Johnson Controls is one of the companies involved in this project, and six of the eight core retrofits have been completed. Malkin said he’s been guaranteed 38.4 percent savings, but he thinks the team will greatly exceed that level.

The Empire State Building is a landmark building, exterior and interior, and is 80 years old. Instead of taking the approach, if we have money left over we will do energy efficiency, he said, “We started out with the approach we will integrate energy efficiency into our program.” Money was already going to be spent on lighting, cooling, and controls; we just spent it differently, he said.

“What are the takeaways that I have from this?” he posed. “Bike racks and showers will not save the world.” A green wall feature or a water feature in your lobby “does not make a whit of difference.”

He asserted, “We have to start giving credit, and accreditation, for documented, factual, technical, verifiable, transparent data which shows what can be done.”

It’s not enough just to build more efficient new buildings, Malkin said. “Building energy-efficient new buildings slows the increase of the consumption of power. Only by retrofitting existing buildings can you actually cut power consumption.”

The Empire State Building previously used 40,000 average households of energy. The retrofit will remove about 16,000 average households’ worth of energy.

An energy-efficiency retrofit is “an investment with a return — that is what this is about.”

In closing, Malkin said, “It’s time for us to stop giving good meeting, and it’s time to start achieving.”

Marketing Energy Efficiency

“People in the energy-efficiency business haven’t really thought about buying behavior,” said Richard Kauffman, senior advisor to the secretary of energy. “We’re marketing it as a savings program and not enough about how people feel about it.”

Those in the efficiency business need to look at buyer motivation, he said, and apply the concept of market segmentation.

This is “still an industry in search of massive scale.” There are different service models, different financing models, and many different approaches.

“How might we segment the market to figure out buyer motivation?” Kauffman asked.

Some customers have no interest in all the details. They want a make-it-easy approach.

Others are do-it-yourselfers. They want the complete details and want to be in charge and monitor each step of the process. Conservative customers want to avoid risk. They want a big name standing behind the job so they feel comfortable. This is probably the largest segment.

These are distinct market segments, Kauffman said, so energy efficiency should start with the customer. The make-it-easy customer will want a packaged approach. The do-it-yourselfer will want to make everything a separate decision.

“Start with the customer and work backwards,” said Kauffman.

Energy and Foreign Policy

Carlos Pascual is the State Department’s special envoy and coordinator for international energy affairs, advising the secretary of state on energy issues.

Pascual said Energy Secretary Steven Chu realizes that increasing appliance efficiency standards has long-term value. Countries that don’t change their standards, he said, become the dumping ground for low-efficiency products, and it has an impact on energy generation.

Energy efficiency reduces de-
mand for electricity and that reduces the need for capital investment and provides ongoing savings.

One of the problems with implementing energy efficiency is the financing barriers that exist, said Pascual. “How do you work with the banking community to let them know that this is a reliable investment?”

He said one solution is to aggregate and package projects to make them a more attractive investment to banks.

S. 1000 Promotes Efficiency

Sen. Jeanne Shaheen, D-N.H., discussed S. 1000, the Energy Savings and Industrial Competiveness Act of 2011, a bipartisan bill introduced with Sen. Rob Portman, R-Ohio, that they have been trying to move through the Senate. The bill was developed to promote energy efficiency in residential and commercial buildings as well as industrial facilities.

“I believe strongly in the importance of energy efficiency,” said Shaheen. “It is where we can achieve tremendous savings.”

When she was governor of New Hampshire, her state did retrofits through performance contracts and saved a significant amount of money for the state.

“One of the reasons I ran for the Senate is that I thought we need an energy strategy for the U.S.”

S. 1000, she said, is based on energy efficiency being “the cheapest, fastest way to address our energy needs.” Elements of the bill include voluntary, advanced building codes; better building standards for the federal government; and financing for Department of Energy loan guarantees and state programs.

Shaheen said this bill is important to job creation, important to businesses, and important to our economy.

Energy Efficiency Indicator

David Myers, president, Johnson Controls Building Efficiency, presented the findings from the sixth annual Energy Efficiency Indicator, a global survey of 3,500 building owners and operators.

Myers noted that 85 percent of respondents said energy management was extremely or very important to their organizations, compared to 70 percent in 2011 and 60 percent in 2010. Among regions, the United States and Canada had the largest percentage of organizations investing in energy efficiency (74 percent) and the smallest percentage investing in renewables (25 percent).

Energy cost savings and government/utility incentives/rebates ranked as the top motivators of energy-efficiency decisions. While lack of funding remained the top barrier to energy-efficiency projects, it decreased from 30 percent in 2011 to 26 percent in 2012. On the other hand, concern over insufficient payback and uncertainty regarding savings/performance increased slightly.

Myers also noted that organizations are “moving in the direction of much greater measurement and reporting,” and those that apply these best practices took the most actions to improve efficiency.

Buildings Panel

The panel discussion, “New Technologies, Government Policy Trends, and Consumer Behaviors Impacting Buildings,” was moderated by Marc Gunther, contributing editor for Fortune magazine. Participants included Myers; Roger Platt, senior vice president of global policy and law, U.S. Green Building Council; Greg Hale, senior financial policy specialist, Natural Resources Defense Council’s Center for Market Innovation; and Maria Vargas, director, Better Buildings Challenge, U.S. Department of Energy.

Myers said the new Energy Efficiency Indicator shows “across the board a really strong endorsement of energy efficiency.” Platt added that the survey indicates people who measure tend to act.

Hale said his organization is looking at the tenant side to reduce consumption and help convince building owners to install improvements. Their team is working to develop a process on how to build out space that lowers energy consumption, produce a process guide, share the data, and use that data to drive change.

Vargas said the Better Buildings Challenge is working to get commercial/industrial companies to commit to 20 percent energy reduction by 2020, and then share how their companies did it. But she said that efficiency remains a hard sell. “Energy efficiency is still a ball we are trying to push up the hill.”

Platt said, “A federal building code would be a great thing.” But he added that he wouldn’t want that to be seen as the standard that people don’t want to move beyond.

Vargas noted that getting building appraisals to take into account the value of energy-efficiency improvements would be very beneficial.

Making Progress

Heather Zichal, deputy assistant to the president for energy and climate change, said the Obama administration has developed an all-of-the-above energy strategy and that net oil imports are now down 1 million barrels a day. She declared, “Energy efficiency is the fastest, easiest, and cheapest way to reduce dependence on oil.”

Zichal then made three announcements. First, six new companies joined the Better Buildings Challenge, including Starbucks, Staples, J.R. Simplot Co., Samas Capital, Greenwood Energy, and Pacific Gas and Electric (PG&E). Second, the federal government is making strides in efficiency, implementing performance contracts to make improvements. Third, the government has established a new training program for building operators through its Centers for Building Operations Excellence.

A Mayor’s Approach

David Miller is counsel, international business and sustainability, Aird & Berlis LLP, and former mayor of Toronto. “When a mayor approaches energy efficiency,” he said, “you do it by looking at the environment and jobs.”

He noted that Sao Paulo is burning methane from landfills to generate electricity. Copenhagen is using renewables and having tremendous success. Toronto uses a distributed energy system powered by renewables.

Miller said you need smart regulations working with industry. You also need incentives. He remarked that Toronto developed a Better Buildings Partnership and said, “Obama must have read about our program.”

Miller said there are many concrete buildings in Canada with no insulating factor. Most of these are located in low-income neighborhoods. Doing energy retrofits on these buildings creates jobs in areas that most need jobs.

Publication date: 7/30/2012