Efficient? Says Who?

Even the most energy efficient U.S. manufacturers and suppliers have room for improvement—especially at a time when sustainability is becoming a more important yardstick for virtually all stakeholders.

But how does one measure sustainability? It doesn’t necessarily mean renewable energy.

Sustainability sus·tain'a·bil´i·ty n.
An approach to business that creates long-term stakeholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.

In the context of this article, sustainability is managing energy risk. It is driven by a number of factors, some of which will directly, or indirectly, impact your company, and even your suppliers. Without an effective risk management plan, a perfect storm could cost many laggard companies dearly.

Some of the drivers of energy sustainability
(in no particular order of importance):

Government • Current and pending EPA regulations • Growing energy demand • Federal, state and local mandates • Executive Orders • The Department of Defense’s shift in strategy • State and local public disclosure requirements • More stringent building codes Infrastructure • Significant infrastructure deterioration • Shrinking reserve margins

Business • The 2010 SEC Guidance document • ISO 50001 • Evolution of corporate social responsibility (CSR) • Supply chain reporting • Fear of litigation • Money flow into new technologies • Peer pressure Other • Extreme weather events • Energy price volatility • Real or imagined scarcity

Corporate Citizenship

The evolution of corporate social responsibility (CSR) is a driver. In fact, many would argue it is the chief driver, followed by peer pressure. Companies recognize that chances to shape investor perceptions are strategic opportunities. They are increasingly being judged on parameters other than economic success, such as environmental and social performance.

Sustainability plans almost always include an energy reduction component with measureable goals. For instance, a 20 percent reduction in energy use may be the primary method of meeting an overall corporate CO2—the most plentiful greenhouse gas (GHG)—reduction goal. Lower energy use leads to lower CO2 emissions. And, this is where technology comes into play.

A significant level of energy efficiency is often obtained through the use of energy management systems (EMS). These can be as simple as timers that automatically turn lights or other equipment off, or as sophisticated as software programs that learn how facilities use energy, then automatically adjust usage to meet pre-programmed objectives.

Many energy managers can attest to the fact that a significant number of industrial facilities in this country do not practice good energy management. In fact, as Table 1 shows, there are plenty of facilities that do not participate in any of the generally used methods to manage their energy and emissions risks at all.

According to the Energy Information Administration (EIA), there were 194,733 industrial facilities in the U.S. at the time of their last update (2006). Of those, more than half did not participate in any general energy management activity, and nearly 80 percent had not even conducted energy audits or assessments, the typical first steps of any program. Most apparently rely solely on on-site personnel to manage their energy risks. In today’s risk-averse world, that is simply unacceptable.

How to Measure Efficiency

When the late management consultant Peter Drucker stated that “if you can’t measure it, you can’t manage it,” he could have been referring to actual energy and emissions reductions. Accurate measurement and verification (M&V) have long been the Achilles’ heel of efficiency. Without a good benchmark obtained through initial energy audits, good M&V is impossible.

Without good M&V, either through the use of the proper technology or an accounting system, and the ability to interpret and act upon huge amounts of energy data that is commonly available today, it is difficult, if not impossible, to meet your sustainability objectives. A number of software programs provide M&V, and if your facility participates in demand response programs, the M&V system must be even more robust.

Supply chain reporting is a new trend quickly emerging to extend the reach of company sustainability plans. It pushes climate change-related risks downstream, forcing suppliers to spend the money and take the actions necessary to clean up their operations.