New Bottom Line Volume 6.24 – The Business of Climate Change: From Kyoto to Money in the Bank

December 14, 1997

The Kyoto Climate Change conference has come and gone. Endless days and sleepless nights that exhausted the translators and left the delegates to do final negotiations relying on their own grasp of English. Now what? Read on.

The agreement, as you probably know by now, calls for reduction of greenhouse gas (GHG) emissions by developed countries of 6-8% below 1990 levels by the year 2008-2010. Developing countries have dodged targets for now, but will not be able to for long; political opposition and economic realities will see to that…though it is not at all clear how quickly.

The jockeying for position in the debate that will unroll over the coming year has already begun. As expected, major industrial forces in the US (often through the benignly named “Global Climate Information Project”) were quick to denounce the agreement. Their [largely Republican] allies in the US Senate vowed its early and total demise. And the Washington Times <>; [not to be confused with the New York Times] went so far as to offer, as the second paragraph of their December 11, 1997 front page story, the following unattributed, seemingly factual statement:

“Under the deal, the use of coal, oil and other fossil fuels in the United States would be cut by more than one-third by 2012, resulting in lower standards of living for consumers and a long-term reduction in economic growth.”

They’re entitled to their opinions (though the Times should be ashamed of itself, though I doubt if it is), but opinions are cheap in this business. No point in being bothered by facts–such as no tight correlation between energy use and living standards. The question is, Does real world experience point in another direction?

So for a reality check, I recently visited the database maintained by the US Department of Energy’s Industrial Assessment Centers, a network of 30 universities that have conducted thousands of ecoefficiency audits in a wide range of SIC (Standard Industrial Classification) codes. <>;

“By the close of 1994, IACs had conducted more than 5,000 assessments and participating manufacturers had cumulatively saved $517 million and 94 trillion British thermal units (BTUs) of energy. As a result of reduced energy consumption, they also decreased emissions of greenhouse gases by 200,000 metric tons of carbon equivalent. These results have been achieved at a total Federal cost of $27 million.” (By late 1997, the database totals more than 6,500 assessments.)

The IAC database chronicles thousands of improvements in thousands of industrial businesses — many of them quite capable of meeting target GHG reductions in just a few years, not a decade, and at a profit, not a cost. A few cases in point:

In the petroleum and coal products industry (SIC 29), ecoefficiency measures projected an average annual facility energy savings of 13.4%, with a 28 month payback. For furniture and fixtures (SIC 25), average annual facility energy savings of 12.3%, with a 20 month payback. Paper products (SIC 26), 8.5%, 15 month payback. Primary (SIC 33) and fabricated metal industries (SIC 34), 7.0% and 7.2% respectively, 15 month and 14 month paybacks. And the list goes on.

It gets even more interesting when we look at specific technologies. Boiler load management alone can reduce some facilities’ energy use by 7%; better boiler maintenance by 2%. Recovering waste heat, 4.6% reduction in facility energy use, 16 month payback. Cogeneration systems, 9% reduction, 34 month payback. Efficient chillers and refrigeration, 1.2%, 23 month payback.

As always, “your mileage may vary.” But note what’s being reported here. Companies in a host of industries — including the most problematic energy consumers, GHG generators and polluters — can individually meet and exceed the Kyoto targets. They can do it quickly. They can do it without risk. And they can do it with returns on investment that in some cases can exceed 30%, 50% or even 80% per annum.

So while some will argue endlessly that we can’t afford to reduce potential human impact on global climate, others will be laughing all the way to the bank.

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PS: Want to get started today? Here’s the IAC’s “Top Ten” list of low cost actions that would produce the greatest immediate impact as cost cutting measures by industry:

10. Have management climb on the roofs
9. Utilize free cooling
8. Monitor and limit ventilation
7. Periodic “dumpster diving” by management
6. Remove water and disposal costs from overhead accounts
5. Establish corporate policy for buying most efficient components of new systems
4. Get plant workers involved in efficient operations
3. Consider contracting out maintenance issues which “just never get done”
2. Increase resources committed to “Diagnostic PM”

1. Have periodic audits/assessments performed by outside parties.

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(c) 1997 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

May be posted intact–including this notice–in any non-commercial forum.
Please inquire at “reprint_rights at natlogic dot com” before reproduction in any commercial forum.