Editor's note: The following is adapted from the Rocky Mountain Institute's Reinventing Fire: Bold Business Solutions for the New Energy Era.

Industry has long formed the foundation of America's economy, from before the first Ford Model T factory to the military-industrial complex that grew out of two world wars to the robust economic growth and high-tech innovation that followed. And whereas U.S. manufacturing is experiencing a resurgence, its old foundation—built on cheap fossil fuels and plentiful electricity—is showing cracks. Rising and volatile fuel prices, supply-security concerns and pressures on the environment are wrecking balls thumping away at many of the underpinnings of our country's key industries—and thus our prosperity.

Fortunately, we can render these wrecking balls harmless through a systematic drive to upgrade industrial energy efficiency. Even with no technology breakthroughs such an effort can, in just over a generation, transform U.S. industry and provide 84 percent more output in 2050 consuming 9 to 13 percent less energy and 41 percent less fossil fuel than it uses today. This scenario, outlined in Reinventing Fire, a book and strategic initiative by Rocky Mountain Institute (RMI), can help U.S. industry build durable competitive advantage and keep jobs from going overseas.

These seem like incredible numbers: Twice today's efficiency? Output nearly doubled with reduced energy use? The opportunity is so significant because, in spite of efficiency gains over the past decade, plentiful opportunities for energy efficiency remain for industry. The U.S. Department of Energy's 24 industrial assessment centers, which have offered energy audits for more than 30 years, report that energy savings per recommendation increased by 9 percent between 1985 and 2005. Turning our wastefulness into profit is our biggest opportunity to reinvent fire.

Dramatic efficiency gains in industry can be enabled by transformations occurring in tandem in other key sectors of our economy. For example, the hugely energy-intensive petroleum refining industry will shrink or eventually disappear as vehicles electrify. But efficiency can be doubled in two main ways: applying new technologies to old sectors, and applying old technologies to new sectors.

Adding new technologies to old sectors

A well-known success story is the steel industry. Since it recovered from the capacity overhang and devastating mill closures of the 1970s, it has quietly expanded with state-of-the-art facilities. The energy intensity to produce a ton of steel fell 40 percent from 1978 to 2008. This was driven by a new technology well suited to our scrap-rich economy: the share of steel production from electric arc furnaces (EAFs) grew from 25 percent to nearly 60 percent. EAFs recycle steel scrap in an electric furnace to produce new steel, bypassing the energy-intensive, coking coal–powered step of converting iron ore to metallic iron, and then to steel in a conventional blast furnace. Adding EAFs close to scrap sources has also pulled steel recycling rates up to the mid-80 percent range in recent years.

Even the conventional route has a more efficient alternative that is starting to make inroads. Steel industry bellwether Nucor recently broke ground on a new direct reduced iron plant in Louisiana. This innovation replaces coal with natural gas in the iron ore conversion step. If the steel industry continues to adopt new technology, it can help lead the transition outlined in Reinventing Fire.

Some old industries have less positive stories. Pulp and paper is still struggling with declining demand for its core product, a dynamic that stymies investment in new and existing facilities. Paper mills are often net-zero or even net energy producers, so many would ask: Why bother? But pulping typically produces a potentially valuable by-product—black liquor. Gasifying it has the potential to transform the industry, unlocking the opportunity for the pulp and paper producer of the past to become the biorefinery of the future—producing a portfolio of products alongside paper, from renewable electricity to boutique chemicals and bulk biofuels.

A new industrial system could leverage what once was considered waste. In Kalundborg, Denmark, for example, materials and energy flow in a symbiotic dance among a refinery, power plant, pharmaceutical factory, drywall plant and fish farm—transforming waste from one operation into valuable fodder for another, and even supplying heat to the city of Kalundborg and fertilizer to surrounding farms. The flagging paper sector could similarly help lead in reinventing fire, instead of fleeing to countries that grow trees faster than we do.

Applying old technologies to new sectors

New and growing sectors like the semiconductor industry have a high energy-saving potential despite their modernity. These industries have high investment rates and rebuild their factories often. Therefore, paying attention to energy, reducing waste and improving process designs can pay back many times over as plants are cloned in commonly used "copy exactly" programs.

Aggressive, radical efficiency is key. Traditional industry logic is to focus on productivity and yield, not energy. This can create home runs—increased throughput at the same cost—instead of base hits—the same throughput for less capital cost. But with radical efficiency, as yields rise, an efficiency-based approach becomes more powerful and lasting. Even in such yield-centric businesses as chip fabs, the power of the energy lens has now been proved. Texas Instruments (TI) used whole-system, energy-focused design to build a million-square-foot semiconductor fabrication plant in Richardson, Texas. This facility, which opened in 2009, was the first LEED Gold–rated semiconductor facility. Its innovative design saved $4 million in annual energy operating cost and 35 percent of its water use compared with TI's previous chip fab built just four miles away. Thanks to collaboration with RMI's designers, this plant cost $230 million less than the traditional design, and got the same yields; that's why it was built in Texas, not Asia.

Data centers are another classic energy-centric, growing industry that lately began to peer through the energy lens, with great benefit. In 2003 RMI released a seminal report on how to slash energy use and capital cost in large data centers. As the industry boomed, a 2007 report to Congress estimated that data centers accounted for 1.5 percent of U.S. electricity use, and that use could double in five years. Now, four years later, data centers account for 2 percent of U.S. electricity use. While demand for computing power continues to grow, industry leaders have increasingly embraced efficiency. They invested in energy-saving server virtualization as well as air-side or water-side economizers to limit chiller operation, and they paid careful attention to layout and hot and cold airflows. These traditional thermal techniques, well known in the buildings sector, formed the basis of a revolution.

The biggest and best in the scale data center world measured energy use and competed for the title of "most efficient." Much like the one RMI helped design with EDS (Electronic Data Systems, now part of HP), currently running in Wynyard, England, these data centers use only 5 to 10 percent of their total energy to cool the equipment and power the auxiliary systems. The remaining 90 to 95 percent of the energy powers the IT equipment performing work within the data center. (Therein lies the next big opportunity—a return to the high-tech side of the opportunity.) Unfortunately, those large data centers make up only a small fraction of total data center electricity use. But there's lots of opportunity left to capture: EDS estimated that had the client adopted all of RMI's recommendations, the facility could have saved up to 95 percent of its energy use and about half its capital cost. That's the next frontier for smart designers.

In another well-known example of continuous attention, Dow slashed the energy intensity of its processes by more than 38 percent between 1990 and 2005, boosting not just efficiency but profits. The chemical company calculates that it saved $9.4 billion between 1994 and 2010 through energy-efficiency investments costing $1 billion. Dow enhanced its crucial cost advantage over less efficient competitors when energy prices spiked in 2008. In fact, energy efficiency has proved to be such a good business strategy for Dow that the company is hungry for more. It now aims for a further 25 percent reduction in energy intensity by 2015. And in February 2011 executives announced an investment of $100 million in scores of new efficiency efforts. The projects that the company will fund "offer exceptional financial returns," explained Doug May, then Dow's vice president for energy and climate change.

Can U.S. industry survive, thrive and help drive the transition to a new energy era? History says it is possible. Over the past 40 years the U.S. industry has cut the amount of energy per unit of output in half, scrubbed its stacks to reduce acid rain, nearly eliminated many poisonous discharges into the water and clamped down on profligate flaring of "waste" gases. It has lost some high labor-intensity work to other countries, partly as a transition toward a service economy. But as its energy intensity shrinks and innovation adoption grows, U.S. industry can indeed compete successfully in the world and drive a multitude of benefits for America at the same time.

Adapted from Reinventing Fire: Bold Business Solutions for the New Energy Era by Amory Lovins et al., by arrangement with the Rocky Mountain Institute. Copyright © 2012 by RMI.