Introduction to Sustainable Development for Engineering and Built Environment Professionals
Unit 2 - Learning the Language
5: Efficiency - Resource Productivity Improvement
demonstrate that efficiency – doing more with
less for longer - is a positive first step towards
sustainability. To introduce the concept of efficiency
and explain how it leads to efficiency gains for
firms, increased profitability and other benefits.
To explain why efficiency on its own will not be
enough to achieve sustainable development.
The topic of efficiency will be further developed
in ‘Role of Engineering in Sustainable Development
B’ and ‘The Role of Efficiency in Sustainable
Development’, discussing in detail how to
achieve sustainability benefits from efficiency
through providing further checklists and further
online resources to assist the engineer and designer.
Hargroves, K. and Smith, M.H. (2005) The Natural
Advantage of Nations: Business Opportunities, Innovation
and Governance in the 21st Century, Earthscan,
6: Natural Advantage and the Firm. ‘Achieving
Radical Resource Productivity’ Table 6.6
(1 page), p 99.
Hawken, P., Lovins, A. and Lovins, L.H. (1999) Natural
Capitalism: Creating the Next Industrial Revolution,
Earthscan, London, pp 11-14.
1. Global demand for energy and resources in the
21st century is forecast to significantly rise with
fast growing economies like China already outstripping
the USA in the consumption of many resource commodities.
Achieving greater and greater levels of efficiency
will be vital to ensuring long term sustainable
prosperity for the global economy, especially when
coupled with design and operations improvements.
To achieve the goal of sustainable development the
first step therefore is ‘to do more with less
for longer’. Activities that are more efficient
are those that provide the same or better product
or service while using fewer inputs such as energy,
water and materials.
2. Many resources humankind uses are non-renewable
(fossil fuel, metals) and many other renewable resources
are being used at unsustainable rates (freshwater,
fish, forests). Given the very real possibility
that we may be pushing ecological systems into collapse,
we must reduce humanity’s environmental load
on the planet by using these resources wisely and
3. Many aspects of the current industrial-economic
system that supply energy, water, transportation
and materials are ecologically unsustainable. It
will require significant investment to create sustainable
and renewable energy and water infrastructure worldwide.
Recycling plants will need to be built as well as
factories which use less energy-intensive ways to
create chemicals and materials. It defeats the purpose
for nations to build wind and solar farms, for businesses
and industry to invest in sustainable energy supply
and water recycling, households to invest in solar
hot water heaters and water tanks, if they then
use these resources inefficiently, especially in
light of the fact that many people do not even have
access to such services.
4. Since many aspects of the transition to sustainability
will involve investments it is wise to invest in
those environmental strategies that ensure the fastest
return on investment. Doing so will ensure that
the greatest environmental outcomes will be achieved
for each dollar spent over time. Utilising resources
and energy more efficiently is often the most cost
effective way for companies, organisations, governments,
schools, and households to begin their journey to
5. Business has already demonstrated the environmental
and financial benefits of efficiency. Efficiency
improvements leads to companies achieving lower
capital and operating costs, increased yields, and
reductions in resource and energy use.
6. The benefits from efficiency improvements can
improve the competitive advantage of business. The
best evidence of significant efficiency opportunities
for most companies is shown by the fact that six
companies have achieved over US$1 billion dollars
in savings through energy efficiency alone while
reducing greenhouse gas permissions over 60 percent.
Additional benefits of pursuing efficiencies include
Insulate businesses from commodity price hikes
and other shocks.
initiatives have been shown to unleash the creativity
Efficiency initiatives have been shown to help
companies improve decision making processes.
7. The potential to achieve resource efficiency
and cost savings exists because the current industrial
production and consumption system is so wasteful.
As Paul Hawken wrote in The Ecology of Commerce,
‘Just 6 months after products have been
bought, 99% of them have already become waste.’
There are numerous ways to ensure that resources
are used more productively.
8. Efforts to increase energy and resource efficiency
have an ancient history. The ancient Greeks utilised
passive solar design of buildings to reduce the
amount of heating required by buildings from wood
fires. In the fields of ocean transportation, significant
efficiencies in wind power were achieved before
the first industrial revolution. Leonardo De Vinci
admired the shape of dolphins which enabled them
to carve through the ocean water so efficiently.
9. It is important to note that an efficiency saving
is not the same as an energy, water or materials
reduction. People assume that if a company makes
its processes more energy efficient by 66 percent,
or if in a household an inefficient light bulb is
replaced by a 90 percent more efficient one then
that will lead to a 66 percent and 90 percent reduction
in energy respectively. Similarly people assume
that if a family buys a hybrid car (approx 50 percent
more efficient than a standard car) then they will
use 50 percent less petrol. Unfortunately, it is
not that simple.
In the book The Coal Question,
it showed that a greater than 66 percent efficiency
improvement in the making of steel per unit
amount of coal was followed in Scotland by a
tenfold increase in total consumption of coal.
The consumer, now saving 90 percent electricity
on their lighting bill may forget to turn the
light off, and will not hesitate to leave it
on for prolonged periods.
The family now only paying half as much for
a litre of petrol may decide that they can afford
to drive the car more, or drive it faster.
This is known as the ‘rebound effect’.
10. Without purposeful sustainability policies,
and incentives for sustainability orientated behaviour
change, efficiency can lead to rebound effects that
lead to even greater resource consumption due to
either making an industrial process much cheaper
(leading to its greater global uptake) or removing
the financial incentive for behaviour change.
World Federation of Engineering Organisations in
their 2001 Model Code of Ethics, calls on engineers
to improve energy and materials efficiency, stating,
[engineers should] strive to accomplish the
beneficial objectives of their work with the lowest
possible consumption of raw materials and energy
and the lowest production of wastes and any kind
of pollution. Global demand for energy and
resources in the 21st century is forecast to significantly
rise. This rapid growth in resource consumption
is not only due to the increasing population, but
also due to the rapid economic growth of China and
India. In 2005, China’s growing economy consummed
more grain, meat, coal and steel than the US and
became the World’s leading consumer.
The US still consumes the most oil, however China
is fast catching up and leads in the consumption
of manufactured goods such as fertilizer, electronics,
household appliances and personal computers. Achieving
greater and greater levels of efficiency will be
vital to ensuring long term sustainable prosperity
for the global economy.
around the world understand that they have a tremendous
responsibility in the implementation of sustainable
development. Many forecasts indicate there will
be an additional five billion people in the world
by the middle of the 21st century. This requires
more water, waste treatment systems, food production,
energy, transportation systems, and manufacturing
-- all of which requires engineers to participate
in land planning, and to research, study, design,
construct, and operate new and expanded facilities.
This future ‘built environment’ must
be developed while sustaining the natural resources
of the world and enhancing the quality of life
for all people.
Federation of Engineering Organisations, 1997
One of the first uses of the word 'efficiency' in
relation to sustainable development was by the World
Business Council for Sustainable Development (WBCSD)
in their 1992 publication 'Changing Course'. The
term was used to seek to encapsulate the idea of
using fewer resources and creating less waste and
pollution while providing the same or better services.
According to the WBCSD,
efficiency entails the following:
reduction in the material intensity of goods
A reduction in the energy intensity of goods
dispersion of toxic materials,
Maximum use of renewable resources,
Increased durability of products, and
Greater service intensity of goods and services.
The 1992 Earth Summit endorsed ‘efficiency’
as a means for companies to implement Agenda 21
in the private sector. Stephan Schmidheiny, the
inaugural honorary chairman of the World Business
Council for Sustainable Development, said in 1996,
"I predict that within a decade it is
going to be next to impossible for a business
to be competitive without also being 'efficient':
adding more value to a good or service while using
fewer resources and releasing less pollution."
As Schmidheiny predicted, efficiency has been
working its way into industry with extraordinary
success. The number of corporations committing
themselves to it continues to increase. Its famous
three R’s (Reduce, Reuse, Recycle) are steadily
gaining popularity in the home as well as the
workplace. The trend stems in part from efficiency's
economic benefits, which can be considerable.
Business Benefits of Efficiency
Companies need to find new ways to improve their
competitive advantage, this can be done through
activities that both reduce operational costs
through greater efficiency and create innovative
ways to deliver higher quality ‘greener’
products to differentiate them in the market and
even command premium prices. There are many ways
that effective environmental management can help
firms to realise this, i.e. through process innovation
(efficiencies), and product differentiation through
‘more efficient’ manufactured products
(innovation). When profit margins are being squeezed
efficiency savings can prevent companies going
into the red. International carpet manufacturing
giant Interface Ltd believes that its efficiency
savings, now worth over $200 million per annum,
were vital to ensuring that it survived the significant
post 9-11 downturn in the US carpet market. According
to research undertaken by The Climate Group, a
UK based think tank, five multinational companies
– Bayer, BT, Dupont, Norske Canada and IBM
- have now all achieved 60 percent or more reductions
in greenhouse gas emissions while saving in total
over US$5 billion.
Such efficiency savings, while seeming small relative
to the overall costs of a business, can be equal
to a company’s current profit margin.
benefits to reduce costs through eco-efficiencies
benefits to reduce costs and create product
differentiation through eco-innovation
Material savings from better Whole System
Increases in process yields and less downtime
through designing-out waste and designing
the plant and process to minimise maintenance
Better design to ensure that by-products
and waste can be converted into valuable
Greater resource productivity of inputs,
energy, water and raw materials to reduce
Reduced material storage and handling
costs through 'just in time' management.
Improvements in the quality of the product
Higher quality, more consistent products.
Lower product costs (for instance, from
material substitution and improved plant
Lower packaging costs.
More efficient resource use by products.
Lower net costs to customers of product
Higher product resale and scrap value.
Products that meet new consumer demands
for environmental benefits.
5.1. Benefits of eco-efficiencies and
eco-innovation to a firm’s competitive advantage.
Porter, M. and van der Linde, C. (1995)
have studied the relationship between productivity
and energy efficiency and found a direct relationship
using different methodologies and datasets. Their
research shows there are multiple benefits for
companies implementing more efficient processes
Efficiency improvements for companies leads to
lower capital costs and operating costs, increased
yields, and reductions in resource and energy
use. Any industrial technology or process improvement
will result in one or more of these beneficial
outcomes. Some efficiency improvements may primarily
be aimed at one goal, but also generally include
beneficial impacts on other aspects of a production
process. For instance, certain technologies that
are identified as being ‘energy-efficient’
because they reduce the use of energy will bring
a number of additional enhancements to the production
These improvements, including lower maintenance
costs, increased production yield, safer working
conditions, and many others, are collectively
referred to as ‘efficiency benefits’
or ‘non-energy benefits’ because in
addition to reducing energy, they all increase
the efficiency of the firm. Key publications like
Factor Four have highlighted the remarkable
achievements already being seen when resource
efficiency approaches are applied. In the book
Factor Four the authors brought together
the range of benefits and the business case reasons
for resource efficiency:
better: Resource efficiency improves quality
of life. Efficient lighting systems help people
to see with less electricity, less toxins in products
and food are healthier, more resource productive
factories produce better goods, and healthier
environments are created with more energy-efficient
and cleaner buildings.
Pollute and deplete less: Efficiency
reduces waste and pollution, which is otherwise
a resource out of place, and can contribute
to solving significant global issues such as
human-induced climate change through greenhouse
gas emissions and water shortage.
Make money: Resource efficiency is usually
undertaken at a profit, as money is saved in
two ways - by converting valuable resources
into useful products and services (rather than
non-useful waste) and by reducing the clean-up,
remediation, transport, treatment, and disposal
costs associated with the waste that is created.
markets and enlist business: Market forces
combined with innovative policy structures and
market mechanisms can drive resource efficiency,
much of it can be driven by individual choice
and business competition.
Multiply use of scarce capital: The money
saved with resource efficiency practices can
be reinvested to solve further efficiency problems.
For example, if a developing country invests
in equipment to make energy-efficient light
bulbs, it can provide the energy services at
a tenth of the cost of building another power
Increase security: Resource scarcity
and competition can be the source of international
conflict – oil, minerals, forests and
water are resources vital to the functioning
of a country, and access to such resources based
in foreign countries can be a primary reason
equitable and have more employment: Resource
efficiency activities can be the source of increasing
employment – by reducing the amount of unproductive
resource allocation, money can be saved and reinvested
into more productive labour.
These ‘eco’ efficiencies have been
so successful that many governments now have programs
to assist industry develop efficiency strategies
as part of their broad portfolio to become internationally
competitive. As the Australian government wrote,
‘There is an ever increasing need for
industry to address sustainability and energy
issues cost effectively to enhance their domestic
and international competitiveness.’
As a result of this understanding, governments
are increasingly providing programs with online
resources to help implement these changes in business,
with everything from freely downloadable Environmental
to databases on efficiency techniques for many
The Rebound Effect
Some argue that the ’rebound effect’
is common, that is, when a more efficient technology
is introduced, lower costs often prompt people
to increase their consumption of resources. Rebound
effects could possibly negate many efficiency
advances. Whether efficiencies lead to negative
rebound effects or their opposite, known as positive
amplification effects, is crucial to achieving
sustainable development. In broad terms, there
are two dimensions to the ‘rebound effect’:
The first type is technological/cultural rebound.
Here, as a result of the application of an efficient
technology, the level of service provided increases.
At the extreme, this can lead to a situation where
additional investment in more energy-intensive
equipment occurs because of the increased technological
capability. For example, the owner of a space-heated
home may find that, when it is insulated, a space
heater can heat most of the home, so they may
then invest in a central heating unit (rather
than a ducted one) in the belief that it will
not cost too much more to run and the house will
be heated throughout. The second type of rebound
effect is economic rebound. In this case what
happens is that the money saved for instance from
saving energy (after the cost of the measure has
been repaid), then flows through the economy,
giving people more money to consume products and
services, which may lead to additional energy
Many assume these rebound effects are significant
but they don’t need to be. It is just as
likely that positive environmental change will
lead to people in their homes and workplaces undertaking
more environmental initiatives, not less. If the
money saved is spent on, for instance, a lower
energy intensive activity (such as hiring a DVD
or paying for cable TV), then there may actually
be a savings amplification effect, as the level
of indirect energy use in the economy will be
reduced by the shift in expenditure, while the
household will continue to use less energy due
to the efficiency improvement.
If the money saved is invested in other energy
saving measures then there is a larger amplification
effect because they save even more. Furthermore,
it is likely that widespread behaviour of this
kind will influence the behaviour of manufacturers
who are more likely to improve the efficiency
of their products and services in order to maintain
market share. The point of discussing these various
possible outcomes of improving energy efficiency
is to highlight the fact that they can vary from
large rebound effects to large amplification effects.
Policies, education and information can influence
the outcome significantly. Driving aggressive
mandatory energy efficiency standards with quite
long payback periods can divert money towards
investment in energy efficiency and away from
other economic activity, reducing the rebound
Changing the behaviour of product and service
suppliers can also result in an ‘amplification
effect’. Policies such as eco-taxes, ‘feebates’
and Germany’s best available technology
that have been covered in Chapter 8 of The
Natural Advantage of Nations can do much
to prevent negative rebound affects and instead
in theory promote large amplification affects.
In Chapter 11 of The Natural Advantage of
Nations more mechanisms of government are
presented that can help provide incentives for
positive amplification effects to occur instead
of negative rebound effects. In Chapter 21 of
The Natural Advantage of Nations, Chris
Ryan contributed an extensive framework on Sustainable
Production and Consumption that provides a comprehensive
program to address negative rebound effects and
encourage amplification effects. In many ways
simple behaviour changes and lifestyle choices
offer the most cost effective ways to reduce greenhouse
gas emissions. If people chose to walk to the
shops rather than driving a car or turning off
the lights they are not using at work this can
significantly reduce greenhouse gas emissions
while having no negative effect on well being
or economic productivity.
Australian Government Department of Industry, Tourism
and Resources (n.d.) Energy Efficiency Best
Practice Program, Available at http://www.industry.gov.au/.
Accessed 3 January 2007.
- Department of Environment and Heritage (n.d.)
Corporate Sustainability. Available at
Accessed 3 January 2007. This page offers over 155
Australian Case Studies of the Eco-Efficiencies/Cleaner
Production benefits of applying aspects of environmental
- Department of Environment and Heritage (n.d.)
Mining. Available at http://www.deh.gov.au/settlements/industry/minerals/index.html.
Accessed 3 January 2007. This page offers Environmental
Management guidelines and resources for the Mining
- DeSimone, L. and Popoff, F. (1996) Eco-Efficiency:
the Business Link to Sustainable Development,
MIT Press, Cambridge MA/London.
- Five Winds (2005) Eco-Efficiency
Training Module, WBCSD, Geneva. Available
Accessed 3 January 2007.- Daly, H. (1999) Ecological
Economics and the Ecology of Economics, Edward
Elgar Publishing, UK.
- Hawken, P., Lovins, A.B. and Lovins, L.H. (1999)
Natural Capitalism: Creating the Next Industrial
Revolution, Earthscan, London.
– Chapter 1: The Next Industrial Revolution.
Available at http://www.natcap.org/images/other/NCchapter1.pdf.
Accessed 3 January 2007.
– Chapter 3: Waste Not. Available at http://www.natcap.org/images/other/NCchapter3.pdf.
Accessed 3 January 2007.
- von Weizsäcker, E., Lovins, A.B. and Lovins,
L.H. (1997) Factor 4: Doubling Wealth, Halving
Resource Use, Earthscan, London, Chapter 1:
Twenty Examples of Revolutionising Energy Productivity.
- WBCSD (1999) Eco-Efficiency:
Creating More Value with Less Impact, WBCSD,
Geneva. Accessed 3 January 2007.
- WBCSD (1999) Measuring
Eco-Efficiency: A Guide to Reporting Company Performance,
WBCSD, Geneva. Accessed 3 January 2007.
Words for Searching Online
World Business Council for Sustainable Development,
Eco-Efficiency. Eco-efficiency Initiatives such
as the European Eco-efficiency An initiative of
the World Business Council for Sustainable Development,
the Initiative (EEEI) European Partners for the
Environment (EPE) and the European Commission for
Enterprises to promote eco-efficiency Europe-wide.
Details on its objectives, action areas and progress
can be found on the EPE site by selecting ‘Resources’
then ‘Most Recent Objectives’. (www.epe.be/programmes/eeei/index.html)
The Climate Group (2005) Carbon Down Profits Up.
Available at www.theclimategroup.org/assets/Carbon_Down_Profit_Up.pdf.
Accessed 3 January 2007. (Back)
Hawken, P. (1993) The Ecology of Commerce, A Declaration
of Sustainability, HarperCollins, NY. (Back)
Jevons, S. (1865) The Coal Question, An Inquiry
Concerning the Progress of the Nation, and the Probable
Exhaustion of Our Coal-Mines, McMillan and Co.,
Brown, L. (2005) China Replacing the United States
as World's Leading Consumer, Earth Policy Institute,
16 February 2005. (Back)
World Federation of Engineering Organisations (1997)
The Engineer's Response to Sustainable Development,
Recently, the WBCSD has taken steps to extend its
work on efficiency to specific sectors. Currently
there are special projects within the cement, electric
utilities, forestry, mining and mobility sectors.
In 2001, 11 companies from six countries embarked
on a project addressing sustainability issues in the
electric utilities sector. In addition to the sectoral
work, there are also several WBCSD projects on policy
development and best practice, such as the European
Efficiency Initiative. For additional information
visit the WBCSD webpage at www.wbcsd.org.
The Climate Group (2005) Carbon Down, Profits
Up. Available at www.theclimategroup.org/.
Accessed 3 January 2007. (Back)
Porter, M.E. and van der Linde, C. (1995) 'Green and
Competitive: Ending the Stalemate', Harvard Business
Review , September-October, pp 121-134; Porter,
M.E. and van der Linde, C. (1995) 'Toward a New Conception
of the Environment-Competitiveness Relationship',
Journal of Economic Perspectives, vol IX-4,
Fall, pp 97-118.
G.A. Boyd and J.X. Pang (2000) 'Estimating the linkage
between energy efficiency and productivity', Energy
Policy 28 5, pp 289-296; Kelly, H.C., Blair,
P.D. and Gibbons, J.H. (1989) 'Energy use and productivity:
current trends and policy implications', Ann.
Rev. Energy 14, pp 321-352; US Department of
Energy (1997) The interrelationship between environmental
goals, efficiency improvement, and increased energy
efficiency in integrated paper and steel plants,
DOE/PO-0055, US Department of Energy, Office of Policy
and International Affairs and Office of Energy Efficiency
and Renewable Energy, Washington, D.C. (Back)
Adapted from: von Weizsäcker, E., Lovins, A.B.
and Lovins, H.L. (1997) Factor Four: Doubling
Wealth, Halving Resource Use, Earthscan, London,
Introduction: Seven Good Reasons for Resource Efficiency.
Australian Government Department of Industry, Tourism
and Resources n.d. Energy Efficiency Best Practice
Program. Available at http://www.industry.gov.au/,
search 'Energy Efficiency Best Practice Program'.
Accessed 3 January 2007. (Back)
Environmental Management Systems can be freely downloaded
from the Australian Government web site, see Department
of Environment and Heritage (n.d.) Environmental
Management Systems. Available at http://www.deh.gov.au/settlements/government/ems/index.html.
Accessed 3 January 2007. (Back)
Department of Environment and Heritage (n.d.) Efficiency
Databases. Available at http://www.deh.gov.au/industry/corporate/eecp/industry.html.
Accessed 3 January 2007, Environmental Management
guidelines and resources for the Mining Sector are
freely available, see Department of Environment and
Heritage (n.d.) Industry and Business Sustainability.
Available at http://www.deh.gov.au/industry/industry-performance/minerals/index.html
. Accessed 3 January 2007. (Back)
von Weizsäcker, E., Lovins, A.B. and Lovins,
H. (1997) Factor Four: Doubling Wealth, Halving
Resource Use, Earthscan, London.
Braithwaite, J. and Drahos, P. (2000) Global Business
Regulation, Cambridge University Press, Cambridge.
Natural Edge Project Engineering Sustainable Solutions
Program is supported by the Australian National Commission
for UNESCO through the International Relations Grants
Program of the Department of Foreign Affairs and Trade.