Efficiency is the mantra of modern business, but many companies appear to have trouble with their math when it comes to energy.
Energy efficiency has become an integral part of corporate decision-making in major economies worldwide, but efficiency projects face a continuing battle with other corporate priorities for investment even though they save money in the long run, a new global business survey shows.
The fifth annual energy efficiency survey was conducted by the Institute for Building Efficiency, a project of Johnson Controls, with the Urban Land Institute and the International Facilities Management Association.
The survey found that saving money continues to be the prime motivator worldwide for companies to undertake building and process efficiency projects, but also that these projects often get the backseat to other business initiatives. Participants included 3,868 building owners and facility managers from commercial, industrial and institutional sectors worldwide,
David Myers, president of building efficiency for Johnson Controls, told the 22nd Annual Energy Efficiency Forum in Washington, D.C. on June 16 that the survey shows shifting motivators after saving money. Concern about greenhouse gases was the second driver globally in 2010; it now lags behind other government energy policies and incentives in the U.S. and Asia.
And while U.S. companies are still motivated by their public images, Chinese and Indian companies were more concerned about security of energy supply lines.
That’s the chief motivator for the US Navy and Marine Corps, Navy Secretary Ray Mabus told the conference. Protecting fossil fuel supply lines has proven costly in Marine lives, in Afghanistan particularly, he said.
Mabus said he considers fossil dependence a military vulnerability, so the Navy has set a goal of getting half its energy from sustainable non-fossil sources by 2020. Among the measures to reach that goal: all new and refurbished Navy buildings must meet at least the gold standard of the US Green Building Council’s LEED program starting in 2012.
Long Term Savings
Charles Holliday, chairman of Bank of America and former chairman of Dupont, said companies have to “bias” internal processes so managers see the long-term benefits from energy-saving projects. He said Dupont managers were able to frame efficiency programs that returned 12% on capital investment, the company minimum, and Bank of America has cut energy use 13% and now is aiming for another 15%.
Key, he said, is motivated people. Leadership is needed to create a culture of sustainable energy efficiency. “Use the people you have” to raise energy efficiency, he advised.
People power was on display in a conference session showcasing the Environmental Protection Agency’s National Building Competition. The 2010 winner, with a 37% savings in the 12-month period, was Morrison Hall of University of North Carolina.
Chris Martin, the university’s director of energy management, said students voted to add $4 to their fees to finance the $30,000 project. The biggest outlays were for lighting upgrades, he said, but a lot of savings came from “tune-ups” to the HVAC (heating, ventilation and air conditioning) systems, including sealing building leaks.
Sears spent about $180,000, mainly on lighting and HVAC, at its Glen Burnie, Maryland store to cut energy 32% and come in second in the EPA contest.
A fully occupied commercial building in Arlington, Virginia operated by Glenborough placed third by cutting usage 28% with a $1 million retrofit of electrical and HVAC.
While all three contestants explored user behaviors to influence energy use, those savings were consistently small compared to efficiencies they could wring out of wasteful lighting and HVAC.
Myers said federal loan guarantees for efficiency projects and a change in tax law to provide clearer incentives for efficiency would accelerate private efficiency initiatives. Two lawmakers – Senator Jeff Bingaman (D-NM) and Representative Charles Bass (R-NH) – said efficiency has bipartisan backing but cautioned any action will be difficult this Congressional session.
Efficiency will continue to be driven by the private market in any case because building sustainability has become a competitive advantage, said Kenneth Hubbard, executive vice president of the Urban Land Institute. He added “we haven’t even begun” to see the efficiencies that innovation will create in buildings of the future.
Picture: US President Barack Obama tours Cree, Inc, a manufacturer of energy efficient LED lighting, in Durham, North Carolina, June 13, 2011, alongside Chuck Swoboda, CEO of Cree, Inc., prior to speaking about the economy.