April 16, 2008

Corporate Energy Efficiency Awareness Up, Spending Flat

Nearly three-quarters (72 percent) of organizations are paying more attention to energy efficiency than they were just a year ago, according to the Johnson Controls Energy Efficiency Indicator survey. However, the percentage of companies expecting to make energy efficiency improvements, as well as their planned investment over the next year, has remained constant.

But as energy prices continue to rise, the research indicates that the combination of economic pressure and environmental awareness will motivate people to make smart investments that have a big payoff in the long term.

Businesses Continue to Implement Basic Energy Efficiency Measures

While interest in energy efficiency and energy management has increased significantly from last year, related investments have remained steady. The most significant growth in energy efficiency measures include replacing inefficient equipment before the end of its useful life (41 percent, up 13 percent from 2007) and switching to energy efficient lighting (78 percent, up 11 percent). Also, 88 percent claim that energy efficiency is a design priority in construction and retrofit projects, up 11 percent from just a year ago.

Environment Increasingly Important as an Energy Efficiency Motivator

For 53 percent of respondents (up 5 percent), environmental responsibility is an equal or greater motivator for investing in energy efficiency than cost reduction. Seventeen percent cited environmental responsibility as the stronger motivator, up from 13 percent in 2007. Thirty-six percent (about the same as last year) said they were equally motivated by environmental responsibility and cost savings.

• Twenty-eight percent of respondents feel climate change is an extremely or very significant influence, and 31 percent said it was somewhat significant.
• Thirty-eight percent believe utility or government incentives are extremely or very influential. For executives with large facilities that number rose to 45 percent. In the only significant regional difference in the results, an even higher percentage of executives in the Western part of the U.S. (47 percent) said incentives were extremely or very influential.

Expectations for the Future

Some interesting expectations for the coming years include the following:

• Nearly 40 percent believe it is extremely or very likely that, within the next two years, legislation will mandate energy efficiency and/or carbon reduction.
• Nearly one-third (31 percent) believe that green buildings will be extremely or very important in attracting and retaining future employees.

As in 2007, executives responsible for larger facilities (500,000+ square feet) place more importance on energy management. A significantly higher proportion of them (84 percent vs. 56 percent for all respondents) plan to invest in energy efficiency measures in the coming year, and they are willing to tolerate a longer payback period for those investments. The ROI tolerance compared to five years ago for the group as a whole was essentially flat, but for executives with large facilities a large percent (29 percent versus 21 percent for all respondents) will tolerate a longer payback period than five years ago

Renewable Energy Gaining Ground

Executives surveyed appear increasingly open to investments in renewable energy. In response to a new question this year, 38 percent said that solar electric panels were being either included or considered in their new construction or retrofit projects, and 24 percent said they were including or considering solar thermal panels for their projects. One possible explanation is that a significant percentage of executives (38 percent) said their companies felt it was extremely or very important to minimize dependence on traditional energy sources such as gas, oil and electricity.

Green Buildings

• Few (8 percent) companies claim to have any green certified buildings. About 40 percent have buildings with green elements.
• One-third of new construction projects intend to seek green certification, compared to just one-fifth for retrofit projects. In most cases, the projects will incorporate green elements but not seek certification.
• A higher percentage of executives with 500,000+sf facilities, 21percent, said they had at least one certified green building.
• A higher percentage of executives with 500,000+sf facilities, 38 percent vs. 31 percent for all respondents, said they thought green buildings were extremely or very important in attracting and retaining employees.

Carbon Reduction Goals

• Only 12 percent of respondents’ companies have a publicly stated carbon reduction goal (up slightly from 11 percent in 2007).
• Those with a publicly stated carbon goal are considerably more likely to state that climate change has a significant influence on their energy efficiency decisions and expect legislation mandating carbon-reduction or energy efficiency in the next two years.

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