Cover Story : Power Struggle

Reducing Consumption

Most large corporations place huge demands on the worlds energy resources. New technology, however, is providing them with multiple ways to cut their power needs.

In these times of heightened environmental awareness, it is not uncommon to hear corporate heavyweights like BP and Shell being lambasted by non-governmental organizations (NGOs) for flouting environmental and social guidelines and their involvement in controversial projects such as the construction of oil pipelines. Oil companies and the banks that finance these projects have been forced to address environmental and social issues, not least through the application of the Equator Principles, a voluntary set of guidelines for assessing and managing environmental and social risks in project financing deals worth $50 million or more.

Companies that operate plants such as cement kilns, oil refineries and power stations have also felt the heavy hand of consumers and policymakers corporate social responsibility expectations. The EUs Emissions Trading Scheme (ETS) requires 12,000 installations and high carbon emitters throughout Europe to reduce their carbon dioxide emissions in the period from 2005 to 2012. These companies are trying to reduce their greenhouse gas emissions through tradable market instruments for investing in renewable energy sources.

To help companies comply with the ETS, Natsource, one of the first funds established to trade in greenhouse gas emission reductions, established a Greenhouse Gas Credit Aggregation Pool, which provides a group of 26 buyers with cost-effective emission reductions. Dirk Forrister, managing director, Natsource, says that, by purchasing renewable energy certificates (RECs) or renewable obligation certificates (ROCs) as environmental credits for renewable energy generation, companies are able to achieve compliance with Renewable Portfolio Standard programs. These programs aim to increase the development of renewable energy in countries such as the United States, the United Kingdom, Italy and Sweden. In this way, Forrister says, the investment prospects for renewable energy sources are raised, particularly for those companies that have historically found the cost of investing in renewables prohibitive.

But the fight to reduce carbon emissions is not confined to just those companies whose activities more directly affect the environment. As fuel and energy costs continue to rise and regulators focus on industry-wide measures for reducing businesses total carbon footprint, a wider range of companies are starting to consider the impact they are having on the environment.

Few companies, it seems, can afford to ignore the environment any longer, with the UK government, for example, setting ambitious targets for reducing carbon dioxide emissions by 20% by 2010 and 60% by 2050.To help companies achieve these objectives, in 2001 the government established the Carbon Trust, an independent organization that helps UK businesses and public sector organizations find ways to reduce their carbon footprint. It does so through a number of meansfor one, by providing small and medium-size companies (SMEs) with interest-free loans of up to 100,000 (200,000 in Northern Ireland) to help them invest in energy-efficient equipment. And those companies with energy bills in excess of 50,000 a year are also eligible for a free survey to help them identify energy-saving opportunities. Philips Semiconductors, based in Milton Keynes, England, used the survey to institute good housekeeping measures, which, according to Andrew Rimmington, business development director, will shave 8% off its electricity bill simply by adjusting the time settings on its air conditioning system.

Similarly, by identifying energy-saving opportunities, international air express network DHL Aviation reduced its electricity consumption by more than 20% (gas consumption was reduced by 42%), constituting a cost saving of more than 120,000. The trust is helping larger FTSE 250 companies such as Sainsburys and John Lewis to improve staff awareness of energy efficiencyfrom remembering to switch off idle computers and compiling checklists identifying where energy is being wasted, to devising their own carbon action plans.

The Carbon Trust also seeks to encourage the development of alternative fuels by investing in renewable energy sources such as solar power, biofuels and synthetic fuels via a venture capital fund it plans to launch on the UK-based AIM market later this year. A core part of our role in accelerating the transition to a low carbon economy has been demonstrating to the wider financial community that attractive returns can be made from clean technology investments, says Tom Delay, CEO of the Carbon Trust.

The Trust has already successfully invested in companies that harness energy from alternative sources such as the ocean. Alongside Mitsui Babcock Energy and Triodos Renewables, the Carbon Trust is also involved in a joint venture called Connective Energy, which aims to recycle some of the 45% of industrial energy consumption that is currently wasted as heat released into the air. The Trust estimates that 40 million megawatt hours of wasted heat could be re-used, which represents a core market potential of up to 1 billion a year in the UK alone and a potential annual carbon saving of 7.5 million tons of carbon dioxide.

Greening the Data Center

The rising costs of energy and regulatory pressure have also put the greening of the data center and IT in the spotlight. Peter Cunningham, senior vice president, advanced technology projects, Sun Microsystems, says the energy consumed by IT hardware, servers and data centers is multiplied many times over as these centers also need to be cooled so they dont overheat.

The faster the processor goes, the more heat it generates, says Cunningham. When you pack these processors closely together in a data center, for example, there is a tremendous amount of energy consumed. Cunningham says a rack of processors consumes around 12 to 14 kilowatts of electricity, and if that is multiplied out through other racks in the data center, power consumption soon spirals into megawatts.

Richard Muirhead, CEO, Tideway Systems, a UK-based IT configuration management specialist that helps large investment banks and telecom companies configure their IT infrastructure more efficiently, says, A large telecoms power consumption is somewhere in the region of 180 million kilowatt hours a year, which corresponds to enough carbon emissions to require a forest the size of Manhattan to sequester.

Sun Microsystems has developed more energy-efficient servers and microprocessors. Its UltraSPARC processor is fitted with Suns CoolThreads technology, which provides higher throughput but, according to Sun, draws about as much power as a light bulb. Cunningham adds that the power consumption of Suns more energy-efficient systems is less than half that of some of its competitors. More efficient, better-cooled technologies also run a lot more reliably and have a longer life span, Cunningham explains. It also means companies are not running air-condition-specific cooling systems.

Other IT hardware providers are also introducing eco principles into the design of their products. Hewlett-Packard has more than 30 computing and display products included in an independent online registrythe Electronic Products Environmental Assessment Tool (EPEAT)which lists products that satisfy environmental criteria including reduced greenhouse gas emissions, safe end-of-life management and recycling.

In the US, legislators are looking to create what David Douglas, Sun Microsystems vice president for eco-responsibility, calls standardized metrics analogous to those that already exist in the white goods industry. This could mean that Energy Star labels, complete with industry-standard metrics, will be affixed to servers and other data center equipmentjust as they are to washing machines and dishwashers.

But instead of waiting for the heavy hand of regulation to take effect, IT-reliant companies can use server virtualization technologies to move from having one server per application to one physical server hosting virtual operating systems, reducing power consumption. As in most sectors, upgrading to modern equipment will improve efficiencyand, in the long run, save money.

Top 10 Tips For Reducing Energy Consumption

  • – By turning down the heating by just 1 degree, a saving of 8%-10% can be made on the annual heating bill.
  • – Reduce heating in areas needing less warmth, such as storerooms and heavy physical work areas, and during holidays, weekends or when the building is empty.
  • – Keep windows closed while heating or air conditioning is on.
  • – Most office equipment, including PCs, monitors, faxes and printers, will have energy-saving features. These sometimes need to be manually activated.
– Always switch monitors off when not in use. They account for almost half of a computers energy use.
  • – Make use of natural daylight where possible. It costs nothing and can reduce lighting bills significantly.
  • – Energy-saving light bulbs use 75% less electricity than standard light bulbs, provide the same amount of light and last up to 10 times longer.
  • – Reduce lighting in areas that dont need bright light, such as corridors.
  • – Encourage staff to turn off lights whenever and wherever they are not needed. Businesses can save up to 15% on their bills by implementing this simple measure.
  • – Check your meters regularly to see how much electricity, gas and oil is being used, and check that bills relate to what you actually use, rather than an estimate.

Source: The Carbon Trust

Anita Hawser