Corporate Energy Management
What is CEM?
"CEM" refers to sets of actions that move accountability for energy outcomes to upper levels of the firm. With CEM, energy is no longer the sole responsibility of plant managers and engineers; in fact, CEM programs are designed to involve many areas of business activity, such as accounting, marketing, and others that were not traditionally concerned with energy. Bringing corporate-level attention and management into the picture helps to ensure enterprise-wide opportunities are explored. Read about how to Save Energy Now with a Corporate Energy Management Program (PDF 407 KB). Download Adobe Reader.
Why get involved?
CEM is triggered by various factors, including high energy costs, market instabilities, and market trends, such as global climate initiatives, the proliferation of quality management practices, and socially responsible investing practices.
Who is involved?The Alliance to Save Energy, in cooperation with the U.S. Department of Energy's Industrial Technologies Program, developed a series of corporate energy management case studies that examined the organizational and managerial aspects of implementing energy management in an industrial context. The companies that are referenced include Dupont, 3M, Frito-Lay, Unilever, and C&A Floorcoverings |
How To Get Started!
Below are some links to further information you can use to start implementing CEM.
CEM Principles
Contributing Factors
Media
CEM Principles
The success of CEM depends upon a union between technology and management. Technology alone cannot achieve optimal savings, but when coupled with O&M practices, as well as, management systems can lead to significant savings. Many reputable sources, including industry leaders, government agencies, advocacy groups, and others, have come to a general consensus on the key attributes of a successful CEM program.
- Commitment by upper level management
- Development of management strategies
- Clearly stated goals on energy efficiency, waste reduction, and sustainability
- Communication of goals, tactics, and achievements throughout all levels of the firm
- Delegation of responsibility and accountability to the appropriate personnel
- Sustained tracking and assessment of energy use and technology application
- Continuous investigation of potential energy reduction projects
- Application of business investment models to energy projects
- Establishment of an internal recognition and reward program for achieving energy goals.
Management Strategies - One of the contributing reasons a firm does not meet production, sales, or profit goals is that its management skills and practices are below the standards of competing firms. However, when a firm is managed properly (i.e., by applying management principles to everyday functions), it can increase its efficiency and productivity and achieve, ultimately, greater profits. No matter what industry or manner of work, management systems are important to sustaining a healthy and successful business practice.
As energy management becomes a recognized corporate function, high-level managers have no choice but to determine how to manage energy effectively. Logically, many firms have responded to this need by developing a CEM structure that relies on successful models based on sound management principles, such as those effectively integrated into quality or environmental management systems. These include approaches such as Total Quality Management (TQM), the ISO 9000 family of quality management systems and the ISO 14001 environmental management system.
When energy is understood in the same framework (dollars and cents) as other business investment options, and managed using quality management principles (such as diverse organizational participation and accountability), it can lead to a flourishing CEM program with high corporate visibility.
Technology Application - Advancements in technology are making CEM possible, and ultimately profitable, by removing many technical barriers caused by a lack of information and continuity between individual plants under a firm's management umbrella. In order to have a successful energy management program, firms should consider elevating the management of energy-efficient practices, and to incorporate centralized tracking and reporting at the enterprise level. Plant level initiatives that incorporate energy-efficient practices are quite common in industry but some firms are taking the approach a step further by elevating the management to corporate levels. Corporate managers can make decisions that affect the enterprise and drive results across the corporation.
Efficient practices can be evaluated through the use of technical resources, (such as diagnostic tools and real-time systems) to catalogue opportunities at individual plants and report back data for review
Related Topic: "Real Time" Systems
"Real Time" Systems - Hardware and software systems are emerging that centralize real-time energy data "enterprise-wide", giving corporate managers a powerful tool for making energy-related decisions. Highly technical information, previously understood by only a few individuals in a firm, can now be presented in a format that speaks a language decision makers can understand. And this concise information is not only delivered in terms of energy, today's systems are flexible enough to provide financial/cost, environmental, safety and other types of information critical to management. Key features include:
- Consolidation of vast technical information into succinct corporate reports
- Access to real-time energy consumption/demand and cost data across multiple plants and facilities
- Tools to conduct enterprise-wide benchmarking
- Ability to manage load profiles to avoid costly utility demand penalties during peak periods
- Ability to aggregate high-volume and diverse load profiles to aid in utility price negotiations
- Capacity to measure energy performance as a function of production, i.e. Btu's per widget
- Data necessary to measure environmental impacts.
Social Responsibility- Social responsibility can take many forms and can involve business ethics, community investment, environmental issues (which in many cases includes energy performance), governance, human rights, and workplace conditions, to name a few. A number of international and national organizations and foundations recognize and support corporate social responsibility around the world. Other indications of socially responsible practices include industry participation in programs such as the World Environment Center's International Environmental Forum, The Pew Charitable Trusts' Business Environmental Leadership Council, the Environmental Protection Agency's Climate Partners, and many others.
Another development to consider is the current growth of socially responsible investing in today's market place. There is a distinct rise in the number of institutional investors who are specifically looking to move their money into firms that show superior social performance. There are many tools and resources available today to help investors make that decision. Such as the Dow Jones Sustainability Index, and other's that benchmark a Firm's performance to allow investors to make informed and accurate decisions. Firms with a strong social performance have increased access to capital that might not otherwise have been available to them.
CEM Opportunity: The similarities between the practices and principles of CEM and the inherent nature of Corporate Social Responsibility intuitively make their integration seamless. As more and more firms, non-profit organizations, governments, and others recognize social responsibility, CEM in turn (as a natural extension) can become increasingly recognized and supported by gaining an ever increasing presence in the reporting of environmental, sustainable, and social aspects of a firm.
Environmental Concerns - As emission tracking and trading takes hold in different markets, global industrial actors must embrace environmental concerns. As a result, firms are beginning to see the importance of employing CEM to bolster their bottom lines and to support their environmental efforts. The European Union was the first to take action with its Emissions Trading Scheme (ETS). ETS is being introduced across Europe to tackle the problem of emissions from carbon dioxide and other greenhouse gases. Under ETS, efficient firms will be able to sell their excess "under the cap" allowances to other firms that are having trouble meeting environmental compliance requirements – allowing efficient firms to be even more profitable.
This type of activity is also on the rise in the United States. The renewed interest in emission trading is due, in part, to pressures from overseas as well as corporate entities with international holdings bringing their vision and experiences to the United States. In fact, a diverse group of firms have already indicated their intent to participate in the design phase of a voluntary pilot trading market here in the U.S., specifically called the Chicago Climate Exchange (CCX). Examples of firms participating include Dupont, the Ford Motor Company, and International Paper.
CEM Opportunity: Where does CEM fit in? Tracking, verifying and reporting on emissions is key to the operation of these exchanges. The very nature of CEM as a quality management, corporate efficiency instrument makes it an ideal tool to help firms track and report on pertinent data, become more streamlined and less wasteful, and eventually identify opportunities for future improvements. CEM can play a complementary role in improving overall environmental performance and profit potential in firms.