Barriers Slow Investments In Energy Efficiency

Urge to conserve trumped by doubts about prices and regulation, survey shows.
Energy efficiency has become increasingly important, but limited funding and uncertainty about future energy prices, government incentives, and legislation have hindered investments.

Johnson Controls joined the International Facility Management Association in April to survey more than 1,400 North American executives who oversee their organizations' energy use and released its Energy Efficiency Indicator survey Wednesday.

The survey found that 71% of business leaders are paying more attention to energy efficiency than they were one year ago, and 58% of the respondents said energy management is extremely or very important. Of organizations that have made public carbon commitments, 45% have identified energy efficiency in buildings as their top carbon reduction strategy, Johnson Controls said.

Thirty-eight percent of respondents with new construction projects said they are seeking green building certification, while 45% said they plan to incorporate green elements but not certify their facilities.

"These findings highlight the fact that business leaders across the U.S. are increasingly aware of the need for energy efficiency and its potential to reduce operating costs while cutting greenhouse gas emissions," C. David Myers, president of Johnson Controls Building Efficiency division, said in a statement. "Economic and regulatory uncertainty, however, are inhibiting organizations from investing in proactive measures."

The survey showed a 10% drop from 2008 in the use of facility capital budgets for energy efficiency projects and a 6% decrease in the number of respondents who said they plan to make investments using their operational budgets. Seventy-six percent of the respondents said that limited capital investment availability presents a barrier to energy savings, while 21% cited unattractive payback as a barrier. Almost 50% of respondents expect return on investment in less than three years.

Respondents were split over whether they thought energy prices would decrease or increase. They do agree that government and utility incentives will drive investment. Eighty-five percent said legislation mandating energy efficiency and/or carbon reduction is likely within the next two years. That's up from 76% in 2008 and 62% in 2007.

Myers said during an interview Wednesday that the federal government's stimulus spending is likely to spur activity for energy efficiency improvements over the next 18 months. Recently, the stimulus package may have slowed spending as organizations waited to see whether preplanned projects would qualify for assistance.

Nearly 45% of the survey respondents said that incentives are either very important or extremely important as they consider energy efficiency. That's up from 38% last year. Respondents said they were considering a variety of technologies and energy sources, including wind, solar thermal, solar electric, and geothermal. Forty-six percent said they're considering solar power, up 8% from the previous year.

Myers said that technology will play a major role in energy projects, in terms of managing use and improving efficiency.

A spokesman for the International Facility Management Association said he believes that "as the economy recovers we will see greater investments in energy reduction and sustainable initiatives."

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