# Presentation: 567386

## “Cost-Effective Implementationof Sustainable Manufacturing Technologies” 

- David Love
- Director, Industrial Solutions
- Johnson Controls, Inc.
- Building Efficiency Group
- Milwaukee, WI
- September 27, 2007

## Presentation Outline

- What is Sustainability?
- Industry Drivers
- Challenges U.S. Manufacturers face to transition to sustainable technologies
- Impact U.S. Manufactures can realize when transitioning to more sustainable technologies
- Available Technologies Today
- Break-out Session Topics

## Defining Sustainability 

**Defining Sustainability**** **

***External***

**Numerous definitions depending on stakeholder’s agenda**
**Johnson Controls Definition:  ***“Through our actions and offerings, we embrace Environmental , Social and Economic practices that benefit our customers, employees, shareholders, and society as a whole”*

**Core Values **
**Ethics Policy**
**ESH Policies**
**Committed management**
**Performance metrics**
**Market position**

***Internal***

***Environmental***** Stewardship**

***Social***** Responsibility**

**An**
**Integrated,**
**Balanced**
**Strategic**
**Approach**
**“****Triple Bottom-line”**

***Economic***** Prosperity**

**Notes:**
DEFINE IT  -  As many of you are aware, sustainability goes by many names and has numerous definitions, which can be very confusing.  

For instance, “Corporate Social Responsibility”.  It’s my least favorite name for sustainability, because it implies a focus on the social aspects versus the more holistic “triple-bottom line” concept espoused by sustainability guru, John Elkington.  Johnson Controls approaches sustainability through this “triple bottom line” concept and defines it as integrating the economic, social and environmental aspects in a balanced manner that promotes long-term success.

Internally, we implement it through various corporate policies, including our FIVE VALUES that I already mentioned.  

##                    Industry Drivers

## Challenges for Manufacturers

**Regulation**
- 	Workplace Safety
- 	Homeland Security
- 	Cost of Government Regulations Sustainability (GHG, ODS, VOC)
**Labor**
-         Increasing indirect expenses
-        Aging Workforce
- 	 Lower off shore production cost
- 	 Available skilled workers
**Core Business**
**     **Outsourcing
-       Affordable technology
-       Deterioration of plant infrastructure
- 	Productivity Demands
**Economics**
**	**Volatile Energy Costs
- 	Continuous cost reduction pressure
- 	Shareholder Expectations
-        Limited Capital
-        Tight ROI
-       Global competition

**Challenges for Manufacturers**

**Industrial sector economics are being  pressured for increased productivity; labor, quality, asset availability and energy efficiency are key inputs to the productivity equation. **

## Proven oil reserves of 1 Trillion barrels
Current global usage is 73 Million barrels consumed daily
Oil consumption increasing globally
4.4% per year in China
3.7% per year in India
2.0% per year in N.A. and Europe

- Proven oil reserves of 1 Trillion barrels
- Current global usage is 73 Million barrels consumed daily
- Oil consumption increasing globally
- 4.4% per year in China
- 3.7% per year in India
- 2.0% per year in N.A. and Europe

**Global Market Drivers**

**Notes:**
World electrical consumption is forecasted to double between 2002 and 2030, over 90% of this increase in energy is expected to come from the use of fossil fuels.  Many of us don’t often look at the bigger picture, fossil fuels are a limited resource, the question isn’t if we’ll run out of oil and other fossil fuels, but when!
Fossil fuels are a precious limited natural resource that we may not be able to sustain in the future.
So, we’re faced with a question and a decision about when we should act, down the road when the fossil fuels are near depletion, or now, when the implementation or alternative energy sources can help sustain this rapidly dwindling resource.
Some people will argue that there is plenty of oil left, notably the “hard to get” reserves, such as the Canadian tar-sands.  Consider this: National Geographic reported earlier this year that there are currently 774 vehicles per 1000 people in the USA.  In China, arguably positioned to be the most up-and-coming nation of the world, there are only 16 vehicles per 1000 people.  As the country’s overall per capita wealth and population increases, so will the demand for vehicles, buildings and fuel.
Given this inevitability, it’s difficult to argue against the need for a truly comprehensive search for alternative energy sources and more energy efficient equipment and building systems.  The question is where the energy and resources can be best focused.

## Industrial Market Drivers

- Source:  Energy Information Administration: Annual Energy Review 2005

**Waste seems to be the major growth industry**

**Annual U.S. energy waste = $300 billion (after saving $365b/y since ’75) – Amory Lovins, RMI**

## Where are the opportunities?

**Where are the opportunities?**

** **

## Total Energy Life Cycle of Vehicle

**Total Energy Life Cycle of Vehicle**

**878,132 MJ**

**119,755MJ**

**1,482MJ**

**39,321MJ**

**105,207MJ**

- Manufacture

- Fuel

- Fuel Extraction, Processing & Distribution

- Parts & Labor

- ELV Disposal*

**Resource Extraction, **
**Processing and **
**Transportation**

**Manufacturing**

**Vehicle Use **
**and Operation**

**End of Life **
**Vehicle **
**and Disposal**

**Parts & Labor**

**Total Energy = 1,143,897 MJ**

## Life Cycle Cost of Buildings

**Notes:**
It is widely understood that the vast majority of the costs related to buildings occur after the facility has been built. If owners and operators look at the life cycle of a building, different choices will be made with regards to the systems that are installed or upgraded and the energy choices that are made. Spending a bit more at the construction phase of a project, and designing and specifying systems that are integrated and efficient at the beginning, can deliver significant savings in energy use and manpower needs over the lifetime of the building.

##      Challenges for Manufacturers

## Challenge:  Data & Benchmarking

- 340

**Worst Performers**

**Best Performers **

**Number of Buildings**

- 166

- 121

- 86

- 30

**Energy Intensity**
- (kBtu/ft2-year)

- 100

- 1

**Challenge:  Data & Benchmarking**

**Notes:**
A 400% variation in energy use intensity of buildings in the USA exists that is not explained by age, technology, hours of operation, size, or climate.  

## Challenge:  Finding Value

***Maturity***

***Value Chain***

_**Regulatory Compliance:**_
** ****Address “end of pipe” issues **
** ****Safety, permitting, auditing, pollution prevention**
** ****Etc.**

_**Reduce Costs:**_
** ****Waste management**
** ****Energy management**
** ****Production efficiencies **

_**Competitive Advantage:**_
**  ****GHG tracking tools**
**  ****Sustainability training**
**  ****Green supplier monitoring  **
**  ****Green buildings/plants**
**  ****Design products for Sustainability**
**  ****Renewable energy **

**Must Do**

**Grow Business**

**Notes:**
As we matured, we realized more value could be gained by categorizing our activities along  the “value chain”.  
For example, regulatory compliance is an essential “MUST DO” and helps growth by keeping employees productive and senior managers out of jail.  
And there are actions focused on reducing operational costs, like better managing wastes and energy - something that many organizations are already doing—at least I hope they are!  
At the top of the value chain are those activities that   distinguish us from our competitors.  We study these to determine how best to use them to outpace our competitors and grow the business. 

## Is there a Challenge at the top?

- On-line survey conducted in March 2007
- 228 manufacturing executives and managers responsible for energy management decisions
- Major findings:
- 77% believe energy prices will rise significantly next year (average increase expected is 15.4%)
- 66% expect to make energy efficiency investments over the next year (9% of capital budget will be used)
- 75% will also fund energy efficiency improvements through operating budgets
- 69% are paying more attention to energy efficiency than they were one year ago.

## ROI Tolerance for Investments

## Changes in ROI Tolerance

## Importance of Energy

**Importance of Energy**

## Motivation for Investment

##      Impact from Sustainability

## Three Global Businesses

- Automotive Experience

**Three Global Businesses**

**Automotive Experience **($18.3 billion)
- Seating and interiors
- Components and system integration
- Electronics

**Power Solutions **($3.7 billion)
- Lead acid (80 million per year)
- Hybrid battery development (NiMH, Lith-Ion)
- Battery management and electronics

**Building Efficiency **($12.2 billion)
- Control Systems and HVAC equipment (York)
- Life-cycle services (1200 locations in 125 countries)
- Energy efficiency and Sustainable Solutions

## Sustainability:  Impact

- Automotive Experience

**Sustainability:  Impact**

**Automotive Experience**
- Bio-polymers:  insulation/acoustics (Eco-Cor)
- Recycled materials:  structural, door panels
- Green Supply Chain:  ISO 14001

**Power Solutions**
- Recycled battery components (98% content)
- Hybrid battery development (NiMH, Lith-Ion*)
- Lighting Retrofits

**Building Efficiency**
- LEED Certified Corporate Office (35% savings)
- Green Cleaning Chemicals
- Energy Efficiency

**Billion Dollar Round Table:  Diverse Spending**
**EPA Energy Star Partner of the Year**
**Supplier Partnership for the Environment**
**Global Environmental Management Initiative**
**Business Roundtable:  Climate Resolve**

## Energy Usage Trend From FY 2006

- United States
- Mexico
- South America
- Europe
- Asia & Rest of World

- However, JCI’s Global Energy Consumption
- _per Revenue $_ Continues to Decline

- JCI’s Energy Use is projected to increase globally, but varies by region.

- 40% reduction in electricity metric
- 38% reduction in natural gas metric

- GRI Report

**Notes:**
GRI – Global Research Institute

## Energy Savings - FY07 (through April)

- Savings realized through April 	AE	   $795,540
- 					BE	   $301,117
- 					PS	_$1,495,994_
- 						$2,592,651
- Projected Savings for FY07	AE	$1,669,004
- 					BE	   $742,911
- 					PS	_$1,869,372_
- 						$4,281,287

- On track to save > $4M in energy costs across divisions FY 07, annualized impact is $5.1M.

## Top Energy Saving Strategies / Projects

_**Lighting Upgrades**_
***Projects Identified Waiting Approval / Installation***
_***Business Unit***__***	***__***Capital Req***__***	***__***Ann Savings Tons CO2***_
***AE******	******	******$4,371,316******	******$2,231,958******	******12,759***
***BE******	******	******$1,053,325******	******$658,734******	******  1,898***
_***PS***__***	***__***	***__***$1,350,645***__***	***__***$710,469 ***__***	***__***  1,211***__***	***__***             ***_***	******	******             $6,775,286     $3,601,161******	******15,868***
-                                Approx. 1.8 year payback
_**Move all plants to the best utility rate / tax**_
***Ensure all plants are on the best / right rates - $100k***
***Reduce utility taxes - $100k***

##                                            Case StudySteps to Building a Sustainability Plan

- Seating Plant

## The Opportunity:  Seating Plant

- Before

- Installation Activity

- Plant Shutdown

- After

**Rockwood Data Logger****Before and After Data Track**

## Cost / Benefit Impact:  Sustainable Returns

**Actual Payback:  1.3 years**

##                                            Case StudySteps to Building a Sustainability Plan

- New Fab Plant

## The Opportunity:  New Fab Plant

- Very tight temperature and humidity requirements . . .
- 70F+/-2 (21C+/-1) and 45% RH +/- 3%
- Combined with a large amount of exhaust and subsequent make up air . . .
- 650,000 cfm (307 m3/sec) = 41 Macy’s Snoopy balloons a minute
- Combined with the need to recirculate a large volume of air through the filters for cleanliness . . .
- 4,400,000 cfm (2077 m3/sec) = 22 Goodyear blimps a minute
- Combined with hundreds of process tools with vacuum pumps, RF generators, and support equipment . . .
- Combined with extensive use of deionized (DI) water to rinse the wafers during processing . . .

- Could lead to annual power consumption of 170,000 mWh (10,000+ homes worth)
- and water consumption of 3 million gallons/day (6,000 homes worth)
-  Annual utility bills could total $20M - $25M

## Cost / Benefit Impact:  Sustainable Returns	

- Invested <1% of the project cost (<$1.5M) in LEED related items – predominately efficiency improvements that we would consider regardless of LEED
- But remember that the overall project cost 30% **LESS** than previous $300M fab plant construction cost
- The first full year should recover $1M in operating savings
- At full build out will save >$4.0M per year in operating costs`
- 20% energy reduction
- 35% water use reduction
- 50% emissions reductio

**Notes:**
The elimination of boilers will significantly reduce our NOx emissions – a critical issue for the DFW area.

##            Building a Sustainable Plan               Steps to Building a Sustainability Plan

## Energy Efficiency Leads to Sustainability

**Utilization**
- 1-10%

**Efficiency**
- 5-25%

**Rate**
- 0-5%

**Notes:**
As most of you know, the process of energy management is really fairly simple.  
You can reduce the amount that you pay for each unit of energy by negotiating a better deal or switching to a different marketer, or going to interruptible rates, or switching to Time of use (TOU) or real time pricing (RTP)
Or you can measure and monitor how energy is used and then reduce the amount of energy that’s consumed by upgrading equipment with state of the art technologies that are more energy efficient
Or you can change how energy is being utilized by shifting to the least cost energy for the application, and education and training facility occupants (i.e. energy users) what they can all do to affect the energy 

## Our Process

- Loss Recovery

- Loss Prevention & Education

- Optimization

**Energy Efficiency Process**

**Notes:**
Customers ask for help when external events (supply shortages or industry restructuring) create budget variances and unpredictability.

D

## Energy Analysis

## Sustainable Energy Information System

**Sustainable Energy Information System**

***“******Continuous Improvement”***

## Operational Improvements

**Building**
**Tune-up**

**Lighting**
**Systems**

**Load**
**Reductions**

**Fans and**
**Pumps**

**HVAC/R**
**Systems**

***Combined efficiency and operational improvements deliver twice the savings as equipment efficiency improvements alone***

- Source: Energy Star

**Operational Improvements**

## Technology Improvements

**Technology Improvements**

**Notes:**
Lighting systems replaced as recently as 5-10 years ago can economically be justified for upgrades to the latest technologies – particularly some of the new dimmable, individually addressable, wireless ballast technologies matched up with Philips new Alto series light bulb (25 W vs industry best of 28W w/ lowest mercury content of any manufacturer – meaning you don’t have to pay for handling the removed lamps as hazardous waste.
Control systems are upgraded for efficiency and comfort, workstations with setback, optimize for energy efficiency and tight control of all loops, change control strategies to match actual building usage (vs. original design).
Water savings – low water using devices for urinals, faucetts, water closets, possible sewer credits from water utility.  
Along the way we look at all mechanical systems, electrical systems, building windows, waste management costs and processes, subcontracted services, POM materials procured, Telephone systems, security systems, nurse-call and life safety systems, code compliance, Asset Tracking and Management

**Solar**
**Solar energy can be converted directly (photovoltaic) or indirectly (thermal solar) into electricity and heat through photovoltaic devices and thermal collectors. The resulting electricity or heat can offset utility costs and reduce, or possibly eliminate, the need for water heaters. **

**Wind**
**In a typical wind turbine, wind energy is converted to rotational motion by a rotor, which turns a shaft that passes into a gearbox, which increases the rotational speed. This transmission is attached to a high-speed output shaft, which is connected to an electrical generator. **

**Biomass**
-  **Biomass byproducts are burned or raised to very high temperatures to release the chemical energy as heat. The heat is used to boil water in biomass boilers, creating steam. The steam is then used to turn turbines and generators to produce electricity.**

**Digester Gas to Energy**
**The most popular technology converts wastewater treatment gas to electricity, employing internal–combustion engines that run a generator to produces the electricity. This electricity is used to power internal operations and the excess is sold back to the grid. Heat generated by the engines can be recovered and used to heat digesters and plant facilities.**

**Landfill Gas to Energy**
**Hundreds of municipalities across the country have landfills which often produce methane in commercial quantities. By capturing the methane and using it to power electrical generation, or cleaning it and sending it to a pipeline, energy is saved and waste reduced.**

**Renewable Technologies**

## SEEC – Internal Education Modules

**Energy and You **
**Illuminate Your Life**
**Getting to Know H2O **
**Watching Your Waste-Line**

**The Great Indoors**
**A Change of Climate **
**Reinventing the Wheels **
**Greening the Supply Chain**
**Sustaining the Momentum**

- Delivered Electronically or in Groups

**SEEC – Internal Education Modules**

**Notes:**
SEEC includes a 10-module series of lessons that show how employees can find financial, environmental and social benefits at work and home. 
Introduction to Sustainability - Explains the importance of an organization's financial, social and environmental accomplishments.
Energy and You - Shows how important energy reductions are to an organization's overall goals and how they impact the surrounding community and the environment.
Illuminate Your Life - Demonstrates the impact lighting has on indoor environment and offers solutions for better, more productive lighting alternatives. 
Getting to Know H2O - Identifies typical overuses of water and provides behavior modification guidelines.
The Great Indoors - Focuses on how air quality affects individual productivity and health, especially through green housekeeping.
Watching Your Waste-Line - Illustrates how waste reduction and recycling can be easily implemented.
Reinventing the Wheels - Presents benefits of alternative forms of transportation and vehicle reduction programs.
A Change of Climate - Defines issues surrounding greenhouse gas emissions and climate change and shows how individuals can have an impact.
Greening the Supply Chain - Indicates how purchasing decisions can expand an organization's sustainable influence.
Sustaining the Momentum - Summarizes the positive financial, environmental and social impact of sustainable education at work and home.

## External Impact

**Calculations from total lifetime energy savings from projects implemented by JCI 1990 - 2000**

_**Savings**_

**$16.7 billion in total energy savings**
**270,000 gigawatt-hours in electricity savings**
**3,425 megawatts in electric demand reduction**
**1.5 billion MMBtu reduction in direct fuel use**

_**Emissions**_

**352 million tons of carbon dioxide**
**1.4 million tons of nitric oxide**
**1.9 million tons of sulfur dioxide**
**34,000 tons of particulate (PM 10)**
**19,000 pounds of mercury**
**1,800 pounds of cadmium**
**33,300 pounds of lead emissions**

**External Impact**

##                                            Case StudySteps to Building a Sustainability Plan

- External

**USC Biomass Boiler**

- Johnson Controls developed an on-campus biomass co-generation facility to largely replace the purchase of natural gas and calculates that the plant will cover its construction and installation costs through the energy savings it will provide.  The innovative approach was just one of 18 projects recommended as part of an audit of energy- and water-saving opportunities on campus.

- A digester gas cogeneration plant at Baltimore’s Back River Wastewater Treatment Plant will reduce emissions, save taxpayer dollars, address workforce development, and support the local economy.
- The combined heat and power plant uses the remainders of treated wastewater as fuel.  It will generate more than 2.4 megawatts of electricity.

**Erie Wind Turbine**

**Back River Treatment**

- A wind turbine installed at the site of a grade school, middle school and high school in Erie, IL will generate the majority of electricity needed to power the facilities, and will sell excess power back to the grid.  The contract for the turbine included energy saving upgrades at the schools to improve the benefit of renewable energy.

**Renewable Case Studies**

## Sources for Guidance

- National Association of Manufactures
- Energy Efficiency, Water and Waste-Reduction Guidebook for Manufactures
- DOE- Industrial Technology Program
- Save Energy Now
- U.S. Green Building Council
- U.S. EPA Energy Star
- Alliance To Save Energy
- Global Environmental Management Institute

##              Break-out Session

## Break-out Session Topics

- Straw-man survey
- What are the primary technology-related barriers industry faces in implementing and profiting from sustainable manufacturing practices?
- What types of financial considerations must be made before a company makes a sustainable technology related investment?
- What are ways in which public and private sectors can work together to overcome technology related barriers to sustainable manufacturing?

##                          Q & A

## Which Business Model Do You Use?

**Water**

**Electricity**

**Natural Gas**

**Chemicals**

**Raw Materials**

**Process**

**Product**

**Process**

**Waste**

**Reuse**
**Recycle**

**Cost****	****	****	****	****Profit**

- -$

- $

**Reduce**

**Reduce**

## Sustainability Framework

## What is LEED?

_**L**_eadership in _**E**_nergy and _**E**_nvironmental _**D**_esign
- The **LEED** Green Building Rating SystemTM is a voluntary, consensus-based national standard for developing high-performance, sustainable buildings.  There are 5 broad categories that force an emphasis on a holistic approach to design:
- Sustainable Sites
- Water Efficiency
- Energy & Atmosphere
- Materials & Resources
- Indoor Environmental Quality

**Notes:**
There are several versions of LEED.   LEED-NC (for new construction) is the most applicable for this project.

## Sustainability Metrics—(GRI)

| ECONOMIC | Direct Economic Impacts | Customers
Suppliers
Employees
Providers of capital
Public sector
Governance |
| --- | --- | --- |
| ENVIRONMENTAL | Environment
 | Materials
Energy
Water
Biodiversity
Emissions
Effluents
Waste
Suppliers
Products and services
Compliance
Transport
Overall |

| SOCIAL | Labor Practices | Employment
Labor/management relations
Health and safety
Training and education
Diversity and opportunity |
| --- | --- | --- |
|  | Human Rights
 | Strategy and management
Non-discrimination
Freedom of association 
Child labor
Forced  labor
Disciplinary practices
Security practices
Indigenous rights |
|  | Society | Community
Bribery 
Political contributions
Competition and pricing |
|  | Product Responsibility | Product safety
Advertising
Respect for privacy |

**Notes:**
We constantly measure our progress using our own metrics and those available through the Global Reporting Initiative or GRI. 

A full discussion on just these GRI metrics alone would take hours, but my point for showing this is to make you aware that many widely accepted metrics already exist for measuring sustainability  -- and the more savvy organizations are using them. 

## Buildings

- Buildings consume:
- 12% of the potable water
- 40% of the raw materials
- 39% of all primary energy used in the US
- 70% of all U.S. electricity

- Source: 2006 DOE Buildings Energy Data Book and USGBC

- And buildings are responsible for 48% of all U.S. carbon emissions

**Industrial Energy Consumption:**
**82.6% Process**
**      ****17.4% Non-Process**