Energy efficiency came back into the limelight this week, a seemingly rare but welcome occurrence. Given the magnitude of our climate and energy challenges, the opportunities to use energy more efficiently and effectively have remained largely unexploited, as I've noted in the past. In our gadget- and gizmo-obsessed culture, in which status is expressed by what we can show for ourselves, not necessarily by what we do, being energy efficient is a decidedly tough sell.
Example: We'll spend irrationally on solar panels, whose economic payoff may be years away, if ever, but whose existence offers a "Hey, look at this" opportunity for both individuals and institutions. But we'll shun smaller investments that have more immediate economic and environmental payoffs: insulating buildings, installing devices that ration energy use to the times and places it's actually needed to provide comfort or service, and upgrades of appliances and other energy hogs with the latest models that do the same job with far fewer tons of coal, barrels of oil, and the like.
True, it's hard to get green cred for bragging about your company headquarter's R-34 insulation, but that may well be the wiser choice from an economic and environmental perspective.
It's not either/or, of course -- we need both clean energy and efficiency. It's simply that one of those two seems to have a much better press agent.
So, it was gratifying to see two significant developments this week that gave energy efficiency its rightful place in the sun. The first was the launch of the Clinton Climate Initiative's global Energy Efficiency Building Retrofit Program, which brings together four of the world's largest energy service companies, five of the world's largest banks, and sixteen of the world's largest cities to reduce energy consumption in existing buildings.
Under the program, four big energy technology and service companies -- Honeywell, Johnson Controls, Siemens, and Trane -- will conduct energy audits, perform building retrofits, and guarantee the energy savings of the retrofit projects. Groups like the American Society of Heating, Refrigerating and Air-Conditioning Engineers and U.S. Green Building Council will help the cities develop programs to train local workers on the installation and maintenance of energy-saving and clean-energy products. Meanwhile, Citibank, UBS, Deutsche Bank, ABN AMRO, and JP Morgan have agreed to provide $1 billion each in financing for both public- and private-sector building owners to undertake these retrofits at no capital cost. The resulting $5 billion kitty effectively doubles the existing global market for building energy retrofits.
This is no small matter. Buildings are responsible for roughly half of greenhouse gas emissions in most cities, and over 70 percent in older cities such as New York and London. And most buildings, large and small, leak heating in winter and cooling in summer, among other wastefulness. A handful of basic activities and technologies, along with a modicum of changed habits, can slash energy use between 25 and 50 percent. The Clinton Initiative's short-term financial injection can go a long way toward growing markets for building efficiency technologies and services, not to mention helping to make energy-smart buildings the rule rather than the exception.
The need to do so was highlighted by the week's other energy-efficiency development: the results of a first-time survey of 1,250 North American business leaders on attitudes and trends in energy efficiency. The study, commissioned by Johnson Controls, examines how companies are responding to rising energy costs, what sort of payback they expect from investments in energy efficiency, and to what extent investments in energy efficiency were motivated by concerns about the environment versus economics, among other things. It is intended as an annual exercise, so this year's survey serves as a baseline against which to measure changes in attitudes and actions.
Earlier this week, I moderated a webcast originating from Johnson Controls' Milwaukee headquarters. It included presentations of three companies' energy-efficiency efforts as well as the release of the Energy Efficiency Indicator research findings. (Johnson Controls is a major sponsor of Greener World Media, the company that produces GreenBiz.com and GreenerBuildlings.com, of which I am co-founder and executive editor.)
The survey found that executives indicate they expect energy prices to continue to rise and plan to invest in energy efficiency measures to help fight rising costs. However, climate and other environmental issues notwithstanding, executives cite a desire to decrease energy costs within their organizations as a greater motivator than reducing their environmental or climate impacts. Overwhelmingly, the survey found, companies are seeking investments with relatively quick paybacks -- usually between two and five years -- and economic concerns haven't yet been sufficient to motivate companies to try more adventurous energy efficiency measures.
None of this is particularly surprising, though the Johnson Controls report portrays the energy-efficiency landscape more comprehensively than had previously been done. In most companies, energy costs (and climate emissions) have yet to be seen as sufficiently strategic or burdensome to require more than a handful of low-cost, quick-hit investments. That will likely change as energy prices remain stubbornly high and greenhouse gas emissions start to have a tangible cost in the form of carbon caps or taxes.
What's significant in the week's events is that energy efficiency appears on the verge of becoming a more significant global market than ever before, with billions of new investments and valuable new research revealing both the challenges and opportunities of market uptake of efficiency solutions.
The time, and the climate, may be right for efficiency to take its proper place in the hierarchy of business energy strategy.
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Great point Joel. For those that are interested in more on this topic, I'd suggest Amory Lovins article "More Profit Less Carbon" in Scientific American. The illustration on p 76 of energy losses is "worth a thousand words" and quite a few megawatts.
Here is the link: http://www.sciam.com/media/pdf/Lovinsforweb.pdf
Posted by: Paul Hudnut | May 18, 2007 at 11:32 AM
A long time builder, it's been fascinating to me, as I get deeper into green building and home performance, how much of the wasted energy for which buildings are responsible is due to sloppy field work. The standards for properly sizing and sealing HVAC equipment and ducting is fairly well established, but not followed. As a result, the average home wastes 30% of the conditioned air it's system tries to deliver. Proper insulation installation methods have been proven, but you'll be hard pressed to find an installer who follows those guidelines, or can even describe them. As a result, R-30 can be reduced to R-9, or less.
God bless the solar panel folks and all they do, but until we learn to properly seal and insulate our buildings, the energy they consume will be wasted, no matter the source.
Posted by: Ron | May 18, 2007 at 03:52 PM
I occasionally wonder why we cdon't spend some of our technology cred on creating energy efficient clothing rather than cooling and heating huge amounts of interior space. I think it would be great to wear clothing that kept us at a steady temperature of our own choosing. Then we could moderate building heating and cooling to optimal levels for efficiency. Seems like the technology to do this should out there...
Posted by: Martin Edic | May 19, 2007 at 12:22 PM
Being located in the UK, but haveing spent the past 4 years back and forth to many USA states to gain an understanding why you prefer to export billions of dollars a year for imported gas, then wonder why the USA is in so much debt to the rest of the world. The UK is now heading that way also after disposing of its nth sea gas and oil for a quick fix and feel good factor to the UK people. With our gasolene heading towards $2.00 per Litre that 5 litres to a gall, you all should start to think, how much will it go to, becouse sooner or later it will hit $10.00 gall.
Fly into Vegas and you will not see a single solar water heating collector on any roof top, Why? becouse the builder is tied to the utility in some way making sure that home owner uses imported gas to heat its hot water 24hrs a day 12 months of the year. Here in the UK my home uses 1hr of gas a day in winter time, my solar collectors provide me free hot water 100% of the time at least 4 months of the year, my attic air to water heat pump drives my central heating. With cavity wall insulation, a layer of thermal blocks on the inside, outer brick as the finish, my heat losses are minium, hence my hourly running cost to heat my 3 bed home is 1.3kwh using a mix of solar thermal and a heat pump. All my appliances are double A rated and my light bulbs are the latest in CFL using 7 watts. My PV and micro turbine gurantees all my pumps work in a power cut, also drives my rain water harvesting pumps. All in all my home is powered, heated and watered for $1,200 a year. No air con needed even at 100 F
Posted by: Eric Hawkins | May 21, 2007 at 12:59 AM
Another important aspect is the investment opportunities in the energy efficiency sector. Actually, there are logical advantages of subsidizing and investing in energy efficiency rather than renewable energy. I develop that discussion on my blog as well. Actually, I believe that a lot of traditional power utilities & construction companies may benefit from a second wave of cleantech interest, with energy efficiency in focus. Companies providing power equipment with higher efficiency, companies providing insulation, "smart" windows, etcetera.
Posted by: Patrik M | June 01, 2007 at 08:16 AM