The concept of “energy productivity” was the focus of the Australian Alliance to Save Energy’s 2XEP: Forum on Doubling Energy Productivity, held on 3-4 April 2014 at the University of Technology Sydney. This article will clarify what energy productivity is, how it is distinguished from energy efficiency, and its pros and cons.
The opening session featured numerous leaders in energy productivity (EP) from the United States, and with good reason: the U.S. Government has adopted a goal of doubling energy productivity by 2030. This set a tone of learning from each other and especially our U.S. counterparts, reinforcing the facts and trends that are rapidly moving our economy closer and closer towards a tipping point in EP.
Admittedly, my initial impression was that “energy productivity” was synonymous with “energy efficiency”. I was not alone, as this distinction was in the spotlight during question time. In summary, EP is distinguished from energy efficiency in three ways:
EP is driven and created out of economic or productivity benefit, not energy.
As I had written in last week’s post on energy efficiency as an alternative to manufacturing job losses:
Sustainability Victoria shared their work with SMEs in improving productivity through energy efficiency. The Clean Energy Finance Corporation described the many projects it finances that are focused on increasing production and output as they are on reducing energy costs. Former Australian Defence Minister Robert Hill summarised research and/or anecdotes saying schools and hospitals that were built in a resource efficient way were more likely to make the entire business more efficient and productive.
In other words, an EP project comes from the departments of finance, operations or production, rather than compliance or sustainability/environment. Or the sustainability sub-committee. As Paul Orton of the NSW Business Chamber remarked, “Energy productivity is inseparable from business productivity”.
EP is a stronger signal/intention to decouple economic growth from energy demand.
By changing where the project is driven from, the entire language of the energy reduction project changes. Instead of being a conversation about reducing, cutting and minimising, the rhetoric is about improving, growing, innovating. Doing more with less. This was particularly resonant for manufacturing, where EP was was presented as a means of transformational organisational change for the struggling sector.
That session also raised the concept of “wasted energy”, which in talking with my fellow participants afterwards, was a key takeaway. In short, this refers to energy that is consumed yet leaks out of the value chain and therefore contributes nothing to the firm’s output. The broader notion is not new, “lean manufacturing” or “lean production” has been around since the 80’s and 90’s with the automotive industry. Applied to energy consumption, this strengthens the application of energy reduction and efficiency to production and value generation and has the decoupling effect.
Energy efficiency is a way to achieve EP.
Importantly, the term “energy efficiency” is not replaced or discouraged. In fact, energy efficiency was profiled consistently through the conference. After all, it is the cheapest, most cost effective and cleanest way to achieve EP. Energy efficiency sits below as a means of achieving EP. But it is not the only way.
The 2XEP opening session acknowledged that despite EP’s merit, shifting the language to EP may compromise the momentum of energy efficiency and reduction. This is a habit for all things sustainability: from sustainable development to green growth and back again, from corporate social responsibility (CSR) to creating shared value (CSV). As Professor Dirk Matten shared in his keynote at the University of Sydney’s Balanced Enterprise Research Network “Corporate Social Responsibility: New Challenges, New Concepts” symposium back in February, the creation and re-creation of terminologies (he was referring to CSR and CSV) is a risk, a barrier to progress.
For me, the event’s legacy will be to always be coming from a business productivity perspective when it comes to energy efficiency, or any other sustainability initiative for that matter. Regardless of the terminology employed, any project that an organisation runs must be viable and positive from a productivity perspective. The focus should be on growth, improvement, expansion. For me personally, I wholly understand this through the concept of energy efficiency, but for others that may be different. If EP is a more meaningful term for the person I must convince, then it is that term I shall use.