Baxter Management of Energy Use and Cost

Baxter Management of Energy Use and Cost

Effectively managing energy usage enhances business efficiency, conserves natural resources and benefits human and other life on earth. Reducing the use of fossil fuels such as coal and fuel oil enhances air quality by reducing fine particulates that contribute to adverse health effects, and helps limit the generation of greenhouse gas (GHG) emissions, which contribute to climate change. In addition, limiting the use of non-renewable energy sources helps preserve their availability for future generations.

While energy conservation benefits the environment, it also makes good business sense for Baxter, since energy is among the company’s most significant manufacturing costs. Since 2005, while Baxter’s sales increased nearly 24 percent through 2008, absolute energy usage increased just 3 percent. However, due to sharply increasing global energy prices, energy costs increased 42 percent during that time, to a total of $182 million. This underscores the importance of Baxter’s ongoing energy management efforts.

During the last decade, Baxter has strengthened its energy management program. In 1999, it re-energized its corporate energy management group, and in 2001 it established a formal position statement on Climate Change and Energy. In 2005, Baxter hired a director of energy management to lead long-term strategic energy planning, coordinate global energy conservation activities and support energy conservation projects.

Baxter’s corporate energy management group oversees the company’s global energy conservation activities and reports energy usage, cost and efficiency improvements quarterly to senior management. Since 2005, Baxter has increased the number of annual facility energy reviews, expanded the use of a third-party utility invoice payment service, established and provided training on facility “Lean” energy standards and promoted best practices in energy management across the company. In addition, to encourage the implementation of energy efficiency projects, Baxter has lowered its internal rate of return for such projects.

Lean Energy Program
In 2007, Baxter launched a “Lean” energy program for the 63 principal company manufacturing facilities. The program established four sets of energy standards – Pre-requisite, Bronze, Silver and Gold – to be phased in from 2007 to 2010. Each category defines 25 to 30 requirements a facility’s energy program should meet. In 2008, 17 locations met 100 percent of the Bronze-level requirements; several facilities are on target to achieve Silver and Gold status.

Biennial Global Energy Conference
Baxter Facilities Engineering Services, with the support of the company’s Manufacturing Council, coordinates a biennial Global Energy Conference for Baxter facility energy managers. The most recent conference was held in autumn 2008 in San Jose, California, United States. Approximately 120 Baxter energy managers, corporate staff, outside presenters and guests attended this conference, which included a special focus on renewable energy and alternative power generation.

Performance
Baxter extended its commitment to reducing energy usage from operations from its original 2010 goal of a 20 percent reduction indexed to revenue, compared to 2005, to a 30 percent reduction by 2015, also indexed to revenue and compared to 2005. Energy usage from operations includes the energy used by Baxter-managed and Baxter-operated facilities, and sales and truck fleets.

From 2005 to 2008, energy consumption for Baxter operations increased 3 percent in absolute terms, from 8,945 to 9,216 trillion joules. During this same period, Baxter improved overall energy efficiency (energy usage indexed to revenue) by 18 percent. This puts the company on-track to meet its energy improvement goals.

Source: www.baxter.com