Energy savers well rewarded

By BRIAN FALLOW

Businesses have a lot of "low-hanging fruit" in the form of energy savings, says energy efficiency expert Rob Bishop, but several barriers must be overcome to gather that harvest.

He said energy audits commonly identified ways of cutting a commercial building's energy use by 30 per cent through a package of measures, with an average simple payback period of one year.

The Warehouse chain had saved about 50 per cent on its energy bills, or around $3 million a year, according to founder director Stephen Tindall.

The New Zealand Business Council for Sustainable Development reckons that nationwide, even with a conservative 15 per cent estimate of potential energy savings, the financial savings would top $100 million a year, and cut greenhouse gas emissions by 466,000 tonnes.

But Bishop said there were obstacles to capturing those gains.

One was skill shortage. Identifying energy wastage, especially in heating, ventilation and air-conditioning, was a difficult task for experts, and many had left the country in the past few years as their traditional contacts in the electricity sector disappeared through His firm, Energy Solutions, was one of only 10 active energy auditors.

"I've got about two years' work sitting ahead of me right now," he said.

Another barrier was that the financial incentives were often misaligned: the building' s owner would incur the cost but the tenant would get the benefits.

One of the biggest barriers, perversely, was that property managers were afraid of losing face. "They are afraid that if they suddenly go to their chief executive or their board and say, 'We can save 30 per cent off our energy bills', the response will be 'Why didn't you tell us this five years ago? That's $100,000 a year down the drain'. And there goes their performance pay."

Bishop said overseas studies had found that the energy savings were often dwarfed by associated benefits, such as productivity gains and fewer sick days.

"In the course of an energy audit you also identify areas where lighting or temperature are inadequate. If they are fixed at the same time, the productivity gains can be substantial."

Manufacturing operations could also benefit from an energy audit.

Preliminary results from an audit of cereal manufacturer Hubbard Foods indicated energy efficiency savings of 20 to 30 per cent were immediately available, through slightly changed practices or equipment.

It might not end there. Managing director Dick Hubbard said that the focus these days on greenhouse gases and global warming made it sensible to look at allowing longer payback periods for investments to enhance energy efficiency and reduce emissions than were allowed for a new piece of manufacturing plant.

"We haven't set a figure, but we might look four or five years out, compared with three years for machinery."

Hubbard said the first priority was to reduce emissions by improving energy efficiency, but further out he was looking at addressing the firm's whole "greenhouse footprint" - in other words how many hectares of trees would need to be planted to offset emissions which could not be eliminated through efficiency gains.

This would not be something to exploit through marketing, he said, but it could have an indirect effect on the business through morale and the company's culture, helping Hubbard employees feel good about where they worked.

In addition to emission reductions through energy efficiency, the case studies in the Business Council for Sustainable Development's report on the commercial upside of a carbon-constrained world identify some of the business opportunities which would arise from the Kyoto Protocol.

Landcare Research, a Crown research institute, is focusing on the ability under the protocol to earn "sink" credits by planting forests on land not already forested.

In New Zealand, that generally means post-1990 commercial plantation forests of pinus radiata, but it also applies to regenerating native forests.

Landcare has developed a software product called EBEX21 (emissions biodiversity exchange for the 21st century) for calculating corporate emissions and the offset in terms of regenerated native vegetation.

"We are linking offsetting emissions with creating or recreating biodiversity in New Zealand," said Dr Maggie Lawton of Landcare.

Under the Government's climate change policy package, large industrial emitters will negotiate individual greenhouse agreements (NGAs) with the Government in order to avoid the planned carbon tax.

In addition to moves to reduce their own emissions, putting money into native forest regeneration would be a bona fide way of meeting their obligations.

"There's a lot of interest from businesses looking for multiple solutions to dealing with Kyoto requirements and a lot of people interested in restoring New Zealand's biodiversity," said Lawton.

"This project tries to link those two groups of people."

Some of the interest is from overseas companies.

Milburn Cement is typical of a company likely to negotiate an NGA. Making cement is inherently intensive in emissions and energy.

Its managing director, Rex Williams, said Milburn had since 1995 reduced its emissions by burning waste lubricating oil in the kiln of its Westport plant in substitution for coal.

Milburn, part of the Switzerland-based Holcim group, has a minority interest in a cement plant in China, which operates at lower energy and emissions efficiency than Milburn's New Zealand plant.

The Kyoto Protocol's clean development mechanism (CDM) allows credits for climate-friendly projects in developing countries.

Williams said Milburn saw a business opportunity in exploiting its expertise and earning CDM credits in affiliated plants in China and Fiji.

EECA

New Zealand Business Council for Sustainable Development


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