Energy Efficiency is Not the End Game

Nick Fassler

Nick Fassler

by Nick Fassler, MBA/MS student at the Erb Institute, Class of 2012.

This article is cross-posted on Environmental Defense Fund Innovation Exchange Blog.

“Energy efficiency is not the end game.” These words from Peter Senge (senior lecturer at MIT, renown author and founding Chairman of the Society for Organizational Learning) literally and figuratively kicked off the Capturing the Energy Efficiency Opportunity conference (read Emily Reyna’s blog post) that focused on the results and learnings of the 2010 EDF Climate Corps program. In just one summer, 51 Climate Corps fellows found energy efficiency projects with savings of $350 million in net operating costs and 400,000 metric tons of annual greenhouse gas emissions. During my own fellowship with HCA Healthcare, I found alighting efficiency project that could be rolled out to most of HCA’s hospitals to save 52,000 metric tons of GHG emissions annually and $14.7 million in net operating costs over the life of the project. The success of EDF Climate Corps is no modest accomplishment for a program that has only been in existence for three years, yet throughout the conference I kept thinking about Professor Senge’s words and wondered how we could be addressing the deeper and more systemic issues of energy and sustainability.

I spoke with Professor Senge shortly after the conference to ask him about moving beyond energy efficiency, and what he thinks programs like EDF Climate Corps can do to be more transformative in their relationships with businesses.

The Problem with Energy Efficiency

While energy efficiency itself is not a problem, a problem arises when people focus purely on energy efficiency and neglect to see the big picture. In most businesses, efficiency improvements help cut costs and lead to additional growth — so while a company may be improving its efficiency, its absolute greenhouse gas emissions may stay flat or even increase. By only focusing on energy efficiency, there may be unintended side effects and fundamental solutions to the deeper problems will likely be missed. Professor Senge gave the automotive industry as a prime example: because internal combustion engines have become more and more efficient, we have seen rapid growth in the automotive industry leading to our current unsustainable, car-based transportation system. Clearly, efficiency is not the only key to sustainability.

Going from Energy Efficiency to Energy Intelligence

To move away from a short sighted focus on energy efficiency, Professor Senge suggested ways to use energy efficiency as a lens to better understand the deeper issues around energy. Companies must become more intelligent about their energy usage and ask themselves key questions to understand the assumptions about energy that their business is based on. These are some questions that every company must ask itself:

●       Where does the energy we use come from?

●       Where is the energy we consume going?

●       How would increasing energy prices impact our business?

●       How much energy does it take to use our products?

●       How much energy is used by our suppliers?

By asking these key questions, companies may realize there is a lot more complexity to how energy will affect their business. They may find that they have been operating as if energy prices will remain low, or find that the majority of energy used in their value chain is actually from the use of their products rather than in manufacturing them. Companies with this deeper understanding of their energy reality can become much more strategic about their energy use. They will be the first to identify both the risks and opportunities that come with an uncertain energy future, and will likely choose strategies beyond just energy efficiency.

Now, imagine if EDF Climate Corps fellows were also trained to ask these important questions at their host companies. We could continue helping companies identify millions of dollars in energy savings while also moving beyond energy efficiency goals, and looking towards a deeper understanding of energy and sustainability.


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One Response to Energy Efficiency is Not the End Game

  1. Peter Senge’s comments underscore the need for systems thinking. Answering questions about “where does energy come from,” “where does it go,” “what’s the connection between energy prices and business practices/performance” is impossible without a transformation in how we collect, analyze, and report energy and other types of environmental data. This is the realm of information systems. So if you want answers to Senge’s questions, you have to think about organizational change, specifically, how organizations can develop information systems capabilities to enable environmental transformation.

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