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Special Interest

Tuesday - March 24, 2009

Remarks regarding a cost-effective efficiency revolution for energy and resource consumption

Address by Professor emeritus Eberhard Jochem

• The possibilities for making more efficient use of energy and materials are not only very considerable, they are also in many cases highly profitable.
• There are various reasons why measures that are both economically worthwhile and ecologically necessary are not being taken.

(1) 80 percent of companies today base their decisions on efficiency investments according to the criterion of risk – or the amortization period. With long-term investments (which energy and material efficiency measures generally are), the risk criterion leads to a neglect of the economic viability aspect. Consequently, we are financing a reluctance to invest (or ignorance) with high energy and resource consumption and high energy and resource costs.
(2) Buyers at many companies and in many private households consistently look to minimize investment, and, if their negotiations are successful, they frequently receive bonuses or recognition. The manufacturers of the goods tend to respond with cheap products that have a high energy demand during the product's use. When deciding on an investment, the buyer should be oriented to the lifecycle costs, i.e. to the capital costs and the operating costs during the planned lifetime of the investment. He should be rewarded for making a decision on the basis of the lowest lifecycle costs.
(3) Separating the investment budget from the administration budget, both in public administration and in large organizations, results in a rigidification of such wrong decisions on resource efficiency in these areas of the economy.
(4) In many production plants, heat, compressed air, refrigeration and even gas and electricity are regarded as overheads or general costs, in other words, they are not allocated directly to the various products. If the energy consumption per production line were measured more accurately – also in service companies – the person responsible for production would be in a better position to take decisions.
(5) Social recognition in the respective social group is a major driver for investment – also for resource wastage, which, as such, is not called into question. Investment in status symbols would be different if resource
efficiency were an important factor in the scale of social values. This change of values should take place ahead of and faster than the price increases for energy and other resources.

These reasons for persisting with resource wastage could be largely changed in just a few years. The responsible investors in industry, administration and private households are now called on to show a greater willingness to learn and take responsibility.

• The more efficient use of energy as provided for in the German government's Meseberg program would lead to additional annual investments of around EUR 20 billion and generate around 300,000 jobs net, because the primarily imported energy resources would be substituted by domestically produced goods and services. The competitive position and the export opportunities of the capital goods industry would be further consolidated by this innovative thrust, because the advantages of being the first mover in a world that has the task of limiting the effects of climate change are obvious.
• In this task of enhancing resource efficiency, the chemical industry and process engineering can find major opportunities through new physical and chemical technologies, biotechnology, new materials and the use of biogenic raw materials. On the other hand, they also have a responsibility to prioritize the open exploitation of all these possibilities.
• In the present crisis with the banks and the real economy, it would be unwise of politicians and industry leaders to look solely at quickly eliminating the self-caused deficits of the banks with many hundreds of billions of euros, and then to ignore the many options available to make the capital stock of this country much more efficient. We are still living on a real globe, which we want to hand over responsibly to future generations.

Professor Eberhard Jochem,
Berlin, March 24, 2009