Back in 2009, Volvo Trucks in North America joined 31 other companies in a ten-year energy efficiency challenge issued by the U.S. Department of Energy, and it looks like Volvo has beaten everyone else to the punch. The company has announced that it is the first to meet the energy efficiency goal of a 25 percent reduction for its New River Valley plant in Virginia, and then beating it with 30 percent.
The challenge, called the Save Energy Now LEADER Program, attracted a diverse group of manufacturers that are already staking out green leadership positions, such as 3M. Some members of the group, like AT&T and Osram Sylvania, are also involved in other federal sustainability partnerships. Some of the companies manufacture energy efficiency and clean energy products such as Dow Corning. What they all have in common is a willingness to leverage any available resource, including federal programs and partnerships, to establish a strong green identity, reduce their dependence on fossil fuels, and compete in the emerging clean tech economy.
Energy Intensity and the Save Energy Now LEADER Program
To create a level playing field for manufacturers with a wide variety of products, facilities and geographic locations, the LEADER challenge did not set a one size fits all energy savings goal. Instead, the goal was to reduce the energy intensity of a particular operation. As applied to countries, energy intensity refers to the energy efficiency of a nation’s economy, as measured in units of energy per unit of gross domestic production. Similarly for manufacturing facilities, energy intensity is measured in terms of energy per unit of production. Volvo’s New River plant had an energy intensity of almost 80 MMbtu per truck before it embarked on the challenge, and it fell to about 6o after one year. The company also expects to achieve up to another 20 percent in savings in the near future.
Strategies for Reducing Energy Intensity
According to the Department of Energy, one of Volvo’s most important strategies was to avail itself of energy assessments and expert guidance from the Department of Energy’s Industrial Technologies Program. The other was to view energy efficiency as a sea change in corporate culture, requiring adjustments from management as well as employees. This approach enabled Volvo to focus on common sense solutions that required a relatively modest investment of $850,000. Suggestions from employees alone were responsible for saving more than 546,000 kilowatt hours monthly, translating into about $33,000 cost savings per month. The total savings over one year was about $2 million, so the payback period was less than six months.
Energy Efficiency Leaders to Follow
For Volvo, the savings translates into a competitive edge that helps it continue manufacturing in the U.S. With 2,200 employees, Volvo’s New River plant is now the largest employer in southwestern Virginia. Volvo plans to replicate this success at its other U.S. operations, and that should help DOE’s Save Energy Now program attract more participants among U.S. companies that are interested in preserving – and growing – and their domestic manufacturing operations. Save Energy Now started doing energy assessments for businesses in 2006, and within its first three years it identified $1.3 billion in savings opportunities for more than 2,000 facilities.
As a side note, this past spring Governor Scott Walker of Wisconsin scheduled a tour of the Manitowoc Grey Iron Foundary to “talk about private sector job creation.” Hopefully he also mentioned that the company is among the 32 that are availing themselves of taxpayer resources to preserve U.S. manufacturing jobs, by participating in DOE’s LEADER challenge.
Image Credit: Volvo truck by Joost J. Bakker IJmuiden on flickr.com.