More than three decades after the 1970s oil embargoes, and President Jimmy Carter's famous Sweater Speech extolling the virtues of doing less, energy efficiency remains the ugly stepchild of environmental improvement. True, green advocates urge us to walk instead of drive, shun clothes dryers for clotheslines or swap out incandescent light bulbs for compact fluorescents. But these are suggestions that few folks heed, since such notions suggest "doing without," a concept unacceptable to most Americans, and to many others around the globe.
But for companies, it's a different story. Energy efficiency has a strong foundation in a bottom-line-centric world. And there are rich resources -- case studies, how-to manuals, calculators, incentive programs, technical assistance agencies, and more -- to help companies manage the process. There's also a sizeable industry that's grown up around helping companies audit, assess, implement, and finance energy-efficiency solutions.
And yet, we've barely begun to harvest the low-hanging fruit, let alone sow the seeds of an economy that can continue to grow and prosper using continually less energy from oil and other polluting resources.
It's long been axiomatic that energy efficiency is the awkward stepchild of renewables -- that is, that it's sexier to install cutting-edge renewable-energy technologies like solar panels than to engage in more prosaic (and less-visible) measures to get more value out of each BTU or barrel.

That mindset has bedeviled proponents of efficiency -- people like Amory Lovins, who for some thirty years has promulgated the notion that we can solve our energy and climate challenges by harnessing existing technologies that allow us to garner ever-greater economic productivity out of fewer barrels of oil, tons of coal, cubic feet of natural gas, and pounds of uranium. (Lovins' 1997 white paper, Climate: Making Money and Making Sense (download - PDF) remains one of the best articulations of how companies and economies can profitably harness efficiency.)

The world is ripe with efficiency opportunities. ("The low-hanging fruit," as Lovins puts it, "is mushing up around our ankles.") His Rocky Mountain Institute points out that in industrial settings, "there are abundant opportunities to save 70% to 90% of the energy and cost for lighting, fan, and pump systems; 50% for electric motors; and 60% in areas such as heating, cooling, office equipment, and appliances." In general, up to 75% of the electricity used in the U.S. today could be saved with efficiency measures that cost less than the electricity itself.

But what will it take for businesses to harvest this bounty of opportunity? At what price of electricity or barrel of oil will it become “worth it” for companies to make the investments that, most analysts agree, can repay themselves in as little as a few months? What rate of return must these investments yield to make sense to companies?

These are questions that forward-thinking business leaders will need to answer in the coming months and years, as climate and energy issues continue to garner attention. The answers to these questions will be of increasing interest not just to CFOs, but also to their shareholders and customers, for whom companies’ energy use and climate footprint are gaining increased importance.

On May 17, Johnson Controls will release results from a first-ever Energy Efficiency Indicator, a research report that examines how much North American businesses anticipate energy prices increasing and how they are responding.   (Results will be posted here and at http://www.johnsoncontrols.com/cg-pressroom.) It will be interesting to view and assess the results to see where energy efficiency ranks in the minds and strategies of U.S. companies -- and the potential for companies to harvest all that low-hanging fruit.

Joel Makower is Executive Editor of GreenBiz.com.

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