Until recently, energy efficiency was seen by many industry leaders as an expensive proposition that may benefit the environment but might not benefit the bottom line. But as energy prices continue to break records and global warming continues to dominate headlines, views on energy efficiency have changed radically.
Today, investing in energy efficiency gives businesses a competitive advantage, according to Peter Smith, president of the New York State Energy Research and Development Authority and chairman of New York’s Energy Planning Board.
“Energy efficiency is cheaper than coal, it’s cleaner than renewables, it’s a resource option without equal,” said Smith, speaking at the 2007 Northeast Energy Efficiency Partnership Summit on May 7 in Providence.
About 300 representatives from the energy industry and government took part in the annual conference organized by Northeast Energy Efficiency Partnerships (NEEP), a nonprofit advocacy organization that promotes regional policies and private sector initiatives to increase energy efficiency throughout the Northeast.
Given the challenges facing them in the 21st century, smart companies already have started developing environmental strategies to innovate, create value and find a competitive advantage, and energy efficiency plays a significant role in those strategies, Smith said.
To illustrate his point, Smith ticked off a list of companies that are “going green” as a cornerstone of their long-term money-making strategies: Raytheon, Wal-Mart, General Electric, Toyota and Ikea.
“It’s altruistic, but it’s driven by profit,” Smith said, discussing GE’s public commitment to reducing its global carbon footprint. “Think about Wal-Mart – and wherever you are on Wal-Mart, they have some of the most energy-efficient stores out there. Why? Because they understand with the very thin margin that they’re operating on, if they reduce energy in their stores it flows to the bottom line.”
From a policy standpoint, energy efficiency is on the frontline in the battle to wean the U.S. off foreign oil and move the nation toward a more secure and sustainable political and economic future, Smith said. More than 90 percent of the Northeast’s petroleum is imported from outside the region, half of that from politically volatile regions of the world, he said.
“We’re funding our friends in the Middle East as well as sending our oil revenues to those regimes that oppose what we stand for – a free society, with the right of free speech and free assembly,” Smith said. “This has to change.”
But while many in industry and government already recognize the merits of energy efficiency, an infrastructure needs to be created to support and promote energy efficiency on a much larger scale, he said.
As head of the New York State Energy Research and Development Authority, Smith’s approach has been to target builders and contractors, banks, insurance companies and other sectors to assess their needs as industries, help them to understand why pursuing efficiency is imperative to the larger economic equation, and provide other resources necessary to motivate that sector to take action, he said.
Metrics are crucial in the fight to get industry leaders to see that investing in energy efficiency is cost-effective he said, explaining that “If you can’t measure it and it’s not billable, it’s not real. It’s got to be real.”
As an example, Smith said he often cites metrics that prove his agency saves New York ratepayers $300 million a year through energy-efficiency improvements that save 1,000 megawatts during peak demand days alone. Those measures cost less than $300 a kilowatt to install and produce savings of about 2.2 cents per kilowatt hour, he said.
Now, as the nation considers the prospect of gasoline prices of $4 a gallon, is the time to frame the debate and lobby states and the federal government to enact new policies and develop regional approaches and partnerships related to technology and energy consumption, Smith said. The decisions we are making right now will effect generations to come, he said.
“We can’t do enough, because we can’t wait to see what will happen if we don’t act now,” Smith said. “The opportunity is upon us. We need to sell energy efficiency like we sell beer, cars and soap. We have to be relentless.”
