Monday, August 27, 2007

Wall Street looks at energy efficiency to boost profits

Today the Wall Street Journal featured a special section on energy efficiency. The paper reports that business is increasingly looking at reducing energy use as a way to improve the bottom line.

"Now, with oil, gas and electricity prices soaring, companies are beginning to realize that saving energy can translate into dramatically lower costs. And that means higher profits and happier shareholders -- not to mention a cleaner planet," write Leila Abboud and John Biers. "So, companies are beginning to pour more money into making old equipment energy-efficient or upgrading to cleaner models. And they're starting to streamline their operations to cut down on waste."

"Even companies with longstanding energy-saving programs are redoubling their efforts in light of rising fuel costs and greater pressure from the public to address global warming."

Abboud and Biers cite a recent International Energy Agency study that found energy use in heavy industry could be reduced by 18% to 26% by applying available technologies, a savings is equivalent to one to one-and-a-half times Japan's annual energy consumption. Light industries like retailing could cut energy use by up to 50 percent.

The authors point to several examples:

* STMicroelectronics, Europe's biggest semiconductor maker, has saved a net $1 billion from 1994 through 2006 through improved energy efficiency at its factories. The projects cost about $300 million.

* Wal-Mart will meet a target to reduce energy use by 20% in existing stores by 2012

* Heineken will use 15% less energy in 2010 than it did in 2002

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