The competitive value of energy efficiency in industry is well documented. It yields significantly lower energy cost and allows companies to survive energy price volatility better than their peers. Equally well documented is that the companies with excellent, sustained energy management excellence are still a small minority. Recently, I had the opportunity to join the annual Energy Star Awards where one of my long-time customers, Corning, was recognized as an Industrial Partner of the Year recipient for exceptional energy management. Its story and those of the other industrial awardees underscored what it takes to be an excellent energy performer.
High-quality energy management basics have been in place for many years. These included sustained senior management commitment, clear targets and accountability, high-quality energy data, adequate and well-planned resources, and compensation linked to energy performance. These basics are summarized in the Energy Star Energy Program Assessment Matrix and seen by these leading companies as a non-negotiable minimum.
The senior management commitment was publicly on display at the awards meeting with CEOs and senior VPs actively and proudly participating. The vast majority of the awardees were market leaders emphasizing that excellent energy management supports excellent business.
Even from companies that have many years, or even decades, of recognized energy performance leadership, there was no sense of complacency in a “task completed.” They all saw significant future energy opportunities and risks, and most had a clear game plan to raise the bar. Corning had already increased energy productivity by nearly 30% over the past six years, directly impacting profits by hundreds of millions of dollars. Far from seeing this as the end of the road, Corning is plotting a road forward to capture a further 15% productivity gain in the coming five to seven years.
The Energy Star Industrial team pulled together a summary of the main themes in energy management exhibited by these companies. These are useful signposts as to how we all may consider adjusting our own programs.
Linking corporate sustainability, climate leadership, and water and energy goals and programs is becoming increasingly common with the relative emphasis tailored to the differing needs and regulatory emphasis of each major site. This calls for more collaborative management, a greater emphasis on long-term, site-specific energy and climate master plans, in turn supporting equally long-term corporate sustainability targets. Budget planning and approval processes are being restructured to support this longer-term view and larger more integrated energy projects.
Understanding how energy performance impacts all aspects of the business is becoming more embedded in a wide range of management processes. These range from customer buying decisions to daily procurement choices of energy-efficient supplies and services.
|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 firstname.lastname@example.org.
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Supporting these more comprehensive approaches is a growing recognition for greatly improved information capture, availability, and analysis. These are manifested in better metering and submetering, along with real-time energy, emissions, and water data monitoring available anywhere in the world.
Analysis using more advanced statistical approaches to track performance and forecast trends is growing. A recent example of this is using statistical methods, widely used to track consumer price indexes, to measure the overall effectiveness of corporate energy programs in a complex company with a diverse range of products. Enhanced analysis methods can also highlight the areas of highest potential risk and opportunity, enabling resources to be more effectively targeted.
These leaders also recognize their energy performance does not live in isolation and is, in fact, part of an entire supply chain. They are investing time and resources in understanding and reducing the energy footprint of both suppliers and customers. Improving the competitiveness of supply chain partners enhances competiveness for all players.
There was one technical theme that emerged pretty much across the board and was one covered recently in this column. All these leading companies consider LED lighting to be ready for prime time and are accelerating installation, both to cut energy consumption and reduce operating costs.
The inevitable outcome of all these themes is the need to have clear, differentiated communications to a wide range of stakeholders. These include all levels of internal teams from the board to individual site energy teams. External communications need to target suppliers, legislators, customers, and the community at large. In many companies, communication also needs to be appropriate to the countries and regions where the company does business.
Leading industrial companies have long recognized they have to stay ahead of the possible market and legislative impacts around energy on the climate. The recent National Climate Assessment, opinion polls in the United States and elsewhere, and weather-related headlines indicate this pressure is not going to change.
The steps these Energy Star leaders have put in place, and the directions they plan to follow not only respond to the climate dynamic, they also deliver better businesses that are better able to thrive in the face of tough global competition.