During the past seven years, Toyota has significantly improved its energy efficiency and sustainability regarding facilities management, product development, and capital projects. The company’s energy program in 2000 consisted primarily of making sure the utility bills were paid in a timely fashion. Today, the company is responding to ecological concerns, such as global warming and greenhouses gases, by developing environmentally friendly vehicles, reducing energy consumption on a corporate-wide basis, and using a management approach that leads to increased sustainability.

“The context of why sustainability and energy reduction are important revolves around the impact of global warming and greenhouse gases (GHG),” says Jim Cooke, national facilities operations manager for Toyota Motor Sales USA Inc. “Legislation passed recently in California regarding GHG emissions may make it imperative for businesses to develop programs that address these energy issues.”

Evidence around the world points to the destructive force of global warming. Since 1979, for example, more than 20 percent of the polar ice cap at the North Pole has melted. Scientific and meteorological experts believe the continual melting of the ice will eventually raise the water level in the Coastal areas of Florida by approximately six meters, enough to submerge existing communities.

Taking a Proactive Stance

Toyota invests a tremendous amount of time, ingenuity, and effort to develop products that minimize the impact on the environment. The company currently produces six hybrid vehicles and continues to develop alternative power train products, including hydrogen fuel cells.

Toyota Motor Corp., the parent company of Toyota Motor Sales USA Inc., launched its Earth Charter in 1992. The broad-based charter calls for Toyota to contribute towards a prosperous 21st Century by pursuing environmental technologies, taking voluntary action, and working in cooperation with society.

“It is about more than just cars for Toyota; it is about environmental responsibility and good stewardship,” says Cooke. “Our action or inaction today will determine the world of tomorrow.”

Toyota’s actions are fueled not only by global warming and greenhouse gas emissions, but also by the increase in the emission of carbon dioxide. According to the Carbon Dioxide Information Analysis Center of the Oak Ridge National Laboratory in Oak Ridge, Tenn., the amount of carbon dioxide concentrations in the air has increased from about 280 parts per million (ppm) in 1750 to nearly 380 ppm in 2005. A ppm is the equivalent of one drop of ink in a 40-gallon drum of water. When the emissions are measured per million metric tons of carbon, the number climbs from slightly more than 1,000 in 1950 to nearly 7,000 in 2005.

Cooke notes that 43 percent of all consumed energy and its emissions come directly from buildings. It consists of emissions from power plants and all of the energy necessary to keep buildings operational. The carbon sources related to the energy used in buildings is more than 800 million metric tons compared to more than 500 million metric tons for transportation and nearly 400 million for industry.

A global energy initiative, entitled “The 2010 Imperative,” discusses the challenges the building industry faces and the opportunity to reduce the carbon footprint of facilities in the future. The initiative stresses the importance of architectural and engineering schools producing graduates who are well versed in sustainability for all aspects of facilities management. The initiative also includes a “2030 Challenge,” calling for the building industry to increase its energy efficiency by 50 percent over the regional Environmental Protection Agency standards.

“The goal is to increase relative energy efficiency in buildings to 50 percent by 2010 and then increase it by another 10 percent every five years,” explains Cooke. “By the time we get to 2030, we will basically be a net zero building inventory. This is for new buildings and renovations. If we can accomplish any of the challenge, we will be better off.”

Energy Consumption Numbers

Toyota’s greenhouse gas footprint shows that 59 percent of the company’s energy usage and emissions are related to its vehicle delivery transportation system, with 41 percent attributed to parts delivery transportation, 18 percent to utility usage, and 12 percent to travel and commuting.

“Getting vehicles from the plants to the dealers and then to the customers is our biggest footprint. We are addressing this number from a delivery standpoint by using more efficient trucking companies,” says Cooke. “Utility usage accounts for about one fifth of our greenhouse footprint and we need to take action in this area.”

The biggest portion of the total electricity used by Toyota is 38 percent at the company headquarters in Torrance, Calif., followed by 25 percent used by its warehouses across North America. The life cycle costs of buildings in general typically consist of 85 percent for expenses required to operate and maintain the facility over its lifetime. Initial costs account for approximately 10 percent of the total lifetime cost of a facility, while other expenses, such as planning, leasing, and consulting, are usually four percent.

“Spending a little bit more money in that initial 10 percent can make significant differences in the 85 percent you pay over the lifetime of the facility,” says Cooke. “We can reduce the life cycle costs and the environmental footprint of facility operations by reducing resource utilization and increasing equipment and resource efficiency.”

Toyota’s business operating costs are broken down to include 54 percent for salaries, 24 percent for benefits, 13 percent for technology, and nine percent for facilities.

“If we can improve the productivity and efficiency of our associates through an improved working environment at our facilities even by one percent, it results in a phenomenal savings,” says Cooke. “There is an opportunity to show senior management and the financial folks that we can make the business case internally to demonstrate the correlation between sustainable green building practices and the subsequent productivity of workers.”

Using the Right Tools

Toyota reaches its objectives by using a process called Facility Integrated Resource Management (FIRM). The process begins by conducting site surveys to determine the available opportunities for energy savings and sustainability. Recommendations can then be made regarding operating strategies, lighting technology, control strategies, HVAC strategies, envelop measures, and alternative energy sources. Suggestions may involve issues as basic as running the air conditioner for shorter periods of time, using more efficient lighting, and having the necessary software and hardware to properly control the building systems.

“Toyota is celebrating its 50th year in America this year and we are starting to see a lot of age in our facilities,” says Cooke. “The aging portfolio creates a whole other realm of possibilities in terms of building envelopes that are sustainable by today’s standards.”

The next step in the FIRM process is to conduct an evaluation to review the baseline database, the project tracking database, and energy efficiency criteria. The most suitable recommendations are then implemented and monitored to verify performance and to determine whether there is a better way to achieve the desired result through the Kaizen, or continuous improvement, process.

The Kaizen process is geared toward eliminating waste or activities that add cost without adding value. This often means disassembling a process and putting it back together in a better way that offers improved functionality. The Toyota production system is well-known for Kaizen where all line personnel are expected to stop their moving production line if there is an abnormality and then work with their supervisor to suggest an enhancement to resolve the abnormality.

The Kentucky facilities, where Cooke is based, are often used as a test bed because Kentucky has the cheapest power in the country. If a process can be proven in Kentucky at a cost of four cents per kWh, it is better than performing the same test in California or New Jersey at a cost of 13 cents per kWh.

“If we have a business unit that is skeptical about change, we will find a location that is always open to new things,” says Cooke. “We will spend $100,000 upgrading their lighting system and if we are successful, that site becomes the disciple in selling the process or change to their colleagues at other locations.”

The final piece of the FIRM process is to monitor operations from an ongoing management standpoint and to ensure the building was properly commissioned and is operating as efficiently as possible. Energy use and cost reports are reviewed, as well as semi-annual program reports. Future opportunities for further improvements are also identified.

The company uses Web-based, real-time monitoring of 68 buildings, 132 electric meters, 34 natural gas meters, and three water meters as a tool to judge the accuracy of its utility bills. Real-time monitoring is helpful in diagnosing problems with the performance of building systems. The power and gas usage at any of the facilities can be reviewed at any time in 15-minute increments. A natural resource tracking database is used to track all utilities in order to set energy targets, determine the best method for achieving the goals, and establish a project cost.

Toyota also conducts treasure hunts to determine where and how electricity is being used at various facilities. A team of about six people is assembled for each facility. Team members analyze the energy use and cost, investigate where and when the energy is being used, report their findings, estimate potential savings, and obtain buy-in from management to implement energy-reduction measures. The return on investment for each project is carefully reviewed and Toyota has never done a project with an ROI of less than 23 percent. Measurement and verification programs are used to report back to management about how the project is performing.

Toyota’s Accomplishments

Toyota is making substantial strides to reduce its energy consumption and to improve its sustainability practices. In fact, the environmental footprint of the company shows a reduction in carbon dioxide emissions of 370,000 tons over the past seven years and an energy cost savings of $10.9 million.

It also achieved zero waste transported to the landfill at its Torrance headquarters site in late 2006. While the company has always had a good recycling program, it was only recycling about 54 percent of its on-site waste. Toyota worked with the waste hauler to also be an investor in an energy plant in Long Beach, Calif., meaning anything that cannot be recycled is incinerated with low-emission, high technology to generate power at Long Beach.

The company also uses photovoltaic (PV), which is a solar power technology that uses solar cells or solar photovoltaic arrays to convert light from the sun into electricity. A 536-kw system is being used in the company headquarters and another 2.2 megawatt system is currently being planned for a one-million-sf warehouse in Ontario, Calif.

Wind power is being used by Toyota to convert wind energy into more useful forms, such as electricity. The company has renewable energy credits (REC), which are the property rights to the environmental benefits from generating electricity from renewable energy sources. The credits can be sold or traded and the owner of the REC can legally claim to have purchased renewable energy. Toyota has purchased 100 percent wind power for several of its facilities not only to support its LEED accreditation, but also because it is another environmentally conscious action.

Lighting retrofits replace high-intensity discharge (HID) lights with more energy-efficient, longer-lasting fluorescent lighting to reduce costs at warehouse and processing facilities.

Water usage is kept to a minimum by rainwater harvesting, reclaimed water use, and xeriscape landscaping, designed specifically for areas, such as Southern California, that are susceptible to drought and for areas where water conservation is practiced.

The company’s efforts to be a good steward of the environment have resulted in four LEED-certified buildings. The south campus in Torrance features photovoltaic panels on the roof, supplying 20 percent of the power for 600,000 sf of space. Toyota’s public affairs office in Washington, D.C., is powered completely by wind energy. The company’s dealership in McKinney, Texas, and its vehicle processing center in Portland, Ore., also include green features.

A cost and energy reduction log maintained by Toyota shows the company invested $6.5 million between April 2001 and November 2006 to enhance energy efficiency at locations throughout the United States. The investment has resulted in energy cost savings of $10.9 million. More than 41 million kilowatt hours (kWh) were saved and 2.5 million thermal units of natural gas were saved.

Toyota has realized a 12.9 percent reduction in the carbon dioxide emissions as a result of reduced energy usage. The Btu per vehicle has decreased from 341,786 in Fiscal Year 2001 to 206,872 in 2006, representing a 38 percent overall reduction.

Business Case for Going Green

Operating costs are a primary driver behind sustainability. The utility bills for high-efficiency, green buildings are typically 40 percent lower than the average office building. The operating costs hinge on how a building affects its occupants. Green buildings lead to improved employee health and productivity, which translates to bottom-line savings nationally of between $20 billion and $160 billion annually.

Sustainability positively reflects on a company’s image, community standing, and corporate citizenship, thereby, enhancing the brand.

“If we follow the 2010 and 2030 challenges, we can get there,” says Cooke. “It is going to become more of a business imperative as we move forward.”

By Tracy Carbasho

We welcome your Questions and Comments

Copyright 2008 Tradeline Inc.
All Rights Reserved
ISSN: 1096-4894