Energy efficiency and conservation have rocketed up China’s corporate agenda, particularly for heavy-industry players such as power plants, steelmakers, chemical companies, and automakers. Energy is the largest expense for some of these industries, and since variable costs represent a larger share of total costs in China than in more developed countries, where fixed labor outlays are higher, volatile commodity prices hit China’s core industrials much harder. These economic fundamentals apply to multinationals and local players alike, so efforts to secure the benefits of improved energy efficiency are important for a wide cross-section of companies.
Yet achieving those benefits is difficult. The tendency at most industrial companies, and not just in China, is to equate energy savings with capital expenditures, hardware, and other technical solutions. Actually, what is often most important to change is poor cooperation and unhelpful mind-sets prevalent on the front line. Similarly, many companies in China and elsewhere lack an integrated view of how energy yields, energy output, and energy consumption combine to affect their operations. Some measure these factors only in a superficial way.