Dec. 21, 2004
Don't complain about energy costs if your company runs like an SUV.

The days of getting by on cheap energy may be over for Americans -- at least for a while. Let's face it, except for a couple of scares in the 1970s and 1980s, we have had an easy time for years. Consider the price of gasoline. I remember paying $1.10 a gallon 20 years ago. Early last year the price was the same. Factoring in inflation over the last two decades, gasoline has almost been cheaper than water. To those living in Europe, the prices we have been paying are a steal. Been to the gas pump lately? With the cost of a gallon of gasoline now approaching $1.50 for regular unleaded here in the Midwest, I am quite content to be driving an economical Honda Civic and not a sport utility vehicle (SUV). Unfortunately, other types of energy are also costing more. If you run a company, you may want to ask yourself: "Are we using energy like a Civic or an SUV?" If the answer is "SUV," it is time to make some changes. Unless, of course, you have money to burn. There are many places to look to find ways to reduce energy usage. A good place to start is by studying companies that are best at it. The recent global movement to certify to the ISO 14001 standard has produced hundreds of firms with enviable energy management programs. Those numbers will grow as companies such as Ford Motor Co. and General Motors Corp. require suppliers to be ISO 14001 certified. Books on the subject are also available. In Cool Companies: How the Best Businesses Boost Profits and Productivity by Cutting Greenhouse Gas Emissions, (1999, Island Press) author Joseph J. Romm provides more than 50 case studies of companies that have reduced costs by improving processes, increasing energy efficiency, and adopting new technologies. The case studies cover topics ranging from building design to using solar, wind, and geothermal energy sources. Here are just a few examples of steps companies have taken to reduce energy consumption and, as a result, carbon dioxide emissions:

  • A California textile plant cut the energy consumption of its ventilation system 59% by installing motor controls, saving $100,000 a year. An energy services firm paid for the system, turning a 1.3-year payback into an instantaneous one.
  • Simply by insulating its steam lines, Georgia-Pacific Corp. reduced fuel costs by one-third with a six-month payback at its Madison, Ga., plywood plant. The project saved 18 tons of fuel per day, lowered emissions, made the workplace safer, and improved process efficiency.
  • Chicago-based A. Finkl & Sons has cut energy consumed per ton of forged steel shipped by 36% and has planted more than 1.6 million trees, which capture carbon dioxide. As a result, the company's net manufacturing emissions of greenhouse gases are zero.
  • Toyota Auto Body of California (TABC), which manufactures and paints the rear decks of Toyota pickup trucks, consumed 2.5 million kw-hr of electricity in 1991. By 1996, TABC had doubled production, but had reduced its electricity consumption to 1.7 million kw-hr. The plant achieved the reduction by making improvements in motors, compressed air, and lighting. In addition to publications, the EPA is also an excellent source for tips on how to reduce energy consumption. By partnering with the EPA through its Energy Star Buildings and Green Lights program, a company can receive access to an experienced group of account managers who have expertise in building technology, financing, and even public relations. Lexington, Mass.-based Raytheon Co. recently became an Energy Star Partner and made a New Year's resolution to have the most energy-efficient plants in the U.S. The EPA's program is certainly effective. As of September 1999, 3,037 organizations participating in it had saved $1.4 billion in energy costs. These energy reductions have prevented 44.1 billion pounds of greenhouse gas emissions per year -- the equivalent of planting 2.2 million acres of trees, or removing the pollution from 1.6 million cars. Sometimes it does take a whack to the wallet before a company will take the steps to be more efficient. In the interest of shareholders, and especially the environment, there is no longer a good excuse for driving your company like an SUV. Glenn Hasek is an associate editor of IndustryWeek and covers environmental issues.
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