From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency
In the last decade, rising and volatile energy prices coupled with increasing concern about climate change and growing support for action on energy and environmental issues has driven a surge of corporate environmental commitments. Energy efficiency has emerged as a key component of these commitments. Leading firms that give greater attention to energy efficiency report billions of dollars in savings and millions of tons of avoided greenhouse gas emissions, according to Pew Center’s report “From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency.” This report documents leading-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.
The report was developed over nearly two years of effort, including a detailed survey of the Pew Center’s Business Environmental Leadership Council (BELC) members and other leading companies, in-depth case studies of six companies, a series of workshops on key energy efficiency topics, broader research in the corporate energy field, and development of a full-featured Web portal to provide a platform for highlighting and updating key findings from the project as well as providing tools, resources, and other important information. The project was funded with generous support from Toyota.
Full Report (Download pdf)
Executive Summary (Download pdf)
- Dow Chemical (Download pdf)
- United Technologies Corporation (Download pdf)
- IBM (Download pdf)
- Toyota Motor Engineering & Manufacturing North America (Download pdf)
- PepsiCo (Download pdf)
- Best Buy (Download pdf)
Press release (click here)
Audio of teleconference on the report (click here)
April 12, 2010
By Eileen Claussen
This article originally appeared in Reuters.
While policymakers in Washington debate the best path forward for dealing with climate change, a growing number of U.S. businesses have discovered a simple technique that can lower costs, increase productivity, and slash greenhouse gas emissions. What’s more, it can work for any business no matter what they make—whether it’s potato chips or computer chips.
It’s called energy efficiency, and a growing number of U.S. businesses are starting to get it.
What does it mean to be efficient? Seven habits of highly efficient companies as identified in the Pew Center’s new report From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency, lists designating full-time staff to be accountable for energy performance, communicating externally the company’s successes in reducing energy costs and emissions and – perhaps most importantly – integrating sustainability as a core part of corporate strategic planning and risk assessment.
The results of this two-year study, featured this week at our Corporate Energy Efficiency Conference in Chicago attended by 260 representatives from 120 companies and universities, speak for themselves.
Dow Chemical, which purchases as much energy in a year as Australia, estimates that its efficiency efforts have saved the company $8.6 billion since 1994 while avoiding about 86 million tons of carbon dioxide emissions. The retailer Best Buy says that in 2008 its sales of certified ENERGY STAR products saved customers over $90 million in electric bills.
Why are they doing it? For starters, higher and more volatile energy prices.
Energy experts at Toyota think of it as a treasure hunt for low-cost efficiency gains that equate to big cost savings. Like other innovative companies, Toyota empowers its employees to uncover and correct inefficient energy practices at their own plants and, in some cases, for their suppliers. These efforts are in line with Toyota’s goal to reduce energy use per vehicle produced by 30 percent in 2011.
But concern about climate change, and growing customer and employee support for action on energy and environmental issues also matter, according to our corporate energy efficiency report. In many cases, CEOs are personally spearheading efficiency efforts at their companies, reflecting the priority now given to energy saving measures.
“The most inexpensive items are generally improvements in energy efficiency, some of which are economic even without a price on carbon,” said Exelon CEO John Rowe at the conference. Exelon, one of the country’s largest electric utilities, cut energy use at its corporate headquarters by 50 percent by retrofitting it to meet LEED Platinum standards.
The most effective companies are also looking outside their own walls to tap into even greater efficiency opportunities. This means working with suppliers to adopt energy efficient practices, and designing products that allow consumers to share in energy savings.
Earlier this year, Wal-Mart announced a goal to reduce carbon emissions from its global supply chain by 20 million tons, which is the equivalent shuttering six average-sized coal plants or taking 3.8 million cars off the road for a year. United Technologies recently announced a goal to improve the energy efficiency of its products by at least 10 percent by 2010.
Energy efficiency also drives broader innovation, and the benefits go beyond dollars saved and emissions reduced. A focus on energy efficiency can lead to reevaluating business practices, often turning up improvements that increase productivity and enhance quality.
Ambitious energy-savings targets forced Frito Lay to reexamine the way it bakes tortilla chips. By installing new draft controls on ovens that reduced heat loss and evened out heat distribution, the quality of the chips improved. At IBM, a focus on efficiency led to equipment upgrades that reduce energy use and improve reliability in semiconductor manufacturing processes.
It is encouraging to see so many leading companies embrace energy efficiency as a win-win solution. But energy efficiency isn’t just for businesses.
We can all cut energy use, lower greenhouse gas emissions, and save money by taking simple steps like turning off the lights when we leave the room, adding insulation in our homes, and taking shorter showers.
But I’ve been around long enough to know that we can’t rely exclusively on voluntary action to achieve our environmental goals.
We need a comprehensive national clean energy policy that puts a price on carbon. Legislation that establishes such a price would unleash hundreds of millions of investment dollars, deliver an adrenaline shot to our nation’s manufacturing sector, and create thousands of well-paying jobs. Energy efficiency sits atop the list of low-carbon choices poised to deliver immediate results in a clean energy economy.
Leading corporations have shown us what is possible. It is time we follow in their footsteps and embrace energy efficiency as something we can do right now to help create a safer, more prosperous future.
Eileen Claussen is President of the Pew Center on Global Climate Change.
Eileen Claussen is President of the Pew Center on Global Climate Change
On Friday, March 12, we held a briefing on jobs and opportunities in clean energy markets.
Today, the President signed an Executive Order creating an Export Promotion Cabinet of top officials and an Export Promotion Council, a private-sector advisory body. This Executive Order serves to highlight once again how important American exports and competitiveness are to economic recovery and continued US economic strength. While much hand-wringing has occurred over the potential for climate and energy policy to hurt the ability of U.S. firms to compete in international markets, the opportunity of such policy to enhance the competitiveness of U.S. businesses has received less notice. The irony is that even as the planet warms, the United States may be left standing out in the cold if it doesn’t choose to lead in the development of next-generation energy technologies.
Domestically and internationally, climate action in 2009 laid critical groundwork for potential breakthroughs in Congress and global negotiations in 2010. Yet with an issue as complex and political as climate change, turning groundwork into policy is a challenge. 2010 will undoubtedly be a pivotal year for climate change – but first it is instructive to take a look back at what happened in 2009 and how that shaped where we are today.
We captured these highlights in our annual Year-in-Review Newsletter – a useful compilation of 2009’s big climate change stories and related insights. The year’s major domestic action included passage of the landmark House climate and clean energy bill along with numerous Obama administration efforts to improve our climate and economy. These accomplishments included the stimulus bill’s $80 billion in clean energy-related funding and EPA actions, including the endangerment finding, the greenhouse gas reporting rule, and stricter auto-efficiency standards.
Copenhagen consumed international climate attention in 2009, culminating in the pre-dawn hours of December 19 when final touches were put on an accord directly brokered by President Obama and a handful of key developing country leaders. While many questions remain after Copenhagen, our summary of the conference provides a sound starting point for grasping what transpired at the year’s largest climate event.
The lead-up to 2009’s main events required a great deal of work, and some of the year’s highlights include the detailed Blueprint for Climate Action released one year ago this month by the influential business-NGO coalition U.S. Climate Action Partnership (USCAP). More industry leaders also showed support for mandatory climate action by joining our Business Environmental Leadership Council (BELC). And efforts to reach business communities, employees, and families expanded through the Make An Impact program. In partnerships with aluminum manufacturer Alcoa and utility Entergy, we continue to provide individuals with strategies to save energy and money while protecting the environment.
We continued to educate policy makers and opinion leaders, producing reports, analyses, and fact sheets on topics ranging from clean-energy technologies, climate science, competitiveness, and adaptation. Featuring expert insights and thoughtful opinions, we informed broad audiences about the immediate need for climate action. And our timely, relevant work moves forward in 2010 as we seek progress in addressing the most important global issue of our time.
Tom Steinfeldt is Communications Manager
“Kick the grocery bag habit, turn the thermostat down, change just one in four bulbs to CFLs, and drive smarter,” that’s my advice in a nutshell as I travel around the country talking to people about saving money and saving energy through the Make an Impact program. Now, a great new study by David Biello in this month’s Scientific American backs this message up: “33 simple actions—ranging from improving the insulation to carpooling—could cut those annual carbon emissions by 123 million metric tons. That savings would more than entirely offset emissions from petroleum refineries, iron and steel works, and aluminum smelters combined.” Those aren’t small numbers and could represent as much as 7 percent of our emissions. There really is a role for the little guy in tackling the challenges of climate change.
For the last year we’ve been holding workshops and talking with communities about simple steps we can each take to save money, save energy, and save the planet along the way as part of The Make an Impact program (www.alcoa.com/makeanimpact or www.entergy.com/makeanimpact). Make an Impact is an education and action partnership between the Center and two thought-leader companies, Alcoa and Entergy. The program’s cornerstone is a website that anyone can visit, filled with non-biased, science based tools and information about reducing personal energy consumption. Those who try its carbon calculator will even get customized tips for improving their energy use choices. Originally designed to help employees, the website, tools and workshops have grown to include communities where partners have operations and their customers.
As energy prices continue to swing and the prospects for carbon constraints grow, it’s no wonder more and more companies are focusing their efforts on energy efficiency. But while most firms recognize the benefits of energy efficiency, many lack the information and resources required to take their efficiency programs to the next level.
To help provide these resources, we have launched a web portal with tools and information to help companies develop stronger energy efficiency strategies. The key feature of the portal is a searchable database of the energy efficiency activities undertaken by the 45 companies in the Center’s Business Environmental Leadership Council (BELC).
Also included on the web portal are results of our recent survey distributed to 95 major corporations that offer key insights for those exploring best practices in corporate energy efficiency. These include:
- Firms recognize the energy paradigm is changing rapidly.
- Companies are responding by establishing corporate-wide energy efficiency targets.
- Senior management support is critical in the development and implementation of energy efficiency programs.
- The most common challenge companies face in pursuing efficiency gains are resource constraints, especially limits on capital.
- Employee engagement is an effective, but possibly underutilized strategy for improving energy efficiency.
- Energy efficiency can be a gateway to wider business innovation.
The portal and survey are part of a larger research project that seeks to document and communicate best practices in corporate energy efficiency strategies across the following categories: internal operations, the supply chain, products and services, and cross-cutting issues. The next step of the project is the release of a comprehensive report summarizing our findings at a major conference in Chicago, April 6-7, 2010. The project is funded by a three-year, $1.4 million grant from Toyota.
Welcome to our new blog. This blog presents ideas and insights from the Center and its experts on topics critical to the climate conversation. These topics include domestic and international policy, climate science, low-carbon technology, economics, corporate strategies to address climate change, and communicating these issues to policymakers and the public. Our bloggers include policy analysts, scientists, economists, and communication specialists – all of whom are working to advance solutions to our climate and energy challenge.
Thank you for visiting our blog, and check back often for more timely posts.
Tom Steinfeldt is Communications Manager
In early 2009, the Pew Center on Global Climate Change invited 95 companies to participate in a 65-question survey on corporate energy efficiency strategies. 48 companies completed the questionnaire. The survey was designed to gather key quantitative data, identify trends, and gauge current activities in corporate energy efficiency. The results will help frame and inform an in-depth Pew Center report highlighting best practices in corporate energy efficiency strategies, due to be published in March 2010.