Energy conservation prudent route to profits

LAHORE: Low energy prices and the possibility that the low price cycle could go on for three to four years, has made most entrepreneurs complacent, who have stopped or slowed down energy conservation.

In the next 15 years global energy consumption will increase by 25 percent, mostly in developing economies. Global warming will become more pronounced if full energy conservation measures are not undertaken.

Energy prices have generally been on a steady rise except for the current era when the prices have come down. However, threats of upwards swing are always present. Oil prices that at one time breached the $30 per barrel mark are now hovering at around $50. Since even this price is very low compared to the peak of $125 per barrel in June 2013, entrepreneurs wonder whether energy-efficiency measures are worth the effort. Prudent planners point out that even in low energy price scenarios, the most efficient consumers remained shielded from  price volatility.

For many industries like cement, chemical plastic, and steel, energy is one of the main input costs. It is much higher than the labour cost. Global research has shown that even in developed economies, energy consumption can be reduced by 10-20 percent. However, if investment is made in energy efficient technologies the saving could go up to 50 percent. The saving will be higher in countries like Pakistan where even the most efficient instruments are turned inefficient by using non-standard wiring in repair/rewinding of motors.

Manufacturing accounts for half of the global energy consumption, though in Pakistan the share of manufacturing in energy consumption is lower. Still, manufacturing generally is the most inefficient energy consumer.

It has to improve energy consumption through in house management and then through innovation technologies.

There are around 33 innovative technologies available for improvement of energy use. Each of these technologies are specific for a particular manufacturing sector divided into nine categories including advanced industries, cement, consumer goods, mining, oil refining and chemicals, power, steel, pulp and paper. The challenge for manufacturers is how to put them into practice, and how to make them sustainable for long term benefit.

The five best practices in vogue globally help make sense about the use of a technology by a particular industry. By using these core principals’ manufacturers in Pakistan can not only reduce energy use but also other resources.

The first and the foremost thing in this regard is to think lean. Entrepreneurs in Pakistan rarely bother about wastages that can be saved easily. They should build a resource-productivity strategy within their organisation. Lean thinking also leads to thinking green because it is based on the same fundamentals.

The industry operators should use the theoretical-limit concept. This concept gives them the target to find out ways to reduce the energy use to lowest for a given process.

Since the main aim of a commercial enterprise is to make profit; they should review the full profit equation when making changes.

They must evaluate trade-offs evaluate on throughput, yield, energy, and the environment as a whole. They must realise that the changes in one will likely affect the others. And profit should be the main aim in making the final decision.

Making and sustaining change in any organisation operating on bad practices is not an easy job. The improvement in technology has to be accompanied with change in mindset and management systems all around.

It is high time that industries in Pakistan move from linear supply chain towards supply circles. Getting smart about energy must be the strategic goal of all companies.