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Spencer Green
Chairman, GDS International

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25 May 2011

The energy argument

Schneider Electric | www.schneider-electric.com

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E vidence suggests that businesses view themselves as removed from the need to save carbon, as they donít see immediate results. Whereas, energy saving measures can produce efficient, tangible results on a companyís bottom-line. So should the emphasis be more on energy savings? David Lewis from Schneider Electric discusses.

When the Kyoto Protocol was signed, it immediately set the tone for emphasising that in the years to come countries would be judged on their carbon emissions.  Governments have implemented a number of policies focusing on the reduction of carbon.  In the UK, this abundance of legislation aimed at encouraging businesses to lower their emissions includes the CRC Energy Efficiency Scheme, the Building Regulations, the Energy Performance in Buildings Directive and The EU Emissions Trading Scheme.

What seems to have caused a stumbling block is that most of these regulations address thermal and insulation issues and decarbonising energy generation as a way to reduce carbon emissions, rather than encouraging and rewarding businesses to economise on energy use by the intelligent application to bring about energy efficiency.

The only legislation that seems to incentivise organisations to lower consumption is the CRC Energy Efficiency Scheme, which offers financial rewards for those that are below their stated consumption for the year.  Conversely, those companies that use more than their allotted carbon emissions will be penalised financially - which goes back to the original argument that these regulations aren't doing enough to encourage businesses apart from scaremongering.

A result of this lack of encouragement seems to be that the majority of businesses see reducing carbon emissions as an environmental concern that should be tackled by large organisations and those responsible for energy generation - looking at the way energy is produced as a means to lower emissions.  In addition, the need to reduce carbon is seen as an issue to be tackled in the distant future and one that does not always rate highly on a business' agenda when compared to surviving the recession, growing the company or expanding into new markets.  Coupled with this, very few companies actually closely monitor their carbon emissions and don't see savings on a daily basis.  This view could lead to despondency.

However, all organisations do have some role to play in reducing carbon emissions.  Not only should businesses recognise the need to contribute to the global agenda, they should look at the future benefits of lowering consumption - which are primarily financial.  Energy bills are usually a major expense for businesses, so by adopting a range of techniques and technologies to reduce energy usage, this will have an impact on expenditure.

Schneider Electric's report into The Future of Energy Management highlighted that while the government may continue to pursue its emissions agenda, cost reduction is the primary focus among companies.

In addition to achieving monetary savings, it is almost certain to reach a point where companies have no choice but to reduce their consumption.  It is proposed that fifteen to twenty years could see an era of supply constraint, which will be a powerful spur to action as businesses could face their energy supplies being capped. The likelihood of this scenario is heightened by the recession and implications on public spending, as poor enforcement of regulations is likely to get worse due to government spending cuts and investment in the supply infrastructure could be deemed inadequate.  Therefore, it is surely better for companies to take steps to reduce consumption now, so they are prepared for the time when it is no longer an option.

While controlling energy can be a complex task, by understanding the business' current situation, developing a strategy, implementing plans and constantly reviewing progress, it is possible to achieve maximum results.  This will deliver cost savings, eliminate waste, improve profits, provide a positive message that can be communicated to customers and create a 'feel good' factor.

Schneider Electric is a firm believer in continuous energy management programmes being the true key to reducing emissions.  In fact, its four step approach to energy management works on a cyclical basis, and in order to achieve the highest levels of energy efficiency, solutions have to be monitored and changed to make improvements.  Statistics show that by not maintaining energy management programmes, reductions in energy consumption, and therefore fuel bills, can increase again by up to eight per cent of any savings that have been made.

While the global community unites in an attempt to fix the CO2 mistakes of the last 50 years in the next 10, one thing is clear: new solutions and a new way of thinking are needed.  The focus is on achieving more with less.  To solve the problems of efficiency, available resources, performance, safety and security requires a collaborative approach to energy management through one integrated system - a complete systems approach that unites security, the building management system, the power and IT portals and the process and machines together.  This also impacts on our electricity supply infrastructure - while electric vehicles are seen as a green option, they may largely consume energy at times of peak stress on the network.  Subsequently, "Smart Grid" technologies and solutions at all levels of generation, distribution and consumption will be necessary.

There are many factors influencing businesses' attitudes and opinions towards carbon reduction but by shifting the focus to energy efficiency, the increase in energy costs and the rising social conscience makes it a more appealing issue for businesses to buy into.  But like any corporate vision, the commitment to energy efficiency starts at the top.  As businesses grapple with the need to fundamentally change the way they view energy, that leadership is vital and there is a role for contractors to play in influencing this.  No longer is energy an overhead cost, a minor company expense that is only marginally controllable.  Energy should be viewed as a risk and one that can be managed and controlled through energy efficiency and effective energy management.

For a detailed copy of the report, please visit www.schneider-electric.co.uk or call 0870 608 8 608.

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