As a reporter who writes about business and the environment, I’ve heard the expression “low hanging fruit” used to describe energy efficiency countless times. Google the words “low-hanging fruit energy efficiency” and you’ll get 57,100 hits. Maybe 57, 101 by now.
For the last month or so, I’ve been helping the Environmental Defense Fund write a report on business innovations and the environment. It’s been a great learning experience, and we’ll release the report next week at the FORTUNE Brainstorm Green conference. This work has helped answer a question that bugged me for years: Why don’t people pick the low-hanging fruit?
The answer is that business does not operate according to classic free-market principles. Business is messier. Human emotions come into play. As does human perfection, and the fact that companies are rarely (ever?) the lean and well-oiled machines envisioned by classical economics.
This is why companies that could (and should) easily save energy and money by becoming more efficient don’t.
Let me offer a couple of examples.
One comes from hotels. Hotels could save thousands of dollars a year by installing key-card systems that would automatically shut off the power whenever a guest leaves the room. A 616-room Westin hotel in Pittsburgh invested $120,000 in a key-card system and got all of that money back in energy savings in a year. After that, the hotel was free to use the savings to lower its room rates, increase its profits or both–and in a world of truly competitive markets, others would be forced follow. That hasn’t happened. Not in Pittsburgh or elsewhere.
And why not? Hotel owners apparently worry that some guests may not like the loss of control or the inconvenience of arriving at a slightly colder room in winter or slightly warmer room in summer–even though the owners could keep room temperatures just a few degrees from 70 or 72 and guests could enjoy something else (lower costs, more amenities) in return for a few minutes of waiting for the room to heat or cool. By the way, travelers in Europe and Asia have come to expect the key card system. How do markets account for that?
A second and better example involves corporate computer networks. They waste a lot of energy because most computers run at night or on weekends. If you work in an office, you know that networks are controlled by IT departments who want access 24/7 to fix bugs or deal with security issues. They want power (electric and corporate), and they don’t, as a rule, care about wasting power (electric) because they aren’t responsible for paying the electricity bills. They’ve got enough to worry about. That’s human emotion, too.
As it happens, there are software products out there that allow the IT guys to control the network and save energy at the same time. So far, though, these products haven’t been selling widely. The people who pay the energy bills don’t buy software. The technical word for this in corporate America is “silos.” Most companies have silos, and they are another reason why the low-hanging fruit keeps on hanging.
EDF’s report, out next week, will highlight best practices in these two areas and others. We will also point to government policy that can help–some states, for instance, give rebates to hotel owners who install the key–card systems because in the end efficiency benefits all of us. It means that collectively we will emit fewer greenhouse gases and that we won’t need as many new power plants.
So take a look at the report next week and check out EDF’s new Innovation Exchange, which provides business people who want to improve their companies–and the planet–with valuable content, practical tools and a community of like-minded people. This post first appeared on EDF’s Innovation blog.
And then do me a favor–even if we can’t pick all the low hanging fruit right away, let’s retire the metaphor.