Energy Efficiency as Strategy: General Electric

The business case
By making a public greenhouse gas and energy commitment and then tracking the results, GE is leading by example and demonstrating how one company can make a difference. As the company shares its commitment, processes, and approach with its partners, suppliers, and customers, GE continues to make ecomagination truly “sustainable”, saving the company money over the long-term. Leadership and accountability, cross-functional teams, recognizing performance, and aligning a program to the existing business culture are all key pieces of this successful approach.



General Electric's (GE) key growth strategy, ecomagination, involves a set of commitments around reducing greenhouse gas (GHG) emissions and improving energy efficiency in the company's global operations. GE calls this program “1-30-30”. The program is one of five ecomagination commitments that the company has made and publicly reported on since 2005.

The other commitments include increasing revenue from GE's ecomagination-certified products to US$ 25 billion by 2010 and doubling investment in environmental technology research and development to US$ 1.5 billion by 2010. In 2008, GE committed to reducing its water consumption by 20% by 2012. All these commitment together allow GE to demonstrate the value of ecomagination as a growth strategy for its customers, stakeholders, and investors.

Targets

The 1-30-30 program references GE's goals to reduce GHG emissions and improve energy efficiency in its operations. The “1%” goal refers to a 1% reduction in absolute GHG emissions by 2012, over a time period when growth is predicted to be 25%. At the same time, GE also committed to improving GHG intensity and energy efficiency by 30% by 2008 and 2012, respectively. The baseline year for all of the commitments is 2004.

Implementation

Each of GE's business units is active in the 1-30-30 program in different ways, suitable to their different operations. Three of GE's vice presidents champion the efforts and conduct periodic business reviews to assess progress toward the goal. A cross-business, cross-functional team from the businesses and GE's corporate offices coordinates the effort and shares best practices across divisions to realize greater savings. GE also continually benchmarks with its partners, customers and suppliers on approaches to GHG and energy management, implementing the best strategies in the marketplace to drive the process.

GE's GHG and energy inventory is an annual process that involves more than 500 employees. The inventory includes the calculated emissions from over 500 of GE's largest manufacturing, service, and headquarters locations globally. Emissions associated with over 3,000 small offices are estimated based on available emissions factors, and emissions from GE's fleet of automobiles and aircraft are also included in the program.

An external party has validated the inventory for the baseline year (2004), and GE plans to validate the inventory in the future goal years.

GE's mechanisms to manage GHGs and energy include “Energy Treasure Hunts”, a lean manufacturing-based process originally developed by Toyota. More than 200 treasure hunts have been conducted across GE's operations to date, and that process has driven a reduction in GHG emissions of 250,000 metric tons and created a pipeline of over 650,000 metric tons in future projects.

GE has also committed to completing several very visible projects using its own technology. In May 2007, GE's headquarters in Fairfield, Connecticut, began using GE's own solar panels to generate electricity. In addition to offsetting energy cost increases, this process demonstrates that renewable technology is a good hedge in the energy market. Four additional locations have been completed since that time – Greenville, South Carolina; Newark, Delaware; Universal Studios, California; and Waukesha, Wisconsin. GE continues to identify the locations where solar technology is viable.

GE leverages the expertise of its global research centers (GRC) to work with GE businesses on GHG reduction projects. A GRC–business team completed a project resulting in 60,000 metric tons of CO 2 equivalent being eliminated annually from a process that uses sulfur hexafluoride, a potent greenhouse gas. In addition, the GRC technologists work with businesses to identify opportunities for energy efficiency and installation of recovery and reuse equipment at locations worldwide.

To recognize the hard work of its employees that drive 1-30-30, GE started an awards and certification program recognizing those sites that achieve at least a 5% GHG reduction over the baseline year. To be certified, sites must demonstrate that reductions were achieved independently of any changes in production levels. During 2007, 46 sites were certified and 10 sites received eCO2 awards based on extraordinary results and use of GE technology.

Each year, GE adjusts its 2004 inventory to account for divestments and acquisitions. With the divestment of its plastics business in 2007, GE's adjusted GHG baseline inventory is now approximately 32% lower than its initial 2004 inventory. Although the number of large GHG inventory sites is approximately the same as in 2004, about 27% of the sites in the original inventory have been replaced by newly acquired sites and the company measures its progress against this adjusted baseline. This ongoing change presents a challenge to manage the inventory and pipeline of GHG reduction projects and GE's approach to GHG reduction evolves as the company continues to change.

Outcomes

In 2007, GE's GHG emissions were 7.02 metric tons, 8% lower than the 2004 baseline. GHG intensity was reduced by 34% and energy efficiency improved by 33%. With the success of the 1-30-30 program GE has shared the approach with GE ecomagination product partners, various customers and suppliers. GE invited over 50 suppliers from Central and South America to participate in an Energy Treasure Hunt through its supplier assessment program, and it has continued to coach these suppliers on various processes, including involvement in Mexico's Clean Industries Certification program.

Further, the company's portfolio of energy-efficient and environmentally advantageous products and services reached US$ 14 billion in 2007, up more than 15% from 2006; the ecomagination order book surged past US$ 70 billion. The company forecasts that total revenues from ecomagination products will surpass US$ 20 billion in 2009. (This led the company to increase its 2010 revenue target from US$ 20 to 25 billion.) GE's own “cleantech” fund – investment in cleaner technology research and development – passed US$ 1 billion for the first time.

Lessons learned

By making a public GHG and energy commitment and then tracking the results, GE is leading by example and demonstrating how one company can make a difference. As the company shares its commitment, processes, and approach with its partners, suppliers, and customers, GE continues to make ecomagination truly “sustainable”. Leadership and accountability, cross-functional teams, recognizing performance, and aligning a program to the existing business culture are all key pieces of a successful approach.

This case study is part of a series of WBCSD member company good practice examples on energy efficiency.