Canada and US energy consumptions are significantly higher that the rest of the G7 nations,
and therefore shift the G7 average up significantly. This means that
Canada and US are significantly worse than the next closest G7 nation. At
the
Bohn G7 Summit in 1978, it was agreed to achieve a 0.8 ratio between
the rate of increase in energy consumption and the rate of increase in
gross domestic product.
There are many reasons for Canada's energy inefficiency. We have
a cold climate. We have had (in the past) an abundance of energy to
supply (or over supply) our wasteful habits. We have specialized in
industries that are very energy intensive (ie. aluminium smelting, steel,
plastics, etc.) If it weren't for Canada being blessed with an
excess of oil & natural gas, we would have been in significant trouble.
Today, Canada has only a 12 year supply of natural gas reserves
remaining at our current consumption/export rate.
After that, we will have to buy foreign LNG (Liquefied Natural Gas) at huge expense. At
our currently poor efficiency for energy usage, Canada will receive a severe, abrupt
shock throughout its society when this occurs.
With better energy efficiency, we can make our natural gas supplies
stretch out farther into the future. Also, as energy prices rise, we
will be able to better cope & adjust.
It takes time to change.
That is why it's imperative we start now, before it is too late to
change our energy inefficient ways.
In addition, Canada's inefficient lifestyle significantly contributes
to Green House Gasses (GHG), global warming, climate change, melting artic
ice (and rising sea levels), air/water/land pollution, and many more
negative effects.
More and more of our earnings are going to feeding our energy hungry
lifestyles. To continue in the same manner means we have to do
without something else.
Energy efficiency is our duty to ourselves, our fellow Canadians, and
all other humans, plants, & animals who are stuck sharing this planet with
us.
When both population and energy consumption per capita are on the rise,
we get exponential growth. The overall quality of life depends upon
many factors such as clean water and air, green areas for recreation, and
availability of goods and services to readily meet our needs. We
need energy to grow food, and transport it to market. We need energy
to build and maintain housing. We need energy to transport people
and goods. We are not talking about conservation for no purpose.
To have and not use serves nobody, and squanders our bounty. To use
this bounty foolishly, or wastefully is what we need to avoid.
Proper balance must be drawn, and re-drawn as we learn & practice
better habits. We must balance between uncontrolled, wasteful
consumption, and the undesirable plan (or need) to severely restrict
energy use to the point that our standard of living is substantially
lowered, or killed.
With growing energy costs, a significant economic advantage can be
obtained by energy efficiency. Traditionally, energy costs were only
2% of the total cost for the average manufacturer. Today, this cost
is growing at 5.6% per year. Even today, a manufacturer can no
longer ignore the energy cost equation.
For example, over 97% of the total cost for an electric motor is the
energy that motor will consume over its lifetime. Why would you want
to save
a few pennies in the purchase price, thereby forcing you to pay thousands
of dollars in excess electricity costs for that motor's operation?
Is it not better to buy the most efficient motor you can afford?
Many energy efficiency projects have a 3 year payback. Some
projects PQA has worked on pay for themselves in 3 months. PQA
recommends making decisions not just on today's energy costs, but the
projected future costs over the life of your business processes.
For example, let's assume you are doing a retrofit to an existing
process, or plan to build a new process, and that retrofit has a planned
life expectancy (ie. it will be operated & depreciated) for the next 20
years. What will the energy costs be between now and 20 years from
today? If you base your process design on just today's energy
prices, you will get a totally different design. PQA recommends you
design with the discounted cash flow median price over the 20 year life
expectancy. This will always result in a more energy efficient
design, taking you to the payback point sooner than those who lag behind
the energy price curve.
The sooner you start to save, the sooner you reach a positive cash flow
from energy efficiency.
The energy rich nations (ie. Venezuela, Saudi Arabia, etc.) realize
that once people feel forced to put extra insulation in their walls, or
buy an ultra efficient electric motor, etc. they won't rip those solutions
out when the price of energy subsequently drops. They realize that
every spike in the price of energy will drive customers away permanently.
That hurts their long term cash flow and profits. Why do you think
OPEC insists on stable energy pricing? Through price stability, OPEC
lulls everybody to sleep while they maximize their long term profits.
You have heard that a frog who is thrown into boiling water will
immediately jump out. However, if a frog is placed in cold water
that is slowly heated, the frog will stay there until it is fully cooked
and ready for eating. Get the picture? Now, what do you want
to do about energy efficiency? All frogs put up their hands.
While lower costs are a benefit, it's not the only one. There
are 9 Competitive Factors. Only one of these is price. In addition,
you can align yourself with the "Moral Majority" who believe in
conservation, ecology, Green Action, and similar initiatives. These
consumers want ethical, energy efficient suppliers. They are willing
to pay a premium for these special goods and services that align with
their personal philosophies.
Green and efficiency will provide you a marketing differentiation.
This leads to a marketing advantage, higher profits, and an increase in
market share.
For example, GM, Ford, and Daimler-Chrysler have mandated that all
their facilities, and all their suppliers must be registered to ISO 14001
Environmental Management standard. Energy conservation is an
integral part of ISO 14001's requirements.
Based on these trends, PQA can now predict (you heard it here first, on
Mar. 20, 2006), the next primary economic
driving force for the 2010's decade, as follows:
1980's Quality (defects,
prevention, Voice of the Customer, reliability, etc.)
predicted in 1979 by G.Black, PQA President
1990's Globalization
(standardization, Mergers & Acquisitions, strategic partners)
PQA predicted in 1988
2000's Velocity (speed of
response to market opportunities)
PQA predicted in 1994
2010's Energy
(efficiency, supply, utilization, conversion, price, etc.)
PQA predicted in 2006
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