Business from the cloud up are you ready for the future making energy efficiency big business

In fact, the range of industries doing so has been increasing in recent years, particularly as energy prices in Europe continue to rise and companies look to strip costs from their opera

Every year, Holcim, a Switzerland-based global building materials

company, sets aside CHF100m (US$106m) to improve the group’s

energy efficiency The company allocates funds from the sale of

excess CO2 emissions certificates, although this is not about boosting

its green credentials Cutting electricity consumption can have a big

impact on the bottom line for heavy industries

Energy has long been a large part of cost structures for minerals,

metals, mining and processing companies “They’ve focused on it for

many years,” says Stefan Heck, a McKinsey director who leads the

consultancy’s work in clean technology “The standards are tightening

from a regulatory point of view but also the cost pressures are

increasing So it’s directly translatable to the bottom line.”

Yet heavy industry is no longer alone in focusing on energy efficiency

In fact, the range of industries doing so has been increasing in

recent years, particularly as energy prices in Europe continue to rise

and companies look to strip costs from their operations Whereas at

one time it was largely a matter of establishing “green” credentials,

reducing energy costs is now becoming a business priority

“The most important driver for our business to pursue energy efficiency

is cost management,” explains Peter Jonkers, who manages the Global

Green Brewery Programme at Heineken, a Dutch brewer for whom

brewing and production processes account for roughly 90% of direct

energy consumption

In many industries, the biggest source of energy use is in buildings,

thought to represent about 40% of the European Union’s energy

consumption As a result, there is a strong profit motive in the

construction industry to turn out highly energy efficient commercial

buildings: corporate tenants want to save money on operating

their offices while landlords are keen to make their buildings more competitive by lowering energy bills for tenants and offering healthier

“green” office and residential spaces

Inside most commercial offices, it is lighting, heating and office equipment that account for the majority of energy consumption The UK’s Carbon Trust, a not-for-profit company, estimates that office equipment like PCs and monitors accounts for 20% of the total energy bill, potentially rising to 30% by 2020

AlternAtive energy efficiency

With energy consumption concentrated in different areas for different types of businesses, the way each company approaches energy efficiency also varies

For companies with large property portfolios, a range of technologies is available, from low-energy lighting to upgrades in air-conditioning and heating systems Even “virtual” businesses such as online retailers or social media websites have significant property and energy footprints, because their server farms generate heat and require energy for cooling

To make cooling more energy efficient, large data-centre operators separate hot from cold air in data-centre aisles and use technology to measure air and heat streams Customers can then be advised on the most energy-efficient configurations for their equipment

Other industries are turning to alternative energies, particularly heavy industries, where the difficulty of making incremental energy cuts means renewables are by necessity part of the picture Take cement production Converting limestone to clinker—cement’s main component—requires raising kiln temperatures to almost 1,500°C

“That’s where a mix of energy efficiency and renewables make sense,”

Mr Heck says

However, renewable energy is also part of some retailers’ strategy IKEA, a Swedish furniture retailer, aims to generate 100% of its energy from renewable sources by 2020 In the UK, Sainsbury’s, a supermarket retailer, is using renewable technologies in its stores, including solar power, biomass boilers and biofuel generators At the end of last year,

it opened an energy efficient store in King’s Lynn to promote these technologies

Paul Crewe, Sainsbury’s head of engineering, sustainability, energy and environment, stresses the importance of finding a strong business driver for each technology “They need to be commercially viable in the long term and have payback rates that fit within our financial business case,” he says

At Heineken, the approach is to set individual targets—monitored and tightened each year—for its operating companies and sites “We have very few offices that are not linked to a production site, so while these offices clearly have their own KPIs [key performance indicators], they are not where we focus our attention at this stage,” Mr Jonkers explains

MAking energy efficiency big business

rising energy costs Are proMpting europeAn

coMpAnies to see the business side of being green

Written by the Economist Intelligence Unit

people power

Technology, targets and alternative energy is only part of the energy

efficiency equation, of course At many companies, responsibility for

powering down equipment often remains in the hands of individuals

Simply switching off PCs in the evening and on weekends reduces

its energy consumption by 75%, according to the Carbon Trust

Meanwhile, upgraded heating and cooling systems are only as efficient

as the facilities managers operating them Pulling down the blinds on

fridges every night can help a store to save thousands of pounds a year

in energy consumption, Mr Crewe says

To promote such activities, Sainsbury’s offers staff tips on reducing

energy and provides end-of-day energy checklists Through its Carbon

Academy, it offers training on climate change and how to make energy

savings in stores and at home At Heineken, energy efficiency targets

and key performance indicators are even integrated into employee

bonus structures and incentives schemes

Still, changing internal company practises is only the first stage Right across Europe, companies like Sainsbury’s and Heineken are looking

at energy efficiency beyond their own operations For the more than 2,500 farmers from whom it sources, Sainsbury’s has developed a carbon footprinting tool that can cut a farm’s annual energy costs by 10%

Heineken takes into account its power suppliers’ consumption when measuring its own energy footprint “If we want to make serious headway in reducing our footprint, it is crucial that we have constructive conversations with our suppliers,” Mr Jonkers says

The next challenge, in Mr Heck’s view, is for companies to tackle the third stage of energy efficiency—the energy used by a product once

in the hands of consumers and what is required to dispose of it at the end of its life, which is rarely addressed outside of the manufacturing

of cars, lighting and appliances “Only a few companies are really proactive,” he says