The cheapest fuel

Peter Garforth says efficiency is an energy boost in good times and a risk mitigator in bad.

By Peter Garforth

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It’s been an interesting time on the world stage underlining the role of efficiency as the cleanest, cheapest, and most readily accessible “fuel.” Efficiency is once more in the headlines as a high-priority response to major energy challenges and risks. This isn’t a new thought, but one that deserves to be revisited on a regular basis in the light of the events of the day.

While it seems like it was only yesterday, the tsunami that triggered the shutdown of all 50 of Japan’s nuclear reactors was more than three years ago. Replacing 30% of all the country’s electricity is a formidable challenge, especially in the absence of local supplies of fossil fuels. The country immediately rallied around emergency power-saving measures, and consumption dropped rapidly. Many observers assumed these effects would be short-lived as the memory of the disaster faded. Not so. Three years later, the output of half the shutdown reactors has been cost-effectively replaced by efficiency.

The speedy contribution of efficiency to the Japanese energy balance is buying time to develop more resilient, cleaner, and more flexible supply strategies. These will include a larger role for renewables, highly distributed generation, and possibly even the recommissioning of a few of the less risky reactors.
In another surprising gain for efficiency, a United Nations panel recently declared that reducing emission from cars is proving to be easier and cheaper than expected. Higher efficiency standards in the United States and Europe have stimulated the global industry to accelerate the rollout of new designs and technologies. Some countries are even hitting targets ahead of schedule. The continuing rapid growth of car ownership remains a challenge, but efficiency is making a major low-cost contribution. Again this is buying time to implement the redesign of cities to reduce the need for car trips.

In a less positive turn of events, the outcome of the situation in the Ukraine could hinge on the politics of natural gas supply. Even a short-term shutdown of gas flow to the Ukraine itself and beyond into Europe would be a supply challenge of the same order experienced by Japan. Efficiency would play a major role in any reaction.

While severe, this would have much less of an impact on Europe than would have been the case 20 or 30 years ago. Overall, efficiency has steadily increased over the recent decades and continues to do so. Accelerating future efficiency plans is a relatively easy policy shift to make in an emergency, allowing the continent to absorb supply interruptions and possibly even supply Ukraine temporarily from the west.

It is reasonable for an industrial commercial energy manager to ask what these big-picture stories have to do with the day-to-day reality in a plant. This is a good question and one that deserves attention.

Peter Garforth heads a specialist consultancy based in Toledo, Ohio and Brussels, Belgium.Peter Garforth heads a specialist consultancy based in Toledo, Ohio and Brussels, Belgium. He advises major companies, cities, communities, property developers and policy makers on developing competitive approaches that reduce the economic and environmental impact of energy use. Peter has long been interested in energy productivity as a profitable business opportunity and has a considerable track record establishing successful businesses and programs in the US, Canada, Western and Eastern Europe, Indonesia, India, Brazil and China. Peter is a published author, has been a traveling professor at the University of Indiana at Purdue, and is well connected in the energy productivity business sector and regulatory community around the world. He can be reached at peter@garforthint.com.

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In some cases the links can be very direct. In a recent discussion with a large U.S. industrial client, the requirement to conduct energy audits for all major sites under new EU legislation by December 2015 was the topic. One common reaction would be to find out the minimum effort needed to meet the rule and continue with business as usual. This company, on the other hand, saw this as an opportunity to improve competiveness through efficiency.

Using the regulation as a trigger, the company is exploring completion of detailed, comprehensive audits that would exceed any statutory minimum. The company aims to complete them a year or more ahead of the deadline, opening up the possibility to implement cost-effective efficiency measures as soon as possible. Lessons learned would be proliferated to worldwide operations, well beyond the reach of the EU legislation. Rather than seeing the legislation as a hurdle to jump, the company sees it as wind in the sails to improve performance.

The big-picture stories also have other lessons. The auto industry experience is one more example of something that has been documented for years. Efficiency gains usually exceed expectations in practice and are often cheaper and easier to implement than anticipated during planning. This is not always an easy sell to management, but a few well-chosen examples are useful as supporting ammunition.

The Japanese experience underlines that it’s possible to change the behaviors and attitude of a community toward ongoing energy management. In this case it took not only a crisis, but also continuing outreach and education programs. It also took leadership at the local level to change expectations in factories, homes, and offices across the country. No energy management program can be world-class without wide employee engagement.

Both the Japanese and Ukrainian stories underline the importance of efficiency as a risk mitigation measure. Both Japan and the EU had a history of efficiency and are intrinsically able to absorb energy supply shocks. This efficiency tradition can be accelerated as needed more easily then when crisis hits. No world-class energy management program ignores efficiency as a major risk-mitigation strategy.

Read Peter Garforth's monthly column, Energy Expert.

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