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Presenter’s Name
Presenter’s Title
Client Name/Location
Date
Energy EfficiencyConsulting Competencies & Capabilities
2
Business Case for Energy Efficiency
Energy Efficiency Practice
DuPont Energy Efficiency Track Record
References
Agenda
3
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.
Companies are expected to publish energy improvement goals and are being held accountable for delivering results.
Energy efficiency is being used as a powerful strategy to lower the cost of goods and attract customers at every level.
1. Volatility of resource costs
2. Public policy
4. Public accountability
5. Competition
The Investment community is increasing the weight of a company’s energy efficiency commitments and capabilities when making investment choices.
3. Access to capital
External Drivers are pressuring companies to improve Energy Efficiency
Rising energy prices are focusing great attention to more efficient use of resources
1. Volatility of resource costs
SLS › Sustainable Operations › EE › DuPont Resume › Business Case
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 releaseSource: International Energy Agency (IEA) – World Energy Outlook 2010; U.S. Energy Information Administration (EIA) website
"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)
World Crude Oil Prices, 1980-2035
$51
$125
$200*
Natural Gas Prices, (1990 -2035)
Many countries are developing and implementing policies to promote efficient use of energy sources and reduction of energy-related carbon emissions
2. Public Policy
SLS › Sustainable Operations › EE › DuPont Resume › Business Case
Country/Region Policy Detail
United StatesNew 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 ProgrammeSubsidies 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 plantFour 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).
JapanPhotovoltaic (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).
Example Policies
Sources: International Energy Agency (www.iea.com) , World Energy Outlook 2009
The number of Fortune Global 250 companies publishing Sustainability reports has been increasing in the last 15 years
GRI: Global Reporting InitiativeGRI: Global Reporting Initiative
4. Public Accountability
SLS › Sustainable Operations › EE › DuPont Resume › Business Case
Percentage of Fortune Global 250 publishing a Sustainability Report
0%
20%
40%
60%
80%
100%
1998 2001 2004 2008
GRI – G11999
GRI – G22002
GRI – G32006
GRI: Global Reporting Initiative
Example energy performance reported in sustainability reportExample energy performance reported in sustainability report
Chevron website, Chevron Corporate Responsibility Report 2009Chevron website, Chevron Corporate Responsibility Report 2009
Many of these companies include energy goals and performance in their
sustainability reports
As energy is becoming more expensive, companies are strategically focusing on its efficient use as a way to gain competitive advantage
5. Competition
SLS › Sustainable Operations › EE › DuPont Resume › Business Case
0.00%
3.10%
16.30%
39.80%
40.80%
Not sure
Not at all
Somewhat
Very
Extremely
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.
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.
Source: The Conference Board, Strategic Energy Management, 2004. Source: The Conference Board, Strategic Energy Management, 2004.
8
DuPont’s enterprise-wide management systems & cultural change approaches drive energy efficiency results
Identifying and elevating energy cost as a strategic business issueUnderstanding business implications of energy consumption and escalating costsUnderstanding implications of energy cost variability on portfolio profitabilityBenchmarking and quantifying the total opportunity value
Developing skills and capabilities of the people in the organizationBuilding collaborative teamsProviding enabling tools
Identifying and executing the right projects to drive highest gain resultsPrioritizing highest gain / lowest investment opportunitiesUtilizing 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 resultsDriving leadership and management commitment to breakout performanceInstituting organizational structures and accountabilities to drive resultsDesigning and implementing managing processes to sustain results
9
Simplified Energy Cost Flow
Energy Input Energy Input
Core Manufacturing Process
Core Manufacturing Process
Energy SystemsEnergy Systems
Energy CultureEnergy Culture
Energy WasteEnergy Waste
• Energy Source Mix• Energy Pricing• Energy Source Mix• Energy Pricing
SourcingSourcing EfficiencyEfficiency • 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:
Core Technology, capital-driven
Energy System improvements, low capital/cost
Changing behaviors – minimal investment
10
Energy Planning Process Overview
Recognize the Energy Challenge
Recognize the Energy Challenge
Develop an Energy PlanDevelop an Energy Plan
Energy Goals
Workshop
Assess Process Energy use
Assess Process Energy use
Identify Opportunities
Identify Opportunities
Identify Opportunities
Identify Opportunities
Develop Capital Projects
Develop Capital Projects
Appropriate Capital FundsAppropriate
Capital Funds
Internal CapitalInternal Capital
External Funds(Performance Contracting)
External Funds(Performance Contracting)
Energy Plan Template
Plant Energy Assessment Template
Energy-related Six Sigma Projects Virtual
Workshops
“Top Ten” Energy Projects Initiative
1111
Business Case for Energy Efficiency
Competencies and Capabilities
DuPont Energy Efficiency Track Record
References
Agenda
1212
QualityQuality
EmissionsEmissions ResourcesResources
EnergyEnergy
ReliabilityReliability
MaintenanceMaintenance SafetySafety
People
Management
Culture
People
Management
Culture
Supply Chain
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
We help you achieve cost reductions and security of supply through efficiency and improved operating team capabilities
Energy EfficiencyEnergy Efficiency
13
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.”
Operational efficiency (inside out approach
prevailing)
Product innovation (outside in approach
prevailing)
Influence on Society and the competitive
landscape
Awareness and Compliance
Moving from discrete energy reduction initiatives to integrated energy management strategies that return significant cash.
Risk Mitigation Cost Reduction Competitive advantageRevenue generation
14
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
Energy Management System (EMS)
These elements, and the system for realizing them, form the best practice reference model against which we implement change
These elements, and the system for realizing them, form the best practice reference model against which we implement change
Strong Leadership Strong Leadership
Appropriate Organizational Structure
Appropriate Organizational Structure
Focused Processes and Actions
Integrated Energy
Management Culture
Integrated Energy
Management Culture
Engaged & Committed Leadership
Challenging Goals, Policies, & Principles
Metrics and Data-Driven Decisions
Integrated Energy Efficiency Organization
Responsible Line Organization
Timely Recognition of Success
Consistent & Targeted Business Planning Process
Commitment to Training & Development
Effective Communication System
Standard Improvement Methodology
1616
DuPont Sustainable Solutions helps clients achieve operational excellence
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.
Empower employees with
critical training in safety, industrial
skills and ethics and compliance by
integrating eLearning tools,
instructor-led courses and
classroom training.
Safety ResourcesSafety ResourcesSustainable Sustainable OperationsOperations
Training SolutionsTraining Solutions
Cleaner air and cleaner fuels are the
result of best-in-class technologies,
equipment and services combined
with strong technical and engineering
capabilities.
Clean TechnologiesClean Technologies
Consulting Businesses & Offerings
1717
Business Case for Energy Efficiency
Competencies & Capabilities
DuPont Energy Efficiency Track Record
References
Agenda
18
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”
19
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 ValueImprove Performance, Release Capital…Increase Shareholder & Stakeholder Value
*Has existed as a safety services business since the early 1970's. *Has existed as a safety services business since the early 1970's.
20
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.
Overall, the health and welfare of the organization and its product lines would be at risk if we didn’t act.
21
* Sustainability accomplishments from 1990 through 2009 (per data available and used for the 2010 DuPont Global Reporting Initiative Report)
** TRI = toxic release inventory
* Sustainability accomplishments from 1990 through 2009 (per data available and used for the 2010 DuPont Global Reporting Initiative Report)
** TRI = toxic release inventory
DuPont Energy & Environmental Accomplishments
DuPont Global Environmental Performance Evolution (Absolute Values)
0%
20%
40%
60%
80%
100%
120%
140%
160%
Per
cen
t o
f 19
90 (
2004
fo
r w
ater
)
Production
Water
Hazardous Waste
Energy
CO2 eq.
1990 1995 2000 2005 2009
• 19% reduction in energy use since 1990 baseline while production increased by 21%
• Over $5 Billion in energy cost savings since 1990 baseline
• Gained industry recognition from “Laggard” to “Leader”
• With this knowledge and know-how, we have been able to accelerate progress and continue to raise the bar.
Other Sustainability Results since 1990: Safety & Health World-Class Major Incidents 90% ↓ Air Toxics 75% ↓ Air Carcinogens 92% ↓ Hazardous Waste (Dry) 42% ↓ U.S. TRI “Releases” 77% ↓
2222
Business Case for Energy Efficiency
Competencies & Capabilities
DuPont Energy Efficiency Track Record
References
Agenda
23
Example: Oil & Gas Client
Goal:10% Energy Reduction by 2015
Objectives:Leadership commitment and cultural change that leads to a sustainable corporate best practice Energy Management process
Performance management process and the metrics necessary for managing the activities and projects
Pilot of new Energy Management System at a Refinery
Estimated benefits from an Energy Efficiency Improvement Program
Without investment: 3 – 5%With Capex <1000K$ 8 – 12% With Capex >1000K$ 16 – 24%
World-Class Refineries consume ~25% less than average
Project Objectives Possible Results
24
Example: Oil & Gas Approach
Corporate & Site Assessment/SurveyCorporate & Site Assessment/Survey
Implementation Plan DevelopmentImplementation Plan Development
Management System & KPI DevelopmentManagement System & KPI Development
Corporate Rollout Plan DevelopmentCorporate Rollout Plan Development
Organizational Development & TrainingOrganizational Development & Training
Process Assessment & Continuous Improvement Plan
Process Assessment & Continuous Improvement Plan
Corporate Energy Management SystemCorporate Energy Management System
1/1/101/1/10 6/1/106/1/10 11/1/1111/1/11
25
Example: Oil & Gas Approach
1/1/101/1/10 6/1/106/1/10 11/1/1111/1/11
Corporate Energy Management SystemCorporate Energy Management System
Energy Culture SurveyEnergy Culture Survey
Technical ReviewTechnical Review
Management System Technical AssessmentManagement System Technical Assessment
Leadership AlignmentLeadership Alignment
KPI DevelopmentKPI Development
Site PilotSite Pilot
Solution DesignSolution Design
Over $1.5 MM in direct benefit in less than 1 year
Corporate system designed for sustainability
Process, energy system, and culture opportunities identified and implemented
Corporate & Site Assessment/SurveyCorporate & Site Assessment/Survey
Implementation Plan DevelopmentImplementation Plan Development
Management System & KPI DevelopmentManagement System & KPI Development
Corporate Rollout Plan DevelopmentCorporate Rollout Plan Development
Organizational Development & TrainingOrganizational Development & Training
Process Assessment & Continuous Improvement PlanProcess Assessment & Continuous Improvement Plan
2626
Shared Vision
Escalating costs
Supply limits
Environmental impacts
Stakeholder expectations
Goals and Strategy
Increased production
Shareholder value growth
Significant footprint benefits
Rapid savings opportunities
Leadership
Organization and Structure
Processes and Actions
Are you ready to build a business case for energy?
Burning Platform
First Practical Steps
27
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.”
Enterprise-wide systems that combine knowledge, experience and technology to identify, capture, and deliver real and lasting energy savings across your
portfolio.”
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