Before Tuesday, September 11, an energy policy rooted in conservation, efficiency and use of renewable sources was strongly desirable. After Tuesday, September 11, such a policy became absolutely imperative. Now we must conserve fuel for national security needs and to reduce our dependence on foreign oil. This means that the days of America’s prodigious energy waste are over. This means we must move swiftly to implement a conservation policy and to maximize the huge benefits such a policy can produce. In short, we need to save huge amounts of energy and we need to do it quickly. As a practical matter, this can be done. The key is small business.
Here’s why. America’s 23 million small businesses now make up half of the economy, generating 51 percent of the private gross domestic product and, in the process, consuming massive amounts of energy. Small businesses in the main use energy inefficiently, one half to one third of this energy is wasted. Through better energy management, this wasted energy could be saved and small businesses could collectively save themselves billions of dollars each year.
But, despite its great economic significance, there’s no focus on small business in the National Energy Plan. In fact, small business as such is scarcely mentioned. But such a focus should be added. Small businesses have distinct energy problems and distinct energy opportunities that should be reflected in public policy.
Unlike big businesses, most small firms operate with low cash reserves and narrow profit margins. This puts them most at risk from energy price volatility. Energy supply failures also can be devastating. Homeowners are unlikely to go broke if their refrigerators and freezers stop working, but restaurant owners can be put out of business. These vulnerabilities were dramatically exposed by last winter’s energy crisis in California.
Energy price volatility and supply shortages are likely to continue in the future. That’s why energy policy-makers should focus on small business, starting with its huge energy consumption. Small firms account for more than half of all commercial energy use. Then there’s energy consumption by small manufacturing. About 85 percent of U. S. manufactured goods are produced by the 14,000 member companies of the National Association of Manufacturers. About 10,000 of these companies are small and medium-sized firms. Plus, there’s residential energy use by 12 million businesses operating out of home offices, garages and basement workshops.
Small business’s energy problems are offset by exceptional opportunities. They can turn their prodigious energy use into large cost savings through increased energy productivity. And this can be done now, not years from now. Energy efficiency upgrades for small businesses can be achieved virtually overnight. Basically, they involve doing the same simple things over and over again in lots of places. Small businesses can make a big dent in energy demand just by improving lighting and by installing better thermostats and occupancy sensors. Better insulation and weather-stripping will make a bigger dent, as will investing in new, highly efficient motors.
All these technologies are available now, and utility bills drop the minute they are installed. And don’t forget maintenance. There’s no point in putting a lot of great new technologies into small businesses if these technologies aren’t properly installed and maintained. For example, at any given time, 90 percent of all air conditioners in America need a tune-up. Some simple steps -- identifying duct leaks, checking airflow and refrigerant charge, cleaning coils and changing filters -- will work wonders, reducing energy use up to 40%!
Small businesses have no better way to get reliable and affordable energy than by installing their own on-site generating equipment. These micropower technologies generate electric power on a small scale close to where it is actually used. They include fuel cells, photovoltaics, microgenerators, small wind turbines, and modular biomass systems. For instance, a microgenerator the size of a refrigerator can generate 25 kilowatts of electricity, enough to power most small businesses.
What’s more, a distinct affinity links micropower and small business. By definition, micropower is decentralized; so is small business. They fit together. Here scale of consumption is the key. Solar water heaters, for example, often make more economic sense for small operations that use a lot of hot water, such as cafeterias and laundries, than for large corporations or for homeowners.
These opportunities should be thoroughly explored in the National Energy Plan. I’m happy to report that a big step forward toward this goal has just been taken recently by
National Small Business United (NSBU). NSBU is the nation’s oldest bipartisan small business advocacy association with over 65,000 participants nationwide. The organization advocates active participation of small firms and entrepreneurs in the development of the National Energy Plan and strongly supports energy efficiency as an option for small businesses. The National Energy Plan should also weigh the economic benefits produced by opening the small business market to the nascent energy efficiency and micropower industries.
Reducing greenhouse gas emissions offers enormous growth opportunities for small businesses. Small business innovators and entrepreneurs design and manufacture energy-efficient appliances, lighting products, control systems, solar and wind power systems, advanced industrial processes, etc. Small firms also dominate the business sectors that sell, install, and service the nation’s lighting, heating/air conditioning, solar, and other energy-consuming equipment. What’s more, the small business half of the economy constitutes the natural market for these nascent energy efficiency and micropower industries. This market has scarcely been tapped. Surely, transforming half of the economy through energy productivity will pay off in manifold ways.
What inhibits this market transformation? Energy policy-makers should identify barriers that exist and propose remedies. For example, a big barrier is the cost of financing energy upgrades. This is surmountable. What small businesses need are low interest loans and longer term financing. The trick is to make monthly loan payments less than the amount saved on utility bills. Finally, in addition to national security considerations, increased energy productivity by small businesses also will prevent the release of millions of tons of carbon dioxide into the atmosphere, reduce air pollution from power plants, and conserve natural resources. Thus, prospects for us all improve if small business is given its due in the National Energy Plan.
--------------------
By Byron Kennard, Executive Director of the Center for Small Business and the Environment. For additional information, see the September 20th National Press Club Panel material on www.ahcgroup.com.
Copyright 2001 The American Hazard Control Group. Copies of this feature, and other articles and features on environmental strategy and external affairs, are available in print via subscription to Corporate Strategy Today, a GreenBiz News Affiliate.