Wednesday, October 29, 2008

Energy Reduction Ownership Needed

Let's face it, outside of energy for direct goods (i.e. fuel in airplanes), corporations and institutions (e.g. universities) have never managed energy consumption with a goal toward reduction. Energy (electricity, gas, steam, water) has been a non-controllable, overhead expense that was inexpensive with low inflation.

Flash to 2008, and we now have electricity prices in some parts of this country rising by 8-12% a year and we are in an extended recession.

But _who_ in the organization is responsible for reducing enterprise energy consumption? Who has this in their job description? Who gets fired when it doesn't occur?

The reality is, today, no one.

Line managers have an "uncontrolled overhead" charge for which they are typically not responsible. Facilities managers are basically "break/fix" teams and are often measured on staying within budget, safety, and occupant satisfaction. EHS departments reduce environmental and legal risk, not energy. Attitudes of the CFO and CEO, budgets and capital allocation all reflect this traditional but antiquated thinking.

We need a better model.


Because energy is often the 2nd fastest growing cost category after health care. Unlike health care, firms _can_ make a substantial improvement themselves. Behavior changes (purchasing policies, temperature control policies, education, reduce plug load, education) can help drive 10-15% reduction in energy use. Holistic capital allocations which consider energy use and well as capital and operating budget implications (with realistic assumptions for energy cost inflation) can drive additional savings. Maintenance budgets for buildings but be thought of with energy savings in mind, not just bare minimum needed.

Leading firms understand this. Raytheon now has energy consumption as a goal for quarterly reviews of line managers, as well as energy leaders at the department level to promote energy conservation.

The CFO seems like a natural place to start for accountability. Leaders emerge. CEO assign accountability.

1 comment:

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