrogen. Drawing on nearly two decades of UK industrial data, the study reveals that companies implementing best practice strategies achieve energy efficiency gains more than double the industrial average. These findings suggest that overlooked management practices could be key to meeting urgent climate targets, quicker and at a lower cost than previously believed.

Best Practices: A Powerful but Underused Solution

The industrial sector accounts for a major share of global greenhouse gas emissions, yet it has long been labeled “hard to abate.” As nations push toward net-zero targets, the dominant policy narrative has focused on technological innovations requiring significant infrastructure investment. While such innovations are essential, they are slow to implement and often prohibitively expensive, especially for developing economies. The Cambridge study flips this narrative by highlighting how proven management systems, such as lean manufacturing, Total Quality Management (TQM), ISO 50001 certification, and Strategic Energy Management (SEM), deliver consistent, long-term gains. These practices emphasize continuous improvement, employee engagement, and systematic monitoring, leading not just to energy savings but to better overall productivity.

Despite their promise, such best practices remain marginal in most national decarbonization strategies. The UK's Industrial Decarbonization Strategy, for example, focuses predominantly on future-oriented technologies while barely mentioning the role of management-led interventions. The study argues that integrating these practices at scale could unlock enormous potential for emissions reductions, particularly during the transition period, while larger technologies are still ramping up.

Measuring Efficiency with a Sharp Lens

To establish this argument, the researchers used the Logarithmic Mean Divisia Index (LMDI) decomposition method to assess changes in energy intensity across 11 UK industrial subsectors between 2002 and 2019. Energy intensity, defined as the energy consumed per unit of economic output, serves as a proxy for energy efficiency. Data was sourced from the Department for Energy Security and Net Zero (DESNZ), the Office for National Statistics (ONS), and other UK government bodies, ensuring reliability and sectoral comparability.

The results were benchmarked against best practice firms identified in an earlier study by Lavery et al. (2013). These companies were selected based on long-term, validated energy intensity reductions, with efficiency gains measured using compound annual growth rates (CAGR). This rigorous methodology allowed the researchers to distinguish genuine efficiency improvements from fluctuations in production or market anomalies. The contrast was stark: while the industrial sector as a whole improved energy intensity at a rate of 2.11% per year, best practice companies achieved an average of 5.16% annually.

Efficiency Gaps Across Sectors

The study found significant variations across sectors. In areas like non-ferrous metals, paper and publishing, and mineral products, best practice companies outpaced the industrial average by 3% to 4% per year. Mechanical engineering, vehicles, and textiles also showed considerable room for improvement, with best practice firms leading the charge. For instance, in the vehicles sector, best practice companies achieved annual efficiency improvements of 7.4%, nearly double the sector average.

One notable exception was the iron and steel sector, where best practice firms posted lower gains than the sector as a whole. The authors attribute this anomaly to structural changes such as plant closures and offshoring of production, which skewed the data. When output shifts abroad, national energy intensity appears to improve, but global emissions remain unchanged or may even rise, highlighting the need for policies that address cross-border carbon leakage.

Policy Implications: From Insight to Action

These findings carry powerful implications for policymakers. By demonstrating quantifiable energy gains from best practices, the study provides a clear rationale for integrating management-based strategies into national decarbonization plans. Policymakers can support adoption through targeted financial mechanisms, such as tax credits, low-interest loans, and subsidies for SEM training, as well as mandatory energy audits and performance benchmarks. Public-private partnerships will be vital to develop sector-specific metrics and showcase replicable success stories.

The research also supports global energy efficiency goals. The International Energy Agency (IEA) has called for doubling the current global rate of energy intensity improvement, from 2% to 4% annually, by 2030. Yet it offers no concrete roadmap for achieving this. The Cambridge study fills that gap, showing that if best practices were widely implemented, an additional 20% reduction in energy intensity could be achieved by 2030, helping to meet and even exceed international climate commitments.

A Rebound Myth Debunked

Concerns about the rebound effect, the idea that energy efficiency might lead to increased consumption, are addressed directly. While theoretically valid, the authors argue that empirical evidence shows rebound effects rarely exceed 40%, and in most industrial applications, remain far below that threshold. The benefits of efficiency gains, lower costs, reduced emissions, and enhanced competitiveness, vastly outweigh any marginal increases in energy demand. Moreover, best practice firms are often more resilient in volatile markets and better positioned to lead in a low-carbon economy.

The research underscores that management-based best practices are not just operational tools; they are strategic assets. When applied systematically, they can serve as a powerful force for industrial transformation. As governments and industries seek faster, cheaper, and more reliable ways to decarbonize, the findings from this study offer a crucial lesson: the path to net-zero may lie not just in high-tech innovation, but in doing what we already know, better.