The future of corporate energy management

Using scenarios to plan for the future

Scenarios are a proven, strategic planning tool that help make planning for the future more tangible and immediate and also help test how decisions made today could affect a company in the future.

Considering changes in global economic patterns and shifts in U.S. policy and regulation towards climate change as key factors that would affect the shape of the future ahead, the following four scenarios were created by the corporate executives who participated in the Global Business Network (GBN) workshops:

  • The Same Road — where the world continues much in the same direction it appears to be going now in regard to energy and environmental concerns around climate change.
  • The Long Road — where the world undergoes a significant shift in the economic, geopolitical, and energy centers of gravity.
  • The Broken Road — where the world continues much in the direction of today, but is then hit by a severe event that overturns established systems and rules.
  • The Fast Road — where reasoned decisions and investments about energy and climate risk are made early enough to make a difference.

Taking action now for the future

Businesses leaders involved in the workshops were asked to explore the impacts of these four “road” scenarios on energy strategy and management in their companies. They identified five robust steps that companies should take to prepare for the future:

1. Master the fundamentals of energy efficiency.
Build an energy efficiency culture through executive leadership: appoint an empowered corporate energy director and team, set aggressive goals, measure and track energy performance for all operations, and establish accountability and review and recognition systems across the business.

2. Take both a longer and a broader view of investments and strategic decisions about energy.
Make major company strategic decisions (e.g., acquisitions, technology choices, and facility location) with energy cost, use, and supply in mind. Balance more assured returns of energy project investments against lower initial returns across a longer time horizon. See the entire Energy Value Chain, including upstream inputs from suppliers (into internal operations) and downstream outputs to customers (from internal operations).

3. Search out business transformation opportunities in the way the company manages, procures, and uses energy.
Frame energy as a lever for positive growth and change within the business, not simply a cost. Make the most of the strategic value of energy by thinking in terms of “Embedded Energy” and “Energy Productivity.” Be innovative and aggressive in pursuing and publicizing new product and service offerings based on new energy technologies and supplies.

4. Prepare contingent strategies for emergent future scenarios.
Rehearse specific aspects of the future, including substantial and sustained swings in energy price and supply, severe weather events, and penalties or incentives around energy use and greenhouse gas emissions. Actively manage exposure to risks, and ready plans to take full advantage of what the future brings. Monitor for signs of which “road ahead” is emerging.

5. Take personal action.
Corporate leaders can take a number of “to-do” actions today for tomorrow. All can be taken individually, in companies, on corporate boards, and across industries.

Examples of executive leadership

As business leaders, it is essential that we plan for the future. Energy Strategy for the Road Ahead provides guidance to help companies prepare for future energy-related risks. Acting now just makes good business sense.

~ Willie Deese, President, Merck Manufacturing Division, Merck & Co., Inc.

Our participation in Energy Strategy for the Road Ahead has been an invaluable input for developing an innovative energy strategy and management system for our energy- and capital-intensive Natural Polymers Group. We fully appreciate the efforts of EPA’s ENERGY STAR Program and Global Business Network for bringing this project together. We see using this experience as a springboard for such approaches elsewhere within the company and believe it offers similar potential value for other like-minded companies.

~ Dex Brown, Group Vice President of National Starch and Chemical