This is the fourth in a Rocky Mountain Institute series on the steps business leaders can take to seize the economic and competitive opportunities outlined in Reinventing Fire: Bold Business Solutions for the New Energy Era. Other installments in the series from GreenBiz are listed here.
America’s industrial sector generates more than 40 percent of the country’s GDP and employs almost 20 million people in refineries, paper mills, chemical plants, smelters and countless other facilities. This mighty engine consumed one-quarter of all U.S. energy in 2010 — 91 percent of which came from fossil fuels — in many diverse segments, in a dizzying array of complex processes.
If we are to move off of fossil fuels, U.S. industry must lead with investment and innovation. This is not only possible, but critical to capturing durable competitive advantage, according to Rocky Mountain Institute’s Reinventing Fire — a blueprint to a 2050 U.S. economy powered by efficiency and renewable sources of energy.
Eliminating the use of fossil fuels will result in a healthier environment by reducing toxic air and water pollution while stabilizing CO2 emissions at levels that avoid the most damaging impacts of climate change. In addition to improving the environment and stabilizing the climate, Reinventing Fire is also an enormous business opportunity.
Firms that lead this transition will benefit from reduced operating costs, improved profits and product quality, reduced fuel price volatility and supply risks, the creation of new markets and a competitive edge at home and abroad. While the work is not easy, one key technique can help industry make fast strides: energy management systems.
To capture energy savings in industry, it is not enough to merely gather up low-hanging fruit either when capital is available or cost-cutting is required. Leading firms are attaining dramatic results by pushing far past that opportunistic paradigm, establishing a continuous improvement mindset to monitor and manage their energy use in good times and bad.
For example, Frito-Lay cut its electricity energy intensity by 25 percent, natural gas intensity by 33 percent and water by 41 percent from 1999 to 2008. These energy savings investments not only brought a financial benefit, with an IRR of 25 percent and $55 million added to the bottom line, but they also reduce risk. These investments have even generated marketing benefits, especially as consumers get more savvy about where their products come from and how they are made. The installation of solar thermal power at Frito-Lay’s Modesto, Calif., plant enabled the use of the tagline “Sun Chips are now made from the sun.”