SUSTAINABLE BUSINESS THROUGH ENERGY EFFICIENCY IMPLEMENTATION:

AN INDUSTRY PLAYER’S PERSPECTIVE

Zaini Abdul Wahab

Group,Malaysia

IEM & IET ELECTRICAL CONFERENCE 2013

20th November 2013

Palace of The Golden Horses Hotel

Kuala Lumpur

OUTLINE

1. Business Potentials In Energy Efficiency Implementation

2. Success Stories

3. Barriers & Counter Measures For Sustainable Energy Efficiency Programs Implementation

4. Energy Efficiency Industry Development & The Way Forward

Business Potentials In Energy Efficiency Implementation

ENERGY OUTLOOK

Vehicle efficiency: Costs influence consumer choices

TRANSPORTATION

Manufacturing, chemicals to lead growth in industrial energy demand

INDUSTRIAL

Industrial demand rises 30 %, led by growth in Non OECD countries

ELECTRICITY GENERATION

The impact of increased energy consumption can be reduced through energy efficiency and a transition to a stronger reliance on cleaner sources of energy, including renewable energy and low-GHG [greenhouse gas] emitting fossil fuel technologies, such as a shift from coal to natural gas

The global energy mix will grow more diverse and less carbon-intensive

Source: Exxon Energy outlook 2012

TOWARDS ENERGY EFFICIENT SCENARIO : NEW POLICY

Economically viable efficiency measures can halve energy demand growth to 2035

GLOBAL ENERGY EFFICIENCY POTENTIALS

Energy efficiency potential used by sector in the New Policies Scenario 2/3 of the economic potential to improve energy efficiency remains

untapped in the period to 2035

SEA: INVESTMENT POTENTIALS (US$MIL.)

The total market size = US$6.7 billion; Industrial = US$2.9 billion(44%) Commercial = US$3.7 billion(56%)

source: www.reexasia.com

Biggest potentials in the industrial sector

SAVING POTENTIALS Pumps (25% - 35%) Chiller (20% - 25%) AHU/FCU (25% - 35%) Cooling Tower(15% - 20% Lighting System (40-60%)

WHERE TO SAVE?...BUILDING FACILITIES

WHERE TO SAVE?...MANUFACTURING FACILITIES

(Source: Energy Conservation Centre of Japan,

2011)

THE TRENDS & PROVEN SUCCESS STORIES

Building owners can see reduced operating costs, increased building values, greater return on investment, and higher occupancy from new and retrofitted green buildings

UNEP - GEO-5 for Business Impacts of a Changing Environment on the Corporate Sector

Companies may receive reputational benefits from achieving green building certifications . A 2011 survey of U.S. adults- 64% would prefer to patronize a business whose facility is certified as green, while 48% indicated that green certification of a facility improves their image of a company.

University of Missouri researchers - consumers would be more willing to pay between 15 & 20% more for retail products from companies that support sustainable practices

UN Global Compact of 766 CEOs worldwide-93 % of CEOs said sustainability issues will be a critical factor to the future success of their business

2012 Ernst & Young Survey – 66% of executives saw an increased amount of sustainability-related inquiries from investors in the past year. 70% inquiries focused on energy management and greenhouse gas emissions & more than ½ questions about sustainability reporting

THE CORPORATE TRENDS… Survey on 250 CFOs in 14 countries by Deloitte - CFOs are increasingly aware the benefits sustainability can bring to the business. 2/3 respondents said they are involved in driving sustainability strategies .More than 50 % said their involvement in pushing sustainable practices has increased in the past year.

More than 50% of executives consider sustainability—the management of environmental, social, and governance issues—“very” or “extremely” important in a wide range of areas, including new-product development, reputation building, and overall corporate strategy. -McKinsey Global Survey Result, March 2010

Profitability

Sustainability

Competiveness

Competency

Working environment quality

Corporate Image

Operating Costs - Energy

Risks – price fluctuation & supply shortages

Pollution

Carbon emission

Depletion of fossil fuel

WHY ENERGY MANAGEMENT?

INCREASE USERS’ COMFORT

SALES/LEASE & ENERGY COST SAVINGS

BOOST IMAGE & VALUES

SUSTAINABLE APPROACH FOR ENERGY MANAGEMENT

MANAGEMENT COMMITMENT

POLICY

PLANNING

IMPLEMENTATION & OPERATION

SYSTEM & PERFORMANCE

CHECKING

MANAGEMENT REVIEW

RELATED STANDARDS FOR SUSTAINABLE MANAGEMENT

ISO 55000

An overview of the subject of asset management and the standard terms & definitions to be used

ISO 55001

The requirements specification for an integrated, effective management system for assets- defines requirements for a management system

IS0 55002 provides

Guidance for the implementation the system

ISO50001:2011 Energy

Management Systems - Requirements With Guidance For Use

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To be launched in January 2014

ENERGY CONSERVATION PROGRAM IMPLEMENTATION IN MALAYSIA

Source: ESCO

TREASURY BUILDING, MINISTRY OF FINANCE OF MALAYSIA 17% reduction of electricity bill in 2011

based on 2010 baseline consumption – SEDA Malaysia

UNITED STATES OF AMERICA

IDAHO NATIONAL LIBRARY,USA Petroleum fuel use reduced cumulative 20.3%

from the FY 2005 baseline -2013 Environmental Leader

With EPC Model

EASTMAN CHEMICAL COMPANY Energy use intensity reductions of 27%, 26% & 9% for the respective building & averaged at 21 % reduction- 2013 Environmental Leader

ESCO PROGRAM IN THAILAND

ENERGY MANAGEMENT SYSTEM IMPLEMENTATION BY COMPANIES IN IRELAND

160 companies - 60% of Ireland’s industrial energy use 2% improvement in energy performance per year Long-term members - have improved energy performance by 33% (1995 and 2010) Energy Management Standard helps up to €150m in avoided energy costs (2005-10)

IMPACTS OF ENERGY EFFICIENCY POLICIES IN JAPAN

1,327

1,273

1,192

1,101 1,101

1,059 1,059

1,000978

951

1,036

1,013

1,013

985

1,049

1,091

1,051

1,0701,077

1,037

1,0441,021

1,059

1,036

1,038

1,050

1,131

1,142

1,345

1,405

1,467

1,566

1,573

1,438

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

'73

'75

'77

'79

'81

'83

'85

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'89

'91

'93

'95

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Fiscal Year

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Ton oil eq. / Billion yen

2nd Oil Crisis

1st Oil Crisis

Source: METI/General Energy Statistics

10 years

Improvement by 30%

10% improved for 20 years

Main Improvements: •Energy Management •Energy Efficient Equip. •Efficient Process Tech. •R&D

ENERGY CONSUMPTION PERFORMANCE WITH NATIONAL ENERGY EFFICIENCY IMPLEMENTATION IN THAILAND

Through strong regulatory implementation framework, sustainable funding & holistic approached for focused sectors

WHAT IS STOPPING US?

Main Barriers In Mainstreaming Energy Efficiency Industry In Malaysia

Common BARRIERS…lack of… • Clear policy & targets • Comprehensive regulatory &

implementation framework • Competencies in institutional set up

Strong governance in policies implementation

• Competency programs

• Career opportunities

Technical competencies & human resource capacity

• Sources of funds

• Understanding risks & mitigating factors in green investments

Sustainable financing & business friendly mechanisms

• On green practices

• Business opportunities

• Impacts to climate change mitigation

Information ,education &awareness

• Funding

• Academic vs. Commercial values R&D & commercialization

Support Measures To OVERCOME barriers…

Technical Assistance

& Advisory Incentives & Financial Assistance

SMEs & SMIs - energy audit and guidance

Measurement & verification of performance

Technical assessment from other ministries/agencies on EE projects for financing /further approval

Registration & deployment of experts

Fiscal incentives

Low interest loans with government guarantee

Grant based on annual government budget for specified initiatives and awareness programs

DO WE NEED TO REINVENT THE WHEEL?

To move forward…

Solution or technology based approaches?

or

Project based or sustainable implementation plans & strategies?

Our WAY forward…

EXPECTATIONS FROM POLICY MAKERS

Clear policy goals & targets

Strong governance & comprehensive framework

Consistency, accountability & competency

Inclusiveness in policies development & reviews

Strong Governance

Financing & business friendly

mechanisms

Accountable & competent

implementing agency

Information, Education

& Awareness

R&D &

Commercialization

For the industry development…

ENERGY EFFICIENCY Industry Growth

Policy Targets

Policy Introduction

Focused Sectors +Industry Players + Consumers

Industry players just need the basic & right “infrastructure” & supports . We can take it from there!

EXPECTED IMPACTS FROM HOLISTIC ENERGY EFFICIENCY IMPLEMENTATION

INTRODUCTION & AWARENESS

IMPLEMENTATION & SUPPORT MEASURES

PERFORMANCE MONITORING& MEASUREMENT

IMPROVED •Energy

Performance •Competitiveness/

•profits •Environmental

quality

REDUCED •Energy

consumption & costs

•Pollution •CO2 emissions

CREATED •Business & job opportunities

•More experts/workers from energy efficiency industry •New source of economic growth

•More Direct Domestic Investments

zaini@cnsgroup.com.my 019 2152700

www.cnsgroup.com.my

THANK YOU!