Is energy productivity the missing link for the Paris Accord?
Climate Week New York came to a close with autumn descending upon the city along with pumpkin-spice lattes (including at Starbucks, which just pledged to commit to 100 percent renewable energy).
What did the week’s events bode for the future as businesses and governments strive to reach climate goals set during last year’s United Nations’ COP21 climate talks?
"Let’s not decide that because Paris was last year the breakthroughs are starting now," said Nancy Pfund, founder and manager of DBL Investors, speaking about clean energy innovation and deployment at VERGE 16, after attending Climate Week NYC. "They’re already happening."
And they are advancing faster than expected, with minimal effort and high cost savings. Case in point: Momentum is picking up around the new EP100 campaign, founded by the Climate Group in May. EP100 focuses on energy productivity and is a complement to the Climate Group’s high-profile RE100 push, which urges companies to convert to 100 percent renewable energy.
Through EP100, companies focus on doubling their energy productivity by adopting energy efficient technologies and practices. Four companies joined EP100 last week: Mahindra Holiday and Resorts India; Chinese LED manufacturer Hongbo Group; Dalmia Cement; and energy efficiency solutions provider Danfoss Group. Covestro and Johnson Controls are among the existing members.
As EP100 grows and engages sectors and regions across the world, energy productivity may be the low-hanging fruit, the resounding and easy-to-implement factor, that helps companies to easily implement climate-friendly policies while building their bottom line.
Many energy efficiency projects have payback periods between two and three years, with some being even lower.
Doubling energy productivity in the U.S. alone will save $327 billion annually in power bills, create 1.3 million jobs and cut carbon dioxide emissions by 33 percent by 2030, according to the Alliance to Save Energy. Globally, EP100 could reduce fossil fuel bills by $2.59 trillion and create more than 6 million jobs, shows the Energy Productivity and Economic Prosperity Index.
In a statement, Mark Kenber, former CEO of the Climate Group, said, “If we are to make headway on a sustainable emissions curve towards net-zero, the first step for businesses needs to be improving their energy productivity — and these leading global businesses are already seizing this opportunity. Doing more with less improves business performance and grows an energy-productive economy — one that enables and rewards low carbon initiative."
Missing puzzle piece
What if the missing puzzle piece to reducing carbon emissions and the intake of fossil fuels is not just to invent new energy systems, but to make better use of what we already have?
"EP100 helps us use and manage energy better," Jenny Chu, head of EP100 at the Climate Group, told GreenBiz. "It’s maximizing economic benefit with every unit of energy that companies consume. We’re taking an energy use metric and inversing it, so you’re looking at economic output over energy input."
Companies can take low- or zero-cost measures immediately, said Chu. Echoing Pfund, she said, "A lot of the technology is to capture cost savings. It’s not a magic machine that’s going to come 20 years from now. It’s already here."
Some cost-cutting measures that businesses can take to amp up their energy efficiency are as simple as insulating old pipes. They can be sector-specific as well; for example, an industrial corporation can clean a compressor room to run more efficiently.
Furthermore, 2030 is a long-term forecast for reaching EP100 goals. Companies such as Mahindra, whose automotive and farm equipment business (75 percent of the Mahindra and Mahindra Group and Mahindra Ltd.) was the first to join EP100, already pledged to reduce emissions through energy efficiency by 25 percent in the next three years, according to CSO Anirban Ghosh. Its efforts already have yielded results for the bottom line with a 24 percent return on energy productivity investment.
'Money in the bank'
"The teams at Mahindra Holidays have been working on energy efficiency programs for many years now," Ghosh told GreenBiz. "The advent of the EP100 program gave us a chance to leverage the work we had done, accelerate the progress, translate what had been an internal initiative into a public movement, and try to motivate other organizations to be ambitious in this space.
"Energy efficiency is money in the bank. Many energy efficiency projects have payback periods between two and three years, with some being even lower … Being green doesn’t mean you have to sacrifice business returns."
Ghosh said it takes a lot of coordination to reach energy productivity goals across a large organization, however: properly documenting where emissions occur, replacing machinery on the manufacturing line, adopting energy efficiency equipment and phasing out inefficient machines, switching to efficient lighting and replacing the air conditioning, which alone can produce 70 percent of emissions in an office building.
He estimated that Mahindra launched more than 100 projects in its EP100 effort. In order to achieve company-wide solidarity, operating managers are tasked to carry different cost-cutting and energy-efficient measures through a process called "policy deployment." In other words, specific people in the business carry performance targets aligned to the business’s major goal of doubling energy productivity.
"If the goal is to reduce emissions by 25 percent, it is deployed to all managing heads across the organization, off of which adds up to helping the organization achieve its goal," Ghosh said.
Iain Campbell, managing director and buildings leader at Rocky Mountain Institute (RMI), offered more insight into the steps needed to reach EP100 goals.
"When a piece of equipment reaches end of life, is the procurement process simply to replace it with the cheapest product available, or is to to replace it with the most efficient (and cost effective when considering life cycle cost)?" he said. "A simple change to procedures and process like this can have a major impact over time. Another example is to set a facility standard (i.e., LEED Silver or Energy Star top quartile) for both owned and leased facilities."
Companies signing up to efforts such as EP100 are sending signals to the corporate sector at large, as well as shareholders, investors and governments, that businesses are ambitious about climate goals.
"That’s where programs like RE100 and EP100 can play their role,” said Jenny Chu. “We are showing that the demand from corporates exists not only for renewables and energy efficient technologies and practices, but showcasing it to relevant stakeholders: policymakers who make sure enabling policies are there; showing the business case to the financing community to make sure that we unlock all the financial mechanisms necessary to fund clean energy projects.
Overall, EP100 is an important part of the puzzle that will be the energy-efficient, renewably powered landscape of the future. But it is not quite enough on its own — the effort will take a (global) village effort among businesses, jurisdictions and nations.
"It’s not enough on its own, but no single sector is," said Campbell. "As they say, there is no silver bullet, but there may be a silver buckshot."