A More Systematic Approach to Energy Consumption and Cost Management

It is common knowledge that energy prices are at or near all-time highs, and elevated prices are likely here to stay. What has become more apparent to business executives is that the magnitude of energy price increases means that industry must fundamentally change the way it manages energy as a component of their product or service.

| December 08, 2008

By Eric Schlumpf, Lauren Hawks and Steve Birndorf

It is common knowledge that energy prices are at or near all-time highs, and elevated prices are likely here to stay. What has become more apparent to business executives is that the magnitude of energy price increases means that industry must fundamentally change the way it manages energy as a component of their product or service. Recently, many executives only thought of energy consumption and the energy content of their products in terms of global climate change implications, and strategies to counteract that impact. This is exemplified by the discussions of carbon trading and other approaches to reducing the corporate carbon footprint. Because these conversations were grounded in "good corporate citizenship," it was hard to pin down their actual or projected impact. The idea of carbon trading (aka "cap and trade"), and the potential for a command-and-control approach that could produce onerous effects on industry, is viewed with healthy skepticism right now. We believe that a more robust approach is to establish the management capability necessary to fundamentally tackle the issue based on its most immediate market manifestation: the high price of petroleum. We suggest that the focus shift from carbon trading to active carbon management.

The rapid rise in oil prices has changed the market dynamics. Now businesses need to consider a more systematic approach that reflects their need to manage what is becoming a problematic factor in their overall cost structure.

To continue reading, become an ALM digital reader

Benefits include:

  • Complimentary access to Consulting Magazine Online and digital edition
  • Bi-monthly digital newsletter delivered to your inbox
  • 1 free article* every 30 days to Consulting Magazine's sister publications
  • Exclusive discounts on events and publications produced by ALM

You Might Like

One-On-One With Holly Paul of FTI Consulting

One-On-One With Holly Paul of FTI Consulting

Global advisory firm FTI Consulting celebrated its 40th year in operation in 2022 and has seen significant and consistent domestic and international…

Terms of UsePrivacy Policy

Copyright © 2024 ALM Global, LLC. All Rights Reserved.