Chapter One | Chapter Two | Chapter Three | Chapter Four | Chapter Five | Chapter Six | Chapter Seven Chapter Eight | Chapter Nine | Chapter Ten | 

• One Toyota plant in California cut its total energy consumption by one-third while more than doubling its output with technology that helped reduce its defect rate from three per hundred to zero.

Defects were once accepted as inevitable and quality was viewed as expensive, but that changed in the 1980s and 1990s as U.S. manufacturers responded to the Japanese manufacturing challenge. Defects are now seen as a measure of inefficiency, and the goal is to prevent them from occurring in the first place. So, too, pollution is seen by our coolest companies as a measure of their inefficiency, rather than an inevitable by-product of production. The goal is to prevent pollution from occurring in the first place.

What is perhaps most striking about Toyota's remarkable strategy for eliminating waste is that it has its origins with Henry Ford, who pioneered many of the best practices in both lean production and pollution prevention. I discuss Ford's and Toyota's thinking about lean production to explain why systematic efforts to reduce greenhouse gas emissions so often lead to productivity gains.

Lean thinking focuses on process improvement and prevention-oriented design strategies to reduce waste systematically. In this book, you will learn how to apply lean thinking to offices, buildings, and factories to minimize wasted energy. With this "cool and lean" strategy, your company will increase productivity at the same time as it reduces greenhouse gas emissions.

CHAPTER THREE begins the step-by-step "How To" for becoming cool. Since every company-service sector or manufacturing-has buildings, we begin with the proven strategies for making any building energy efficient. Cutting energy use by a quarter has been achieved in thousands of buildings. Hundreds of buildings have broken through the "25 percent savings" barrier. Cool buildings that cut energy use-and hence greenhouse gas emissions-in half are increasingly commonplace, as many of the examples in this chapter demonstrate:

• Centerplex, a small business in Seattle, reduced the energy consumption in its two office buildings by 55 percent with a 1.5-year payback, and expects to raise that to 65 percent.
  
• The Ridgehaven office building in San Diego cut its energy consumption by 70 percent, saving $80,000 a year, using a "low-bid" contractor. Utility financing of the efficiency improvements turned a 3-year payback into an instantaneous payback.
  
• BlueCross BlueShield of Oregon cut energy use by 61 percent at its Portland headquarters. BlueCross did not have to put up any money for the project, which was financed by the local utility, but instead is paying for it entirely from the monthly energy savings.
  

A good rule-of-thumb for what a comprehensive efficiency upgrade can achieve today is an annual energy savings of $1 per square foot with a simple payback of two to three years-a return on investment (ROI) of 33 percent to 50 percent. (In this book, a one-year simple payback means a $1 investment that generates $1 in savings each year, which equates to a 100% ROI. If it generated $0.50 in savings each year, that would be a two-year simple back or a 50% ROI.)

By following the strategies in this book, you may be able to finance some or all of the cost of your upgrade off-balance-sheet-letting you achieve savings without adding to your overall debt.

Stop thinking of energy efficiency as mundane. Whether you are a service sector or manufacturing firm, your employees work in buildings designed by people who probably had little understanding of the work that would be done in the building, and even less understanding of how to design a building to maximize their performance. We now know how to design a new building or upgrade an old one to reduce energy use and other operating costs, while at the same time reducing absenteeism and increasing worker productivity.

CHAPTER FOUR examines more than a dozen office and building designs that have boosted productivity from 5 percent to 15 percent, providing measurable benefits that can dwarf reductions in operating costs. While an upgrade that cuts energy use in half can save $1 per square foot in annual energy costs, it can generate more than $10 a square foot in new profits every year if it boosts productivity even 5%. Productivity gains have made it possible to achieve deep energy savings with paybacks of under two years-returns on investment (ROIs) exceeding 50 percent:

• VeriFone, a California manufacturer, renovated and daylit one of its buildings. The improvements that saved 60 percent of the energy would have paid for themselves in 7.5 years. The productivity rise of more than 5 percent and absenteeism drop of 45 percent brought the payback to under a year-a return on investment of more than 100 percent.
  
  
• A Georgia carpet manufacturer moved into an extensively daylit building and worker's compensation cases dropped from 20 per year to under 1 per year.
  

Researchers at Carnegie Mellon University's "Intelligent Workplace"-a must-see building for anyone designing a new or upgraded office-have begun to quantify these productivity improvements. They have systematically analyzed a large post-occupancy database of new buildings and retrofits. The researchers then estimated the benefits of design improvements for a 100,000-square-foot workspace with 500 employees. They concluded, for instance, that while improved lighting design would add $370,000 to the initial cost of the workplace, it would add $680,000 in value in energy savings and other reduced operating costs. Far more important, Carnegie Mellon has calculated that efficient lighting could provide a productivity benefit of $14.6 million.

Productivity-enhancing design requires a shift in your corporate thinking. Companies underinvest in their workplaces in part because they tend to see efficiency improvements as simple cost-cutting, which rarely motivates much management attention or capital spending. A key purpose of Chapter Four is to help managers see these investments as strategic productivity-enhancing investments crucial to their company's long-term survival.

Many, if not most, managers believe that physical changes in the workplace, such as improved lighting, are irrelevant to the productivity of its workers. Their error is due in large part to a powerful myth created at Western Electric's Hawthorne Works in the 1920s and 1930s. As I explain in detail in the Appendix, the so-called Hawthorne Effect has not been supported by subsequent research. Even more shocking, the original experiments not only failed to demonstrate the effect, but actually proved the reverse, that work conditions can have the dominant impact on productivity.

CHAPTER FIVE examines the work of two of the best energy-efficiency experts in the business: Ron Perkins and Lee Eng Lock. It explores how Perkins, Facilities Manager for Compaq in the 1980s, helped break down the traditional corporate barriers to strategic investment in buildings, and, with Lee Eng Lock, helped Compaq become one of the coolest of companies. We will then follow Perkins to Supersymmetry, an energy consulting company founded by Lee in Singapore, the benchmark for reducing energy consumption in semiconductor manufacturing.

I'll discuss the strategy of one of the industry leaders in cool semiconductor manufacturing, STMicroelectronics. The company measures its energy inefficiency in terms of electricity consumed per million dollars of production cost. With Supersymmetry's help, the company has exceeded its remarkable goal of reducing its energy inefficiency 5% per year for three years running. The chapter concludes with two more of Supersymmetry's best upgrades, which have wide application throughout the semiconductor industry:

• An integrated circuit factory outside of Manilla upgraded its lighting, heating and cooling system and cut the electricity usage per chip by 60 percent.
  
  
• In Malaysia, Western Digital built what is now considered the most efficient disc drive factory in the world, cutting energy consumption 44 percent with a one-year payback. These cuts were achieved even though plant floor space increased by more than 10 percent and air filtration requirements increased 1000-fold!
  

• One small fiber processor in New York City installed a cogeneration system that cuts its energy costs by more than half and its carbon dioxide emissions by one-third, all with a two-year payback.
  
  
• A 90 percent efficient cogeneration system at the Chicago Convention Center saves $1 million a year in energy costs and cuts carbon dioxide emissions in half.
  

• Some Phillips 66 gas stations are using geothermal energy to cut energy costs and carbon dioxide emissions from heating, cooling, and refrigeration by 40 percent.
  
  
• Toyota has chosen to purchase electricity from purely renewable sources for virtually all its California facilities. This choice, made possibly by California's utility deregulation, instantly cut Toyota's carbon dioxide emissions by more than half.
  

• McDonald's is using both geothermal energy and energy-efficiency in a new restaurant near Detroit to reduce greenhouse gas emissions 40 percent to 50 percent while cutting energy costs by 20 percent.
  
  
• The first cool U.S. skyscraper-the 48-story office tower, Four Times Square, in Manhattan-has cut greenhouse gases emissions 40 percent. The design combined energy efficiency with two fuel cells for cogeneration as well as photovoltaics for clean electricity from the sun.
  

• An Arkansas steel tube manufacturer replaced a key motor and drive. The 34 percent energy savings would have paid for the new system in five years, but the improvement in producivity and reduction in scrap paid for it in five months-a 200 percent return on investment.
  
  
• A California textile plant cut the energy consumption of its ventilation system 59 percent by installing motor controls, saving $101,000 a year. An energy services firm paid for the system, turning a 1.3-year payback into an instantaneous one. By reducing the plant's airborne lint, the new system increased product quality.
  

• Perkin-Elmer cut energy consumption per dollar of sales by 60 percent from 1991 to 1997. Its Norwalk, Connecticut plant cut the electric-power bill 26 percent, despite an increase in rates and expansion in square footage.
  

• At a multi-factory complex in Flint, Michigan, General Motors combined efficiency with cool power to cut carbon dioxide emissions from steam use by more than 60 percent. Annual savings came to $4 million with a two-year payback.
  
  
• Simply by insulating its steam lines, Georgia-Pacific reduced fuel costs by one-third with a six-month payback at its Madison, Georgia, plywood plant. The project saved 18 tons of fuel per day, lowered emissions, made the workplace safer, and improved process efficiency.
  

• From 1993 to 1997, DuPont's 1,450-acre Chambers Works in New Jersey reduced energy use per pound of product by one-third and carbon dioxide emissions per pound of product by nearly one half. Even as production rose 9 percent, the total energy bill fell by more than $17 million a year. By 2000, the company as a whole has committed to cut greenhouse gas emissions by 40 percent compared to 1990 levels.
  

• Chicago-based A. Finkl & Sons has cut energy consumed per ton of forged steel shipped by 36 percent and has planted more than 1,600,000 trees, which capture carbon dioxide. As a result, the company's net manufacturing emissions of greenhouse gases are zero.
  
  
• A shade tree planted near a city building saves ten times as much carbon dioxide as a tree planted in the forest because it reduces the energy used for air conditioning and helps to cool the entire city. Such tree-planting, coupled with use of lighter colored roofs and road material, could cool a city like Los Angeles by five degrees, cutting annual air-conditioning bills by $150 million, while reducing smog by 10 percent, which is comparable to removing three-quarters of the cars on L.A.'s roads.
  

• The embodied energy in the material that Interface uses to make 25 million square meters of carpet tile a year exceeds the process energy needed to manufacture that carpet tile by a factor of 12. Interface Flooring Systems made process improvements that saved 2.5 million pounds of nylon from being purchased. The embodied energy of the unneeded nylon equaled the energy used by their manufacturing and administrative facilities
  

• At one Australian refinery, BP has reduced unit carbon dioxide emissions 19 percent since 1995 and expects to achieve an overall 45 percent reduction through efficiency and cogeneration. Ultimately, the company expects to offset all the rest of the refinery's emissions by improved land use practices and forestry sequestration.
  

• The steel industry has put forth a voluntary plan to reduce greenhouse gas emissions by 10 percent below 1990 levels by the year 2010.