BY PETER GARFORTH,
Energy Productivity Solutions
Canada’s ratification of the Kyoto Protocol and the
current level of energy prices in North America bring to
the fore the question of the sustainability of energy use,
and the associated environmental and economic impacts. Too
often this debate lapses into a black-and-white, pro-and-anti
The “pro” camp defaults to the global climate
change disaster scenarios and takes a stand that we must
do it, whatever the cost. The “anti” camp throws
doubt on whether outcomes of the status quo are really that
bad, and anyway, fixing it would cost too much and be bad
This is a no-win conversation for a responsible engineer
obliged to serve the business and social needs of his clients
at acceptable cost, while doing as little damage as possible
to the environment.
Evidence suggests that there is another, far more satisfying
place to stand. The challenges to reduce energy intensity
by factors of two or more appear to be creating more, not
less, innovation and market opportunities.
The Cost of Not Responding
The corollary appears to be coming true. Failing to respond
to these challenges is hindering the ability of companies
and communities to innovate, and ultimately compete, globally.
When the history of energy of North America is written 50
years from now, Canada’s decision to commit to the
challenges of Kyoto may be seen as an inspired decision to
enhance its global competitive stance, and less as doing
the right thing environmentally.
Sometimes in this life, what is good for us is not always
apparent! The professional engineer has a significant responsibility
to understand the impacts of developing sustainable solutions,
such that they can better serve their customers and societies.
The word “sustainability” is much misused. All
too often it’s used to refer to anything from important
but relatively minor environmental improvements to fully
self-supporting ecosystems. Strictly, a sustainable system
is one that creates more resources than it uses. A sustainable
energy building, for example, in effect becomes a power plant
in its own right.
At a minimum, a strategy should be aimed at least at halving
the energy use compared to today’s norm before it can
be said to be a significant contributor to sustainability,
as distinct from enhanced performance.
Energy Use Increases
A quick look at the energy big-picture is good place to
start. Twenty per cent of the world’s population uses
about two-thirds of all energy. The energy demands of the
remaining 80 per cent are accelerating rapidly in India,
China and other countries.
The hope that the developed world’s energy use would
flatten off and that the developing world’s needs would
grow relatively slowly is not proving to be the case. In
addition, after more than 10 years of scientific and political
debate, there is finally consensus that the climate is undesirably
affected by the greenhouses gases coming from human activity,
mostly from energy systems.
From the mandatory demands of Kyoto to the voluntary approach
adopted by the United States, a range of voluntary and mandatory
measures is being put in place globally to reduce energy
intensity. Whatever our personal beliefs, these measures
are having massive impacts on markets worldwide.
Improving energy productivity is too often discussed as an
environmental and not an economic question. Worldwide, energy
in all forms has a total cost of $3.5 trillion US. What is
easy to forget is that less than 20 per cent of the energetic
value of the original fuel finds it way into the final product
or service – suggesting that there is $2 trillion in
Even within the developed world, energy use differs greatly.
Canada has an energy intensity about 40 per cent higher than
that of the U.S., which in turn has an energy intensity about
twice that of the European Union.
Price Gap Closes
The rationalization for this difference is often the supposed
relatively lower energy cost in North America. This may have
been true in the past, but today gas and electricity prices
in parts of North America are equal or even higher than in
some parts of Europe. Amazingly, many political and business
leaders still believe that American energy is significantly
The prognosis on energy prices is that those in the U.S.
will probably increase, in Europe they will stabilize or
even reduce, and in Canada they could go either way, depending
on policy. Even if Canadian prices go down, it still makes
better economic sense to export it to the U.S., rather than
waste it at home.
As an example, let’s look at a single area of the market:
residential, commercial and industrial buildings. Here, we
begin to get a sense of the competitive impact of energy
use. On a normalized basis, the energy use in buildings constructed
to pretty widely used standards in Germany, Scandinavia,
Austria and elsewhere, is about one third the level of the
best practice in the U.S. and Canada. The difference is even
higher when the average new construction in both markets
The meaning of these differences comes into sharp focus when
a real example is evaluated. The recently constructed headquarters
of a major corporation in the Midwest of the U.S. had been
built to standards that exceed local codes in terms of energy
efficiency. This good quality building has current annual
energy costs of about $1 million US.
If design approaches, construction techniques and energy
supply had been used that would be readily available in a
German or Scandinavian city, the running costs could drop
to as low as $200,000 US.
“ When the history of
energy of North America is written 50 years from now, Canada’s
decision to commit to the challenges of Kyoto may be seen
as an inspired decision to enhance its global competitive
stance, and less as doing the right thing environmentally.”
What About Construction Costs?
Contrary to popular belief, this would be with relatively
little increase in the initial construction cost. There is
increasing evidence that the initial costs of high-performance
buildings may be the same or even cheaper than conventional
construction, once the supply chain has reorganized around
a new market reality.
The cost savings for the operator in this example are a
fairly obvious dimension of competitiveness. More subtle
is the impact that different building approaches can have
on the competitiveness of the construction industry. The
data are not conclusive but strong indicators exist.
The European architectural, engineering and construction
industries are exporting proportionally more than their
North American competitors and the gaps seem to be widening.
Even more telling is that countries such as China are increasingly
adopting global best practice as the basis for their building
codes, further enhancing the competitive edge of the companies
that can meet those standards as a matter of course.
Comfortable Working Environments
I have a last, very personal point on the competitiveness
of high performance buildings. Having worked in one for four
years (the headquarters of Landis & Gyr in Zug, Switzerland),
I can personally attest to the comfort and productivity of
such a building. Low energy use does not mean low comfort
or low productivity. The data point the other way.
There is not enough space to delve into other industry
areas where the markets with the highest environmental
standards are spawning innovation and competitiveness.
Automotive, power, and energy supply systems, chemicals,
pharmaceuticals and, civil aviation are among a selection
where this case can be made. It appears we could be looking
at a general market reality.
When a local market demands products with radically different
environmental performance, this appears to ultimately raise
the global competitiveness of the companies that learn
to serve that local market. This is the ultimate win-win
situation. Radically improved environmental performance,
lower operating costs, higher user satisfaction, and improved
So how do you feel now about the signing of Kyoto?
Peter Garforth, P.E., is a Toledo, Ohio, consultant who
spoke in April at the Sustainable Building Symposium in
Edmonton and Calgary. His company, Energy Productivity
Solutions, assists companies and policy-makers around the
world in the development of effective and competitive approaches
to reducing the economic and environmental impact of energy
use. The company has offices in Toledo and Brussels. Until
recently, Mr. Garforth was vice-president of strategy and
business development for Owens Corning. The opinions expressed
are his own and not necessarily those of APEGGA.