Volvo Meets Ten Year Goal In One Year

Saves $10 Million on 850K Energy Investment

Energy reduction is not as difficult as we initially believe it will be. Our mental models are a bigger problem than getting it done.

As part of the part of the U.S. Department of Energy's Save Energy Now LEADER Initiative, Volvo Truck's New River Valley plant set a 10 year goal to reduce energy intensity by 25% over ten years.

Not only did they exceed the target in a just one year, but they did it in a way that pays huge financial dividends.

The investment in energy efficiency cost about $850,000 and will save approximately $2 million per year according to the Department of Energy. Assuming a very conservative 5 year lifespan of the improvements they will see a total of $10 million in savings over that period. That is an annualized ROI of 215% and a total project ROI of 1,077%. Those are numbers any CFO can be happy with.

According an energy.gov blog post "The NRV plant also initiated a contest to promote employee engagement in identifying and suggesting ways for the facility to improve its energy efficiency. From late 2009 to early 2010, the implementation of employee-suggested projects saved the NRV plant more than 546,543 kilowatt hours per month, which translates to approximately $33,000 in monthly cost savings."

Significant energy risk and cost reduction are closer than you think. The sooner we take off the blinders of our embedded mental models the sooner we can start enjoying the benefits.

Compliance is cheap

Business estimates to comply with the clean air act of 1990 to reduce acid rain put the prospective compliance cost at up to $1,500 per ton. Over the first 10 years the price per ton NEVER went above $200 and the mean and average costs were significantly less*

The laggards in the US Chamber of Commerce have been beating the governmental pavement for years creating a false relationship between GHG and carbon emissions and economic recovery. Cleaning up our act will create more jobs, not less. That's why all the clean tech jobs are in Europe and China and not here.

* Source: "Green to Gold", copyright 2006, 2009; by Daniel C. Esty and Andrew S. Winston

The Results of Efficiency

The Las Vegas Sun reported today that the electric utility NV Energy is seeking a rate increase because efficiency programs are working and therefore people are using less energy and decreasing revenues. In any other commercial venture, a decrease in output means the supplier uses less raw material. They mistakenly overestimated demand and built too much supply (with taxpayer supported low cost financing). In a free market they suffer the consequences. Electric utilities are not like other companies though. They are a monopoly supplier and guaranteed a profit.

In any other business they would increase efficiency and create a long-term guaranteed supply (like wind). Should state officials grant them their request? I am torn.

As a businessperson, I believe they should increase their operational efficiency to match demand. On the other hand, the higher the energy prices the more we become even more efficient, creating a virtuous cycle that is only better for the commons in the long run.

Mental models and systems need to be updated to meet our new energy efficient economy. Simply giving the same model more money to burn more coal is more of the same. And that we for sure don't need. What should the electric utility and grid even look like in the future? Is our current system of regulated monopoly outdated?

See the full article here: http://www.lasvegassun.com/news/2011/may/04/nv-energy-does-good-so-it-wants-raise/

Podcast, Rick Heede, Climate Mitigation Services

Rick Heede is the founder and principal of Climate Mitigation Services. He has studied climate change since the early-1970s and has worked on energy and climate solutions since 1984. He worked with Armory Lovins at the Rocky Mountain Institute from 1984 through 2002 on issues ranging from energy policy, energy-saving office equipment, home energy measures and “Climate Neutral by 2020” for Oberlin College.

Along with his work at Climate Mitigation Services Rick is working on a book on the global risks of Antarctica’s climate-sensitive ice sheets.

Today's podcast is a little more technical than most, but if you enjoy a detailed talk on getting climate change done, this is a good one to hear.

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Sustainability is just an accounting problem

In the end we as individuals and businesses pollute because it is free or nearly free to do so. The actual costs of our actions are recognized elsewhere in taxes, healthcare or put off for future generations to pay. They are called externalities.

All of the products (like water, coal, oil and other extracted things) and services (like air that does not make us sick and allows food to grow) that we get from the earth and atmosphere are ecosystem services. And those services have a price.

The solution is to value these ecosystem services. “This is nothing to do with corporate social responsibility and the green agenda, it is hard-nosed economics,” says Chris Knight, assistant director of the forestry and ecosystems team within PwC’s sustainability practice in the Financial Times.

The challenge is to link the scientific data with business and personal choice. And the way businesses and individuals make choices is based (mostly) on cost and benefit. Also known as accounting in business speak.

The World Business Council for Sustainable Development, a global coalition of some 200 companies, is about to release a guide to corporate ecosystem valuation.

A new report, The Economics of Ecosystems and Biodiversity, aims to put a price on those products and services that we get from nature, so we can recognize the costs. I believe there is nothing more critical to sustainability than paying the price of all we consume at the time of use.

The Financial Times article referenced here is "Biodiversity: Valuing nature can cut business costs" published on March 21, 2011.

To see the report The Economics of Ecosystems and Biodiversity you can go to www.teebweb.org.

Efficient Buildings Pay You

Sometimes they say the devil is in the details. For those that care about sustainability and jobs, the God is in the details. Tax rules and regulations that will decrease energy use and increase jobs without sacrificing tax dollars. Its a rare, true win-win-win. Win for business, win for jobs, win for the environment and energy security. It adjusts the EPAct Section 179D from a tax deduction to a tax credit.

In previous years if you bought a $50,000 HVAC or building management system you could deduct (reduce your income) by $50,000. Assuming a 35% tax bracket this would have saved you $17,500 in taxes, making your net cost of the new system $32,500. This was still a great deal for a building owner.

The new proposal (and it is just a proposal, not law yet) will allow you to have a tax credit of the $50,000. So instead of saving 17,500 in taxes you will save the entire 50,000 in taxes, bringing your net cost on the system to ZERO.

The tax system will not suffer from a loss of revenue though. Although the building owners will pay less taxes when making the upgrades, the employers and employees doing the work will add to the tax rolls.

Want Affordable Clean Energy? Remove ALL Subsidies

Subsidies for Fossil Fuels Far Outweigh Renewables

A report of energy subsidies from 2002-2008 by the Environmental Law Institute shows that subsidies for traditional fossil fuels and corn ethanol totaled 87 Billion dollars. During the same period, subsidies for traditional renewable energy and carbon capture and storage were a paltry 14.5 billion. Although some would argue corn ethanol is renewable, it is not sustainable and uses nearly as much fossil fuel to produce as the energy that it creates. So it is essentially unsustainable.

Green energy would benefit significantly by simply removing all subsidies. It would make the price of dirty energy more expensive than clean energy. Even a tea partier can like that. 

100% Wind Power Cheaper Than Coal

The Empire State Building has gone to 100% wind power for one reason. It is cheaper than using coal and prices are more stable. Not only are operating costs lower, but the building owners are able to attract the best tenants and higher rent because of the switch. "Clean energy and our nearly 40% reduced consumption of watts and BTUs gives us a competitive advantage in attracting the best credit tenants at the best rents" said Anthony E. Malkin, president of Malkin Holdings, which runs the building, in an announcement.

"Everything that we're doing at the Empire State Building is about business and bottom line, that's the first and most important thing," Malkin said. "We're not about paying more to do something qualitatively different, we're about market-ready solutions. We didn't know we were doing green power until the bid was won by Green Mountain."

I speak to building owners all the time. Two of the biggest objections I hear is "my building is too big for this" and "my building is too small for this." Those are excuses to stop people from doing better because change is scary. Embrace the change. You will feel better and you'll prove your a better business-person than the others.

Read more: http://www.greenbiz.com/blog/2011/01/06/empire-state-building-turns-100-green-power#ixzz1AvO0hNvE

New Codes Improve Efficiency By 30%

Code and government officials meeting in Charlotte, North Carolina voted to improve the 2012 International Energy Conservation Code (IECC) standard by 30%. This is a great start on the road that we need to travel for energy neutral buildings. This is action that was not taken by Washington, but by state and local government agencies that see the need.

Buildings are responsible for 50% of the energy consumption and CO2 emissions in the US. Without fixing this we will never become energy independent or truly reduce our greenhouse gas output.

According to Edward Mazria, CEO of Architecture 2030, "By the year 2035, three-quarters of the built environment... will be either new or have been renovated, and that is the opportunity for this sector to basically slow down and reverse the destructive trend of global warming."

See this clip from the PBS show E2 (pronounced E-Squared): The Economies of Being Environmentally Conscious, hosted by Brad Pitt.

Commercial Property Owners: Doing It Green Means Cash in Your Pocket

Does doing the right thing pay in the pocket book. Hell Yes! A recent study of 144 LEED Certified homes that included apartments, townhouses and duplexes and single family homes recently showed a 40% savings in utilities. 64% of the properties surveyed were NOT single family dwellings.

For commercial property owners utilities can make up 35% of a buildings overhead so this  savings will go straight to the bottom line. Add to that the fact that you can charge a higher rent for a green rental and you quickly can see the benefits.

Estimates to remodel or build to LEED standards range anywhere from 2-15% of the building or remodeling cost. If it is financed in the same way as the rest of the building, and incentives are thrown in, the investment is cash flow positive from day 1.

For more info on the study go to: http://www.alliancees.org/index.php/RT_PreOcc/