Why Do You Need a Corporate Energy Management Policy?

Well-run companies are implementing formal corporate energy policies for the following reasons (in no particular order; the importance of these varies across companies):

1. Demonstrate administrative and legal compliance with respect to environmental liabilities, both current and future. Carbon is the big item here, but so are other direct emissions (fossil fuels used onsite) and indirect emissions (the emissions generated by the power plants that supply your electricity). Your front office should know that the U.S. EPA issued a mandatory greenhouse gas (GHG) reporting rule on 3/7/2009. This rule requires facilities to keep records, starting Jan. 2010, of the GHG it is responsible for producing. Facilities must begin reporting their GHG emissions starting Mar. 15, 2011. Compliance penalties for not doing so will clock in at $32,500 per day. This applies to any facility that generates in excess of 25,000 tons of GHG emissions annually. The biggest and most controllable element of emissions compliance is energy use. That’s why an energy policy is relevant.

2. Capture investment incentives that can improve energy performance and boost productivity. The federal stimulus package provides the latest in an evolving set of investment incentives. There is not “enough money for everybody.” While the disbursement of these funds is still a work in progress at this date, you can bet that the limited funds will ultimately reach the entities that are best prepared to receive them. That means (1) knowing your current energy profile, (2) knowing what the optimal profile SHOULD be, and (3) having a business plan for achieving that optimum. An energy policy is that roadmap.

3. Keeping new business opportunities open. You may be familiar with Wal-Mart: as a corporate policy, they demand that their suppliers demonstrate clean, waste-reduced production processes, or else Wal-Mart doesn’t buy from them. Your customers (the defense department and government agencies) are under executive order direction to improve the energy and sustainability performance of their facilities. It’s only a matter of time before such criteria appear in the terms and conditions of work that they bid out to contractors. It’s hard for a contractor to demonstrate compliance with these expectations WITHOUT a formal energy policy in place.

4. A formal policy is the key to buy-in from your staff. Execution of any organizational effort hinges on its people. Energy cost control requires many staff to change the way they work and make decisions. In the absence of policy, there’s very little to compel them to make those changes.

5. A good policy means less work, not more. A good corporate energy policy sets the standard for taking action. It establishes clear roles, accountabilities, and investment criteria. A clear energy policy saves the company from wasting time and effort. Without such a policy, the company must deliberate energy improvements one at a time, mixed in with all the other core business decisions that have to be made. The energy agenda then becomes a stop-and-go process, and expect to “reinvent the wheel” many times over. Think of a corporate energy policy as a way to largely “automate” the decision-making process, removing the debate and speeding up the results.

BOTTOM LINE: a corporate energy policy has two major purposes: (1) to harmonize energy improvements internal to the organization, and (2) to prepare the organization for outside scrutiny and opportunities, such as compliance and market development. In other words, if energy policy is focused only on internal cost reduction, the glass is only “half full.” A valuable energy policy is one that also helps to improve productivity and provides entry to new business opportunities.