The Best Time to Plant a Tree…

Using ISO 50001 to reduce operating costs and carbon footprint

Published: Tuesday, August 25, 2015 - 13:33

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With the ISO 9001:2015 revision currently dominating standards conversations, it's easy to pass over the humble energy standard from Geneva—ISO 50001. You might not even know what it is, let alone the benefits of implementing it. On the other hand, the rising price of energy and concerns over carbon emissions may spur us to consider a comprehensive enterprisewide energy policy as a front-burner issue.

Energy as a management issue

"Energy is no longer a technical issue but a management issue with an impact on the bottom line," noted Rob Steele, the former secretary general of the International Organization for Standardization (ISO). "The time to address the issue is now." Steele issued this statement at the launching of the new energy management standard by ISO at the Geneva International Conference Centre (CICG) in Switzerland back in 2011. That statement remains more relevant now than ever before.

A quick look at the annual price index for electricity, published by the Bureau of Labor Statistics, only confirms what everyone already knows: The cost of electricity is a rapidly growing factor of conducting business. In 2011, Nobuo Tanaka, executive director of the International Energy Association's (IEA), said that "the age of cheap energy is over." Fast-forward four years, and the IEA's "World Energy Outlook 2014" report confirms Tanaka's prediction.

As environmental concerns continue to mount, government continues to address the issue with appropriate measures. In the United States, The Energy Policy Modernization Act of 2015 is a 300+ page bill that "...builds on recent technological breakthroughs and promises to bring substantial benefits to American families and businesses while protecting the environment." Among other issues, Title I of the bill pertains to energy efficiency, Title III–Subtitle G addresses workforce development, and Title V—which includes some eight subtitles and 43 sections—delves into accountability. Arriving at a method for organizations to come into and maintain compliance is a significant managerial issue.

How do organizations address these concerns? By implementing an ISO 50001 energy management system.

On a positive note

Cost and regulatory qualms aside, it's important to take stock of the multiple benefits of implementing an energy policy and becoming certified to ISO 50001.

The environmental benefits of applying lean principals to energy use are a given; the same is true for the positive effect it has on cash flow. For growing companies, a vehicle to implement and maintain an energy policy across multiple departments and facilities is crucial. ISO 50001 provides a framework to draft a custom energy plan and then assess the plan according to internationally recognized standards. Not to mention the fact that a growing number of large OEMs are emphasizing their sustainability efforts in their annual reports. It may not be long before certification to ISO 50001 is a prerequisite to play ball, just as it is with ISO 9001.

What is ISO 50001?

ISO 50001 is an energy management standard published by ISO. First published internationally in 2011, the standard has proven itself as a valuable framework for industrial facilities, commercial facilities, or entire organizations to manage energy—including all aspects of energy procurement and use.

"ISO 50001 requires organizations to formalize their energy planning process, including energy review. The review entails taking a close look at the energy sources, uses, consumption, and efficiency then determining the most significant energy uses," says Nitin Shahani, associate program manager for green services within the Business Assurance group at Intertek, an international leader in management systems certification, customized audit solutions, and supplier management services. "ISO 50001 is a management systems standard that provides organizations with an internationally recognized systematic framework for not only managing and improving energy performance but also institutionalizing continual improvement within the organization."

 "This standard applies to all industry sectors," explains Shahani. "Certification to the ISO 50001 standard requires companies to demonstrate improved energy performance."

And that's a good thing if companies really want to reap the full benefits of their energy management system.

The ROI rub

Naturally, whenever money and time are required, return on investment (ROI) is a major consideration.

"The ISO 50001 standard requires the company to identify the current energy sources within the scope of its energy management system," says Shahani. "If electricity is identified as an energy source, then you look at where this energy is applied (i.e., energy use)—in chillers, compressors, motors, and lighting, for example—and then you evaluate the energy use and energy consumption to determine which application is a significant use of electricity. The company is then required to establish energy baselines and energy performance indicators, set objectives and targets, and define specific actions plans—for example, installing variable frequency drives and adjustable speed drives, replacing CFL with LED lighting, installing high-efficiency motors, and purchasing ENERGY STAR-certified equipment—to achieve improved energy performance in the area of significant energy use. The action plans need to address the elements specified in ISO 50001. The standard also requires organizations to consider energy performance improvement opportunities in the design of facilities, equipment, and processes, and to develop energy-purchasing specifications as well. Unlike some others, this standard is data driven."

"We're all aware that economic growth relies on energy, so energy is a critical component of organizations' operations," says Shahani. "Depending on the activities within an organization, energy costs can be one of the largest controllable costs, and ISO 50001 supports companies in using energy more efficiently through the establishment of the energy management system. Adopting ISO 50001 definitely makes good business sense. This standard can absolutely deliver a return on investment."

Who benefits?

"This standard applies to organizations large or small, public or private," explains Shahani. "Across all sectors—you name it, 50001 applies. Light or heavy manufacturing, transportation and logistics, mining, agriculture, construction, building maintenance; everyone is looking at it. Even the energy production companies and utility companies are instituting and benefiting from the implementation of the ISO 50001 energy management system."

Not surprising, considering the standard's direct influence on operating costs.

First steps

Fortunately, organizations that rightly discern the benefit of an energy management system have several resources to guide them. You can preview the freely available sections of ISO 50001:2011 on ISO's Online Browsing Platform. ISO also offers guidelines for energy management systems: general principles, measuring energy performance using baselines and performance indicators, and implementation of an energy management system.

Intertek offers an awareness webinar as well as lead auditor training designed to educate participants on implementing, maintaining, and auditing an energy management system in their organization; the company is also fully accredited to offer third-party certification to the ISO 50001 standard.

And it's green!

When you are reducing energy consumption and improving efficiency, you are automatically minimizing your carbon footprint.

As an old Chinese proverb says, "The best time to plant a tree was 20 years ago. The second-best time is now." One might make a similar case for a company's energy policy. If you didn't implement an enterprisewide energy policy years ago, maybe doing so today would be a prudent choice.

About The Author

Ryan E. Day

Ryan E. Day is Quality Digest’s project manager and senior editor for solution-based reporting, which brings together those seeking business improvement solutions and solution providers. Day has spent the last decade researching and interviewing top business leaders and continuous improvement experts at companies like Sakor, Ford, Merchandize Liquidators, Olympus, 3D Systems, Hexagon, Intertek, InfinityQS, Johnson Controls, FARO, and Eckel Industries. Most of his reporting is done with the help of his 20 lb tabby cat at his side.