August 2009: Energy Benchmarking project final conference in Beijing

In August 2009 the project 'Promotion of Benchmarking Tools for Energy Conservation in Energy Intensive Industries in China' held its final conference in Beijing. The conference was attended by high ranking representatives from China National Reform and Development Commission, Ministry of Energy and Ministry of Environment, further from the Delegation of the European Union, which co-funded this project within the framework of the 'European China Energy and Environment Programme'. More than hundred Chinese experts from industry and the energy consulting sector joined this final meeting of this important project.

In the following the key speech of CAI benchmarking methodology expert Gerhard Weihs at this conference, which summarizes the project experiences in the context of 'International experiences on benchmarking work':

Ladies and Gentlemen!

It is a great pleasure and honour for me to join this morning with you and to exchange our ideas on energy benchmarking. This conference marks also the formal finish of a very intensive project on the Promotion of Benchmarking as a tool for energy conservation in the industry in China. This project was intensive in several respects: first; because the project was dealing with energy intensity and energy intensive industries; second, because this project was an intensive work itself, trying to apply benchmarking in a number of 5 pilot companies and 9 demonstration companies, train more than 40 experts on benchmarking; and all this within a very short period of less than one year only. The outcomes of this project are reported by my co-speakers. Being experts in this field, you will know that implementing a fully established benchmarking system cannot be done in such a short period - neither on the micro-level of a company, nor on the macro-level of economy. This is one of the international experiences on benchmarking work and I will come back to this topic later again.

The second topic which I want to address is "international benchmarks". This type of indicators concern performance values to describe world best, best practice or average performance values, which can be found all over the world. Depending on the sectors in which we are interested in, we have very well to almost non existing data bases available. While e.g. the cement industry is a very well researched industry and big amounts of international benchmarks are available, other industries like some of the non-ferrous metal industries (such as gold for example) remain a black box regarding international benchmarking. There are mainly two reasons for this deficiency: the first reason is that some businesses are confidential and companies are not willing to share their experiences with their competitors; the second reason is the diverse production and technology combinations of production processes, which make comparisons between the performance of different companies even from the same sector far-reaching useless. Basically these problems are the same with domestic benchmarks. To make use of international or domestic benchmarks you need an industrial community who is ready to feed the benchmarking system with benchmarks. And the companies, which want to use these benchmarks as reference values, need to set up an internal benchmarking system first. The methodology which has been developed for this project meets this requirement and guides companies to develop their own data base to calculate indicators and compare them internally and externally. This practice is conform with international benchmarking work. It has to be highlighted that international benchmarking requires a standard of indicator generation. To be compatible with international data sources it is necessary that indicators use metric and international units. The most common in this respect is GJ/t which means the energy consumption per product output, which we name energy intensity. Hence, for international benchmarking the in China frequently used standard coal (kgce) as energy unit has to be converted accordingly.

A lot of work is done to collect such international benchmarks. A most helpful source are the so called "Reference Documents on Best Available Techniques (BREF)", which have been compiled by international sector experts of the "Integrated Pollution Prevention and Control (IPPC) Bureau" under the European Commission. The IPPC Bureau was set up to organise an exchange of information between Member States and industry on Best Available Techniques (BAT), associated monitoring and developments in them. Such documents have been made for all energy intensive industries and a number of further industries and core technologies; in total 33 reference documents have been published over the recent 10 years. The content of these BREFs covers not only energy but also other environmental issues and large space is given to illustrate best practices. The purpose of these documents is not only to report benchmarks but also to explain how best practice can be achieved. As far as to my knowledge there is some interest to make this source available also in Chinese language, which in my opinion would be a great contribution to technology transfer.

Let's come back to the first topic, which is that benchmarking cannot be established over night. The international history of benchmarking is just 30 years long. Benchmarking work started first with genuine economic themes such as costs, labor, production time, etc. The basic idea of benchmarking is simple: (1) Find an organisation or a case which is best at what your own organisation does. (2) Study how it achieves it results. (3) Make plans for improving your own performance. (4) Implement the plans, and (5) monitor and evaluate the results. Prior to that, it is necessary to make an inventory or audit or assessment of your own performance. According to this logic the project methodology BMT was designed. It is obvious that a company will need time to establish such a system and the required period is usually longer than a year; and benchmarking should not be a single shot but a long term strategy.

Internationally benchmarking became a central instrument for improving performance in industry. Many bigger and international active companies have set up their own benchmarking system, tailored to their demand. If you want to identify, if a company has a benchmarking system in place, you might not only ask after benchmarking, but look what the controlling department is doing, and you will see that these people are working with benchmarks as their daily business. Today benchmarking is also frequently used in public administration and government. A number of benchmarks exist of which GDP is only one of the more popular.

Since a decade, give or take some years, also environmental and energy issues were more systematically approached by benchmarking. The main driver of energy benchmarking for companies are increasing energy costs. Reducing energy consumption per production output means cutting production costs; a very simple equation and highly reasonable. Hence, clever companies will do energy benchmarking on their own. But we can observe a number of developments, where such voluntary engagements cross fingers with mandatory and regulatory instruments, to ensure that the simple equation "do more with less energy" is materializing in the larger scale.

Coming to the end with my speech, I want to introduce some of such systems. They not all necessarily bear the name benchmarking in its title, but it is energy benchmarking in most of its features:

• Launched in May 2006, the "Sustainable Energy Ireland's Energy Agreements" aims to reduce consumption by large industrial users. The Programme intends to support annual 1% cuts in national energy consumption above business-as-usual from 2008.
• The Canadian "ecoEnergy for Industry programme" is designed to improve industrial energy intensity and reduce energy-related industrial greenhouse gases and air pollution. It brings together industry associations and companies representing more than 98% of all industrial energy use in Canada. To help large industry deal with, approximately 20 million CAD are provided to encourage information-sharing on new technologies and best practices in energy use; training for energy managers to identify and put in place energy-saving projects; and cost-shared assistance for energy assessments that identify a wide range of ways to improve energy use.
• Already in 1999, the Dutch government concluded the "Energy Efficiency Benchmarking Covenant with industry". Nearly all energy-intensive Dutch enterprises have signed the Covenant. The covenant requires member companies to systematically improve their energy efficiency rate per unit of product and to monitor their energy use more scrupulously. Companies acting under the covenants may offset some taxes. In 2008, the Dutch government entered again into a new set of long term agreements with industry. Twenty-two industry associations signed voluntary agreements to improve energy efficiency by 30% from 2005-2020. The Dutch government supports this exercise by providing the necessary expertise to help draft the energy efficiency investment plans, as well as a knowledge infrastructure through information and research on energy efficiency measures per sector.

I could continue this list with further examples from Austria, Australia, Belgium, Finland, France, Germany, Italy, Japan, Luxemburg, Portugal, South Africa, Spain, Sweden, Switzerland, UK, and USA. Basically, also the "European Union Emission Trading System (EU ETS)", which is the largest multi-national, emissions trading scheme in the world, is a big benchmarking system. Under the EU ETS, large emitters of carbon dioxide within the EU must monitor and annually report their CO2 emissions, and they are obliged every year to return an amount of emission allowances to the government that is equivalent to their CO2 emissions in that year.

I am sure that NDRC will find rich ideas in the international benchmarking work done to set up an even more advanced system for the People's Republic of China.

With this I am at the end of my speech. I only want to mention, that CENTRIC AUSTRIA INTERNATIONAL was engaged in this project with two key experts, Mr. Xin Mingyi and myself. We worked together during the past months with dozens of experts from our project team and with our pilot and demonstration companies and further experts, who have been trained on BMT. On behalf of CAI, I would like to thank all of them for their cooperation and important contributions.

Thank you very much for your attention!