Clean Revolution case study: BT

Author:
Clare Saxon Ghauri
Reading time: 7 minutes
26 September 2012

This is part of The Climate Group's Clean Revolution case study series. Read an interview with Richard Tarboton, Director of Energy and Carbon at BT Group.

BT Group has pioneered a values-driven stance on carbon reduction, and as an energy-intensive company it’s clear that financial drivers are equally important in the delivery of its strategy. The company has set bold targets and pursued continuous improvement in its energy-reduction measures.

The information and communications technology (ICT) sector is at the forefront of developing and implementing technologies that will be pivotal to the Clean Revolution. These smart energy technologies, together with measures to reduce the energy footprint of the sector, could reduce global emissions by as much as 15% by 2020. One company helping to lead this revolution is BT Group.

BT Group (formerly British Telecom) is one of the world’s largest telecommunications companies with operations in more than 170 countries. It provides fixed-line, mobile, broadband and networking services and employs over 100,000 staff. In 2010 its revenue was over $30 billion.

Running such a large electronic-based business comes with a hefty power bill. In the UK, where the company is headquartered, BT is one of the country’s largest energy users. The scale of its energy use helped the firm to identify not only cost and efficiency savings within the company but a new and growing range of external business opportunities as well. BT has also moved further and faster than many competitors, underlining the importance of a corporate culture actively supportive of sustainability ideas and initiatives.

Through its everyday business, BT is acting as a catalyst for the Clean Revolution: first by demonstrating how emissions can be reduced while still maintaining growth; and second by providing the tools and technology to enable others to follow.

THE FUNDAMENTAL BASIS FOR OUR LONG-TERM COMMITMENT TO SUSTAINABILITY IS TO REDUCE THE NEGATIVE EFFECTS ON THE ENVIRONMENT FROM OUR ACTIONS WHILST REDUCING THE COSTS PASSED ON TO CUSTOMERS.
- Richard Tarboton, Director of Energy and Carbon, BT Group

COMPREHENSIVE AND AMBITIOUS TARGETS

BT has set targets across a wide range of sustainability indicators including carbon and energy.

Since 1997 it has achieved a 59% cut in net CO2 emissions (see BT's climate change impact graph). By 2020, BT aims to reduce its net CO2 emission intensity by 80% compared to 1996/97 levels. Significantly, BT’s targets were set in advance of the UK Government’s 2007 Climate Change Act, which commits the country to an 80% cut in emissions by 2050 compared to 1990 levels.

By setting comprehensive targets that allow a wider, more long-term business case to be made, BT has been able to achieve a 3.5% net energy and carbon saving year-on-year despite a 4.6% network growth rate.

In the seven years before BT set its targets, energy consumption had been rising at 3.5% annually, driven by a 20% yearly growth in data and communications across the world.

The company tackled this energy challenge in two ways: first it reduced electricity and gas usage across its networks, data centers and offices, and second it began to generate or purchase its own green power.

SMART CONTROL MEASURES

At first, BT’s actions were all about quick wins. But it quickly realized that a major audit and upgrade of its systems to measure and control energy use across the network would be required. In the UK as a result, BT is investing over $26 million to install smart meters, control systems, and integrated energy-management platforms in all its key buildings. Payback of around $20 million a year is expected in the first two years alone.

The process is fast: BT is retrofitting 120 sites per month. Some 22,000 smart meters are already installed in the UK. These will provide real-time data on a half-hourly basis, covering 90% of BT UK’s energy consumption. The meters wirelessly manage heating, ventilation and air conditioning (HVAC) systems in exchanges and data centers, maximizing their cooling efficiency. BT is also starting to integrate smart lighting controls into its systems with partners such as EnergyICT and Matrix. To manage all of this, BT has installed a platform that provides a single dashboard for controlling all its different systems. In 2012 the company will begin to roll out similar smart systems globally.

Many of BT’s achievements and targets have been driven by minimizing costs and maximizing business opportunities. A long-term, internal commitment to carbon reduction, plus a further commitment to pass on cost reductions to customers have also been drivers for change. But BT has moved further and faster than many competitors, underlying the importance of a corporate culture actively supportive of sustainability ideas and initiatives.

FINANCIAL OPPORTUNITIES

Costs of increasing energy consumption: Until recently BT was faced with increasing energy consumption (see BT UK energy consumption graph) and associated costs. As a telecoms company, smart ICT was seen as an effective, efficient and obvious instrument to help reduce energy consumption and costs.

Delivering cost reductions for customers: Delivering value to customers is at the heart of any successful business. By reducing its own energy bills, BT has been able to pass on cost savings to its customers, delivering better value-for-money to its customer base.

STRATEGIC ADVANTAGE

Commercial growth opportunities: BT realized that environmental actions and commercial growth were not mutually exclusive but could work together to enhance the firm’s competitive advantage. All the BT sites that are monitored for their environmental impact require communications infrastructure, and BT’s expertise in communications networking was a strategic benefit to making this rollout go smoothly. Layered on top, energy management tools are now the basis for a growing new market in energy services and products. BT’s learning from their own network rollout will provide new market opportunities as other organizations adopt more advanced energy management solutions.

VALUES

A long-term commitment to sustainability: BT’s attention to environmental issues has been longer than most. The company first started measuring and reporting its CO2 emissions in the early 1990s, well before the Kyoto Protocol was signed, let alone ratified. This period of time has helped embed a culture of sustainability in the company, enabling and driving greater environmental action.

Despite its successes BT, and providers of smart energy technologies in general, face a variety of challenges in the short, medium and long-term.

MEASUREMENT

As the saying goes: “You can only manage what you measure”. Without accurate information, BT’s actions will have little meaning. Getting its energy and carbon data right is therefore of critical importance for BT.

SECURITY ISSUES

Smart energy systems can be accessed remotely from any location. This means they can be vulnerable to malicious attacks. Corporations need to develop technologies that are secure and this takes time and money.

DECISION MAKING

Senior decision makers are cautious when new technologies and fresh technology suppliers are involved. Often a lot of convincing is required for senior decision makers to see the benefits in innovative technologies.

RESOURCES

As new technologies are implemented, other existing technologies need to be improved to provide a uniformly efficient structure. This process involves large short-term challenges to insure and finance.

ENERGY EFFICIENCY

Improving energy efficiency will become more challenging over time due to the higher energy consumption of new infrastructure such as superfast broadband. This will mean less ‘easy wins’ and will require the implementation of more effective methods for reducing energy consumption through ICT and other methods.

NETWORKING INFRASTRUCTURE

Rolling out smart energy technologies successfully requires a supporting network infrastructure. This is not guaranteed in all locations in which BT (and its competitors) operate, creating infrastructure bottlenecks.

THE NUMBERS

Reduction in global greenhouse gas emissions smart ICTs could help deliver in other industries by 2020

$20 MILLION

Estimated annual payback per year for BT UK from its $26 million investment in smart energy control systems

15%

Reduction in global greenhouse gas emissions smart ICTs could help deliver in other industries by 2020

3.5%

Year-on-year increase in energy consumption before BT introduced its targets

59%

Reduction in net CO2 emissions achieved by BT in 2011 compared to 1997

3.5%

Year-on-year fall in energy consumption after BT introduced its targets

1992

Year BT first starting measuring its CO2 emissions – five years before the Kyoto Protocol was signed, and 16 years before it entered force

22,000

Number of smart meters BT plans to install just in its own buildings in the UK

170

Number of countries where BT operates

319

Number of UK sites where BT is installing integrated Building Energy Management Systems (BEMS)

100,000

Number of BT employees

$375 MILLION

BT’s power bill in 2011 for its UK and Ireland operations

$30 BILLION

BT’s revenue in 2010

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