With an aggressive plan that has put businesses on notice, the White House has recently targeted the country's biggest energy guzzlers: skyscrapers and buildings. Hospitals, universities and colleges, too.
Commercial and industrial buildings suck up about 49% of the country’s energy supply, worse than cars and trucks, says the Department. of Energy.
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President Barack Obama has tapped former President Bill Clinton and General Electric (NYSE:GE) chief executive Jeffrey Immelt to lead the way in cutting buildings’ energy usage by a fifth over the next decade.
The plan? Hundreds of millions of dollars in tax breaks, government loans and grants. Who pays? Oil companies, with potentially $39 billion in tax hikes.
Ironically, the Government Accountability Office says the federal government is the nation’s single largest energy consumer, its buildings making up 35% of the government’s energy consumption.
Government officials, though, say the Administration and the U.S. Congress have already been pressing for more energy efficient standards for the federal government. In October 2009, the President signed an executive order "that sets sustainability goals for Federal agencies and focuses on making improvements in their environmental, energy and economic performance."
The plan relies on targets for greenhouse gas emissions and things like less water and government car usage for federal workers.
Still, the president has merely set targets here for government agencies, targets which federal workers can easily blow off. Whereas oil companies face the cudgel of tax hikes, and those who get the tax breaks for green energy can squander them, too.
Meanwhile, many federal buildings needlessly waste energy by not doing the basics — like turning off the lights at night. (Not asking for the government to make the country look like North Korea, just to be more aware of what they do when telling others what to do.)
But ironically, as the government finger wags the private sector to be more energy efficient--ready to drop on Corporate America's head the blacksmith anvil of the US tax code to get its way--companies like Honeywell International, IBM, and yes Wal-Mart are making loads of money selling to the energy hogs in the government energy-efficient technology, so as to stop wasting taxpayer money.
FOX Business visited a green building on Wall Street with the biggest player in this space, the president of Honeywell International’s (NYSE:HON) energy division, which is showing companies one of the most powerful incentives of all -- how energy efficiencies can protect their bottom lines.
The Energy Guzzlers
Homes consume about 22% of the nation’s energy, versus 49% for commercial and industrial buildings, says the Department of Energy. And not surprisingly, commercial and industrial buildings waste energy, big time.
The U.S. has more than five million commercial structures, eating up about $200 billion in annual energy costs, IBM (NYSE:IBM), a player in this space, has said.
Commercial buildings account for “nearly 18% of our greenhouse gas emissions,” Energy says in its annual Energy Outlook. “On average, 30% of the energy used in commercial buildings is wasted."
The president’s budget aims to slash about $39 billion in subsidies for oil and gas companies in order to pave the way for new tax incentives for “green energy” for buildings.
White House officials have already said the President was “committed” to paying for these investments by eliminating subsidies for the oil and gas industry.
Overall, the President wants to cut companies’ and business owners’ energy bills by about $40 billion per year. “That money that can be put to better use hiring more workers, inventing new products, and creating shareholder value,” the President’s plan notes.
And the plan includes calling upon the Small Business Administration to get existing lenders to take advantage of recently increased loan size limits to promote new energy efficiency retrofit loans for small businesses.
It also will push state and municipal governments to streamline regulations in order attract private investment for retrofit projects. The president doesn’t want to upgrade just commercial and industrial buildings -- he’s aiming his plan at stores, schools, colleges, and hospitals.
The administration also hopes the unemployed in the construction industry could be put to work on upgrading buildings to make them more energy efficient by 2020.
The president’s initiative builds upon his proposed “HOMESTAR” legislation, which wants to encourage American households to make energy saving upgrades in their homes.
However, Andrea McCarren, a reporter for WUSA9, a local Washington, DC news station did some digging into the federal government’s energy usage last January. McCarren found that the federal government wastes energy. A lot of energy.
McCarren said: “We kept track of the lights left on in a dozen federal buildings, including the Departments of Commerce, Agriculture, Transportation and Energy always checking after 10 p.m., each on at least six occasions.”
McCarren also sent document requests to the government via the Freedom of Information Act, asking for six months of utility bills for the headquarters buildings of more than a dozen agencies.
One month's electricity bill at the Department of Labor? More than a million dollars, in July of last year, McCarren found.
The Department of Health and Human Services paid a bill last August of $799,000 for a month of service, McCarren discovered.
And the Department of Commerce paid a bill last June of $794,000. The Environmental Protection Agency appears to leave its lights on, McCarren says. Also, she found that the Department of Energy's monthly electricity bills average $260,000.
Honeywell on the Move
Honeywell has already noted that "one of the best energy savings mechanisms of any lighting system is the simple control system that allows for lighting to be turned off when not needed," and sells products that do just that for all sorts of buildings, products that can save up to 75% of uncontrolled lighting energy, it says.
Honeywell, based in Morris Township, New Jersey, is the inventor of the iconic round thermostat found in homes around the world.
It has a $33 billion portfolio -- and nearly half of it is tied to energy efficiency products and services, Honeywell says.
Honeywell says that sales for energy efficiency products, such as sensors and switches for lights and other appliances, jumped last year at a rate twice that of total company sales in 2008.
How a Honeywell Energy Audit Works
Honeywell says that “In a typical contract, Honeywell engineers audit building systems for potential energy efficiency improvements and oversee comprehensive retrofits that can save thousands of dollars and tons of emissions and create or sustain a range of jobs for Honeywell engineers, local subcontractors and manufacturing workers in supplier companies."
It says a $10 million contract can create or sustain 95 jobs, according to the National Association of Energy Services Companies, or about $105,200 per job.
Honeywell also brings in renewable energy sources as it tightens up the efficiency of sources old and new.
Honeywell’s Work For Pittsburgh
Honeywell says a contract launched last fall with the Housing Authority of the City of Pittsburgh is forecasted to save the city $3.2 million annually in utility costs.
How? By switching communities to geothermal HVAC systems, systems that store air from the earth's natural heating and cooling processes.
It also involves sealing buildings to reduce loss of hot and cold air and retrofitting lights and appliances with more efficient models, Honeywell says.
The improvements also are expected to cut annual carbon emissions by nearly 16 million pounds -- equivalent to removing more than 1,300 vehicles from the road, Honeywell says.IBM is also working with Honeywell on technologies and products that make office buildings more energy efficient.
Specifically, IBM is making inroads with its monitoring and energy management software, which will be integrated with those of Honeywell's Tridium unit, a division that focuses on energy controlling devices inside commercial buildings.
Those monitoring systems ramp up the efficient use of heat, water, sewage and electricity in buildings, and helps flush out and stop problems in the building's energy networks and devices, IBM said.
For instance, a company’s main refrigeration unit shuts down. A monitoring system would note that it is broken, sending out repairmen to fix it immediately—as opposed to sitting around waiting for a worker to notice his yogurt is now a Penicillin specimen.
Wal-Mart Moving In
Meanwhile, guess who is encroaching on Honeywell? Wal-Mart (NYSE:WMT), which is now offering energy audit services to state capitols.
This is all part of a new public-private partnership with the National Governors Association.Wal-Mart’s energy efficiency improvements are based on technologies Wal-Mart has used in its stores, clubs and other facilities around the world.
"State and local governments spend more than $11 billion on energy every year and those costs are growing rapidly," said Minnesota Governor Tim Pawlenty, chairman of the National Governors Association.
Wal-Mart’s program, called "Greening State Capitols,” includes a two-day auditing process. A Wal-Mart team of engineering experts zoom in to capitol facilities. They then analyze the electrical network, the lighting systems, and HVAC, refrigeration, and building structure.
The audit engineers then write up an estimate of the upgrade costs, as well as potential energy savings and carbon dioxide reductions.
Check out Wal-Mart’s energy audit of capitol complexes in Arkansas. Its report includes recommendations that could save the state more than $430,000 in energy costs and help avoid producing more than 2,800 tons of carbon dioxide annually.
“Wal-Mart’s audit gives us detailed guidance toward reducing the State of Arkansas's energy costs,” Governor Mike Beebe said in a statement. “These recommendations can help us save taxpayer dollars and operate government with better energy efficiency. We appreciate Wal-Mart’s continued commitment to improving its home state.”