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“Cost-Effective Implementation of Sustainable Manufacturing Technologies”

“Cost-Effective Implementation of Sustainable Manufacturing Technologies”

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“Cost-Effective Implementation of Sustainable Manufacturing Technologies”

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  1. “Cost-Effective Implementationof Sustainable Manufacturing Technologies” David Love Director, Industrial Solutions Johnson Controls, Inc. Building Efficiency Group Milwaukee, WI September 27, 2007

  2. Presentation Outline • What is Sustainability? • Industry Drivers • Challenges U.S. Manufacturers face to transition to sustainable technologies • Impact U.S. Manufactures can realize when transitioning to more sustainable technologies • Available Technologies Today • Break-out Session Topics

  3. Defining Sustainability • Numerous definitions depending on stakeholder’s agenda • Johnson Controls Definition: “Through our actions and offerings, we embrace Environmental , Social and Economic practices that benefit our customers, employees, shareholders, and society as a whole” External Internal Economic Prosperity • Core Values • Ethics Policy • ESH Policies • Committed management • Performance metrics • Market position An Integrated, Balanced Strategic Approach “Triple Bottom-line” Environmental Stewardship Social Responsibility

  4. Industry Drivers

  5. Challenges for Manufacturers Regulation Workplace Safety Homeland Security Cost of Government Regulations Sustainability (GHG, ODS, VOC) Labor Increasing indirect expenses Aging Workforce Lower off shore production cost Available skilled workers Core Business Outsourcing Affordable technology Deterioration of plant infrastructure Productivity Demands Economics Volatile Energy Costs Continuous cost reduction pressure Shareholder Expectations Limited Capital Tight ROI Global competition Industrial sector economics are being pressured for increased productivity; labor, quality, asset availability and energy efficiency are key inputs to the productivity equation.

  6. Outlook for primary fuel consumption... Btoe 20 18 16 Developing countries Central and Eastern Europe 14 Industrialized Countries 12 82% of people 10 8 6 4 18% of people 2 0 1860 1880 1900 1920 1940 1960 1980 2000 2020 2040 2060 Source: World Energy Council, World BankPeriod 2000 – 2060 shows future energy consumption based on current trends Global Market Drivers • Proven oil reserves of 1 Trillion barrels • Current global usage is 73 Million barrels consumed daily • Oil consumption increasing globally • 4.4% per year in China • 3.7% per year in India • 2.0% per year in N.A. and Europe

  7. Industrial Market Drivers Waste seems to be the major growth industry Source: Energy Information Administration: Annual Energy Review 2005 Annual U.S. energy waste = $300 billion (after saving $365b/y since ’75) – Amory Lovins, RMI

  8. Where are the opportunities? Automotive Experience

  9. Total Energy Life Cycle of Vehicle Total Energy = 1,143,897 MJ Vehicle Use and Operation 878,132 MJ Manufacturing 119,755MJ End of Life Vehicle and Disposal Resource Extraction, Processing and Transportation Parts & Labor 39,321MJ 105,207MJ 1,482MJ Manufacture Fuel Fuel Extraction, Processing & Distribution Parts & Labor ELV Disposal* Commissioned by Johnson Controls Inc. The Need for a Sustainable Vehicle Rating System - Michael D. Arny, President Leonardo Academy -May 4, 2005

  10. Life Cycle Cost of Buildings

  11. Challenges for Manufacturers

  12. Challenge: Data & Benchmarking Number of Buildings 166 121 86 30 340 1 100 Energy Intensity (kBtu/ft2-year) Worst Performers Best Performers

  13. Challenge: Finding Value • Competitive Advantage: • GHG tracking tools • Sustainability training • Green supplier monitoring • Green buildings/plants • Design products for Sustainability • Renewable energy Value Chain Grow Business • Reduce Costs: • Waste management • Energy management • Production efficiencies Must Do • Regulatory Compliance: • Address “end of pipe” issues • Safety, permitting, auditing, pollution prevention • Etc. Maturity

  14. Is there a Challenge at the top? • On-line survey conducted in March 2007 • 228 manufacturing executives and managers responsible for energy management decisions • Major findings: • 77% believe energy prices will rise significantly next year (average increase expected is 15.4%) • 66% expect to make energy efficiency investments over the next year (9% of capital budget will be used) • 75% will also fund energy efficiency improvements through operating budgets • 69% are paying more attention to energy efficiency than they were one year ago.

  15. ROI Tolerance for Investments

  16. Changes in ROI Tolerance

  17. Importance of Energy

  18. Motivation for Investment

  19. Impact from Sustainability

  20. Three Global Businesses Automotive Experience ($18.3 billion) • Seating and interiors • Components and system integration • Electronics Automotive Experience Power Solutions ($3.7 billion) • Lead acid (80 million per year) • Hybrid battery development (NiMH, Lith-Ion) • Battery management and electronics Building Efficiency ($12.2 billion) • Control Systems and HVAC equipment (York) • Life-cycle services (1200 locations in 125 countries) • Energy efficiency and Sustainable Solutions

  21. Sustainability: Impact Automotive Experience • Bio-polymers: insulation/acoustics (Eco-Cor) • Recycled materials: structural, door panels • Green Supply Chain: ISO 14001 Automotive Experience Power Solutions • Recycled battery components (98% content) • Hybrid battery development (NiMH, Lith-Ion*) • Lighting Retrofits Building Efficiency • LEED Certified Corporate Office (35% savings) • Green Cleaning Chemicals • Energy Efficiency Billion Dollar Round Table: Diverse Spending EPA Energy Star Partner of the Year Supplier Partnership for the Environment Global Environmental Management Initiative Business Roundtable: Climate Resolve

  22. Energy Usage Trend From FY 2006 JCI’s Energy Use is projected to increase globally, but varies by region. However, JCI’s Global Energy Consumption per Revenue $ Continues to Decline • United States • Mexico • South America • Europe • Asia & Rest of World GRI Report 40% reduction in electricity metric 38% reduction in natural gas metric

  23. Energy Savings - FY07 (through April) Savings realized through April AE $795,540 BE $301,117 PS $1,495,994 $2,592,651 Projected Savings for FY07 AE $1,669,004 BE $742,911 PS $1,869,372 $4,281,287 On track to save > $4M in energy costs across divisions FY 07, annualized impact is $5.1M.

  24. Top Energy Saving Strategies / Projects • Lighting Upgrades Projects Identified Waiting Approval / Installation Business Unit Capital Req Ann Savings Tons CO2 AE $4,371,316 $2,231,958 12,759 BE $1,053,325 $658,734 1,898 PS $1,350,645 $710,469 1,211 $6,775,286 $3,601,161 15,868 Approx. 1.8 year payback • Move all plants to the best utility rate / tax • Ensure all plants are on the best / right rates - $100k • Reduce utility taxes - $100k

  25. Case StudySteps to Building a Sustainability Plan Seating Plant

  26. Rockwood Data LoggerBefore and After Data Track The Opportunity: Seating Plant Before Installation Activity Plant Shutdown After

  27. Cost / Benefit Impact: Sustainable Returns Actual Payback: 1.3 years

  28. Case StudySteps to Building a Sustainability Plan New Fab Plant

  29. The Opportunity: New Fab Plant • Very tight temperature and humidity requirements . . . • 70F+/-2 (21C+/-1) and 45% RH +/- 3% • Combined with a large amount of exhaust and subsequent make up air . . . • 650,000 cfm (307 m3/sec) = 41 Macy’s Snoopy balloons a minute • Combined with the need to recirculate a large volume of air through the filters for cleanliness . . . • 4,400,000 cfm (2077 m3/sec) = 22 Goodyear blimps a minute • Combined with hundreds of process tools with vacuum pumps, RF generators, and support equipment . . . • Combined with extensive use of deionized (DI) water to rinse the wafers during processing . . . Could lead to annual power consumption of 170,000 mWh (10,000+ homes worth) and water consumption of 3 million gallons/day (6,000 homes worth) Annual utility bills could total $20M - $25M

  30. Cost / Benefit Impact: Sustainable Returns • Invested <1% of the project cost (<$1.5M) in LEED related items – predominately efficiency improvements that we would consider regardless of LEED • But remember that the overall project cost 30% LESS than previous $300M fab plant construction cost • The first full year should recover $1M in operating savings • At full build out will save >$4.0M per year in operating costs` • 20% energy reduction • 35% water use reduction • 50% emissions reductio

  31. Building a Sustainable Plan Steps to Building a Sustainability Plan

  32. Energy Efficiency Leads to Sustainability Efficiency 5-25% Rate 0-5% Utilization 1-10%

  33. Energy Efficiency Services Ongoing GHG Measurement & Verification Utility Bill Audit Rate/Tariff Audits Commodity Supply Services GHG Measurement & Verification Bill Payment Facility Audits Operational Improvements Our Process Energy Efficiency Process Loss Recovery Loss Prevention & Education Optimization

  34. Energy Analysis

  35. Sustainable Energy Information System “Continuous Improvement”

  36. Operational Improvements Combined efficiency and operational improvements deliver twice the savings as equipment efficiency improvements alone Load Reductions Fans and Pumps HVAC/R Systems Lighting Systems Building Tune-up Source: Energy Star

  37. Technology Improvements

  38. Renewable Technologies Digester Gas to Energy The most popular technology converts wastewater treatment gas to electricity, employing internal–combustion engines that run a generator to produces the electricity. This electricity is used to power internal operations and the excess is sold back to the grid. Heat generated by the engines can be recovered and used to heat digesters and plant facilities. Landfill Gas to Energy Hundreds of municipalities across the country have landfills which often produce methane in commercial quantities. By capturing the methane and using it to power electrical generation, or cleaning it and sending it to a pipeline, energy is saved and waste reduced. Wind In a typical wind turbine, wind energy is converted to rotational motion by a rotor, which turns a shaft that passes into a gearbox, which increases the rotational speed. This transmission is attached to a high-speed output shaft, which is connected to an electrical generator. Biomass Biomass byproducts are burned or raised to very high temperatures to release the chemical energy as heat. The heat is used to boil water in biomass boilers, creating steam. The steam is then used to turn turbines and generators to produce electricity. Solar Solar energy can be converted directly (photovoltaic) or indirectly (thermal solar) into electricity and heat through photovoltaic devices and thermal collectors. The resulting electricity or heat can offset utility costs and reduce, or possibly eliminate, the need for water heaters.

  39. SEEC – Internal Education Modules • The Great Indoors • A Change of Climate • Reinventing the Wheels • Greening the Supply Chain • Sustaining the Momentum • Introduction to Sustainability • Energy and You • Illuminate Your Life • Getting to Know H2O • Watching Your Waste-Line Delivered Electronically or in Groups

  40. External Impact • The Leonardo Academy Report • Calculations from total lifetime energy savings from projects implemented by JCI 1990 - 2000 Emissions Savings • 352 million tons of carbon dioxide • 1.4 million tons of nitric oxide • 1.9 million tons of sulfur dioxide • 34,000 tons of particulate (PM 10) • 19,000 pounds of mercury • 1,800 pounds of cadmium • 33,300 pounds of lead emissions • $16.7 billion in total energy savings • 270,000 gigawatt-hours in electricity savings • 3,425 megawatts in electric demand reduction • 1.5 billion MMBtu reduction in direct fuel use

  41. Case StudySteps to Building a Sustainability Plan External

  42. Renewable Case Studies USC Biomass Boiler Back River Treatment Erie Wind Turbine Johnson Controls developed an on-campus biomass co-generation facility to largely replace the purchase of natural gas and calculates that the plant will cover its construction and installation costs through the energy savings it will provide. The innovative approach was just one of 18 projects recommended as part of an audit of energy- and water-saving opportunities on campus. A digester gas cogeneration plant at Baltimore’s Back River Wastewater Treatment Plant will reduce emissions, save taxpayer dollars, address workforce development, and support the local economy. The combined heat and power plant uses the remainders of treated wastewater as fuel. It will generate more than 2.4 megawatts of electricity. A wind turbine installed at the site of a grade school, middle school and high school in Erie, IL will generate the majority of electricity needed to power the facilities, and will sell excess power back to the grid. The contract for the turbine included energy saving upgrades at the schools to improve the benefit of renewable energy.

  43. Sources for Guidance • National Association of Manufactures • Energy Efficiency, Water and Waste-Reduction Guidebook for Manufactures • DOE- Industrial Technology Program • Save Energy Now • U.S. Green Building Council • U.S. EPA Energy Star • Alliance To Save Energy • Global Environmental Management Institute

  44. Break-out Session

  45. Break-out Session Topics • Straw-man survey • What are the primary technology-related barriers industry faces in implementing and profiting from sustainable manufacturing practices? • What types of financial considerations must be made before a company makes a sustainable technology related investment? • What are ways in which public and private sectors can work together to overcome technology related barriers to sustainable manufacturing?

  46. Q & A

  47. Sustainability Metrics—(GRI)