Market News

 May 18, 2007
Rising energy costs spur energy efficiency push

 Milwaukee, USA - More than three-quarters of American business leaders believe energy prices will continue to rise, and as a result most say their companies have or will soon implement energy efficiency measures in their offices and operations.

The survey of 1,250 of executives from companies large and small, across sectors, conducted by Johnson Controls in March 2007, found that a variety of economic and environmental concerns are pushing business to adopt energy efficiency in a big way.

"This survey provides a valuable snapshot of how organizations are reacting to rising energy prices, and I think we're going to see even more attention paid to this in the future," said David Myers, president of Johnson Controls' Building Efficiency business.

More than half of the respondents - 52 percent - said saving money is the main or primary reason behind the move to reduce energy use, while 13 percent said environmental concerns were the main motivator. Both economic and environmental reasons figured prominently for 35 percent of the execs.

The form that these steps have taken are primarily modest, or the "low-hanging fruit" of energy efficiency, as Myers termed it in a press conference.

The survey found that 70 percent of executives said they had educated their employees on how to conserve energy; 67 percent switched to energy efficient lighting, 60 percent took greater control over their heating and cooling needs, and 46 percent installed light-control sensors to turn off lights in empty rooms.

Among the more ambitious programs adopted by survey respondents, 28 percent said their companies have installed energy-saving glass in windows, 13 percent have re-roofed buildings with white shingles to reduce how much heat they take in, 11 percent are recycling their operations' waste energy, and 10 percent have begun to self-generate power for use during peaks in the demand cycle.

Despite their recognition of the importance of saving money by saving energy, most of the companies surveyed have not extended the amount of time they're willing to wait for new efficiency projects to pay for themselves.

64 percent said their maximum payback period is between two and five years, and only 18 percent of those surveyed said their companies would allow a longer payback period today than they did five years ago. About 45 percent say the required payback period has not changed compared with five years ago.

But companies that manage much larger workspaces, starting at 100,000 square feet and rising to more than 5 million square feet, were willing to accept longer payback periods for their projects, perhaps because those companies tended to spend over 70 percent more of their budgets on energy than companies managing smaller spaces.

The report follows on the heels of a new program launched at the C40 Large Cities Climate Summit in New York this week. The Clinton Climate Initiative has arranged for more $5 billion in funding to go toward exactly these kinds of conservation projects in buildings around the world. Johnson Controls is one of several companies that will be auditing the efficiency projects in these buildings and helping companies achieve the best savings.

"There's a growing realization of the role commercial and industrial facilities play in energy consumption, and the role they can play in making the economy more energy efficient," Myers said. "Johnson Controls believes that employing effective energy management strategies can help mitigate the impact of those costs and improve our country's energy self-sufficiency."