An Energy Productivity Lens Shows Companies Doing More and Saving More
An energy productivity framework has shed light on the efforts of 21 companies that have collectively saved over 146 million MWh annually, equivalent to cutting more than 103 million metric tons of carbon dioxide emissions. The companies are members of EP100, which brings together a growing group of businesses committed to increasing their energy productivity – achieving high economic output per each unit of energy consumed. The campaign is led by The Climate Group in partnership with the Alliance.
The companies’ accomplishments so far were spotlighted in a recent campaign report, Smarter Energy Use: Businesses Doing More With Less. Collectively, the reporting companies saved $55 million last year alone as a result of their energy productivity efforts.
Measuring Energy Use Trend Relative to Output
The key ingredient to the energy productivity framework is its account for economic growth. Most companies are already tracking the components of energy productivity – their output and their energy use. Energy productivity resonates more broadly across companies’ boardrooms by helping track energy efficiency improvements in a way that aligns directly with business growth and development goals.
EP100 members have the flexibility to choose the metric by which they track their progress in terms of the ratio of economic output per energy consumed, for instance by the number of products they sell or by the revenue they generate per each unit of energy consumed. Using an energy productivity lens, the relationship between economic growth and energy consumption is the key indicator for progress. EP100 members commit to one of three pathways: doubling energy productivity, establishing energy management systems in facilities and reaching a self-selected energy productivity improvement target, or owning and operating only net zero carbon buildings and making energy efficiency improvements.
If a company commits to doubling its energy productivity, then it has a variety of ways to do so, ranging from doubling its economic output while keeping energy consumption constant, to halving its energy consumption while maintaining economic output, or something in between. Energy productivity correlates positively with greater savings and financial stability, which helps companies articulate a straightforward narrative that relates energy savings with higher profitability.
Companies Responding to Investors, Customers
Beyond the boardroom, companies are increasingly called upon to address investors’ and customers’ interests in sustainable practices.
Arvind Bodhankar, chief sustainability office of EP100 member Ultratech Cement, explained in the new report that Ultratech’s response to climate change “is something investors care about.” Bodhankar also noted that committing to energy productivity helps the company demonstrate leadership in the cement sector, remarking that “With 30-35% of our costs coming from energy, it was clear that doubling our energy productivity would increase our overall productivity as a business.”
Across its operations, Ultratech saved $4.5 million last year as a result of energy productivity efforts. The economic output component of energy productivity allows it to capture the benefits of a variety of efforts beyond savings from efficient technologies, including savings from operational practices, or employee behavior.
In another case study in the report, EP100 member Hilton noted that “guests want to stay in sustainably run properties [which] makes the business case for both cutting energy waste and engaging our customers on the journey even stronger.” The company’s commitment to improving energy management is evident in the use of its corporate responsibility measurement system called LightStay, which it launched in 2008. Since then, Hilton has achieved cumulative savings of more than $1 billion.
Improving Energy Productivity Should Be a Key Goal for the U.S. and the World
A focus on increasing energy productivity encourages energy efficiency without curtailing economic growth, which has applications beyond the private sector. Energy productivity not only provides a platform to showcase the benefits energy efficiency generates in financial terms, but setting energy productivity improvement goals also encourages countries to decouple economic growth from energy consumption.
Developing countries are likely to experience significant growth in energy consumption and emissions in absolute terms to support standard of living improvements, including through greater access to energy-consuming appliances and equipment (e.g. for adequate lighting, air-conditioning). But absolute terms don’t tell the full story; measuring energy use relative to the size of an economy, i.e. tracking whether energy is used productively, captures the broader picture and underscores the importance of energy efficiency.
While the EP100 campaign showcases global companies’ commitment to advancing energy productivity, all countries, including the U.S., can benefit from striving to further increase energy productivity, improving efficiency, and spurring innovation to save energy and save costs while increasing economic growth.