CleanTech WebLog

Amory Lovins, Rocky Mountain Institute founder and conservation guru, frequently comments about the low-hanging fruit available to companies through conservation. He says there’s so much of it that it “is mushing up around our ankles and spilling in over the tops of our waders while the tree pelts our heads with more fruit.”

Part 1 of this two-part post, described some of the great water conservation incentive programs available to Silicon Valley companies. There are also a number of ways to get paid for eating the low-hanging fruit of energy conservation. Some of these programs are so sweet that demand outstrips the budget allocated for the programs. So, businesses are well-advised to act now!

Energy Rebates
Pacific Gas & Electric (PG&E) and several municipally-owned utilities (like Silicon Valley Power in Santa Clara and the City of Palo Alto Utilities) provide a wide range of rebate programs for HVAC systems, lighting retrofits, food service equipment, commercial washing machine replacement, and LEED certification of new buildings, just to name a few. Check out the PG&E business rebates and incentives pages for some examples of these great programs.

Beyond Rebates
Beyond rebates, there are other significant incentives available through the utility companies. For example, owner incentives for energy-efficient new construction can reach as high as $500,000. PG&E will even customize incentives for an array of retrofits to existing buildings.

Demand response programs provide energy discounts and incentives in exchange for curtailing energy use during severe periods of peak demand. The PG&E Technical Assistance and Technology Incentive Programs provide free-of-charge engineering assistance on how to reduce energy demand and how best to participate in a demand response program. Unfortunately, PG&E is no longer accepting applications for the 2006-2008 TA/TI programs because the budget has been depleted. (The utility is applying for additional funds for the next program cycle which runs from 2009-2011.) You can still participate in demand response programs, you just don’t get the free engineering help until the next funding cycle kicks in.

Building Retro-Commissioning
Retrocommissioning, according to Facilities.net, is “an organized process that identifies facility performance objectives, a methodology for testing and verifying those objectives are achieved, and documentation of the process. …Retro-commissioning is performed on facilities that are already in operation…” PG&E has a monitoring-based commissioning program that is offered to members of Silicon Valley Leadership Group and Sustainable Silicon Valley and implemented in partnership with QuEST, an energy efficiency consulting firm. The program includes an energy audit, installation of building monitoring equipment, and a range of incentives for retrofit costs that cover up to 80% of the project costs. 40% of the PG&E incentive funds are disbursed right at the start of the project, before equipment is even installed. Immediate cost savings in the 10-15% are not uncommon, according to Michael Lechner of QuEST. (For a formal cost-benefit analysis of 224 commissioned buildings, see “The Cost-Effectiveness of Commissioning New and Existing Commercial Buildings.”) The PG&E/SVLG Monitoring-Based Commissioning incentive program is only available through 12/31/08, or until program funds are exhausted, whichever comes sooner.

Federal Tax Deductions for Energy Efficiency Upgrades
“The Energy Policy Act of 2005 created the Energy Efficient Commercial Buildings Deduction, which allows building owners to deduct the entire cost of a lighting or building upgrade in the year the equipment is placed in service, subject to a cap.” (http://www.lightingtaxdeduction.org/). This deduction is due to expire at the end of 2008, unless The Energy and Tax Extenders Act of 2008 (HR 6049), which extends the deduction for five more years, is signed into law. The House passed the law on 5/21/08 but President Bush has threatened to veto it. Act now to ensure that you can take advantage of the deduction!

For more information about energy tax incentives visit the Tax Incentives Assistance Project.

Even without rebates, incentives and tax deductions, you can still save on energy costs. But if you act now, you can get paid to eat that fruit!

How does sustainability become part of the culture of a company? One way is from the ground up—through programs like employee green teams. The other is from the top down–with commitment and involvement cascading through the ranks.

I read an interview recently with Gap’s Kindley Walsh-Lawlor that gave some good insight into how companies can engage their employees from the top down. Walsh-Lawlor runs the “ECO” sustainability initiative at Gap, Inc. The acronym stands for Energy conservation, Cotton or sustainable design, and Output or waste. These three categories capture activities across brands and departments, and provide a framework for communicating progress.

By using a meaningful acronym to describe the program, Gap has created a way to engage the company in the mission, and there’s a lesson here for other companies who want to create what I call a “sustainability sensibility”.

Many of the companies we see have multiple “green” initiatives taking place. Typically these initiatives have been started by employees who have a passion in a particular area, but they aren’t connected to business objectives, or even to other departmental efforts. They aren’t aligned in a way that has the greatest possible impact for the company, and they aren’t necessarily aligned with business goals.

Gap seems to have cracked the code on creating this alignment, but as Walsh-Lawlor was quick to point out in the interview, they’ve been at it for years.

So for those of you who haven’t been at it for years, and haven’t yet developed a comprehensive strategy, there are some lessons to be taken from Gap’s work:

• The creation of a meme that is meaningful, memorable and catchy creates recognition and acceptance.
• Identification of broad categories can encapsulate (and tie together) many activities across departments within the company.
• Categories can be used to develop a standard methodology for communications—all information about sustainability can be framed within these groupings.
• Opportunities for ownership and accountability at any level creates wide participation in the initiative.

Walsh-Lawlor closed the interview by expressing the importance of helping employees set priorities for sustainability programs from a business perspective. She said, “That’s another great way of integrating sustainability into the DNA of the company.” I couldn’t agree more.

Last Wednesday, I attended a great workshop put on by Sustainable Silicon Valley on the topic of “Green Teams: Employees Making a Difference.” Speakers from eBay, Genentech, BJG Architecture + Engineering and Gunn High School described the work being done predominantly by “green team” volunteers within their organizations. I was truly impressed with the passion, commitment and growth of their teams. At the same time, all that effort, coordination, passion and fun is often missing significant corporate sponsorship in the form of resources and budget. The result can be that green teams end up focusing on consciousness-raising among employees and on activities that make an important — but relatively small — impact on the carbon footprints and financial success (!) of companies.

Wouldn’t it be great if the senior executive teams would do more to nourish and cultivate these efforts? Integrate some stretch environmental and corporate responsibility goals into the overall business goals of the company. Allocate some resources. Incorporate environmental performance measures into the performance objectives of key managers.

Executives can either run to the front of the parade or get swept along by their employees. Leadership, vision and resources could really accelerate the positive impact of these teams. This would enable companies to reap the rewards* much sooner than by staffing these green initiatives with an underfunded, volunteer force.
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* Companies can benefit from “going green” by reducing costs (through more efficient use of resources), increasing revenue (with new products to address emerging needs), doing a better job attracting and retaining employees, mitigating risks and better managing their corporate reputations.

The Environmental Defense Fund and buyout firm, Kohlberg, Kravis and Roberts made an interesting announcement today. Their “Green Portolio” collaboration taps into EDF’s expertise to create analytical tools to “assess and track improvements on a series of environmental metrics. These tools will enable managers to cost-effectively improve efficiency, reduce waste and address environmental impacts, such as greenhouse gas emissions, the use of toxic substances, waste generation or water consumption.”

I’m encouraged by such talk. But it’s interesting that this announcement comes about 10 weeks after a scathing report published by the Service Employees International Union (SEIU) entitled “Winners and Losers: The Fallout from KKR’s Race for Profit.” This report highlights negative environmental impacts from some of KKR portfolio companies (particularly Accellent and Borden Chemicals).

It would have been much better for KKR to have instituted the Green Portfolio collaboration before the report by the SEIU. It could have been a more impactful announcement and would have been met with less skepticism.

Still if KKR and EDF can develop some useful tools, begin publicly reporting environmental metrics for their portfolio companies and propagate these processes so that many other firms manage and report on their environmental impact, then the result will be very fine indeed. The proof of concept is targeted for some time in the next 3-6 months. I’m marking my calendar. I want to see what comes out of this.