Powerful incentive

Companies are looking for a ‘quick win’ in energy management rather than seeing it as a good business move, says Paul Lazarevic

Several high-profile announcements have been made in the last few weeks, with major organisations pledging to put care for the environment at the heart of business operations.

Despite this and the continued media and political focus on environmental issues, the latest npower Business Energy Index (nBEI) reveals a lack of awareness among the business community of the potential of the low-carbon economy and poor understanding about the inherent environmental benefits gained from energy-management initiatives.

The report shows that while energy management has become woven into the fabric of some engineering firms, many are still not making the connection that effective energy management for a good economic return also has environmental benefits.

The fourth nBEI has tracked the impact of rising energy costs on a broad range of companies, including many in the engineering and manufacturing sectors and the progress of energy-management initiatives.

With environmental issues becoming a growing concern since the Energy Review and the publication of the Stern report, the special topic this time is the low-carbon economy — the level of understanding among business and the priority it places on reducing carbon.

What is clear from the findings is a lack of common understanding on what the low-carbon economy is. Opinions are diverse and negative perceptions abound. Some commentators called it: ‘the final nail in the coffin of UK manufacturing’ and ‘a system whereby the Government will punish those people using high energy’.

The apparent misgivings about environmental issues are further underlined by the priority given to reducing carbon. When asked if reducing carbon emissions was a business priority, 60 per cent of all respondents stated it was not. However, for major energy users 60 per cent believed reducing CO2 was a business priority. Of the 40 per cent of major users who had said it was not, 64 per cent said it never would be.

Even with this greater level of understanding and activity, companies believe further energy savings are possible, with engineering firms predicting an extra 10 per cent reduction is technically available. The resources are also available: 65 per cent of engineering firms said they had the money to invest.

The results of the nBEI do, however, show reticence from businesses about introducing changes that would achieve a substantial reduction in energy
consumption, despite predicted savings and resources being available.

Offered a range of more wide-ranging solutions and asked to rate them out of 10 for feasibility, only reducing lighting was seen as remotely possible, rated 4.5 out of 10. Other options such as more flexible working (2.5/10) and major changes in manufacturing processes (3/10) were viewed as remote possibilities.

At the same time, respondents believe there is a dearth of information on energy management and display scepticism that the advice available is practical.

This sentiment and other findings in the report suggest a tendency for companies to look for ‘quick wins’ in energy management, a trend also prevalent in previous surveys. This approach implies a focus on traditional energy management programmes, where investment is focused on retro-fit, add-on projects such as improved lighting, better heating controls or variable speed drives. In an ideal world, these should be considered the basics and should be fully implemented in all situations.

What is required now is a more sustainable approach to energy. Then activity switches to more radical initiatives to re-engineer complete energy systems to reduce consumption and emissions. This focuses on optimising whole systems instead of components. The evidence is that this approach produces a step change in reducing emissions through more efficient energy use and maintenance costs — 50 per cent or more in many cases.

The latest nBEI clearly shows that more companies than ever are implementing energy-management programmes but few are taking their lead from big business and realising the commercial potential of environmental action.

A more sustainable approach may require a leap of faith for some businesses but the return on investment will benefit business as well as the planet.

Paul Lazarevic is the head of corporate sales at npower business