From shop floor to top floor: Best business practices in energy efficiency

U.S. Department of Energy's Industrial Technologies Program
Tags: energy management

With rising energy prices and climate change legislation trending to the forefront of domestic and global policy reforms, companies across the United States are placing heightened importance on the reduction of energy intensity and associated carbon emissions. Those companies paying greater attention to energy efficiency are reporting increases in productivity, billions of dollars in savings, and millions of tons of avoided greenhouse gas emissions, according to the Pew Center on Global Climate Change's recently released report, From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency.1 The report documents cutting-edge energy efficiency strategies, describes best practices, and provides guidance and resources for other businesses seeking to reduce energy use in their internal operations, supply chains, and products and services.

Andre de Fontaine, a Markets and Business Strategy Fellow at the Pew Center, delivered a Webcast summarizing findings from the report on April 1, 2010, as part of the U.S. Department of Energy's (DOE's) Industrial Technologies Program's (ITP's) Thursday Webcasts for Industry series. Mr. de Fontaine provided an overview of the Pew Center, its Business Environmental Leadership Council (BELC), and key findings from the report, including the motivations driving businesses to adopt more aggressive energy efficiency strategies and the common barriers to implementing organization-wide efficiency initiatives.

Background
Mr. de Fontaine began by explaining that the report stemmed from a shift in business leaders' perceptions of energy and climate change issues. The combination of rising energy prices, increasing concern about climate change, and growing consumer support for energy and environmental issues has driven many organizations to make corporate environmental commitments. Energy efficiency has surfaced as a top strategy for companies to act on these commitments, and many are going well beyond the scope of earlier efforts.

The Pew Center set out to explore the best practices in corporate energy efficiency strategies, focusing on management approaches to improving efficiency throughout a company. Using a grant awarded by Toyota, the Pew Center launched the Corporate Energy Efficiency project. This project was a three-year effort, which included a survey of BELC members and other leading companies, in-depth case studies of six companies with exceptional programs and strategies, four BELC workshops on key energy efficiency topics, and broad research in the corporate energy field.

Overview and Findings
A key finding from the report noted by Mr. de Fontaine was the extent to which climate change commitments are driving corporate energy strategies. He indicated that as companies are committing to carbon reduction and evaluating their carbon emissions, they are beginning to see energy use in a new light. On average, the companies that were surveyed reported spending less than 5 percent of total revenues on energy, but when they calculated their carbon footprints, they typically found their energy consumption accounting for the majority of their emissions impact.2Therefore, energy shifts from a small-cost item to the largest contributor of their carbon footprints.

Additionally, Mr. de Fontaine went over the elements of the best corporate energy efficiency strategies, which the report summarized into "Seven Habits" of core practices and principles:

  • Efficiency is a core strategy.
  • Leadership and organizational support are real and sustained.
  • The company has SMART (specific, measureable, accountable, realistic, and time-bound) energy efficiency goals.
  • The strategy relies on a robust tracking and measurement system.
  • The organization puts substantial resources into efficiency.
  • The energy efficiency strategy shows results.
  • The company effectively communicates efficiency results internally and externally.

Another point of discussion included the common challenges and barriers faced by companies when implementing organization-wide energy initiatives. The most common barriers identified included a lack of project funding, lack of staff time and expertise, inadequate management tools, and insufficient technical information.

Case studies of six highly effective corporate energy efficiency programs supplemented the report. The case study companies included The Dow Chemical Company, United Technologies Corporation, IBM, Toyota, PepsiCo and Best Buy. Mr. de Fontaine addressed aspects of the companies' efficiency initiatives that are helping them achieve significant reductions in energy use and carbon emissions. While some companies have integrated approaches to achieving superior corporation-wide energy performance, others have specific initiatives targeting products and services, the supply chain, and internal operations.

From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency documents what organizations are doing and what they can do to reduce energy use and carbon emissions. With business accounting for a large amount of energy use in the United States, the Pew Center's study suggests that they not only have an opportunity to face today's energy and climate challenges, but they also possess the tools needed to do so.3

Additional Information
For the complete report, From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, go to the Pew Center on Global Climate Change's Web site: http://www.pewclimate.org/energy-efficiency/corporate-energy-efficiency-report.

To access or download (PDF and audio file) Mr. de Fontaine's presentation, visit ITP's Thursday Webcasts for Industry page: http://www1.eere.energy.gov/industry/resources/thursday_webcasts.html.

To receive e-mail notifications on upcoming Thursday Webcasts for Industry and other ITP news, please go to http://www1.eere.energy.gov/industry/subscribe/index.html.

ITP's Thursday Webcasts for Industry help industrial personnel learn about DOE software tools, technologies, partnership opportunities, and other resources that can be used to save energy and reduce carbon emissions. They occur on the first Thursday of every month from 2:00 to 3:00 p.m. Eastern Time. You can register to participate in upcoming Webcasts by visiting the ITP events calendar (http://www2.eere.energy.gov/industry/newsandevents/events.html) or the Best Practices training calendar (http://www1.eere.energy.gov/industry/bestpractices/events_calendar.asp).

Endnotes
1Pew Center on Global Climate Change, From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, April 2010, Page iii, http://www.pewclimate.org/docUploads/PEW_EnergyEfficiency_FullReport.pdf.

2Pew Center on Global Climate Change, From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, April 2010, Page v, http://www.pewclimate.org/docUploads/PEW_EnergyEfficiency_FullReport.pdf.

3Pew Center on Global Climate Change, From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, April 2010, Page vii, http://www.pewclimate.org/docUploads/PEW_EnergyEfficiency_FullReport.pdf.