Systematic Energy Efficiency. Beyond EE capital From Energy Champions to Everyone Envolved. Mike Molnar 25 August 2010

Transcription

1 Systematic Energy Efficiency Beyond EE capital From Energy Champions to Everyone Envolved Mike Molnar 25 August 2010

2 Diversified Global Company Components Turbochargers Filtration Emissions Fuel Systems Engines Distribution 2 Power Generation

3 Global Revenue 2009: $10.8B Latin America + Mexico 11% India 5% US/Canada 44% China 6% Asia Pacific 10% EMEA 24% 3

4 Global Footprint Over 35,000 employees in 131 countries. 4

5 Climate Change?? Carbon Sequestration Carbon dioxide (CO 2 ) Methane (CH 4 ) Nitrous oxide (N 2 O) Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) Sulfur hexafluoride (SF 6 ) Heating Temperature & Evaporation water holding capacity atmospheric moisture greenhouse effect & rain intensity Floods & Droughts Cradle to Grave 1,428 page US House Bill 923 page US Senate Bill AB32 5

6 Low Carbon Energy Efficiency Facilities Commit Plan Manage Improve 6

7 Business Case Climate change initiatives position Cummins for sustainable success It s Good Business and Good For Our Business Energy Efficiency Drives Greenhouse Gas Reduction Regulations are Coming Our Customers Can Count on Us It s the Right Thing to Do 7

8 GHG Reduction Goal Setting Measure what we had already accomplished 2.3% absolute and 20% intensity reduction Set competitive goal A goal that is competitive among peers Cummins enjoying strong growth, elected an intensity metric to focus on sustainable growth First public commitment 25% intensity reduction from 2005 baseline by

9 Climate Leaders Commitment Achieved by Energy Efficiency Mobile sources (owned auto/air) 3% "Fugitive gases" (process GHG) 15% Stationary combustion (direct GHG) 22% Other 1% Electricity (indirect GHG) 59% 85% of our GHG emissions are from using energy Indirect - generation of electricity Direct - fuel we combust Fugitive gases focus to eliminate Achieving GHG reduction pays dividends of energy efficiency Avoiding ~ $25 million of annual utility spend 2005 baseline year footprint

10 Low Carbon Energy Efficiency Facilities Commit Plan Manage Improve 10

11 Systematic GHG/EE Approach Planning 1. Scenario 2. Business Case 3. Commitment 4. Baseline 5. Benchmark 6. Assessments Managing 7. Leaders 8. Teams 9. Methods 10. Portfolio 11. Goals & Targets 12. Reporting Improving 13. Capital Improvements 14. Operational Improvements 15. Education and Engagement 16. Sustainable Building Standards 11

12 Carbon Footprint Pareto 15 US sites account for ~ 2/3rds of total footprint (~ 400 sites) Make GHG emissions visible stress linkage to Energy Use Manufacturing Tech Center Data Center Office / Whse 189 other non dist sites - 14% 150 distributor sites - 5% Mfg site - 9% of total CMI Tech Center - 8% of total CMI 7% Next 10 sites - 18% 6% 5% Data Center - <1% Tech Center - 1% 5% 12 Data Center- 1% 3% 3% Large office building - 1% 3% 5% 5%

13 Assessing Opportunities By Intensity vs Energy Use Energy Intesity ( Use / size ) Intensity (kwh / ft^2) High Intensity and Low Energy Use Low Intensity and Low Energy Use High Intensity and High Energy Use Low Intensity and High Energy Use Energy Use MwH / Annum

14 High Intensity and Low Energy Use Energy Intesity ( Use/size ) Assessing Opportunities By Intensity vs Energy Use Intensity (kwh / ft^2) Actual Intensity 201 Actual Intensity 177 High Intensity and High Energy Use Manufacturing Tech Center Data Center Office / Whse 25 priority sites for first wave of detailed EE assessments Low Intensity and Low Energy Use Energy Use MwH / Annum Low Intensity and High Energy Use

15 The Cummins 7 Energy Themes Power Management Lighting Building Envelope Heating & Cooling Machinery & Equipment Fuel Usage Energy Recovery

16 Reduction Opportunities Found More than 500 technically viable capital projects defined at first 15 US sites Building Envelope 2% Powered Equipment 2% Water 3% Lighting 10% Operations 4% Combustion 8% Key Idea 1 Heating / Cooling 36% Invest in EE assessments at largest /energy intensive sites parent findings for all others Process Power 12% Waste Heat 23% 16

17 Low Carbon Energy Efficiency Facilities Commit Plan Manage Improve 17

18 Systematic GHG/EE Approach Planning 1. Scenario 2. Business Case 3. Commitment 4. Baseline 5. Benchmark 6. Assessments Managing 7. Leaders 8. Teams 9. Methods 10. Portfolio 11. Goals & Targets 12. Reporting Improving 13. Capital Improvements 14. Operational Improvements 15. Education and Engagement 16. Sustainable Building Standards 18

19 Teamwork for Energy Efficiency All capital projects are evaluated for energy efficiency and greenhouse gas reduction Capital Council Site Teams Energy Efficiency Team Energy Champions and the Health, Safety, Environment Council Promote Efficiency at Site Level Facilities and Business Leaders EET provides program management, goal setting, activity tracking, and accountability to progress Cummins Facilities Council established to drive improvements and share best practices 19

20 Financial Valuation and Prioritization Cummins pioneers sustainable capital planning Standard capital evaluation tool has Energy & Environment section added Calculates energy use, costs, and GHG footprint for every investment Includes financial valuation for CO 2 impact Tool enables our prioritization of energy efficiency investments Prioritize by IRR and GHG cost/benefit Investment rule for % return, initial $ per annual CO 2 20

21 Initial capital cost per annual GHG benefit ( $ / tco 2 e ) Financial Return Hurdle Data Mining Assessments for best environmental and financial results Tremendous opportunities for improvement found in energy efficiency Balanced Scorecard financial model with GHG metric produces clear total value return Prioritization based on both environmental and financial benefits two minimum hurdles designed to meet our goals All these projects meet our environmental and financial investment criteria Environmental Benefit Hurdle All these projects are priorities offering superior environmental and financial benefits do these first! Return on Investment ( IRR % ) COMBUST HVAC LIGHT PROC WH POWEQ 21

22 Example Site Energy Efficiency Assessment/Prioritization Identified energy efficiency capital projects by assessment team After further study, technically Key Idea 2 viable projects Put a value on GHG Meets corporate investment rule Portfolio investment approach based on best financial and environmental returns Reviewed and selected by plant for implementation wave Positive financial return, meeting 25% reduction goal 22

23 Low Carbon Energy Efficiency Facilities Commit Plan Manage Improve Capital Improvements Operational Improvements via Energy Champions Involving everyone in savings 23

24 Systematic GHG/EE Approach Planning 1. Scenario 2. Business Case 3. Commitment 4. Baseline 5. Benchmark 6. Assessments Managing 7. Leaders 8. Teams 9. Methods 10. Portfolio 11. Goals & Targets 12. Reporting Improving 13. Capital Improvements 14. Operational Improvements 15. Education and Engagement 16. Sustainable Building Standards 24

25 Capital Project Example High Efficiency Lighting Fuel Systems Plant - Columbus Indiana Former MH lighting replaced New high efficiency lighting installed Capital: $535k Annual Savings $343k GHG avoided: 3,372t Lighting is higher quality and brighter, uses smart sensor Project replicated at 49 other sites 25

26 Energy Efficiency Case Studies Case studies illustrate projects very effectively Organized by the seven energy themes in a standard format Each to include case studies relevant to employees home life Lighting: Industrial Lighting: Home

27 Energy Efficiency Capital Project Results 100,000 90,000 80,000 70,000 Tons CO2 Equivalent 60,000 50,000 40,000 30,000 20, to date 251 capital projects, ~50% ROI $17M annual savings 235,000 tco2e annual reduction EPA base year is 2005, 1/06 is start of our improvement commitment Energy Efficiency Team (EET) established Strategic fund begins seeding projects Cummins Facilities Council established Energy Champions Training Program Launched PGBU CBS FSBU CFBU DBU EBU CTT CES 10,000 0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Quarter

28 GHG reductions 28

29 Low Carbon Energy Efficiency Facilities Commit Plan Manage Key Idea 3 Lots of opportunities with capital investments, but How you operate sites equally important Capital Improvements Improve Operational Improvements via Energy Champions New Building Standards for Sustainable Future Growth 29

30 GHG and Energy Training Strategy Energy Champions & Leaders Energy Champion one per site Energy Leaders Area/shift based associates, 2-20 per site All Cummins employees info for their benefit at home, and at work Commitment 5 Days Centralized Group + Web Lead EE at site Coach/mentor ELs in local teams Energy Champions Energy Leaders 10 one hour local weekly sessions 4 Hours Web Team starpoint resource Generate Ideas Generate ideas Act Implement power down Cummins Employees Individual Actions- Company Impact $ Content 30

31 Energy Champions/Leaders Program Operating our facilities for Energy Efficiency One per Site Coaching and Project Focus Every site can save at least 10% with low/no cost actions ~ $10M savings Wave 5 EC Launch, Daventry UK February Goal: 100 Energy Champions trained At least 20 sites with active Energy Leaders programs 31 One in every area/team at a Site Operations Improvement Focus Pilot Graduation Energy Leader Class CIC/CKEC, January 2010

32 Building a Network of Energy Champions 32

33 9 Box Matrix Resources: Time, People, Money Projects for Energy Leaders Projects for Energy Champions Projects for Facilities Council/EET Benefits: Financial, Environmental, Impact to the Enterprise Bronze Silver Gold Just Do It types of projects No or low cost Kaizen projects, Energy Campaigns Large capital and/or strategic projects, Six Sigma Avoid low or negative return on resource investment

34 Example activities for Energy Leaders Conducting Energy Treasure Hunts Non-capital Energy Treasure Hunt Creates hoppers of ideas for operations to do with either just do it, Energy Kaizens, or Six Sigma projects 100+ improvement ideas at typical plant Example Energy Treasure Hunt projects Minimize Fan Run Time from 24 hrs/day to run only when wash pumps operate. Cost to Implement Savings/yr $100 $28,019 Change chemicals to reduce tank temps, use less natural gas $8,000 $36,400

35 Examples Make Energy Visible Lightswitch card Key Idea 4 Making energy use/carbon footprint visible is VERY powerful Printer sticker Everyone enabled to shut it off 35

36 Low Carbon Energy Efficiency Facilities Commit Plan Manage Improve Capital Improvements Operational Improvements via Energy Champions Involving everyone in savings 36

37 Make Energy Use Personal Real employees engaged in energy efficiency actions Home energy use / fuel savings tips 37

38 Employee Carbon Pledge Capture carbon footprint before and after individual energy efficiency efforts 38

39 Educate Broadly with Varied Vehicles Articles Intranet stories s Web and Video Newsletter Webcast Factbook Web conferences Slides w/audio Social networking In Person Site visit roadshow Staff meetings 39

40 Keep Everyone Updated Dedicated intranet portal website * Progress and success stories GHG tracking and reduction scorecard Energy Champion training Energy and green building awards 40

41 Make Energy Use Visible and Personal 41

42 Employee Engagement Case Study: The Cummins Unplugged Challenge

43 Cummins Unplugged Challenge Use the year-end shut down period as Employee Engagement opportunity to show no cost actions by all can result in Energy and GHG savings Objective 1: Educate employees about energy use and carbon footprint Objective 2: Show that everyone can have an operational impact by their individual behavior Objective 3: Demonstrate to plant leaders simple changes in operating procedures during off-shift, weekend, and holiday can lower the at rest facility profile

44 Unplugged Challenge Best Practices package developed with Facilities Council and EE leaders Supporting website created Invitation to participate sent to every plant manager and facilities leader Webcast with blast sent to every Cummins employee

45 Make it a contest! Only cost banners Best Energy Cost Savings Best % Energy Reduction - Best GHG Reduction - Best Employee Communications Best Employee Engagement Most Innovative/Creative Results 2009 Challenge - $908,000 saved 2010 Challenge - $1,300,000 saved

46 Unplugged Challenge Wrapup Key Idea 5 Hold a shutdown contest at your company Shows many small no-cost actions by everyone collectively make a difference! Winning site: Best Cost Reduction Cummins Turbo Technologies Huddersfield England

47 Thank You! Questions or Comments welcomed Mike Molnar Director Environmental Policy & Sustainable Development