1. 95 – 99 Molesworth St PO Box 12332 Thorndon WELLINGTON New Zealand +64 4 890 5294 stephen.drew@strataenergy.co.nz While Strata Energy Ltd has used reasonable endeavours to ensure the information in this presentation is as accurate as practicable, Strata Energy, its contributors, employees, and directors shall not be liable (whether in contract, tort (including negligence), equity or on any other basis) for any loss or damage sustained by any person relying on the information contained in this presentation, whatever the cause of such loss or damage. Less Talking and More Walking down the Energy Efficiency Road – the Journey has begun 22 nd February 2007 International Conference on Sustainability Engineering and Science

2. 2 An acknowledgement This paper would not have been possible without the experience I gained over the last 4 years as the Chief Executive of Demand Response Limited. As the leading contractor to Fonterra for their Energy Reduction project, my project team broke new ground and helped them continue their journey in energy efficiency.

3. 3 What we will cover Energy efficiency and sustainability Lifting our game Fonterra’s journey Reasons for success We need a tool-box How can we apply these lessons to other industries? The journey must continue for others and accelerate

4. 4 Energy efficiency and sustainability Energy efficiency and sustainability go hand-in-hand. Energy efficiency is a journey. Energy efficiency is also a team effort.

5. 5 Lifting our game In sport, we have high ambition and we are geared for success. In sport, in many cases we do not have a lot of money and people get on and just do it and win. In business, our export growth is below OECD average, possibly one of underachievement. In energy efficiency, we are also well down in the rankings of OECD countries – we are the glaring anomaly. Yet, energy efficiency does not require huge investments or resources to get started.

6. 6 Lifting our game We are different and niche. But, we need the right people to drive energy efficiency, mainly engineers. We need to offer careers for our bright engineers in energy efficiency. They will be the champions of the future. I am confident we can make a difference if we get some inspirational leadership, some more discipline, some more training and embed some team-work into lifting our game.

7. 7 Fonterra’s journey It started decades ago with the industry investment in growth and their advances in new technology. More recently, they had to put in place a major initiative in energy cost reduction company-wide. The energy reduction project started in 2002 at a pilot site and was quickly rolled-out to their 10 largest manufacturing sites. Their first corporate target of a 10% energy reduction will be achieved earlier than they planned. Some valuable lessons have been learnt along the way.

8. 8 Reasons for success By taking a positive approach By taking a long term view By team-work from engineers at all levels By having a clear focus on robust projects By being able to measure and report successes.

9. 9 The tool-box – some solutions for sustainable engineering ToolSolution for sustainable engineering Process descriptionsBasic Heat and Materials balances and metering diagrams Database managementA flexible web-based database is needed to view, aggregate and overlay energy metering data and should hold production, weather and energy prices. Easy and flexible reporting. Targeting methodsStatistical methods improve as the database advances. Going from simple to performance based methods are needed to set more realistic and aggressive targets. Monitoring and Targeting reports Reports must be used to take actions: weekly for managers, daily for energy plant shift engineers, near real-time for operators, benchmarking and league tables across sites and emissions tracking for carbon management. Project identificationSound process engineering and pinch techniques. Robust cost:benefit life-cycle analysis. Savings BulletinsTwo page reports to summarise the savings opportunity.

10. 10 The tool-box – some solutions for sustainable engineering ToolSolution for sustainable engineering CalculatorsSimple day-to-day calculators are needed to help operators and shift engineers take actions Utility modelsComplex steam and refrigeration systems can be modeled for operators and shift engineers to calculate “what ifs” when loads or prices change. Scheduling models can help plan boiler and compressor run-orders to meet changing demand profiles. Common themesAn effective technique in technology transfer which works well to roll-out successes. The steam, chilled water and compressed air themes have been effective. Engineering standardsUltimately, energy efficiency experience has to incorporated into standards and procurement policies to ensure minimum life-cycle costs. Energy budgetsAchieved energy savings must be reflected in forward budgets. Normalising energy performance against production and product mix is the key.

11. 11 How can we apply these lessons to other industries? As a country, we are very short of experienced chemical engineers with energy efficiency or renewables experience. We must look after our energy efficiency engineering specialists and make them our technology champions. We need to urgently introduce Best Practice programmes. The techniques behind Monitoring and Targeting must be advanced. So must the economic methods in analysing life-cycle costs for projects that are more sustainable for the environment.

12. 12 The journey must continue for others and accelerate Sustainable engineering must continue on to the large number of medium sized sites But, we are a cross-roads in terms of how fast we can make progress. Our immediate challenges are to lift our game through leadership, discipline, training and team-work. If we can get there we may set some world records as a low emissions country and we will have something at last to celebrate along with our sporting successes.

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