Five barriers to energy efficiency savings – and how smart companies can overcome them

Here’s a business conundrum for you: energy efficiency saves serious money, cuts carbon pollution, requires low tech solutions, and is a known quotient, having been around since the 1970s. So why are so many companies still not taking the necessary steps to identify and eliminate these inefficiencies?

“What we learned in Econ 101 doesn’t hold true when it comes to energy efficiency – the notion of perfect markets, where information flows freely and people are maximizing their value,” notes Environmental Defense Fund’s Gwen Ruta. “Instead, it’s as if companies across the globe are walking around with a hole in their pocket with coins dribbling out nonstop.”

How is it that smart companies who are vigilant about monitoring the bottom line, stock price, customer satisfaction and much more let this wasteful “dribbling” occur? This question launched a robust discussion at a Fortune Brainstorm Green session last week titled “A Trillion Dollar Opportunity: The Hunt for Energy Efficiency.” Gwen Ruta was joined on the panel by Gretchen Hancock, Project Manager for Corporate Environmental Programs at GE; Bill Weihl, Google’s Green Energy Czar and Beth Trask, Deputy Director of EDF’s Innovation Exchange. GE and Google have made huge strides around energy efficiencies in past years, with still more work to do on the horizon and still some barriers of their own to break down.

So what are the main barriers to energy efficiency and how can companies try to overcome them?

Barrier #1: Information overload and lack of focus. There’s a ton of information out there about energy efficiency – and what companies should do to reap the savings – but it’s diffuse and challenging to wade through. Companies need help focusing in on the right tools and content and prioritizing where and how to begin. GE conducts through regular energy “treasure hunts” inside a given company where selected employees come together for a jam-packed three-day working session to identify energy efficiency savings at a chosen manufacturing site. The results are impressive – each treasure hunt typically identifies opportunities to reduce energy spent by 20% – and proves that when people have the information, data and focused time to spend on this challenge, huge savings can be found.

Barrier #2: Structural limitations. This is a big one. Companies of all sizes suffer from a siloed approach to business, where business units and operational departments are managed by separate budgets, performance timelines, product cycles and more. Finding energy efficiency savings requires employees throughout the company to share information and make trade offs in order to achieve strong results. For example, there may be an increase in cost to the R&D budget around energy efficiency efforts, but balanced by a result in savings that will show up in the facilities management budget. Most likely, these two divisions communicate rarely and have little in common – including different bosses who may not communicate well among themselves, either. Why would one take on a cost for the other to reap the savings? Google takes a “total cost approach” that is geared to precisely avoid this problem. And GE’s treasure hunts bring cross-functional teams together over the three-day activity which by definition helps break down silos. According to Gretchen Hancock, the more people from different departments are involved, the better the results of these treasure hunts are