In this paper, we evaluate and quantify the energy losses associated with compressed-air systems, and their costs to manufacturers. We also show how to reduce the cost of compressed air in existing facilities by making some modifications with attractive payback periods. Among the measures, we investigate to reduce the compressed air are: (1) repairing air leaks, (2) installing high-efficiency motors, (3) reducing the average air inlet temperature by using outside air (4) reducing compressor air pressure. We also illustrate the potential saving associated with each measure by using realistic examples. Copyright (C) 2002 John Wiley Sons, Ltd.