Johnson Controls Research Indicates Cost Savings Remains the Single Biggest Driver for Energy Efficiency

Posted on 30. Sep, 2011 by in Business & Policy

Johnson Controls provides products, services and solutions for building operations and automobiles. In 2011, Corporate Responsibility Magazine recognized it as the #1 company in its annual “100 Best Corporate Citizens” list.

A project of Johnson Controls is the Institute for Building Efficiency, which provides technology and policy analysis for energy efficient buildings and systems. The Energy Efficiency Indicator survey reaches out to CEOs, real estate executives, facility managers and engineers annually. Its goal is to understand the challenges facing executive decision makers, and to help them accelerate the transformation to a more energy efficient environment. Questions cover management practices, investment plans, and technology integration in sectors ranging from manufacturing to life sciences.

Jennifer Layke is the Director of the Institute for Building Efficiency. She came to Johnson Controls from the World Resources Institute, where she was the deputy director, Climate and Energy. There, she founded the Green Power Market Development Group, a partnership with 12 major U.S. businesses.

Environmental writer Sarah Hadburg, for OppGreen Insights, interviews Jennifer Layke to explore just what the Energy Efficiency Indicator signifies to her.

1. The Energy Efficiency Indicator Executive Summary states that “energy cost savings remains the single biggest driver around the world” for energy efficiency. What do you predict will happen once cost savings have been exhausted?

Energy efficiency and cost reduction go hand in hand. There isn’t a point at which cost savings are exhausted. When people evaluate opportunities around energy efficiency, they’re doing so in the context of broader goals, like cost savings. We’ll see energy efficiency as a continued co-benefit to these goals.

2. That same survey question ranked “existing policy” as the lowest on the list of drivers for energy efficiency. Do you see this as a problem or an opportunity?

While policy may be ranked lower, government incentives and programs ranked second in drivers. This carrot approach allows companies to make a monetary choice, as opposed to the stick regulatory approach. Companies look to programs that help them to make these investments more financially attractive. What we saw this year was a lean toward finding utility-based programs designed to ease the financial transaction around energy efficiency.

By contrast, China ranked existing policy as more important than government rebates. They published their 12th 5-year plan in March, around the same time as they survey was conducted, and government policy is important in shaping this market.

3. One of the organizational barriers identified was a “lack of awareness of opportunities for energy savings.” Do you have any suggestions for raising this awareness within companies?

 Barriers are always market-specific. For example, in the US and Canada, information and awareness are not barriers; instead, it is financial criteria and capital. Companies here must find capital internally, or make the case for finding it externally. The US is learning how to structure the market for energy efficiency.

In other markets like India and China, there is less certainty around how to implement energy efficiency, which is needed earlier. There is a ways to go in terms of addressing the capacity for energy efficiency opportunities, from building construction to ongoing improvements.

4. On page 6 of the summary, there were a large number of companies that did not have Energy and Carbon reduction goals. What do you think will be necessary to achieve formal goal-setting?

 

A company’s involvement in sustainability progresses over time. Companies start by piloting activities, then formalizing internal plans, then creating goals and targets in the public space. Companies in the “no goal but reducing” category are still working through that progression.

In some sectors like Fortune 500 companies, this is more important now, because they have peers and nonprofits that pressure them to formalize goals. In medium-sized companies, there is less engagement on these social goals. However, this will change as supply chain analysis becomes more prevalent.

 

5. Given the current political and economic climate, do you believe that companies will continue to move in the direction of energy efficiency in the coming year?

Energy managers anticipate prices rising, so we will continue to see strong interest in energy efficiency. Another important forecast is technologies that will be ready for market adoption in the next 10 years. The technologies vary by region, but there is very strong interest in the US and Canada for advanced lighting technologies and smart grids. Companies will reinvest in the same types of technologies over time. Given the strong interest and the number of companies investing, we will continue to see these kinds of solutions deployed.

Jennifer’s responses indicate that companies are still actively seeking ways to improve their energy efficiency. This is good news for all parties involved, from the technology companies who are designing more energy efficient lighting technology to financial companies looking to help companies find capital for these projects. Jennifer and the rest of the Institute for Building Efficiency at Johnson Controls have done great work that inspires optimism for the future of sustainable business.

 

 

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Johnson Controls

Northeast Energy Efficiency Partnerships

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