‘Energy productivity improvements can help to deliver a great return on investment for any business’: interview with Johnson Controls’ Clay Nesler

Reading time: 6 minutes
10 February 2017

Johnson Controls was one of the first companies to join The Climate Group’s EP100 corporate commitment campaign, pledging to double the company’s energy productivity by 2030. A leader in intelligent buildings, efficient energy solutions, integrated infrastructure and next-generation transportation systems, the company is planning to get twice as much economic output from each unit of energy it consumes. We interviewed Clay Nesler, Vice President for Global Energy & Sustainability at Johnson Controls, to find out more.

Why did Johnson Controls join EP100 last year?

Johnson Controls has been tracking and publicly reporting our energy use and greenhouse gas (GHG) emissions since 2002. Using 2002 as a baseline, we have already increased our energy productivity by two-thirds, as measured by revenue (millions of dollars) divided by gigajoules (GJ) of energy use. We joined EP100 to extend the sustainability commitments and accomplishments we have made since 2002 and to demonstrate leadership in our industry. Our EP100 commitment is to double our energy productivity by 2030 from a 2009 baseline. This is the same baseline as our US Department of Energy’s Better Plants Challenge commitment.

Johnson Controls and nearly 150 other companies have signed the US Department of Energy’s Better Plants Challenge program – how do you see that relating to EP100?

We view EP100 as quite complementary to the Better Plants Challenge. The Better Plants Challenge is a ten-year commitment to a 25% energy intensity reduction. This is roughly consistent with a 2.5%-per-year energy productivity improvement for EP100. We are on-track to meet our Better Plants Challenge target in only seven years for 79 US facilities and EP100 will extend this rate of improvement across all of our global operations through 2030.

People are sometimes intimidated by the up-front investment of labor and capital necessary to radically improve energy productivity. Can you help explain the business case for those who are still on the fence?

For a company with our global footprint, increasing our energy productivity by two-thirds as we have done since 2002 means that we are spending over US$100 million less in energy bills each year than if our energy productivity had remained constant. For a business with a 10% return on sales, they would have to find US$1 billion dollars in additional revenue to have the same financial impact. Also, most of our energy productivity improvements have been through low-cost and no-cost measures with paybacks in less than two years. This is a great return on investment for any business in any country or industry.

Beyond the low-hanging fruit – how does Johnson Controls plan to double energy productivity as a part of the EP100 program?

We have found that the “low-hanging fruit” of energy efficiency grows quickly and can be harvested frequently. We have integrated energy and sustainability management into our Johnson Controls Manufacturing System, and we use many of the same continuous improvement and best business practices to improve quality, cost and productivity. We deploy energy champions and teams in our plants who are trained in basic energy management practices focused on lighting, heating, ventilation and air conditioning (HVAC), compressed air, energy cost management and employee engagement. In Europe, we have implemented the ISO-50001 Energy Management standard and we have implemented the Energy Hunt process across the rest our global operations. Plants compete with each other to achieve higher energy management maturity levels based on their plans, practices and performance.

As industry leaders work on their own operations, there is increasing attention to sustainability in supply chains. Does Johnson Controls help their suppliers improve their energy productivity?

We have a program called the Supplier Efficiency Program that provides hands-on energy management training at their plant locations using our Energy Hunt processes and tools. We find that many of our suppliers can reduce their energy consumption by 5% or more with basic training and implementation of low-cost/no-cost improvement measures. We specifically target small and medium-sized enterprises (SMEs) for training as they often lack the resources to identify and implement energy management improvements but can greatly improve their competitiveness from the economic benefits.

Getting into the metrics, why does it make sense for Johnson Controls to measure energy productivity in revenue/energy consumed?

Johnson Controls is a global, diversified multi-industrial company with a wide range of products from air conditioning equipment and batteries to fire alarm and security systems. Each of these product families has very different energy requirements in manufacturing, including storing electricity in the batteries we manufacture. As our business is growing, we track energy use per production unit as a measure of energy productivity within a product family. The problem is these numbers can’t really be aggregated in a meaningful way across the enterprise as the energy required to make a chiller is much larger than to make a battery or a fire sprinkler head. While revenue isn’t a perfect normalization unit, it is at least useful.

Are there any new technologies that you are deploying in your facilities?

We are in the process of deploying an enterprise-wide energy metering and sub-metering system on a global basis. In a pilot implementation with one of our businesses, we found that installing an energy sub-metering system and using it to support the plant’s ISO-50001 processes resulted in a significantly greater annual energy intensity reduction than similar plants not implementing either measure. The combination of energy measurement at a process level, real-time data analytics and integration with an energy management system is a winning combination. We also found that the payback for energy metering was well within the two to three-year investment hurdle range.

What advice would you give another company with a large energy footprint?

The single most important thing we did as a company to improve our energy productivity was to integrate energy management into our manufacturing system. What often starts as a “green team” activity at a plant or a “sustainability initiative” at corporate level can become much more predictable, scalable and effective when built into the operating system and culture of a large organization. We have also found that standard, programmatic approaches to setting targets, identifying best practices, training employees, deploying technology solutions and measuring performance can provide great efficiencies for larger organizations.

And before we let you go, could you share with us what you are most optimistic about in the world of sustainability and energy productivity in the coming years?

I am very optimistic about the role that the private sector can play in improving sustainability around the world. Global efforts, like EP100, that encourage and recognize private-sector commitments to make more efficient and productive use of energy resources are critical in achieving our environmental, economic and social objectives.

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