Case Studies
4
ENERGY SAVINGS
IDENTIFYING RISKS
ABC Warehouse Company purchases electricity for lighting, fans and HVAC uses. Management assembled a team to review options for addressing climate change challenges and selected reducing energy consumption as their first project. After reviewing their internal skills, the team hired an outside energy auditing firm to review their current situation and recommend changes. They also collected the past 12 months of utility bills and entered consumption and financial data from those invoices into a Microsoft Excel database to get a baseline record.
XYZ Logistics Company, which offers many logistics services, has a transportation division with a fleet of 43 diesel-powered tractor trailers. These units are used to complete deliveries for its shipper customers throughout the midwestern and eastern U.S.
The energy auditor found that energy consumption in ABC’s three warehouses could be reduced by 20 percent by making the following two changes: • replacing all metal-halide lights with T5 fluorescent fixtures • replacing all old ceiling fans with (fewer) largeblade ceiling fans with variable speed motors, directly tied to a software-based thermostatic control system ABC budgeted $69,000 for the changes for each warehouse, totaling $207,000. Projects were completed by outside contractors within six weeks. ABC’s project team continued to enter data from utility bills after the retrofits. The first month after the installation, energy consumption declined by 27 percent. Based on ABC’s utility expenses, the project returned its total investment in 16 months. NOTE: ABC did not complete pre-retrofit and postretrofit carbon footprints for its facilities. If it had done so, it would have been able to demonstrate significant reductions in GHG emissions—with data to back up its claims.
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In 2014, XYZ experienced significant losses due to increased fuel costs that XYZ was unable to pass on to its customers. Although it changed its pricing strategy, XYZ’s management hired a risk-management expert in 2015 to help it better understand risks from the uncertain supply and pricing of diesel fuel. In conversations with XYZ, the consultant recommended expanding the scope of the project to look for other risks—particularly risks associated with current and expected climate change impacts. Because XYZ was reluctant to investigate something it considered far off in time, XYZ’s management set up an internal team to scan all possible environmental issues that could negatively impact the company’s operations and revenue stream. This way, XYZ could have some confidence that the outside contractor was heading down the correct path. XYZ’s team chose a leader for its project and held four one-hour meetings over the course of five weeks. During these discussions and in between meetings, the group considered a wide range of possible environmental issues from a long list it found through the EPA website, through industry connections and on the website of a nonprofit organization specializing in corporate environmental responsibility.
UNIVERSITY OF MICHIGAN | Erb Institute | Business for Sustainability
