Wednesday, May 27, 2009

Johnson Controls Releases Third Annual "Energy Efficiency Indicator"

Johnson Controls, Inc., a global multi-industrial leader in energy efficiency, commissioned research within the North American business community to examine perceptions of energy efficiency and sustainability. Named the Energy Efficiency Indicator (EEI), this survey includes responses from more than 1,400 executives responsible for managing, reviewing or monitoring energy use within their organizations.

The third annual survey examines how events from the previous year have impacted the management of energy within companies, including financing strategies, expected return-on-investment, incentives, certification, renewable energy strategies and the outlook on building efficiency trends.

Please note that in the survey questionnaire, energy was defined as natural gas and electricity expenditures. The survey was conducted in April 2009.

•Online survey completed in April 2009 by energy management decision makers.
•Job responsibilities included “reviewing or monitoring energy use within their company’s facilities, or proposing or approving initiatives to make facilities more efficient.”
•Respondents had “capital- or operations-related budget responsibility.”
•Respondents were sourced from an executive panel and facilities professionals who are members of the International Facility Management Association (IFMA)
•The survey was completed by a total of 1,422 respondents.
•The majority of respondents (71%) were chief executive officers, vice presidents, general managers, facility directors and managers.

The 2009 EEI results reveal an important distinction regarding the perception of energy efficiency within the North American business community. While a majority of key decision-makers continue to cite their enthusiasm for energy efficiency, that interest is countered by diminishing action.
Business leaders nationwide expect significant government legislation and utility incentives to promote energy efficiency investments; however a lack of available capital and unattractive payback periods are creating barriers to capture potential energy savings.

Of the organizations making public carbon commitments, 45 percent identified energy efficiency in buildings as their top carbon reduction strategy. Within the North American business community, renewable energy does continue to play a role in construction and retrofit projects, with solar electric and geothermal technologies seeing the largest increase in consideration.

It is clear that interest in energy efficiency remains high despite the turbulent economy; however fiscal limitations are barring many business leaders from taking measurable action.

Enthusiasm for energy efficiency remains strong, but is not translating into action.
•71% are paying more attention to energy efficiency than they were one year ago.
•58% continue to say that energy management is very or extremely important.

Access to capital is constraining many business leaders from making investments.
•Only 46% expect to make energy efficiency improvements financed with capital expenditures, down from 56% in 2008.
•60% expect to spend less than 10% of their facilities-related capital budgets on energy efficiency.
•The two largest barriers to capturing potential energy savings are limited capital availability (42%) and unattractive paybacks (21%).

Business leaders hold energy efficiency investments to a high payback standard.
•Nearly 50% require paybacks periods that are less than three years.

Overall, executives have a less pessimistic outlook on energy prices.
•60% believe that natural gas and electricity prices will rise over the next year, a drop from an estimated 80% response rate in 2008 and 2007.
•31% do not expect those prices to change significantly.

Business leaders now have a greater anticipation of regulation and incentives.
•85% think that significant legislation mandating energy efficiency and/or carbon reduction is likely within the next two years, up from 76% in 2008.
•44% say utility or government incentives are very/extremely influential in making energy efficiency decisions, up from 38% in 2008.

Building efficiency is the first priority for business leaders who want to make their companies more energy efficient.
•45% of business leaders say improving energy efficiency in their buildings is their top strategy to meet public greenhouse gas reduction commitments.
•Only 10% of business organizations responding to this survey have made public greenhouse gas reduction commitments.

Business leaders continue to adopt lighting tactics to address energy efficiency.
•77% have switched to energy efficient lighting, down only 6% from 2008.
•38% have installed lighting sensors, down 4% from 2008.
•Other top energy efficiency measures implemented by businesses nationwide include adjustments to HVAC temperature controls (64%, up 3% from 2008) and education of facilities operations staff (62%, down 10% from 2008).

The upward trend to include renewable energy technologies in new construction or retrofit projects continues.
•Solar electric (46%), solar thermal (26%), wind (21%), and geothermal (21%) continue to be included or considered in these building projects.
•Among the renewable technologies referenced above, solar electric (up 8%) and geothermal (up 7%) have seen the largest increase in consideration.

Note: Overall the findings highlighted above have consistent response rates from the C-level executives to facility managers. Responses are also consistent among those with large and small real estate portfolios. All statements are supported by 2009 EEI data.


Wednesday, May 13, 2009

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.


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