It’s increasingly common to hear industrial and political leaders making strong statements about why managing energy is strategically vital for the future. They underline the growing energy cost risk, fear of unreliable supplies, and the effect on the world’s climate. A naïve observer would naturally assume that the speakers are scouring the planet for proven best practices, technologies and policies that could be implemented to reduce energy risks and capture benefits. In reality, this is rare. Why, and what can we do about it?
The easiest reason to understand is good old fashioned hypocrisy. Energy and climate change are the fashionable topic of the day, prompting leaders to pay lip service to how engaged they are, to overstate their achievements, and to understate the challenges of achieving real changes. In these cases, an underlying lack of belief in the importance of energy productivity means there’s little appetite to seek out and implement best practices. The best recommendation to an energy manager in this difficult situation is to use transparent data and the budgeting process to hold management accountable to their words, rather than their intents.
Disbelief is another barrier to best practices. This column has repeatedly cited examples of energy management and greenhouse gas reduction programs that deliver 20% to 40% gains. But, after years of being told that a couple of percent per year is the best that can be achieved, it’s perhaps understandable that breakthroughs are viewed more as selling snake oil than reality. Here, the energy manager must establish solid benchmarking data that challenge disbelief.
Unwillingness to adopt a global and industry-wide view is probably the most common problem. The reasons are complex, and often extremely personal. This column has frequently touched on the range of energy performance, especially between the United Stated and the European Union. The gaps are large, ranging from 20% to 30% productivity differences in industry, to 40% to 50% in transportation, and 100% or more in homes and buildings.
Within industries, the ranges from best-in-class to less efficient players are often equally as wide. It’s an understandable human reaction to explain away these differences using various rationalizations, many of which would do credit to an alcoholic justifying excessive drinking. Hidden nationalism also can creep in, where experiences in a distant land in a foreign language might seem less valid than the experiences of the local domestic market. In a world of global business, there’s no place for xenophobia or chauvinism.
Healthy companies explore the differences through objective benchmarking, and if substantial energy or climate productivity opportunities are discovered, trigger a rapid and widespread best-practice transfer program. At least one company I’m working with recognizes that industries in countries such as Sweden, Japan and Germany have developed sophisticated approaches to heat recovery, saving vast quantities of cooling water, natural gas and heating oil, and reducing capital investments in equipment specifically dedicated to getting rid of waste heat. Rather than defend the status quo, this company is systematically exploring heat recovery opportunities at many of its sites. One I visited recently has a chance of completely eliminating the need for natural gas for space heating by recovering heat from a wide range of electrically driven processes.
Government communications and policies can perversely reinforce these barriers to best practice transfer. In the United States, for example, recent policy has heavily emphasized the role of future technology in resolving energy and climate challenges.
Without belittling the importance of new technology, an equal emphasis on rapidly deploying global best practices would deliver large-scale immediate results. However, given that many of these would benefit foreign companies, and require deep national and local policy changes, it’s easy to understand political resistance to this approach.
A company, however, must not have similar reluctance. Its responsibility to customers and investors is to deliver the best possible results, irrespective of where the technology or practices come from. And many of the energy productivity breakthroughs of recent decades have come from non-English-speaking countries - much might be missed by relying on Googling in English alone.
The bottom line is, be open to the belief that breakthroughs are possible. There’s no place for xenophobia and chauvinism, and local government policies might not paint the complete picture. To survive competitively, a company must deploy immediately available best practices, wherever they exist.
Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at [email protected].