Prioritizing Energy Efficiency
Thursday, 11 October 2012
Some businesses express reluctance when it comes to embracing the path to a cleaner energy future. They see nothing but dollar signs. However, a recent case study by the Environmental Defense Fund (EDF) Climate Corps demonstrates that it is possible to get into a “virtuous cycle” of energy efficiency that pays dividends for both the company’s bottom line and the environment.
EDF Climate Corps is a great program that matches either specially-trained MBA (Masters in Business Administration) or MPA (Masters in Public Administration) students as summer fellows with companies, cities and universities interested in achieving energy efficiency to cut costs and greenhouse gas emissions. Since 2008, the program’s fellows have built business cases for smart energy investments. The end results are lighting, computer equipment and heating and cooling system efficiencies that can cut 1.6 billion kilowatt hours of electricity use and 27 million therms of natural gas annually, equivalent to the annual energy use of 100,000 homes; avoid over 1 million metric tons of CO2 emissions annually, equivalent to the annual emissions of 200,000 passenger vehicles; and save $1 billion in net operational costs over the project lifetimes.
The Virtuous Cycle of Organizational Energy Efficiency has five components: executive engagement; resource investment; people and tools; identification, implementation and measurement; and results and stories. According to EDF, the virtuous cycle is a model of change for energy efficiency across even extremely different organizations.
The business profiled in the case study is Diversey, which is a subsidy of Sealed Air. Diversey entered the virtuous cycle of energy efficiency by establishing a public commitment to reduce its greenhouse gas emissions from operations to eight percent below 2003 levels by 2013. This was also the initial component of the virtuous cycle, executive engagement.
Once Diversey’s leaders committed, policies from the top down required that energy efficiency projects produce a positive return on investment in a payback period of three years or less. This criterion allowed Diversey to invest $19 million, and yield $32 million in cash savings over the life of the program in order to reach their emissions reduction goals.
Because the goals and criteria were clearly articulated, Diversey’s ability to measure success was also positively impacted. In fact, Diversey’s environmental health and safety department received a 40 percent year-on-year budget increase, which is significant because all other divisions of the company at the time were undergoing a 50 percent budget cut. This was due to the capacity to produce data that demonstrated energy project performance. According to the report, plant managers were also engaged and incentivized to implement efficiency measures due to centralized capital budgeting.
This is all to say that there are easy and affordable ways for businesses to invest in a commitment to combat climate change that is both good for the company and the environment. Saving money is always in style; simply combine that goal with one of reducing greenhouse gas emissions and you’ll be maximizing the good you can do.