Hi I'm John Byrd and this week we're looking at identifying good first projects as you become a sustainability change agent. In the next several lectures, I'll give some examples of good first projects. Along the way I'll Introduce you to some of the ways that we develop quantitative information to support our proposal, which is important for developing a successful sustainability change proposal or the business case for sustainability. And I'll talk about some low cost changes that might get you started on being a change agent. This lecture we'll talk about an energy saving project, switching to LED lightbulbs. This requires an investment by the company and then generates benefits in the future. Ideally the benefits more than offset or repay the investment, so the project increases company profits. We'll learn how to do a formal financial analysis in a few weeks, but we can get started here. In the next lecture I'll talk about behavioral economics. Now that may sound a bit dull, but you'll see how you can use some of the insights from behavioral economics to encourage sustainability changes in your company. This is called nudging, and it's becoming fairly common in lots of areas. In the third lecture, I'll talk about waste reduction and recycling. And finally in the fourth's when we'll talk about reporting. So let's get going. This pie chart shows how energy in the US is used by sector. Buildings use about 40% of all energy, this means that the greatest possible savings are often in finding ways to reduce energy used in buildings. The second pie chart breaks down how energy is used in buildings. HVAC, that's heating, ventilation and air conditioning consumes about 44% of all energy. Lighting, refrigeration, that's freezers and cold displays, consume about 20% each. The actions I'm going to talk about are all relatively low cost, high probability of success ideas. In business language, they have a high return on investment, a high ROI. Remember, these first projects should be easy to implement and have a very high success rate, ideally with measurable results, like lower energy bills. If you can do something that reduces the need for heating and cooling, that could be a big savings in most buildings. Of course, following Jarrett Smith's comments, you need to know what's been done, that will give you a place to start. Lighting is often the easiest place to begin, because the retrofit or the change is not technically difficult. In fact, it's just screwing in a lightbulb. The nice thing about lighting systems, if your company hasn't updated in a while, is that they have a high return on investment, or they repay the initial investment really quickly. The new LED bulbs are incredibly efficient and don't have some of the problems that the early compact fluorescent bulbs had. Many electric utilities provide rebates for replacing the older bulbs with the new low energy LED bulbs. By changing from incandescent to compact fluorescent or even better to the new LED bulbs, electricity demand decreases. This means the utility company doesn't have to worry about expanding capacity with a new power plant as soon as it would otherwise, which is very expensive. That's why they are willing to supplement this change. Here's an example of the energy savings from lightbulbs. I have three bulbs, an old fashioned incandescent, a new, energy efficient halogen, and an LED. All of them produce about the same amount of light. The old bulb uses 100 watts, the halogen uses 72 watts, and the LED, for the same light, uses 15 watts. Are there real savings from replacing lightbulbs? Turns out there are. Here are the three types of bulbs that replace the old 100 watt incandescent bulb. The 72 watt halogen is a more efficient incandescent type of bulb. The curly one is a compact fluorescent and the one on the right is an LED, that's light emitting diode, which is the very newest type. The old fashioned bulbs used heat to make light. 90% of the energy used in these bulbs produced heat and only 10% produced light. The newer halogen bulbs are better, but you can see that the LED uses 80% of energy to make light. All these bulbs produce the same lumens or light as a 100 watt incandescent bulb, that's about 1,600 lumens. Now lumens is a measure of the light that's produced. And when we shop for lightbulbs, we're buying lumens, we're not buying watts. It's the light we want. We'll return to this notion of what it is that we really want in a couple of other places in this program. Sometimes we need to rethink products by figuring out what service they produce. In terms of lightbulbs, we talk about watts, but we really should be focused on lumens or light. Anyway, I went to the home depot and the Amazon websites and I found the current prices and the approximate lifetimes of these three types of bulbs. I rounded them off a bit to make things simpler when we start to do some calculations. You can see that the LED bulbs are more expensive, but use less electricity and last longer than the other types. But is that electricity savings enough to offset the higher price? That's exactly the sort of analysis you need to do to figure out what's best for your company. How do we compare these bulbs? We need to put them on some sort of equal basis to make a good comparison. Since the LED bulbs last 25,000 hours, we'll compute the total cost of purchasing and powering all three bulbs for 25,000 hours. In this chart I compute how many bulbs it takes to last 25,000 hours and how many kilowatt hours it takes to power those bulbs. You can see that it takes 12.5 halogen bulbs using 1,800 kilowatt hours of electricity to give the same level of service as one LED bulb. Here are the calculations. A kilowatt is 1,000 watts. 72 watts for 25,000 hours is a 1.8 million watts, which we divide by 1,000 to get kilowatt hours, so 1,800 kilowatt hours. I set the price of electricity at $0.12 per kilowatt hour, which is about what we pay, our family pays, where we live. The national average is about $0.10 and one-half in the US. So we buy 12.5 bulbs at about 2 bucks of bulbs for the longer lasting halogens. There are 2,000 hours compared to 1,000 hours for the cheaper ones and then with buy electricity, and that results in a total cost of $241 to own and operate the halogen bulb for 25,000 hours. We do the same calculation for the compact fluorescent and we get a total cost to own and operate the bulb over 25,000 hours of $81.50. And a total cost to own and operate the LED bulb over 25,000 hours, its lifetime, $70. Now, this isn't quite a fair comparison, because we have half a bulb left in the halogen and the compact fluorescent bulbs, but no life left in the LED. We'll fine tune that analysis when we practice doing a financial analysis later in the class. The LED has lower lifetime costs, this is important. We're comparing lifetime cost to own and operate the bulb, not just how much a bulb costs. It's the total long term costs that matter, not just one component of those costs. Here's another way to look at what's happening. We pay an extra $8 for the LED bulb compared to the halogen. Using the bulbs 5,000 hours a year about 14 hours a day, every day, the electricity savings from the LED take about 3 or 4 months to offset the extra cost. After that, the energy savings are all money in the bank for the company. We show that you save money by using less electricity, but what does it have to do with sustainability? Using less electricity means fewer carbon emissions, as well as other air pollutants. By finding the least costly, actually the most profitable way to reduce energy use, you automatically find the least costly way to reduce carbon emissions. To add a bit of confidence to the savings from changing lightbulbs, McKinsey and Company, the super high end consulting group, lists changing to LED lights as the best investment that can be made for reducing carbon emissions through energy savings. Here's the McKinsey greenhouse gas abatement cost curve. The detail shows a large negative cost, so negative cost is a profit, for switching to LED bulbs. We'll finish up by estimating the reduction in carbon emissions from changing lightbulbs. I know that you might not have been expecting to do arithmetic as a sustainable business change issue, but you simply have to do this type of analysis if you want to build a compelling case for making change. We'll help you improve your skills for this type of analysis. Once you get used to thinking in terms of watts and dollars and tons of carbon, it'll be second nature to you. We know that the LED uses 1,300 kilowatt hours less electricity over its life then the equivalent halogen incandescent bulb, so say 200 kilowatts less per year. The average carbon dioxide emissions per kilowatt in the US, is 1.363 pounds per kilowatt hour. 1.363 pounds per kilowatt hour, this if from the US EPA's eGrid database. So, switching one bulb reduces carbon emissions by 272 pounds per year. The US emits about 5 billion tons of carbon per year, so 272 pounds doesn't sound like very much, but about 2.5 billion lightbulbs are sold in the US every year. If just half of those shifts were from halogen to LED, the potential savings is over 150 million tons, or 3% of total US emissions, just from changing a fraction of our lightbulbs in one year. Over several years, we could reduce total CO2 emissions by 10% or 15%. Now, let's review what we've done. We started by showing that buildings are big energy consumers. And we looked at a simple way to reduce building energy use, shift to low watt lightbulbs, the LEDs. We then computed the lifetime energy savings and the lifetime dollar savings from making the switch. And, finally, we computed the carbon dioxide reduction. Change in lightbulbs is a great first project. We'll talk about other good first projects in the next three lecture, thanks.