The last time energy efficiency was a high profile issue was during the notorious oil shocks of the 1970s and the three-day week. But here we are again.
This time round, the ‘trinity’ of rising energy costs, supply concerns and climate change policies is providing a new imperative that will be harder to ignore or forget.
The new ENDS special report on energy efficiency shows how far a wide range of both large and medium sized companies have gone on their energy efficiency journey – and how they are reaping rewards in lower energy bills and greater competitiveness.
As the report explains, there is still a huge amount to be done.
In too many organisations, energy efficiency is just not seen as being as prestigious as a new power plant, not a candidate for a ministerial visit. Most energy efficiency initiatives are part of normal operation and maintenance rather than capital expenditure, so its benefits are all too easily forgotten among other priorities.
A 2009 survey by the British Standards Institute suggested that as many as 20% of firms have no one with responsibility for energy management, and only 5% have a dedicated energy manager. No surprise, then, that the European Commission has been forced to admit that the EU is on track to fail miserably it’s target for cutting energy use by 20% by 2020.
All organisations really need to shift their focus. Energy efficiency happens to be the most cost-effective and often the most immediate way to cut both energy use and carbon emissions – paying a double dividend in terms of the bottom line.
The Carbon Trust nails it in its guide to energy management strategy: “The most compelling business reason for saving energy is reducing energy costs. It is estimated that the majority of organisations can save up to 20% on their fuel bills simply by managing their energy use and investing in cost-effective measures.” Cutting energy bills has also been linked to increased sales through greater competitiveness.
And there is plenty of other information and case studies available from many sources, not to mention free consultations, site surveys and even funding.
The mystery is why, with so much free information, do so few organisations other than those in the EU emissions trading scheme (ETS) take the issue seriously?
There are many answers to this question. For smaller firms, the range of efficiency options can be confusing, awareness of initiatives is low, and management is often too stretched to respond. And outside of the energy-intensive sectors, energy costs usually add up to only a small fraction of total costs. This makes them difficult to target – even if, in larger organisations, the absolute amounts can be quite large.
Fortunately there are also many strategies to tackle energy efficiency too.
Behavioural and cultural change in businesses, better training, greater use of environmental and energy management system standards can all yield substantial savings. Simply opting for more energy-efficient equipment when replacing plant can provide huge longer term savings without necessarily raising up-front costs substantially.
The government has made an important contribution by developing the Carbon Reduction Commitment – Energy Efficiency Scheme. The government’s abrupt redesign of the CRC has upset many. But despite the fresh uncertainty there is no doubt whatsoever the scheme has raised awareness and prompted action in many large organisations.
But the CRC only tackles a small proportion of emissions outside the EU ETS, and incentives still appear to be lacking elsewhere. The government has indicated a wide package of proposals will be on the way, not least reform of the Climate Change Levy into a form of carbon tax, and a raft of other possible measures on energy efficiency. It remains to be seen where these take us, but in the meantime there is huge uncertainty in business.
But does that mean we are powerless in the meantime to do anything about it? Far from it. Yes, a stronger carbon price signal and a host of other carefully crafted measures will be needed to pull through higher cost technologies for deeper cuts in energy use. But long before we reach that stage, there is still a large amount of low hanging fruit, and it is more than ripe for plucking.