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See Inside September 2005

More Profit with Less Carbon

Focusing on energy efficiency will do more than protect Earth's climate--it will make businesses and consumers richer

A basic misunderstanding skews the entire climate debate. Experts on both sides claim that protecting Earth's climate will force a trade-off between the environment and the economy. According to these experts, burning less fossil fuel to slow or prevent global warming will increase the cost of meeting society's needs for energy services, which include everything from speedy transportation to hot showers. Environmentalists say the cost would be modestly higher but worth it; skeptics, including top U.S. government officials, warn that the extra expense would be prohibitive. Yet both sides are wrong. If properly done, climate protection would actually reduce costs, not raise them. Using energy more efficiently offers an economic bonanza--not because of the benefits of stopping global warming but because saving fossil fuel is a lot cheaper than buying it.

The world abounds with proven ways to use energy more productively, and smart businesses are leaping to exploit them. Over the past decade, chemical manufacturer DuPont has boosted production nearly 30 percent but cut energy use 7 percent and greenhouse gas emissions 72 percent (measured in terms of their carbon dioxide equivalent), saving more than $2 billion so far. Five other major firms--IBM, British Telecom, Alcan, NorskeCanada and Bayer--have collectively saved at least another $2 billion since the early 1990s by reducing their carbon emissions more than 60 percent. In 2001 oil giant BP met its 2010 goal of reducing carbon dioxide emissions 10 percent below the company's 1990 level, thereby cutting its energy bills $650 million over 10 years. And just this past May, General Electric vowed to raise its energy efficiency 30 percent by 2012 to enhance the company's shareholder value. These sharp-penciled firms, and dozens like them, know that energy efficiency improves the bottom line and yields even more valuable side benefits: higher quality and reliability in energy-efficient factories, 6 to 16 percent higher labor productivity in efficient offices, and 40 percent higher sales in stores skillfully designed to be illuminated primarily by daylight.

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