Unlocking the benefits of Energy Efficiency

Unlocking the Benefits of Energy Efficiency

John W. Conover IV Senior Vice President, Ingersoll Rand

President, Security Technologies Sector

Green Building Focus Conference

Charlotte, NC

Wednesday, April 20, 2011

Green Building Focus Conference 2011 2

We are a world leader in creating and sustaining safe, comfortable and efficient environments

Helps Satisfy

Critical Needs

• Enhancing the human environment

• Improving quality of life

• Promoting energy efficiency and

sustainability

• Increasing customer productivity

Unifying Strategy — Guides Our Actions and Leads Our Growth

Growing Urbanization

Feed Growing

Population Comfortable, Safe, Efficient Environments

Drive for Competitiveness

Resource Conservation

Ingersoll Rand Mission


• Satisfy customers

• Reduce accidents and injuries

• Reduce costs through eco-efficiency

• Avoid fees and fines

• Increase shareholder value

• Enable entry into new markets

• Create new products

• Establish partnerships to innovate and grow

• Stay competitive + Differentiate

• Enhance brand

• Stay in compliance

• Avoid supply chain risk

• Avoid negative press

• Maintain license to operate

• Satisfy investors

A company’s vision and strategic goals

Avoiding Risks

Compliance and

Reducing Costs

Creating Options

and Adding Value

Conventional wisdom on sustainability continues to evolve

Sustainability is Becoming a Differentiator


Regulatory Compliance

Urbanization

Drive for Competitiveness

An unprecedented global energy and operating environment

World energy consumption

projected to grow 60% by 2030

Source: Energy Information Administration

Global Energy Environment is Dynamic


79%

30%

% of carbon emissions

attributed to existing buildings

New York U.S.

30%

<30% But still

significant

World

Buildings are the single largest contributor to global warming

Buildings Have a Huge Carbon Footprint


Compared to other energy resources, energy efficiency measures are:

Energy efficiency is clean, secure (homegrown)

and quicker to develop than other sources of energy

52

1

2

4

8

22

24

37

0 10 20 30 40 50 60

Geothermal, Solar and Wind

Conventional Hydroelectric

Biomass

Nuclear Electric Power

Coal

Natural Gas

Petroleum

Energy Efficiency and Conservation

Quads

Energy Efficiency and Conservation Improvements Since 1973 Have Reduced Annual Energy Consumption by 52 Quads in 2008

Energy Efficiency and Conservation 2008 Domestic Production Net Imports

Alliance to Save Energy, June 2009

Why Energy Efficiency as an Energy Resource?


• Partnership with Economist Intelligence

Unit

• Focus on C-level and senior execs

‒ 278 execs surveyed, wide range of industries, worldwide

• Included online surveys and interviews with leading organizations including:

‒General Electric

‒Tata Motors

‒Carbon Trust Standard Co.

‒World Resources Institute

Because energy efficiency programs require C-suite leadership, funding and commitment – their perceptions are important

Executive Survey Uncovers Issues with Implementing Energy Efficiency Programs


• Nearly 80% of executives say energy efficiency will be more important to

their business in 5 years yet only 26% have ever done an energy audit

• 61% of non C-level execs said their organization does not do enough to

integrate energy efficiency into its strategy

Companies see value but struggle with implementation

Dilemma: Energy Efficiency and Strategy


• Energy efficiency still perceived to be

the CEO’s job

• Companies must appoint a respected

owner and drive accountability

throughout the organization

• Successful initiatives often have

senior leaders driving the campaign –

not necessarily the CEO ‒ Only 20% say an energy efficiency

manager or EHS manager is

responsible for energy efficiency

Few have dedicated sustainability staff or energy management experts

Responsibility Must be Assigned Across Organization


• Measurement helps monitor usage

and equipment efficiency, identify

cost savings

‒ Only 26% of organizations have

conducted an energy audit

‒ 15% audited by a third party

‒ 22% do no measurement at all

• With a proactive maintenance

approach – including energy

audits – companies can better

gauge energy usage and track the

efficiency of their equipment

Lack of expertise may hinder companies’ progress Lack of in-house expertise hinders many companies’ progress

Companies Lack Measurement, Expertise


• Business leaders generally see

benefit of regulations ‒ Large companies believe they

level the playing field and create

new markets

• 69% believe companies are only

meeting the “minimum” required

by policy – room for improvement

exists

• Almost 75% believe taxpayers

need to bear some of the cost of

energy efficiency strategies

Building owners welcome policy and incentives that

enhance ROI of efficiency initiatives Companies welcome policies that enhance ROI of

efficiency measures

Companies View Regulation Positively


• Only a fraction of respondents

are working with their suppliers ‒ 8% said energy efficiency is a

priority for suppliers

‒ 4% are working with their

suppliers on energy efficiency

• However, this is changing ‒ Wal-Mart said it will require

suppliers to disclose their

environmental impact

“In the present model of

manufacturing automobile units,

70-80% is outsourced.

So it’s not enough for us to measure

our carbon footprint. We need to

also measure the carbon footprint of

our suppliers.”

-A.S. Puri, Vice President , Tata Motors

Pressure mounts for vendor participation in energy initiatives

Energy Efficiency Seen as an Internal Issue


Practices • Make energy efficiency and sustainability

part of business strategy

• Assign responsibility across the organization

• Look to vendors to capture carbon footprint

Policies

• Change standards and codes to drive

minimums up

• Develop incentives to encourage

incremental investment that meets all

stakeholders’ needs

“For a long time, people thought it was all about technology. But what

we’re learning is that, really, it’s all about people. How do you get people

to do something differently?”

Gwen Ruta

Director & Vice President for Corporate Partnerships

Environmental Defense Fund

Practices and Policies Drive Changed


• Buildings account for one-

third of world energy use,

GHG emissions

• GHG emissions from

buildings will double by 2030

• Poorly designed buildings

lock in inefficiencies for

decades

• Small investments cut energy

use 30-50%

Current and Projected Building Sector Emissions by World

Region 180

0 150

0

900

120

0

600

300

0 North America,

Western Europe,

and Pacific OECD

Central and

Eastern Europe,

Former Soviet

Union

Asia Latin

America

Africa

CO

2 E

mis

sio

ns

(M

tC)

2010 Emissions

2030 Emissions

6

5

3

4

2

1

0

Energy

Supply Transport Building

s

Industry Agricultur

e

GtCO2-eq/yr

Non-OECD/EIT*

EIT

OECD

World total

7

Forestry Waste

Issues argue for change in how we build, operate, imagine buildings

Buildings Offer Promising Global Opportunity


High performance buildings:

• Are safe, comfortable and efficient

• Help owners and occupants achieve their business

mission

• Use design and operating standards that are created,

measured and continually validated to deliver

established outcomes within specified tolerances

• Are created using a unique methodology – combining

financial, operating and energy analysis with

specialized service offers and available financing

• Meet specific standards for energy and water use,

system reliability and uptime, environmental

compliance, occupant comfort and safety and other

factors

Enhanced security, comfort, and building efficiency enables growth and helps management deliver the business mission

High Performance Building Solutions Exist Today


• Typical buildings have occupied lives of

50-75 years or even longer

• Operating costs account for 60-85% of building

lifecycle costs – compared to 5-10% for design

and construction costs

• High performance buildings reduce lifecycle

costs so organizations can invest in other

priorities

• Standards are created, measured &

validated continually to deliver desired

outcomes

• Standards are typically set for:

– Energy and water consumption

– System reliability

– Environmental compliance

– Occupant health, safety and comfort

Huge opportunities exist to improve building performance

A Whole Building, Whole Lifecycle Approach


Major ECM Category ECM Type Technology/ECM Name Rating

Controls General/Special Upgrade to Direct Digital Control 100%

Industrial Compressed Air Implement Compressed Air Utility Management 100%

Water Reduce Use Install Low Flow/Use Fixtures 96%

Controls General/Special Retro/Recommission Controls for Optimizing Savings 94%

Controls General/Special Install Lab Hoods Control - Flow Safe Lab Hoods 94%

Supply Side Management Manage Energy Supply Change Regulated Utility Rate/Tariff 94%

Water Smart Metering Install Smart Meters & software -- for Billing & Accuracy 94%

Electrical Lighting Install Lighting Controls 92%

Electrical Lighting Replace T-8s for HiBays with T5s 92%

Plant Boilers Install Tankless/Instantanious Water Heaters 92%

Supply Side Management Manage Energy Supply Change to Interruptible Rates and Use Electric Generators 92%

Architectural Envelope Install Weather-Stripping 92%

Electrical Lighting Upgrade Fluorescent Fixtures w/ T8 or T5 Lamps and Electronic Ballasts 92%

Electrical Lighting Retrofit Incandescent Lamps w/ Compact Fluorescent Lamps 92%

Electrical Lighting Replace Exit Sign w/new LED Fixture 92%

Plant Boilers Adjust Burner as Regular Maintenance 92%

HVAC (Building/ Non-Plant) Unit Upgrade Convert CV to VAV 88%

HVAC (Building/ Non-Plant) Unit Upgrade Convert Dual Duct to VAV 88%

Electrical Lighting Replace HID HiBay fixtures with T5s or T8s 86%

Electrical Lighting Add LED night lights in halls 86%

Architectural Roof New Construction with Green Roofs (Plants) 85%

Plant

Water Source Heat Pump

Systems Install Water Source Heat Pump System 83%

Plant Motors/Pumping Install VFD/VSDs for Pumps 81%

Controls Resetting Reduce Outdoor Air To Design Level 78%

Controls Resetting CO2-Based Demand-Controlled Ventilation 78%

• Many, many Energy Conservation

Measure (ECM) technologies and

applications need a methodology to

assess and rate

• Methodology developed using Six Sigma

analysis processes and tools

• Evaluation process based on 5 key

customer “importance factors”

– Savings potential, Practicality, Commercial

viability, Risk management, Business

differentiation

• Score of 0-100% with 100% being the

best ranking

Use Six Sigma methods to choose best energy measures

Top 25 Energy Conservation Measures


• Link the building to its primary

business mission

• Determine the funding strategy

• Understand energy

conservation measures and

their payback

• Focus on total cost of

ownership over occupied life

• Conduct the financial analysis

– including cash flow

• Energy efficiency makes

more sense than ever

• Environmental performance

is becoming more critical

• Organizational performance

and employee productivity

drive value, ROI

• Effective service strategy

maintains lifecycle

performance

Moving the building sector toward High Performance Buildings

Compelling Case for Improving Lifecycle Performance


TIAA-CREF Headquarters – New York

Solutions Applied:

• Analyze building systems, energy use, rate

structure and procurement methods

• Recommend mission-focused ECMs

• Design & install upgrades

– State-of-the-art chilled water system

– Rooftop thermal storage system

– Reprogrammed central automation control

system

Results: • Infrastructure upgrades will save an estimated $765,000 per year in energy

and operating costs and a 25% internal rate of return for TIAA-CREF.

• The efficiency improvements are avoiding 6.1 million pounds of carbon

dioxide emissions -- the equivalent of removing 560 cars from the road, or

planting 828 acres of trees.

HPB Based Success Story


• DOE Save Energy Now LEADER

Initiative

– Over $4 million in energy cost

savings

– Program relies on skilled employee

volunteers

– Three tiers of energy audits

• Treasure Hunts

• Expanded Energy Audits

• System Specific Audits

Internal Ingersoll Rand Energy Audits


• Energy efficiency must become part of business strategy

• Success depends on leadership, accountability and expertise

• Climate change cannot be effectively addressed without including

commercial building sector

• Our growing populations will seek greater security, efficiency and

integrated approaches to increase quality of life.

• Technology exists today to create High Performance Buildings that

can mitigate GHG emissions while providing long term ROI for

building owners

High Performance Buildings help organizations

achieve their mission

Bottom Line for Addressing Energy Efficiency


Thank You

Real Estate

Unlocking the benefits of Energy Efficiency