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Energy Efficiency Consulting Competencies & Capabilities Presenter’s Name Presenter’s Title Client Name/Location Date Agenda Business Case for Energy Efficiency Energy Efficiency Practice DuPont Energy Efficiency Track Record References 2 External Drivers are pressuring companies to improve Energy Efficiency External drivers Volatility, magnitude and escalation of energy costs are increasing the urgency to drive improvements in energy efficiency. Governments and global institutions are introducing new energy management regulations and policies, pressuring companies & societies to re-think energy consumption. 1. Volatility of resource costs 2. Public policy 3. Access to capital The Investment community is increasing the weight of a company’s energy efficiency commitments and capabilities when making investment choices. 4. Public accountability Companies are expected to publish energy improvement goals and are being held accountable for delivering results. 5. Competition Energy efficiency is being used as a powerful strategy to lower the cost of goods and attract customers at every level. 3 1. Volatility of resource costs Rising energy prices are focusing great attention to more efficient use of resources World Crude Oil Prices, 1980-2035 $200* $125 "The high oil prices will encourage us all to focus on renewable energy. We will have to push harder." Krairit Nilkuha, director-general of the U.S. Alternative Energy Development and Efficiency Department (Jan 2011) $51 Natural Gas Prices, (1990 -2035) Forecasted energy prices will encourage industries to: Invest in development of new technologies that are less energy intensive and improve productivity Increase the demand for sustainable energy sources that generate less GHG emissions Promote efficient use of fossil fuel energy sources *Nominal oil price – the higher projected oil price. **% consumption as reported by EIA in the 2011 Energy Outlook early release Source: International Energy Agency (IEA) – World Energy Outlook 2010; U.S. Energy Information Administration (EIA) website SLS › Sustainable Operations › EE › DuPont Resume › Business Case 2. Public Policy Many countries are developing and implementing policies to promote efficient use of energy sources and reduction of energy-related carbon emissions Example Policies Country/Region Policy Detail United States New Corporate Average Fuel Economy (CAFE) Standards Sales-weighted fuel economy for light-duty vehicles capped at 39mpg in 2016, 35.5 mpg for cars. China Golden Sun Programme Subsidies 50% of investment cost for on-grid solar-power projects (over 500MW) and 70% for off-grid projects, 2009-2011. Feed-in tariff for wind power plant Four categories of on-grid tariffs for new wind projects, based on regions of varying wind conditions. Nuclear programme Planned expansion of nuclear capacity to 2020. European Union 20-20-20 Package Cap on overall greenhouse-gas emissions of 20% below 1990 levels by 2020. National renewable energy targets for emission reductions and to reduce energy imports. Include a minimum 10% share for alternative fuels in gasoline and diesel by 2020. Revised guidelines on state aid for environmental protection to support development and safe use of carbon capture and storage (CCS). Japan Photovoltaic (PV) subsidy and feed-in tariff for households Subsidy: JPY 70 000/kW with a total budget of JPY 20 billion (April 2009 to january 2010). Feed-in tariff: surplus electricity to be purchased by electric utilities at twice retail price (JPY 48/KWh). Sources: International Energy Agency (www.iea.com) , World Energy Outlook 2009 SLS › Sustainable Operations › EE › DuPont Resume › Business Case 4. Public Accountability The number of Fortune Global 250 companies publishing Sustainability reports has been increasing in the last 15 years Percentage of Fortune Global 250 publishing a Sustainability Report Many of these companies include energy goals and performance in their sustainability reports 100% 80% 60% 40% 20% GRI – G1 1999 0% 1998 GRI – G2 2002 2001 Example energy performance reported in sustainability report GRI – G3 2006 2004 2008 GRI: Global Reporting Initiative Chevron website, Chevron Corporate Responsibility Report 2009 GRI: Global Reporting Initiative SLS › Sustainable Operations › EE › DuPont Resume › Business Case 5. Competition As energy is becoming more expensive, companies are strategically focusing on its efficient use as a way to gain competitive advantage More than 80% of surveyed companies rated energy to be “extremely “ or “very” important to their business, making energy an strategic factor to focus on to gain competitive advantage. 40.80% Extremely 39.80% Very 16.30% Somewhat Not at all Not sure 3.10% 0.00% Source: The Conference Board, Strategic Energy Management, 2004. For much of the global economy, energy has become one of the strategic factors driving business decision-making. Business and consumers are increasingly considering the energy efficiency of the products and services they buy and use. In Industrial production, companies are searching for the most energy-efficient process design solutions. (…) these development are the results of economic and political facts: the long-term depletion of fossil fuels and public policy decisions to curb greenhouse gas emissions (GHG). Thus, energy has become a key factor in gaining a competitive edge, and the relevant global markets are growing rapidly. McKinsey & Company, Energy: A key competitive Advantage New sources of growth and productivity, April 2009. SLS › Sustainable Operations › EE › DuPont Resume › Business Case DuPont’s enterprise-wide management systems & cultural change approaches drive energy efficiency results Identifying and elevating energy cost as a strategic business issue Understanding business implications of energy consumption and escalating costs Understanding implications of energy cost variability on portfolio profitability Benchmarking and quantifying the total opportunity value Developing skills and capabilities of the people in the organization Building collaborative teams Providing enabling tools Identifying and executing the right projects to drive highest gain results Prioritizing highest gain / lowest investment opportunities Utilizing leading methods for improvement opportunity execution (six sigma, lean, etc) Bringing deep technical expertise, in both energy systems & core processes Implementing a vertically integrated management approach to drive results Driving leadership and management commitment to breakout performance Instituting organizational structures and accountabilities to drive results Designing and implementing managing processes to sustain results 8 Simplified Energy Cost Flow Sourcing Efficiency Core Manufacturing Process Energy Input • Energy cost is a function of pricing, consumption, GHG credits/options, and incentives • Pricing is driven by market dynamics, but is negotiable • Efficiency efforts are focused on minimizing waste • Improvements to efficiency: • Energy Source Mix • Energy Pricing Energy Systems Energy Culture Energy Waste Core Technology, capitaldriven Energy System improvements, low capital/cost Changing behaviors – minimal investment 9 Energy Planning Process Overview Recognize the Energy Challenge Develop an Energy Plan Assess Process Energy use Energy Goals Workshop Energy Plan Template Identify Opportunities Energy-related Six Sigma Projects Virtual Workshops Identify Opportunities “Top Ten” Energy Projects Initiative Plant Energy Assessment Template Develop Capital Projects Appropriate Capital Funds Internal Capital External Funds (Performance Contracting) 10 Agenda Business Case for Energy Efficiency Competencies and Capabilities DuPont Energy Efficiency Track Record References 11 We help you achieve cost reductions and security of supply through efficiency and improved operating team capabilities Energy Efficiency Emissions Supply Chain Providing an effective energy management system that’s rooted in leadership enablement, clear organizational goals, effective staffing and training, and specific processes and actions Integrating energy efficiency management into the strategy and execution of the ongoing business processes (capital, cost, resources, etc.) Designing a practical and enduring energy management process to sustain and build on achieved goals – customized at each level of the organization 12 Resources People Management Culture Quality Maintenance Energy Reliability Safety Competitive Advantage Through Proactive Approaches “We are uniquely able to combine knowledge, experience and technology to identify, capture, and deliver real and lasting energy savings across your portfolio of assets.” Risk Mitigation Awareness and Compliance Cost Reduction Operational efficiency (inside out approach prevailing) Revenue generation Product innovation (outside in approach prevailing) Competitive advantage Influence on Society and the competitive landscape Moving from discrete energy reduction initiatives to integrated energy management strategies that return significant cash. 13 Corporate Approach to Strategic Issues Recognize strategic value & drive from the top Line accountability Appropriate support resources Integrated Management System Consistent implementation approach across entire operations portfolio Rigorous performance management Prioritize no-capital & low-capital improvement 14 Energy Management System (EMS) Strong Leadership Engaged & Committed Leadership Challenging Goals, Policies, & Principles Metrics and Data-Driven Decisions Appropriate Organizational Structure Integrated Energy Efficiency Organization Responsible Line Organization Integrated Energy Management Culture Timely Recognition of Success Focused Processes and Actions Consistent & Targeted Business Planning Process Commitment to Training & Development Effective Communication System Standard Improvement Methodology These elements, and the system for realizing them, form the best practice reference model against which we implement change DuPont Sustainable Solutions helps clients achieve operational excellence Consulting Businesses & Offerings Safety Resources Sustainable Operations Transform your workplace culture, develop employee skills, reduce incidents and injuries, which improve operational efficiency and sustain company growth. Maximize returns, minimize waste and reduce risks through sustainability, energy efficiency and sustainable assets management. Training Solutions Empower employees with critical training in safety, industrial skills and ethics and compliance by integrating eLearning tools, instructor-led courses and classroom training. Clean Technologies Cleaner air and cleaner fuels are the result of best-inclass technologies, equipment and services combined with strong technical and engineering capabilities. 16 Agenda Business Case for Energy Efficiency Competencies & Capabilities DuPont Energy Efficiency Track Record References 17 DuPont Founded in 1802 A Fortune Top 100 Science Company Recognized for experience and success in operational excellence Active Leader in environmental sustainability since 1989 – “Laggard to Leader” 18 DuPont Sustainable Solutions Consulting, Technology, & Training Services: DuPont Sustainable Solutions • Global Safety Consultants Since 1998* • Clean Technologies • Training Solutions • Sustainable Operations – Environment, Energy, Sustainable Assets Improve Performance, Release Capital…Increase Shareholder & Stakeholder Value *Has existed as a safety services business since the early 1970's. 19 The DuPont Energy & Enviornmental Challenge DuPont has addressed sustainability and energy reductions on a continuous basis since 1989 Our motivations: Recognized energy cost as a significant part of our total operating cost Experienced supply disruptions as costs were increasing rapidly Energy efficiency would provide the greatest cost savings among global warming initiatives, but emissions would gain ground Clearly viewed energy efficiency as a way to outperform competitors Overall, the health and welfare of the organization and its product lines would be at risk if we didn’t act. 20 DuPont Energy & Environmental Accomplishments • • • 19% reduction in energy use since 1990 baseline while production increased by 21% Over $5 Billion in energy cost savings since 1990 baseline Gained industry recognition from “Laggard” to “Leader” With this knowledge and know-how, we have been able to accelerate progress and continue to raise the bar. DuPont Global Environmental Performance Evolution (Absolute Values) 160% Percent of 1990 (2004 for water) • Other Sustainability Results since 1990: Safety & Health World-Class Major Incidents 90% ↓ Air Toxics 75% ↓ Air Carcinogens 92% ↓ Hazardous Waste (Dry) 42% ↓ U.S. TRI “Releases” 77% ↓ 140% 120% 100% 80% 60% Production Water 40% Hazardous Waste 20% Energy CO2 eq. 0% 1990 1995 2000 2005 2009 * Sustainability accomplishments from 1990 through 2009 (per data available and used for the 2010 DuPont Global Reporting Initiative Report) ** TRI = toxic release inventory 21 Agenda Business Case for Energy Efficiency Competencies & Capabilities DuPont Energy Efficiency Track Record References 22 Example: Oil & Gas Client Project Objectives Goal: 10% Energy Reduction by 2015 Objectives: Leadership commitment and cultural change that leads to a sustainable corporate best practice Energy Management process Performance management process and the metrics necessary for managing the activities and projects Pilot of new Energy Management System at a Refinery Possible Results Estimated benefits from an Energy Efficiency Improvement Program Without investment: 3 – 5% With Capex <1000K$ 8 – 12% With Capex >1000K$ 16 – 24% World-Class Refineries consume ~25% less than average 23 Example: Oil & Gas Approach Corporate Energy Management System Corporate & Site Assessment/Survey Implementation Plan Development Management System & KPI Development Corporate Rollout Plan Development Organizational Development & Training Process Assessment & Continuous Improvement Plan 1/1/10 6/1/10 11/1/11 24 Over $1.5 MM in direct benefit in less than 1 year Example: Oil & Gas Approach Corporate system designed for sustainability Corporate Energy Management System Process, energy system, and culture opportunities identified and implemented Corporate & Site Assessment/Survey Implementation Plan Development Management System & KPI Development Corporate Rollout Plan Development Organizational Development & Training Process Assessment & Continuous Improvement Plan Site Pilot Energy Culture Survey Technical Review Management System Technical Assessment Leadership Alignment Solution Design KPI Development 1/1/10 6/1/10 11/1/11 25 Are you ready to build a business case for energy? Escalating costs Supply limits Burning Platform Environmental impacts Stakeholder expectations Goals and Strategy Increased production Shared Vision Shareholder value growth Significant footprint benefits Rapid savings opportunities Leadership First Practical Steps Organization and Structure Processes and Actions 26 Success depends on an ability to create and execute the business case for energy efficiency • Identifying and elevating energy costs as a strategic business issue • Developing skills and capabilities of people across the organization • Identifying and executing the right projects to drive highest gains • Implementing an enterprise-wide management approach to drive results Enterprise-wide systems that combine knowledge, experience and technology to identify, capture, and deliver real and lasting energy savings across your portfolio.” 27 Speaker’s Name Speaker’s Title E-mail Address