Measure for Measure
By John Walsh
Energy issues – whether financial or environmental– have never been higher on the news agenda, but will the public sector rise to the challenges they pose?
Energy is a driving concern of the 21st Century. Whole geopolitical systems revolve around the flow of gas and oil supplies and carbon emissions have been blamed for threatening the stability of the world’s entire climate via the global warming effect. The government has made many policy proclamations about plans to cut back on greenhouse gas emissions, and has promoted the UK as a leading force in efforts to tackle global warming.
The Climate Change Levy was introduced in April 2001 as part of the Government’s subscription to the Kyoto Protocol on climate change. Under Kyoto, greenhouse gas emissions must be cut by 12 per cent by 2010 but the government set itself the ambitious target of exceeding Kyoto by a full eight per cent. A reduction of 20 per cent by 2010 became a manifesto commitment.
But, like so many manifesto commitments, this target was eventually watered down. Earlier this year, Environment Secretary Margaret Beckett admitted the 20 per cent target would not be met. An 18 per cent reduction by 2010 is still possible, she believes, and businesses will be expected to bear the brunt of the cuts over the next four years – between half and two thirds of the reduction is expected to come from the corporate sector.
The Climate Change Levy, which taxes companies’ energy use and is partly offset by a reduction in employer’s National Insurance contributions, has come under particular criticism from businesses, trade organisations and energy producers. It is, they claim, an unworkable and potentially crippling tax. But the government has business firmly in its sights. Next year the Government plans to publish a review of its climate change programme, and this is likely to include the imposition of more stringent emission controls on service and manufacturing companies.
Environmental targets
The latest environmentally friendly measure from Tony Blair to combat climate change is by transforming Whitehall into “carbon neutral” within six years. The Prime Minister said the public sector would lead by example on combating greenhouse gas emissions. He set an “aspirational target” of reducing carbon emission by 30 per cent at the entire Government office estate by 2020. Officials claimed the scheme would save approximately 800,000 tonnes of carbon a year, the equivalent of taking over three quarters of a million cars off the road.
David Miliband, environment secretary, announced other environmental targets for official buildings by the end of the next decade. These include reducing water consumption by 25 per cent and increasing energy efficiency per square metre by 30 per cent.
In addition, Peter Ainsworth, the shadow environment secretary, pointed out that 12 government departments were still not meeting their 2004 water efficiency targets while carbon emissions from the government estate were rising.
A long term task
Carbon emission reduction requires time, effort and most of all expense. With effective procedures in place at an early stage, local authorities and public sector organisations will be fully prepared in sustainability and energy management –both in facing the new government environmental policies and combating rising energy costs.
A steady diet of rocketing fuel prices squeezes profitability, especially at those firms with large utility overheads. The Office of Gas and Electricity Markets (OFGEM) has calculated that over the winter of 2004-5 alone, UK businesses and domestic consumers paid ? billion more for gas and electricity than in the previous year. And industry regulators expect further price rises, possibly totalling as much as ?illion over the next 12 months.
Government-funded emissions agency the Carbon Trust says businesses can do much to help themselves, claiming that 60 per cent of the cost-saving opportunities exist outside traditional heavy energy users – amongst, for instance, the public sector organisations, corporates and SMEs.
Energy management
But there is no doubt that energy management is a key issue for organisations large and small in a climate of environmental and financial concerns. But if you are a hard-pressed CEO or manager, from where do you find the time and money to make the savings needed to keep energy bills and usage under control? There is a clear and pressing need for an affordable and feasible way to monitor energy usage.
My own company, Energy Management Advisory Services (EMAS), has spent six years and six million euros on the development of a system which we think meets this need. Energy Performance Management (EPM) makes use of simple-to-install, non-invasive monitoring and transmission equipment to provide real-time remote analysis of gas, water, and electricity.
EPM allows businesses and public sector organisations to accurately forecast future energy consumption and to closely align actual usage to their particular needs, thereby achieving significant cost reductions and a rapid return on investment. It also offers utility companies fast and accurate data on energy consumption to facilitate accurate billing.
Measuring the key to management
Before EPM’s formal launch earlier this year, we conducted a major trial at a major UK retail bank. We were approached by facilities management firm Johnson Controls, who reported concerns at the bank about excessive energy bills at different branches round the country – managers were worried about the effects of such usage on the environment and on bottom line costs and looking for a solution.
Many of the branch meters were classed as “hard to read” and consequently often received inaccurate readings or estimated bills, making it difficult for Head Office to forecast energy expenditure at the bank’s 2000 branches.
EMAS was presented with a list of retail branches in the north of England which were generating excessive or erratic energy bills. We installed meter-reading devices at each of the branches, being careful not to disrupt energy supplies or the day-to-day operations of the bank. The devices were timed to collect accurate usage data from gas, water and electricity meters and to transmit this data at half-hourly intervals to remote monitoring stations.
At one branch, data indicated that gas was being consumed at an alarming rate, 24 hours per day. An investigation uncovered the cause: a central heating timer which had been set incorrectly. The problem was corrected and gas usage promptly dropped by an impressive 64 per cent.
Similar in principle but easier to rectify was the electricity consumption at another branch. Electricity was being consumed from 05:30 to 03:00 (22.5 hours) each day, including Sundays and other days when the branch was closed. The problem was quickly traced to an air conditioning unit. The timer was adjusted and temperature controls amended to a more comfortable setting. Electricity bills dropped by 47 per cent.
There is a clear connection between the prevention of energy wastage and the achievement of energy efficiency and cuts in overall usage – so monitoring systems provide business with the double benefit of lower bills and a relatively painless way to meet carbon emissions targets.
Tackling climate change is very definitely a long-term project so there is little chance of energy dropping off the global political agenda for many years to come. Energy usage monitoring is a technology with a big future, and one with big benefits for business.
John Walsh is Chief Executive Officer of EMAS
For further information or to set up an interview with John Walsh, CEO of EMAS, please contact Charmaine Chan on 020 7031 4344 (charmainec@ram-pr.co.uk) or Cas Park on 01423 720005 (casp@ram-pr.co.uk)